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Nick Smith (Blaenau Gwent) (Lab)
1. What steps he is taking to assist schools and colleges to register for the opportunity to obtain free tickets for the London 2012 Olympics.
The Minister for Sport and the Olympics (Hugh Robertson)
Since our last session of DCMS questions, Iain Sproat, a former sports Minister, has passed away. On behalf of all Members, I should like to convey our condolences to his wife Judy—who, incidentally, is a former parliamentary reporter—and to his family and friends.
Let me also, on behalf of the ministerial team, welcome the right hon. Member for Dulwich and West Norwood (Tessa Jowell) and the rest of the new shadow team to the Opposition Front Bench.
The London Organising Committee of the Olympic Games and Paralympic Games is making up to 100,000 free tickets available to schools and colleges throughout the United Kingdom which sign up to the Get Set network by 16 December. In addition, the Mayor has purchased 75,000 tickets to be allocated to young Londoners through the network. Lord Coe has recently written to the schools and colleges that have not yet signed up to encourage them to do so, and 1 fully support him in that approach.
Nick Smith
It is disappointing that after 14 months, 75% of tickets for schools outside London have not been taken. Will the Minister assure us that every effort will be made to ensure that young people, not just in the home counties but throughout the United Kingdom, are given this one-in-a-lifetime Olympic opportunity?
Hugh Robertson
I thank the hon. Gentleman for asking that question, because it gives me a chance to encourage Members on both sides of the House to get out in their constituencies and encourage as many young people as possible to go. The involvement of young people was one of the central tenets of the London bid, and I am sure that Members in all parts of the House want as many schoolchildren as possible to have that opportunity.
Charlie Elphicke (Dover) (Con)
Children have been heavily involved in the “pass the passion” celebration in Dover, where the torch will stop on the way to London. Is it not particularly important for children to have access to free tickets when they have played a real role in the torch’s progress around the country?
Hugh Robertson
Of course it is. The very fact that the torch will spend a night in Dover, which is emblematic as a port of entry to the United Kingdom, is yet another powerful reason for young people to become involved.
Tessa Jowell (Dulwich and West Norwood) (Lab)
I welcome what the Minister has said. Obviously there is not a single Member in the House who will not want young people to have access to every available ticket, and we will support that fully in every possible way. However, does the Minister share my fear that the excitement stimulated by the prospect of young people going to the games is being undermined by the gradual disappearance of school sport from the lives of children throughout our schools? Does he agree that, as the school sport partnerships are dismantled and redundancy notices handed out, we should at least establish the desired levels of continuing participation, and take advantage of the chance that still remains to fulfil our legacy promise to transform a generation of young people through sport on the strength of London 2012?
Hugh Robertson
School sport is a vital part of the base of the sporting pyramid, and most young people in the country will have their first experience of sport at school. I make no bones about the fact that it is difficult for us to deliver our commitment against the current public expenditure background, but the right hon. Lady is absolutely right to say that we should make every effort to do so.
My Department’s funding is confirmed for the next four years, and 8,000 schools are now signed up for school games, which is a much better result than we had expected. We are engaged in discussions with the Departments for Health and for Education about the further support that they will provide, and we fully intend to make this a key tenet of London 2012.
Duncan Hames (Chippenham) (LD)
We have heard about the schools and colleges that have not taken up their allocation, but aspiring young Olympians in sports clubs such as the Melksham school of gymnastics are disappointed not to have been able to secure tickets. What provision is the Minister making for young members of sports clubs to attend the Olympic and Paralympic games?
Hugh Robertson
The problem is simple: we had 26 million applications for 6.5 million tickets. Even the most basic calculation will make it clear that one will not go into the other, and that there will be a lot of disappointed people. The good news is that I am sure some members of that gymnastics club will have obtained tickets, or will obtain them in further rounds. We should also bear in mind the fact that one of the successes of the last six months has been the securing of the world gymnastics championships, which are coming to this country in 2015.
Nia Griffith (Llanelli) (Lab)
2. What steps his Department is taking to assist young people into employment in the creative industries; and if he will make a statement.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
The Government support young people wishing to enter the creative industries at all levels through apprenticeships, careers advice, degree courses and business start-up schemes. We are expanding apprenticeships, including those in the creative industries, and the National Skills Academy, which was set up by Creative and Cultural Skills, has been successful in increasing the number of career opportunities for young people.
Nia Griffith
I am sure the Minister will be aware that the television media company Tinopolis, which is in my constituency, is a significant employer of young arts graduates. Vice-chancellors up and down the country are worried about what arts courses they will be able to provide. Can the Minister tell me how many students are taking such courses this year, and how that compares with the number last year?
Jake Berry (Rossendale and Darwen) (Con)
When young people do manage to get a job, if they choose to listen to the radio in their workplace they may be subjected to hounding by PPL. That company is repeatedly phoning a constituent of mine to demand money for a radio licence when he is working at home in his garage. Will the Minister meet me to discuss this case and the behaviour of the company more generally?
Pete Wishart (Perth and North Perthshire) (SNP)
As the Minister will know, the Hargreaves review of intellectual property will result in many opportunities for young people in the creative industries, but there are also some wild and fantastic assumptions, including the claim that if all the recommendations are implemented it will bring £7.9 billion into the economy. That amounts to almost 0.6% of GDP. The Business Secretary now calls this a ballpark figure, as these estimates start to unravel. What is the DCMS view of that figure of £7.9 billion?
Dan Jarvis (Barnsley Central) (Lab)
The creative industries are incredibly important for jobs and growth, but I am sure the Minister agrees that websites that illegally give access to copyright material are a major problem. Will he assure the House that he will play an active role in discussions between rights holders, search engines and internet service providers in order to tackle these illegal websites, and does he believe an agreement will be reached?
Mr Vaizey
First, may I welcome the hon. Gentleman to his Front-Bench position? I look forward to exchanging views with him for many years to come.
I wholeheartedly endorse what the hon. Gentleman has said. I am working with rights holders and ISPs to achieve a self-regulatory solution. It is also important to work with credit card companies and advertisers; Indeed, later today I shall speak to the Internet Advertising Bureau on this very subject.
Caroline Nokes (Romsey and Southampton North) (Con)
3. What progress his Department has made in rolling out superfast broadband to rural communities.
Nicky Morgan (Loughborough) (Con)
10. What progress his Department has made in rolling out superfast broadband to rural communities.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
We have already announced plans to roll out superfast broadband to 90% of the country by 2015. Good progress has been made, with nine parts of the country already at procurement stage, including Highlands and Islands, Lancashire, Cumbria, Wales, North Yorkshire, Rutland, Herefordshire and Gloucestershire, Surrey, Kent and Medway.
Caroline Nokes
Broadband Delivery UK has allocated £8 million to Hampshire for the delivery of rural broadband. Although that is very welcome, and much more than was received under the last Government, residents in the rural Test valley are still concerned to know not only when they will receive faster broadband but how long it will take to get there. What can be done to speed up the process?
Mr Hunt
Absolutely. First, we need Hampshire to submit a broadband plan explaining how it will get broadband access to 100% of Hampshire residents, with 90% of them getting superfast access. We are strongly encouraging councils to look at the 10% who will not get superfast immediately and to make it as easy as possible for them to get superfast access by 2015, especially by those communities finding their own community solutions.
Nicky Morgan
I recently met the Leicestershire county council champion for broadband, Mr Byron Rhodes. He is very grateful for the financial assistance he is getting from the Government, but he has asked me to make the point that councils would appreciate having the maximum flexibility in delivering their own solutions. Does the Secretary of State agree that councils are best placed to deliver maximum connectivity, as they know their own areas best?
Mr Hunt
I absolutely agree. We have quadrupled the amount of money going into superfast broadband roll-out. When £530 million became available following the BBC licence fee settlement, we could have signed one big contract with BT for a national roll-out. Instead, we parcelled it up into 40 lots, and made it available to councils so they can take ownership of solving broadband problems in their areas. The response has been superb and there is enormous enthusiasm, so that was a good localist solution.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
Many of those in rural communities who use superfast broadband will log on to Amazon to buy books and other artefacts, but does the Secretary of State agree that Amazon needs no help from the British Library? Will he look into the worrying development that the British Library is allowing users browsing its online catalogue to click through to Amazon, which will potentially have a major effect on the book retail market?
Mr Hunt
We obviously want to support the retail book market, but as a Government we have to be neutral about whether people obtain their books through the internet or by going to bookshops. However, I will certainly look into the concerns that the hon. Gentleman raises. The reality is that companies such as Amazon are doing a great deal to promote reading. I think that partnerships with organisations such as the British Library can have a positive impact. I will happily look at what he says.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
This week’s “Communications Infrastructure Report” by Ofcom reveals that 14% of British homes still do not have access to decent broadband. By delaying Labour’s universal broadband pledge by three years, are not this Government letting down rural businesses and communities?
Mr Hunt
I gently remind the hon. Lady that we have quadrupled the amount of money available for superfast broadband; we have brought forward the roll-out of superfast broadband from the next Parliament, which was and still is Labour’s policy, to this Parliament; and in October the Chancellor announced £150 million to get rid of mobile coverage gaps and increase mobile coverage to 99% of the population. I think that our record is pretty good.
Jeremy Lefroy (Stafford) (Con)
4. What steps he is taking to encourage inbound tourism from other EU member states.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose)
Visit Britain’s tourism marketing activities have been refocused to include a stronger emphasis on promoting the UK to potential EU visitors. That is in contrast to the previous Government, who took this important market for granted. Our most recent initiative is GREAT, a major international campaign announced by the Prime Minister on 21 September, which will promote the UK globally as one of the best places to visit, study, work and invest.
Jeremy Lefroy
The exhibition of the Staffordshire hoard of Anglo-Saxon gold in Washington DC is a great success and will encourage tourism to the UK. Will my hon. Friend work with the owners of the hoard to encourage the promotion of similar exhibitions in European cities?
John Penrose
My hon. Friend is absolutely right: the Staffordshire hoard is a glittering jewel, both literally and figuratively, in the British crown. It shows our history in a completely new light and transforms our understanding of a particular period of our nation’s story. It will indeed draw many tourists to this country, and I hope that it will be involved in many international tours to spread that message more widely.
Mr Ben Bradshaw (Exeter) (Lab)
The vital south-west tourism industry says that the single measure that would make a difference to it would be an extra hour of daylight, particularly in spring and autumn. When will the Government fulfil their promise on this, and why is the Department not pushing much more vigorously within Government for the change?
John Penrose
The right hon. Gentleman will be aware that a private Member’s Bill on that issue is going through Parliament. He will also be aware that my right hon. Friend the Prime Minister has said that the Government do not want to move forward on this without the consent of people from the whole of Britain. That means that the people of Scotland, for example, must be comfortable with the move before we take it forward.
Mr John Whittingdale (Maldon) (Con)
I congratulate the Government on the boost to tourism that will be achieved with the extra money from the regional growth fund. I also commend the Secretary of State for the amount of time that he is devoting to taking an around-Britain tour to promote tourism. Does the Minister agree that it is not just his Department that needs to prioritise tourism? It is essential that Departments such as the Department for Transport and the Home Office, in relation to visa policy, also recognise the importance of tourism to our economy.
John Penrose
I could not agree more. This is quintessentially a cross-departmental role that we have to fulfil. The Government’s tourism policy, published in March this year, deliberately included input from all those Departments to ensure that we were all speaking with one voice.
Pamela Nash (Airdrie and Shotts) (Lab)
5. If he will take steps to promote the holding of festivals and cultural events in 2012.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
The most prominent 2012 cultural festivals and events will come under the cultural Olympiad umbrella. Since my appointment, I have taken every opportunity to work with the London Organising Committee of the Olympic Games and Paralympic Games in arranging a cultural Olympiad of which we can be proud.
Pamela Nash
I thank the Minister for that answer. Will he share with the House how much of the cultural Olympiad budget has so far been spent in Scotland? Will he assure the people of Scotland that when the follow-up programme is announced later this month, Scotland will get its fair share?
Mr Vaizey
I am certain that Scotland will get its fair share. In fact, I have recently had a meeting with the Scottish culture Minister and we are going to have a cultural policy meeting of all Ministers. Ministers from around the world will go to Edinburgh after the Olympics. The Edinburgh international festival will play a prominent part in the cultural Olympiad. There were 70 events in Scotland at the last open weekend in 2011. Scotland is fully on board the cultural Olympiad, and quite rightly so.
Tony Baldry (Banbury) (Con)
Next year also provides an opportunity for a grand national festival and celebration because of the Queen’s diamond jubilee. May I tell my hon. Friend that in Banbury and Bicester we are already planning for that event, and in Banbury we intend to hold the largest street party in the country?
Chris Bryant (Rhondda) (Lab)
And doubtless next year you will blame the jubilee for the collapse in the economy.
Barry Gardiner (Brent North) (Lab)
The Minister spoke of an Olympic year in which we can be proud. How does he propose to deal with the current dispute between the London Organising Committee of the Olympic Games and Paralympic Games and those campaigning on behalf of the 25,000 victims of the Bhopal disaster, and Union Carbide/the Dow Chemical Company having been given the wrap for the stadium? That does not fit with the sustainability and corporate social responsibility criteria of LOCOG.
Mr Vaizey
I am aware of the dispute, which is obviously on the desk of my colleague the Minister for Sport and the Olympics. I would say that the Dow Chemical Company is a top sponsor of the International Olympic Committee and my understanding is that it has been for many years.
Bob Russell (Colchester) (LD)
6. What discussions he has had with the Football Association on ensuring that all Football League stadiums have adequate access and facilities for disabled spectators.
Stephen Lloyd (Eastbourne) (LD)
17. What discussions he has had with the Football Association on ensuring that all Football League stadiums have adequate access and facilities for disabled spectators.
The Minister for Sport and the Olympics (Hugh Robertson)
With permission, Mr Speaker, I will link questions 6 and 17.
We are working hard to bring all stadiums up to the necessary standards—
Mr Speaker
Order. May I say to the Minister that it is a courtesy for the Department to seek clearance of such groupings in advance of the sitting? Exceptionally, I will allow it today but it is a rank discourtesy to the House simply to announce it in that way without prior notification.
Hugh Robertson
I can only apologise, Mr Speaker. I thought that that had been done.
We are working hard to bring all stadiums up to the necessary standards. The Sports Grounds Safety Authority, formerly the Football Licensing Authority, has published “Accessible Stadia”, which has made an important contribution to delivering better facilities for disabled spectators, not just at football grounds but at all sporting venues. However, much needs to be done and we are working closely with the Football Association and the professional leagues to achieve this.
Bob Russell
I thank the Minister for that comprehensive response. I invite him to congratulate the Muscular Dystrophy Campaign on its Trailblazers campaign on promoting better access to stadiums. Will he meet a delegation of young people from the campaign to discuss their aims?
Hugh Robertson
I am very happy to acknowledge the campaign in the way that the hon. Gentleman asks. If he would allow me, I would rather those young people met the Football League first. If he has any difficulty in fixing that meeting, I would be happy to do that. If there are any issues that cannot be resolved or that arise out of that meeting, I will of course be happy to meet them in due course.
Stephen Lloyd
I thank the Minister for his answer. The Liberal Democrats and, in particular, my right hon. Friend the Member for Bath (Mr Foster), have been campaigning on this issue tirelessly. A large proportion of the 30,000 disabled supporters who regularly attend matches in England still encounter a range of problems related to access, so I would be grateful if the Minister could outline what additional spend may be possible in the next year or so in support of the Trailblazers campaign.
Hugh Robertson
Directly, Sport England has earmarked £8 million of lottery funding for disabled sport issues, but there is an opening at the moment in a way that there possibly has not been before. As a result of the Select Committee’s report on football governance, the football authorities are consulting on a range of licences that will govern the running of the leagues. This is an extremely good moment for the hon. Gentleman and others interested in this campaign to feed into that process and make recommendations.
Mr Gerry Sutcliffe (Bradford South) (Lab)
But the Minister will know that this is long overdue; as the previous sports Minister, I tried, as he has done, to push the FA into making sure that access was available. Is this not about the role of the FA too? Can he update us on its reorganisation?
Hugh Robertson
Yes, of course I can. I pay tribute to the work that the hon. Gentleman did on this during his time in office. As a result of the Select Committee report, we produced a response in September. That has set a straightforward deadline to the three football bodies—the FA, the Football League and the Premier League—to come back to us with firm proposals to address the three central tenets of that report: the FA board, the licence, and the link with the councils. I expect that work to be completed by the end of February.
Clive Efford (Eltham) (Lab)
In this day and age it really is not acceptable that only 13 football grounds in the country meet the minimum standards and I am sure the Minister would agree that we should be moving towards a time when people with disabilities should not be turned away from a football ground because they cannot be accommodated. In its evidence to the Select Committee, Level Playing Field highlighted a number of horror stories. Its representatives talked to me about a gentleman who had turned up on crutches and been turned away because, he was told, his crutches might be used as a weapon. What is the Minister doing actively to move the FA to improve the situation and increase the number of grounds that provide at least the minimum facilities for people with disabilities?
Hugh Robertson
I hope that I am not traducing him but I think the current chairman of the FA was the chairman of the National Association of Disabled Supporters beforehand.
Hugh Robertson
The former sports Minister nods. There is therefore somebody at the head of the FA who understands this agenda. As I said in answer to an earlier question, there is an opportunity now with the new licensing system, and I will certainly encourage the FA to take every available step.
Mr David Hanson (Delyn) (Lab)
7. What plans he has for the future sale of the 4G spectrum.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
Ofcom is consulting on its plans for the auction of 800 MHz and 2.6 GHz spectrum by the end of 2012. The Government are also committed to releasing 500 MHz of spectrum, which is currently used by the public sector, over the next 10 years.
Mr Hanson
Will the Minister confirm that he will undertake that sale by the end of 2012 and that that will be a firm commitment to the House? May I also, in passing, urge him to examine very favourably the recommendations that have been issued today by the hon. Member for Maldon (Mr Whittingdale) and the Select Committee on Culture, Media and Sport about ensuring that private companies do not make windfall profits from what were once public assets?
Mr Vaizey
The right hon. Gentleman makes very valid points. This is an independent process that is run by Ofcom, but he is right to indicate that if mobile phone companies decide to litigate this process, as they have in the past, that will seriously hold it up and be of great detriment to the consumer.
Alun Cairns (Vale of Glamorgan) (Con)
The Minister’s focus on delivering broadband through mobile technology and fibre is commendable and the investment is very welcome, but will he join me in calling on mobile operators and Ofcom to deliver the will of the House by delivering 98% broadband coverage through mobile technology in the 4G network?
Mr Vaizey
I very much welcome the Select Committee report that was published this morning. The House will be aware that the Chancellor of the Exchequer has announced an additional £150 million to invest in mobile networks in order to cover many of these not spots. We certainly wish to get much greater mobile phone coverage, particularly because of its importance to broadband.
Helen Goodman (Bishop Auckland) (Lab)
When the Labour Government left office, the sale of the 4G spectrum was scheduled for 2010, but it has been delayed twice since the general election, which has meant a loss of £300 million a year in fees and a delay of at least £2 billion in auction receipts. If Ministers had pressed Ofcom to do this to the original timetable, they would have needed no cuts in their departmental budget and they could have handed over a surplus to the Treasury. Why have they been so lackadaisical?
Mr Vaizey
I welcomed the hon. Lady to her new position at two very lively Westminster Hall debates last week, but may I welcome her again, to the Dispatch Box? It is hard to know where to start in pointing out how wrong the points she makes are. First, any receipts would have gone to the Treasury; and secondly, the delay was caused by the previous Government, who could have done this five years ago. They left us an order on their last day in office at a time when Orange and T-Mobile were separate companies, but when those companies merged that had to change. We have got on with this whereas Labour delayed for five years.
Bill Esterson (Sefton Central) (Lab)
8. What assessment he has made of the effects on the arts of reductions in public expenditure.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
Cuts are a challenge for all arts organisations and we have tried to mitigate the situation with four-year budget settlements and an increase in lottery funding of 43%, with the result that we have been able to preserve free admission to museums.
Bill Esterson
I could thank the Minister for that very complacent answer, but the arts have faced huge cuts of 29% and the Government say that the cuts will be replaced by “philanthropic giving” although the level of donations always falls in a downturn. How much of the 29% cut in the arts has been replaced by philanthropic giving?
Mr Hunt
Let me tell the hon. Gentleman. Philanthropic giving to major arts organisations stands at £250 million and went up 6% last year. Lottery funding changes that we introduced, which his party did not support, will add £80 million a year to the arts budget by 2013—so, more philanthropy and more lottery. His party was talking about cuts of 20% across the whole of Government whereas we have limited cuts to 15%, so there are lower cuts as well.
Mr Don Foster (Bath) (LD)
I welcome the shadow Secretary of State and her team to their new posts.
Does the Secretary of State agree that the biggest threat to funding for the arts is anything that damages income to the national lottery, such as the so-called society lottery set up by Richard Desmond and his newspapers? Does the Secretary of State believe that that lottery abides by the spirit and letter of current legislation? If not, what is he going to do about it; and if he believes it does, should we not change the legislation?
Mr Hunt
My right hon. Friend is well aware of my concerns about anything that challenges or threatens the important income that goes to good causes from the national lottery. He will know that the Gambling Commission and the National Lottery Commission are looking at this, and we await what they have to say with great interest.
Dame Anne Begg (Aberdeen South) (Lab)
9. If he will ask Ofcom to review its code on electronic programme guides.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
It is the duty of Ofcom from time to time to review and revise the electronic programme guide code. We will consider the electronic programme guide as part of the communications review.
Dame Anne Begg
I add my condolences to those expressed by the Minister to the family of Iain Sproat who, when he represented Aberdeen South, was my MP for a short time. Will the Minister ask the Department and Ofcom to look at guaranteeing front-page prominence for public service broadcasting channels such as the UK’s highly successful children’s channels, and extending that prominence so that children’s services are as easy to find on on-demand TV as they are on live TV?
Mr Vaizey
The hon. Lady makes a good point. As my right hon. Friend the Secretary of State has pointed out, the EPG is the most important lever to protect public service broadcasting going forward. We are reviewing it as part of the communications review, and we may legislate to protect public service broadcasting.
Greg Mulholland (Leeds North West) (LD)
12. What support his Department has provided to the rugby league Four Nations tournament.
The Minister for Sport and the Olympics (Hugh Robertson)
Sport England is providing £27.5 million to the Rugby Football League to support the grassroots in the period 2009-13. We are also providing up to £1.5 million to help with the hosting of the rugby league world cup in 2013. As with the six nations tournament in rugby union, we do not provide direct financial support for the Four Nations cup in rugby league, but I wish it every success.
Greg Mulholland
I thank the Minister for his answer and for his support. The all-party rugby league group is delighted to host the Rugby League International Federation board today, and I am sure that he will want to join us in welcoming the return of international rugby league to Wembley with the Four Nations double header on Saturday. Does he welcome the fact that there is going to be a statue of a rugby league player at Wembley, and will the Government assist in making that a success as well?
Hugh Robertson
I join the hon. Gentleman in welcoming the international board. That is a fantastic achievement, and yes, it is right that an appropriate way to mark that connection should be found at Wembley, which is a stadium that resonates with rugby league history as well as football history. I will of course do anything that I can to help.
Mark Pawsey (Rugby) (Con)
In the other rugby code, rugby union has just seen a successful world cup in New Zealand. The next tournament will be in England in 2015, and the town of Rugby in my constituency is already preparing to receive visitors to the home of the game. Will the Minister lend his support to that work?
Hugh Robertson
Yes, certainly. Was it not in Rugby that William Webb Ellis first picked up a ball and ran with it? That will clearly be a key part of the celebrations in 2015, and we will do everything that we can to support them.
Tom Brake (Carshalton and Wallington) (LD)
13. What discussions he has had with the Chancellor of the Exchequer on the effects on levels of participation in sports of the VAT status of sports clubs.
The Minister for Sport and the Olympics (Hugh Robertson)
A range of tax benefits is available to community clubs under the CASC—community amateur sports clubs—scheme, including 80% mandatory rate relief, gift aid on donations, and exemption from some levels of corporation tax. I wrote to the Economic Secretary on 10 August to ask that tax exemption thresholds be increased in line with inflation. To date, just over 6,000 clubs have registered and have benefited from an estimated £100 million in savings since the launch of the scheme.
Tom Brake
I thank the Minister for his response. Will he look in particular at an issue that has been raised with me by Powerleague, a five-a-side organisation that believes that the tax arrangements on VAT, which had been in place for the past 20 years but have recently been changed, will have a heavy impact on its membership?
Hugh Robertson
I wrote to the Treasury to take that issue up on behalf of a number of small five-a-side providers. The issue is not that the regulation has changed but simply that its interpretation has been clarified. Some providers were paying VAT, but others were not. That conversation is ongoing, but the point of the intervention by Her Majesty’s Revenue and Customs was to level the playing field.
Gavin Shuker (Luton South) (Lab/Co-op)
I thank the Minister for his answer to the right hon. Member for Carshalton and Wallington (Tom Brake). I would like to raise the same issue: playfootball.net in Stopsley in my constituency is facing challenges to its finances as a result of the changes. Surely if the regulation has been applied in a certain way for the past 20 years, suddenly to change it now would be a silly idea.
Hugh Robertson
The issue is fairness in the tax system. If some providers are being taxed in a certain way and others are not, that provides a competitive advantage that many would argue is unfair. What is important is that the same rules apply, whatever they are. As I said, we are in discussions with the Treasury and we will continue those discussions. The important thing is that the rules are applied equitably to all providers.
Gordon Banks (Ochil and South Perthshire) (Lab)
14. If he will assess the economic and cultural value of dance to the UK; and if he will make a statement.
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
My Department fully recognises the economic and cultural value of dance to the UK. The performing arts, including dance, contribute more than £3 billion to the UK economy.
Gordon Banks
I am grateful for the Minister’s response, which shows the economic benefits of dance to the UK, although he did not mention the cultural benefits. I declare an interest, as my son is a dancer and works in that industry. Does the Minister agree that injured dancers are unable to contribute to that cultural and economic benefit? What is the Department doing to assist the sector to get dancers who are injured back to health, fitness and work?
Charlie Elphicke (Dover) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Culture, Olympics, Media and Sport (Mr Jeremy Hunt)
With permission, Mr Speaker, I would like to inform the House that on Monday we will be announcing the route of the torch relay for next year’s Olympics. The torch arrives on 18 May. It will be travelling for 70 days, going through 1,000 communities. Unfortunately, it will not go through every hon. Member’s constituency, but I can assure the House that 99% of the population will be within 20 miles of the torch route.
Charlie Elphicke
People often think of DCMS as the Ministry of Fun. Does the Secretary of State just have fun or is there a serious side to his Department in terms of the growth agenda and getting our country doing well in future years?
Mr Hunt
My hon. Friend makes a good point. We focus heavily on growth through our broadband agenda, our tourism agenda and the economic boost of the Olympics next year, but I would not want to deceive him by saying that it is not fun as well. He could be part of that fun by coming along regularly to DCMS questions.
Ms Harriet Harman (Camberwell and Peckham) (Lab)
Sorry to spoil the fun. With mounting evidence of the Murdoch empire knowingly using illegal phone hacking, and with the Press Complaints Commission appointing a Tory peer, former Thatcher Cabinet Minister Lord Hunt, as its new supposedly independent chair, it is ever more evident that radical change is necessary and must not be kicked into the long grass. Will the Secretary of State tell the House when he expects to be in a position to bring forward his Green Paper, and when he expects to be able to introduce legislation?
Mr Hunt
I welcome the right hon. and learned Lady to her position. I hope that she agrees with me that this is the best job in government and that it has some fun in it as well as the serious issues that she mentions. I agree with her entirely. [Interruption.] The hon. Member for Rhondda (Chris Bryant) is making comments from a sedentary position. Let me remind him that 300 breaches of the Data Protection Act were brought to the attention of the previous Government by the Information Commissioner and they did nothing about that. We have had one, and we are overhauling the system of press regulation. We do not want to go too far in the opposite direction and stop the press being free, vibrant and robust. That is very important. The independent inquiry by Lord Justice Leveson will be reporting on press regulation and the relationship between the press and politicians by September next year, and we hope to be able to bring to the House a White Paper before the end of next year, which will include what we think should happen on the basis of his recommendations.
Neil Carmichael (Stroud) (Con)
T2. I welcome what the Government have already done to enhance super-fast broadband opportunities. Does my right hon. Friend agree that we need a clarion call to all businesses and communities, especially in rural areas such as Gloucestershire, to make sure that people understand that there is a strong demand for enhanced service?
Mr Hunt
I completely agree with my hon. Friend and thank him for his excellent work. I have been to Gloucestershire, where the county council is on fire with excitement, which I was not expecting, at the prospect of super-fast broadband getting to the most remote villages. It has a big role, he has a big role and we must do everything we can to bang the drum.
Natascha Engel (North East Derbyshire) (Lab)
T5. Lord Taylor’s inquiry into the Hillsborough disaster recommended the banning of standing in football stadiums in the top two divisions. Does the Minister agree?
Andrea Leadsom (South Northamptonshire) (Con)
T3. Has the Minister seen a demonstration of TalkTalk’s HomeSafe system, which enables families to keep their children safe not only from internet porn, but from sites on suicide and on bomb-making, and all sorts of unsuitable sites? Does he agree that unless internet service providers do more to enable family-friendly systems to protect children, the Government will have to legislate?
The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)
My hon. Friend makes a good point. I have seen the TalkTalk system. I have said to ISPs again and again that I prefer self-regulation to legislation, but the mood of the House is for action and legislation. This is not about censorship, but about giving families the tools to protect their children from inappropriate content, and we rely on ISPs to come up with solutions.
Bill Esterson (Sefton Central) (Lab)
T6. May I again press the Secretary of State on phone hacking in News International? Will he guarantee full co-operation between his Department and Lord Leveson’s inquiry?
Jessica Lee (Erewash) (Con)
T4. Is the Minister aware of concerns over the quality and frequency of subtitling services on television? A constituent of mine who relies entirely on subtitling feels that the service could be significantly improved and that in the 21st century it should be 100% accurate.
Chris Bryant (Rhondda) (Lab)
In 2007, News International’s lawyers, as we now know but have recently learned, wrote to senior management at the News of the World, including James Murdoch, to make it explicit that the “sole rogue reporter” line was completely untrue. Does the Secretary of State really believe, with BSkyB’s annual general meeting coming up on 29 November, that James Murdoch is a fit and proper person to chair the company any longer?
Mr Hunt
The hon. Gentleman has campaigned extensively on this. The most important thing is that the truth comes out. James Murdoch is speaking to the Select Committee, Lord Justice Leveson is conducting an inquiry and there are extensive police inquiries. It would be inappropriate for me to make specific comments on who should do what job before the inquiries are completed, but this Government launched the process to resolve this and are doing everything possible to ensure that we end up in the right place.
Matthew Hancock (West Suffolk) (Con)
T7. Will the Minister commend the work of Attitude is Everything, which works extremely hard to promote disabled access to music venues? Going to a music concert is brilliant for the morale of many disabled people and people in wheelchairs, and access—
Mr Speaker
Order. The hon. Gentleman will resume his seat when asked to do so. He is making a very important point, but it must be made briefly, and that is the end of it.
Mr Vaizey
I received my hon. Friend’s invitation and immediately sent it to my officials with a note stating, “This invitation comes from one of the most important Members of the House and a rising star, and we must take his concerns seriously.” He raises the important issue of disabled access, which we have already discussed in relation to sport.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The Government have spent the past year attacking FIFA following the World cup bidding process, but does the Minister think that a flimsy assurance from the organisation’s president is sufficient guarantee that a Team GB Olympic football team will not compromise the footballing independence of Wales, Scotland, Northern Ireland and England?
Hugh Robertson
The key thing with FIFA is not what it says but what it does, and as far as the larger reform programme is concerned we will judge FIFA by its results. It has been absolutely categorical about this issue, and it is about time everybody stopped playing politics with it and remembered the athletes, who have an unbelievable opportunity to compete in a home Olympics. Can we get behind the athletes and stop playing politics?
Jo Swinson (East Dunbartonshire) (LD)
My constituent Julia Donaldson is the author of many much-loved children’s books, including “The Gruffalo”, and she is also the children’s laureate. As a passionate advocate of the benefits of reading for children, she is also concerned about the possible impact of library closures. Will the Secretary of State agree to meet Julia and a group of campaigners to discuss the issue?
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
On the question of Olympic security, most competing nations will have training centres and cultural homes or houses. May I ask the Minister whether the list has finally been published, and seek an assurance that those venues will be protected during the course of the games?
Hugh Robertson
The final list has not yet been published, because negotiations are still ongoing and there is quite a long tail in Olympic terms, with smaller nations and so on and so forth; indeed, some of the larger ones are split between a number of venues. It is the responsibility of those nations to tie up security with the local police force, but that is very much part of the agreement and will be done.
Mary Macleod (Brentford and Isleworth) (Con)
Now that the International Association of Athletics Federations has received an assurance that the athletics track will remain in the Olympic stadium, what has been done to help promote London as an outstanding city for the world athletics championships?
Hugh Robertson
I thank my hon. Friend for that question, which is a good one at the end of Culture, Olympics, Media and Sport questions. We have already had the evaluation commission in London; the Mayor and I spent two days with it. The bid comes up next week, and I am sure that everybody in the House will want to wish UK Athletics and the bid team—and probably even me as part of it—all the very best of luck, because it would be a fantastic tournament to bring home to this country.
Mr Peter Bone (Wellingborough) (Con)
1. What progress has been made in implementing the Prime Minister's policy to hold more free votes in Parliament.
The Leader of the House of Commons (Sir George Young)
The Government are committed to strengthening the opportunities for hon. Members to hold the Executive to account. We have introduced a number of measures to increase Back Benchers’ power, including establishing the Backbench Business Committee, helping to facilitate the election of Select Committee Chairs and members, extending Select Committee powers over public sector appointments and relinquishing the Executive’s power to call general elections.
Mr Bone
I obviously did not make my question clear enough; I was talking about free votes. Quite rightly, the Government have reformed a lot in Parliament and have done a very good job, but as a reformer, here is just a suggestion: between now and the end of the Session, could we have free votes in Committees to test out what the Prime Minister promised us in May 2009 and see how it works?
Sir George Young
For my hon. Friend, every vote is a free vote. The speech that my right hon. Friend the Prime Minister made referred to Public Bill Committees and suggested not total free votes but more free votes; and we have had more free votes in the House on certain issues which, in the previous Parliament, were whipped. Having said that, I hope my hon. Friend will understand that most of us got here wearing a party label, and that it is wholly legitimate for the party to expect some loyalty to the manifesto on which the Member stood.
Angela Smith (Penistone and Stocksbridge) (Lab)
Since gaining the keys to No. 10, the Prime Minister has alienated at least 81 of his colleagues over the vote for the EU referendum and is yet to deliver free votes on other issues. Is it not the case that here we have a Government led by a cavalier Prime Minister, who is abandoning his cheap promises more quickly than he is distancing himself from his unhappy Tory Back Benchers?
Sir George Young
The hon. Lady would be speaking from a position of strength had her party not divided on precisely the same issue as the Government. It is an issue on which all parties were divided last week, and my right hon. Friend has not alienated 81 Back Benchers.
Duncan Hames (Chippenham) (LD)
2. How many e-petitions he expects to have attracted 100,000 signatures on the Government's e-petition website by the end of July 2012.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
Since the launch of the site in July, five petitions have reached the threshold of 100,000 signatures, and three out of those five have already been allocated time for a debate. I am not able to predict precisely how many more petitions will reach the threshold by July next year, but the current rate demonstrates the significant interest and support that e-petitions have created.
Duncan Hames
There is, indeed, a significant interest. I am glad that the Backbench Business Committee has been able to schedule a debate on the FairFuelUK campaign’s petition later this month, and I look forward to a debate now that our campaign for financial education in schools has reached 100,000 signatures on the e-petitions site. Given that petitioners will naturally expect to secure a debate once they reach that threshold, will my hon. Friend keep under review the amount of time that is allotted to the Committee this year?
Mr Heath
We have already made it clear that, in the light of the extended first Session of Parliament, the intention is to provide extra days for the Backbench Business Committee, which is doing a very good job of reflecting interests outside. The threshold is one of eligibility—making a petition eligible for debate. It is then for a Member of the House to take that forward, and for the Backbench Business Committee to decide whether it is a matter that has not been debated in some other form.
Gavin Shuker (Luton South) (Lab/Co-op)
The substantive point is that when people outside the House are asked to sign a petition they expect it to be debated on the Floor of the House.
Gavin Shuker
The Deputy Leader of the House says no, but many of my constituents believe that to be the case. If that is so, and it is the Government’s intention, will they make available such business in Government time, rather than relying on my colleagues on the Backbench Business Committee?
Mr Heath
That was never our intention for the petition site. It is a mechanism for allowing members of the public to express an interest in a matter, and it is for the Backbench Business Committee, which has the time available, to consider that. If we find that there is a huge oversubscription, of course we will have to look at it, and I think the Procedure Committee will want to do that in due course. It makes sense to do so. However, we must not lose the capacity for the House properly to consider legislative business as it should, or to consider matters raised by hon. Members, which is also important.
Jo Swinson (East Dunbartonshire) (LD)
3. What steps he has taken in support of the Parliament week initiative; and if he will make a statement.
Christopher Pincher (Tamworth) (Con)
5. What steps he has taken in support of the Parliament week initiative; and if he will make a statement.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
I pay tribute to all hon. Members and staff of the House who are contributing to the excellent array of events in Parliament week. As part of that, my right hon. Friend the Leader of the House will meet members of the UK Youth Parliament, and will speak at the beginning of its debate in this place tomorrow.
Jo Swinson
I thank my hon. Friend for that reply, and associate myself with his remarks about congratulating all the staff involved in making the events possible. Parliament week is a fantastic initiative, with events around the UK, the BBC’s “Question Time” in Westminster Hall, and the excellent UK Youth Parliament debate here tomorrow. What does my hon. Friend think can be done to extend the spirit of Parliament week in promoting democratic engagement to the other 51 weeks of the year?
Mr Heath
I commend my hon. Friend for her contribution; I understand that she took part in a young people’s “Question Time” event on Monday evening before an audience of more than 200. That was excellent. Engagement with the public, particularly with young people, is extremely important. The programme takes place not just in this place in Westminster; the whole point is to take that engagement out to the country, using a variety of methods. My hon. Friend makes a very good point that it should not be just for one week a year. We must make sure that the general public understand what the House is for, and how they can engage with it. We are determined to make that a reality every week of the year.
Christopher Pincher
Following on from what the Deputy Leader of the House has said, as part of Parliament week I gave a tour of Parliament for sixth-formers from Landeau Forte college this week, and next week I will see students from Rawlett college. What can the Government do every week of the year to make sure that students learn more in schools about our Parliament and its history, so that they are more engaged with Parliament and the democratic process?
Mr Heath
I commend the hon. Gentleman for his involvement with young people. As I said, we must build on the extremely good work being done by the Department for Education, the education services in the House and others to make that a reality. A variety of things are happening that may engage the interest of young people. For example, there is even a parliamentary week app for tablets. I have downloaded it, and it is very good. The only drawback is that for some obscure reason, it has a 12-plus rating on the grounds of mild or occasional sexual content, nudity, fantasy violence, alcohol and drug abuse, profanities and crude humour—all of which are far from the normal life of hon. Members.
Dame Anne Begg (Aberdeen South) (Lab)
I took the opportunity to write to all the schools in my constituency to inform them about Parliament week and the excellent resources that were available to them. As a result, I was at a school last Friday and I will be visiting another school tomorrow. Does the Deputy Leader of the House know how many hon. Members have actively taken part in promoting and attending Parliament week events? How will he encourage those who have not participated on this occasion, to make sure that they do so next year?
Mr Heath
The honest answer is that I do not know how many hon. Members have taken part, but from speaking to colleagues around the House, it seems that a significant number have done so. Those who have not done so have missed an opportunity, and let us hope that they will do so at different stages, not only during Parliament week next year but throughout the year, as the hon. Lady suggests.
Ian Paisley (North Antrim) (DUP)
The promotion of Parliament is of course a noble cause. However, does the Leader of the House agree that the continuation of allowing Members who do not take their seats in this place to claim expenses from this place, to claim offices in this place, and to claim salaries from this place is a scar on Parliament? When is he going to bring a comprehensive statement to this House—
Mr Speaker
Order. I have allowed the hon. Gentleman to place his thoughts on the record on that very important matter, but unfortunately it does not relate to Parliament week, and therefore we will have to leave it there for today.
Simon Hughes (Bermondsey and Old Southwark) (LD)
4. What plans he has for future pre-legislative scrutiny of Government legislation; and if he will make a statement.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
The Government recognise the value that pre-legislative scrutiny can add and we are committed to seeing more measures published in draft. So far this Session, we have published draft measures on Lords reform, financial services, defamation, detention of terrorist suspects, individual electoral registration and electoral administration, and a groceries code adjudicator. The Government expect to publish further measures in draft this Session, including on parliamentary privilege.
Simon Hughes
I am seriously grateful to my hon. Friend and to the business managers for arranging more pre-legislative scrutiny, which is very important. Can he assure us that, as the plans are laid for the next parliamentary year, starting next May, all Departments understand the benefit of, and the priority for, pre-legislative scrutiny and the disbenefit of introducing Government changes to Government Bills after they have been published?
Mr Heath
I am grateful to my right hon. Friend. That is exactly the point that we repeatedly make to Departments: it is in everyone’s interests including theirs that we have proper scrutiny, because better legislation has an easier passage through the House. Increasingly, we have dealt with measures rather than whole Bills, because when a measure is ready for publication it makes sense for the House to have an opportunity to scrutinise and improve it prior to the publication of a Bill.
Diana Johnson (Kingston upon Hull North) (Lab)
Can the Deputy Leader of the House therefore give a guarantee that in future all Bills will have had pre-legislative scrutiny before they get on to the Floor of the House, so that we do not have the debacle that we had over the Health and Social Care Bill?
Mr Heath
I cannot give that guarantee any more than the previous Government, of whom the hon. Lady was a supporter, could give it. There will, for instance, be Bills that start in the Lords, where there is a different procedure, which means that they would not be subject to pre-legislative scrutiny in this House. However, it is our intention, wherever possible, to ensure that it happens. Inevitably, there is a slightly different position with an incoming Administration, when it is in no one’s interests for the House to do absolutely nothing for six months while we await Bills for pre-legislative scrutiny.
Hugh Bayley (York Central) (Lab)
6. What steps he is taking to improve access for hon. Members to Government Ministers and officials.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
The Government are committed to hon. Members having access to Ministers and, where appropriate, Government officials. My right hon. Friend the Leader of the House has recently taken up a number of cases with his ministerial colleagues where it was felt that meetings with Ministers were not forthcoming. If the hon. Gentleman has any specific concerns, my right hon. Friend and I will be happy to take them up on his behalf.
Hugh Bayley
I am grateful for that reply. I have never been admitted to a Government Department—at least, not since I was a Minister—without having a prior appointment, showing my parliamentary pass, and being accompanied by a pass-holding civil servant. How was Adam Werritty able to avoid those restrictions? Will the Government regularly publish details of all official meetings between Ministers and other people to reassure Parliament that access to Ministers is transparent and not partisan, and based on need and Government policy?
Mr Heath
The report from the Cabinet Secretary has been published, and changes in the ministerial code have been put in place. Clearly things happened in this instance that have been regretted and have resulted in changes, but I do not think we should have free access to Departments. It is very clear that that is also the Prime Minister’s view.
Miss Anne McIntosh (Thirsk and Malton) (Con)
The Leader of the House is aware of my interest in having access to Ministers taking decisions in Europe, and particularly in Back Benchers having the power to amend draft regulations. Rather than being able to amend a motion to hold Ministers to account, may we please have the power to amend the actual implementing regulations?
Mr Heath
I think we have strayed a little far from the original question, which was on access to Ministers, but—[Interruption.] The hon. Member for Rhondda (Chris Bryant) says more from a sedentary position than he does standing up, and that is saying a lot. [Interruption.] He is carrying on doing it now. [Interruption.]
Mr Heath
I am so glad somebody does.
The hon. Member for Thirsk and Malton (Miss McIntosh) raises an important point. She may like to approach the Procedure Committee, because it is really a question of procedure, rather than one of access to Ministers, on which I might reasonably be expected to have some impact.
Natascha Engel (North East Derbyshire) (Lab)
7. If he will establish a regular day of the week in sitting time for Back-Bench business.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
This issue could be considered as part of the review of the operation of the Backbench Business Committee. The hon. Lady knows, because we have had discussions, that we hope that will be undertaken fairly soon.
Natascha Engel
I thank the Deputy Leader of the House, but what reasons can he give for not having a regular slot? Would it not just be much, much easier?
Mr Heath
The hon. Lady will recall that she sat on the Wright Committee. I did not, but she did and so did my right hon. Friend the Leader of the House, and we were committed to putting into effect the recommendations of the Wright Committee. She will recall that the Committee stated, in paragraph 214 of its report, that
“it could be left open to a process of regular discussion and negotiation as to which day of each week would be devoted to backbench business. This would avoid the rigidities referred to above.”
We have simply taken that recommendation—she may or may not have agreed with it, because I know she did not agree with all of what the Wright Committee recommended—and put it into effect. I have to say, there are advantages to having that flexibility.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op)
8. What plans he has to bring forward proposals for a Select Committee on Civil Society; and what representations he has received on the remit of any such committee.
The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)
In light of the recommendations of the Wright Committee that the House should reduce the number of Committees and end overlapping or duplicate remits, we have no plans to do so.
Alun Michael
It is very interesting that the Cabinet Office website, which announced with great passion that that Committee would be provided, does not record the withdrawal of that offer. Why has the Government’s decision been reversed, and why is it being kept secret?
Mr Heath
The establishment of Committees is a decision for the House, not the Government, as the right hon. Gentleman will be aware. The Cabinet Office is scrutinised by the Public Administration Committee, which is currently undertaking an inquiry into civil society entitled “Smaller Government: Bigger Society?” I pay tribute to the hon. Member for Harwich and North Essex (Mr Jenkin) and his Committee for their work on that matter and on other issues that are important to the Government. The matter is being looked at by a parliamentary Select Committee.
Mr Speaker
From that hon. Member we can now hear; I call Mr Bernard Jenkin.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
May I thank my hon. Friend the Deputy Leader of the House for that answer?
Eurozone Crisis
(13 years, 1 month ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
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Mr Peter Bone (Wellingborough) (Con)
(Urgent Question): To ask the Chancellor of the Exchequer to make a statement on the euro crisis and its implication for the United Kingdom.
The Financial Secretary to the Treasury (Mr Mark Hoban)
Hon. Members will be aware of recent developments in the eurozone. My right hon. Friends the Prime Minister and the Chancellor of the Exchequer are at the G20 meeting in Cannes as we speak, and we understand that the Greek Cabinet is due to meet imminently as well. We will not be providing a running commentary on the market and media speculation of those events, but I can reassure the House that the Prime Minister will be making a statement to the House on Monday.
What is clear, however, is that the instability in the eurozone continues to have a chilling effect on the rest of the European, the UK and the entire global economy. As the Chancellor has said, a resolution to that crisis is in our vital national interest. It is vital that the eurozone members reach a solution that is coherent, comprehensive and lasting. Last week, European Heads of State reached an outline agreement that laid out a blueprint to resolve the crisis. It was a three-pronged strategy. First, weak European banks should be recapitalised. Importantly, in the assessment of the European Banking Authority and our own regulatory authorities, no British banks require additional capital, which is an important expression of confidence in the country’s banking system.
Secondly, the unsustainable position of Greece’s debts should be resolved. In particular, a headline agreement was reached to reduce the Greek debt to gross domestic product ratio to 120% by 2020, through an additional €30 billion of euro area money and private holders of Greek sovereign debt being asked to accept a nominal write-down of 50%. Thirdly, eurozone member states should reinforce the bail-out fund to create a firewall, either by using the fund to insure new debt or by attracting public and private investors through a special purpose vehicle. Both mechanisms are designed to have the capacity to leverage around €1 trillion. This package demonstrated the commitment of the euro area member states to stand behind the single currency. It was progress, but more details are needed on how it will work.
Right hon. and hon. Members will be aware, however, of developments in Greece since that agreement was reached last week. There is no doubt that the decision by the Greek Prime Minister has added to the instability and uncertainty in the eurozone. Ultimately, it is up to Greece to make its own decisions, but it is critical that all parties stick to the deal that was agreed last week. That agreement is an important part of the economic recovery here in the UK, across Europe and across the global system. If the euro area collectively does not decisively sort out its ongoing problems, the uncertainty that that creates and its impact on global confidence will continue to undermine economic recovery across the world.
This is uncertainty that the global economy can ill afford, and uncertainty that has been a drag on all our economies for months. We will continue to urge our euro area counterparts to press for a decisive resolution of the crisis at the G20 at Cannes over the coming days, but at no point have we committed any British taxpayer money—not to Greece, not to the bail-out fund.
I want to address directly the question of UK commitments through the International Monetary Fund. Britain has always been one of the largest shareholders in the IMF, and there may well be a case for further increasing the resources of the IMF to keep pace with the size of the global economy. We stand ready to consider the case for further resources if necessary, but let me be clear: we are only prepared to see an increase in the resources that the IMF makes available to all its members. We would not be prepared to see IMF resources reserved only for use by the eurozone. The IMF can use its expertise to help administer its fund, but it can only lend to countries with a programme for adjustment. A potential special purpose vehicle for the euro area bail-out fund does not fit that bill.
Last week’s announcement, however, was only the first step to resolving the immediate crisis. In the long term, it is vital that the euro area members follow the remorseless logic to closer fiscal union. It is equally vital that we work together to improve competitiveness in the peripheral countries of the eurozone, as well as the overall competitiveness of the European bloc in the world economy.
The ongoing instability in the euro area is a vindication of the Government’s decision to get ahead of the curve, cut our own deficit and improve our economic competitiveness. Our decisive action to cut the deficit means that the UK has stayed out of the storm, and is the reason we have gilt yields close to the likes of Germany, rather than similar to those of Greece, Italy or Spain. We will encourage our euro area counterparts to do the same over the coming weeks. As I said, the Chancellor and Prime Minister are in Cannes. It is vital that leaders commit in Cannes to increase confidence in the global economy, agreeing the detail of the euro area rescue. The Prime Minister will update the House on Monday.
Mr Bone
I thank you for granting this urgent question, Mr Speaker, and the Minister for his full response.
It has long been argued by Conservative Ministers that retaining the pound and allowing it to float in line with market conditions has enormous benefits for the British economy. If the British economy is having a difficult time, the value of the pound will fall, which makes exports cheaper and foreign companies’ imports more expensive, thereby increasing growth, jobs and prosperity in the United Kingdom. Equally, Conservative Ministers have always argued that the Bank of England’s ability to set UK interest rates allows the country to encourage growth in a recession and control expansion in a boom.
Both those powerful economic weapons are being denied to Greece, as it is in the euro straitjacket. Will the Minister explain why it is the Government’s policy to deny Greece a way out of its economic crisis by allowing it to withdraw from the euro and re-establish the drachma? Does he think it was a mistake for the German Chancellor and the French President to increase the crisis by making the Greek referendum on the bail-out a referendum on whether Greece remains in the euro? Does the Minister agree that the Greek Government were right to consult their people on the proposed austerity measures, so that if the country votes yes, they will have a mandate to drive through the reforms? What other countries does he think would come under market pressure because of the instability of the euro? Were the President of France and the Chancellor of Germany right to say that they wanted to save the euro at any cost, rather than putting the interests of Europe first? Finally, do the Government have a comprehensive contingency plan for when the euro collapses?
Mr Hoban
I am grateful to my hon. Friend for his question and his response to my statement. He is absolutely right: it was right for this country to stay out of the euro. That is the settled position of the coalition Government, and it is the right position to adopt. However, that was a decision that the people of this country made. It was not made under duress from other countries; it was a free choice that we made. On that basis, it is better for the Greeks to make their own decisions than for us to offer them advice.
My hon. Friend asked about contingency planning. He would expect every good Government to have plans in place to cover a range of eventualities, and this Government are well prepared for any eventuality.
Chris Leslie (Nottingham East) (Lab/Co-op)
The Minister should at least have the grace to admit that the reason we are not in the euro is because of decisions by the Labour Government.
Clearly there are major ramifications from the uncertainty in Greece. With the Greek Treasury due to refinance €8 billion on 19 December, time is of the essence. The Minister has told the House that UK banks have more than £2 billion of direct exposure to Greek sovereign debt, so what assurances did the Prime Minister seek from his Greek counterpart at last week’s summit about the implementation of that deal?
The market pressures on the Italian Government are now considerable. Can the Minister reassure the House that the Treasury is preparing for all eventualities? Will he confirm that UK banks have an estimated €10 billion of exposure to Italian sovereign debt? The Italian Government have been unable to agree a deal on structural reforms ahead of this week’s G20 meeting. While the UK has in the past offered bilateral loan aid to Ireland, clearly we would want to avoid being drawn into more significant loans to larger countries. Will the Minister therefore explain whether, in general, the Treasury will entertain support only via the IMF, or could bilateral loans be on the agenda on a case-by-case basis?
Does the Minister believe that the €1 trillion bail-out fund will be sufficient if other eurozone countries are drawn into the danger zone? Will the Greek referendum delay the establishment of the fund?
On the IMF, the Minister knows that many people are anxious to safeguard the interests of British taxpayers, and it would be wrong for the British people to pay twice over—through temporary, ongoing EU funds and the IMF. Does he therefore agree that the eurozone should not rely principally on IMF money for the bail-out and that there can be no excuses for eurozone countries not putting up their own resources? If we are to see a full and permanent euro bail-out fund, we agree that our role should be through the IMF, but what does the Treasury expect will be the scale and timing of any further increases in IMF funds for the eurozone, however they are described?
Finally, with our own growth so weak and with unemployment rising, the Chancellor must surely be regretting his claim that the UK is a “safe haven”. When will the Government take urgent steps to bolster the strength of our own economy to insulate us properly from this international turbulence? Is it not now abundantly obvious we need an immediate plan to boost jobs and growth here in the UK and across Europe? What will the Prime Minister be proposing to boost growth when he meets his G20 colleagues? The Government continue to play a dangerous ideological game, but it is time that they stepped up to the mark and opted instead for a proper strategy for jobs and growth.
Mr Hoban
Let me first tackle this issue of who kept us out of the euro. The fact that a previous Conservative Government secured an opt-out from the Maastricht treaty meant that we were not going to join the euro. Also, one of the things that we did when we came into office last May was to close down the euro preparations unit in the Treasury. We are taking action on contingency planning for a whole range of outcomes, and that work is under way in the Treasury.
The hon. Gentleman asked whether work would be put on hold on the three legs of the deal that was agreed last week. It is important that the euro area continues to work on those three legs, particularly on the ring fence and on the recapitalisation of the banks. They are important parts of the package, and they are needed to ensure that the eurozone is stabilised. He talked about the various European mechanisms that are in place to support finance. He will remember that the Greek bail-out was originally paid for purely by the eurozone; the UK did not contribute to it and has not contributed to subsequent parts of the bail-out package for Greece. We have negotiated that when a permanent mechanism is put in place to replace the one that the previous Government signed us up to, which we do have to contribute to, that permanent mechanism will not require UK participation. That is an achievement of this Government, getting us out of the mess that the Labour Government put us into in May last year.
The hon. Gentleman referred to the IMF. He will have to remember that it was he who led opposition to increasing our subscription to the IMF—[Interruption.] He says that that was to safeguard Britain’s subscription to the IMF, but it would in fact have marginalised the UK in international debates on tackling the global economic problems that we face today. Labour should think very carefully about its repudiation of the legacy left to it by the previous Prime Minister, who agreed to a trebling of resources for the IMF. We need to take action to stabilise the situation in the eurozone. The uncertainty is casting a chilling effect on the UK economy, and it is important that those issues are tackled as soon as possible.
Mr Andrew Tyrie (Chichester) (Con)
I wonder how much we can reasonably learn from the Minister, given that the negotiations are taking place in Cannes and that he is here with us today. Anyway, there are one or two questions that we might ask. What assurance can he give us about the UK banks’ exposure not only to Greece but to other eurozone countries at risk? What confidence does he have that the eurozone banks have the capital strength required to withstand a eurozone default?
Mr Hoban
My hon. Friend asks some interesting questions. I think that I would rather be here in the House than in Cannes at the moment—[Interruption.] It is important that Parliament should hold Ministers to account on these matters, and I am here to answer its questions. On my hon. Friend’s first question about the strength of the UK banks, there has been a process with the leadership, through the European Banking Authority, which is based here in London, and it concluded that the UK banks did not need to be recapitalised. That is partly a consequence of the measures taken over the past two or three years to increase banks’ holdings of capital and highly liquid assets, which have helped to ensure that they are to an extent insulated from the problems in the euro area.
On my hon. Friend’s wider question about the strength of the European banks, I can tell him that, in calculating the amount of additional capital that banks should hold, the EBA determined that they should hold 9% core tier 1, and that, crucially, their holdings of sovereign debt should be marked to market rather than held at face value. That led to the calculation that banks across Europe need to hold an additional €100 billion of capital.
Keith Vaz (Leicester East) (Lab)
May I urge the Minister not to join others who are criticising Greece for its decision to hold a referendum? George Papandreou is a decent and honourable man, and at the end of the day, if he wishes to put this to the Greek people, it is a matter for them. Whatever their decision—I hope that they will vote to accept the bail-out—we should accept it. This is a country that has voted with us on the European Council on many occasions over the last 20 years.
Mr William Cash (Stone) (Con)
The Minister will know that the presidency conclusions last week set out 10 new areas of European economic governance. What is the legal basis in the existing treaties for the creation of these new areas of governance and for the creation of a euro summit? Was the Prime Minister asked to give UK consent? Did he give his consent or were the Government bypassed? As Chairman of the European Scrutiny Committee, I would be grateful for specific answers to those questions.
Mr Hoban
My hon. Friend will be aware that a number of actions have been taken throughout this crisis intergovernmentally rather than through the institutions of the European Union. That applied to the creation, for example, of the European financial stability facility. There are ways in which actions can be taken that do not depend on the treaty because they are done between Governments rather than between Governments and the European Commission.
Chris Bryant (Rhondda) (Lab)
The Minister said something very interesting earlier. He used a phrase that I do not think I have heard a Minister of either side ever use before, which was the remorseless drive towards fiscal union—and, as I understood it, in an approving sense. The danger of that, of course, is that we will end up supporting for the first time a two-speed—a two-tier—Europe, with us very definitely at the second speed and in the second tier. Is that really what he wants?
Mr Hoban
We have always accepted that the remorseless logic of monetary union is closer fiscal integration. I believe that this crisis demonstrates that monetary union needs to be underpinned by closer fiscal integration. That is not a new expression on my part; I said nothing novel; the Government have taken this view for some time. We need to ensure that the institutional arrangements are in place to support that. What I think hon. Members on all sides of the House want is a stable eurozone because it will contribute towards economic recovery in the UK.
Mr John Redwood (Wokingham) (Con)
As joining a single currency is like taking out a joint bank account with the neighbours, when does the Minister think the neighbours will agree how much overdraft they can afford and who gets to pay the bill for it?
Mr Hoban
My right hon. Friend will recognise that the agreement that was reached in the European Council last week and then later in the summit of eurozone Governments was on what size the bail-out for Greece should be and what the ring fence should be around that. We welcome last week’s announcement. What is very clear, however, is that more work needs to be done on those questions—particularly what the size of the overdraft will be and who will pay for it. We need eurozone leaders to move that forward as quickly as possible.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Part of Europe’s plan to get Europe and the eurozone out of this mess is the introduction of a financial transaction tax. Will the Minister confirm from the Dispatch Box that such a tax could be introduced through qualified majority voting and that this is essentially own resources, just by another name?
Mr Hoban
I have to tell the hon. Lady that I am not entirely clear what role a financial transaction tax would play in resolving this crisis. The EU’s own impact assessments on that tax demonstrated that it would lead to lower employment and lower growth across Europe. I do not think that that is in any way going to help tackle the problems in Europe when what we need is more investment, more jobs and more growth.
Stephen Williams (Bristol West) (LD)
I think we all heard my hon. Friend the Member for Wellingborough (Mr Bone) advocate Greece’s withdrawal from the euro, and a worryingly large number of his Conservative Back-Bench colleagues seem to will the destruction of the euro area. Does the Minister agree that a fragmentation or break-up of the eurozone is not in our economic interest or indeed the national interest?
Mr Hoban
We have made it very clear that the instability and uncertainty in the eurozone has a chilling effect on the UK economy. What our actions have been driving towards over the course of the last few months is encouraging our partners in the eurozone to take the action needed to tackle the problems so that we can see economic growth strengthened across the whole of the European Union.
Mr Dennis Skinner (Bolsover) (Lab)
I wonder whether the Minister has seen the film “Groundhog Day”. I was here in the early ’90s with another Tory Government, another euro crisis and another Prime Minister battling for his life—the same players, only this time there are about 40 more Tory rebels. It finished up with a Prime Minister being kicked out of office.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
Why are the Government advocating fiscal union? I put it to the Minister that the words “remorseless logic” are, in fact, a cover for a policy preference, and that the remorseless logic of the present situation is that fiscal union will be economic dictatorship, that it will fail and that we had better be planning for something else.
Mr Hoban
I think my hon. Friend would recognise that if a monetary union is to be successful, it requires closer fiscal integration. That is a precondition of the success of monetary union. When the decision was made to opt out of the Maastricht treaty and to keep sterling, one reason for doing so was that monetary union had to be underpinned by fiscal integration. One follows the other as surely as night follows day. That is why I think we were right to take that position then and we are right now to encourage the eurozone, if it wants the euro to be successful, to move towards closer fiscal integration. Frankly, if it does not, it will cause huge economic damage to all of us.
Tony Lloyd (Manchester Central) (Lab)
Is it not a matter of plain fact that the Government’s negotiating position and therefore the protection of our national interest is hamstrung because all the time this Minister and his colleagues have to address the Eurosceptics? Britain has got to be involved in these negotiations through the IMF and at Cannes. The Minister needs to face down his Eurosceptics and explain why, if the euro goes down, we lose.
Mr Hoban
I find the position adopted by Labour Members quite curious. They want us to be at the top table, yet they voted against the increase in our subscription to the IMF, so we would not be at the top table. I believe we have played an important role through European Councils by trying to push our eurozone partners to make progress on tackling problems in the eurozone. We are very clear that matters such as the completion of the single market, competition and financial services should be dealt with by all 27 member states, not by the 17. I believe that this Government are punching way above their weight.
Andrea Leadsom (South Northamptonshire) (Con)
If the remorseless logic of greater fiscal union proves to be true, can my hon. Friend tell us what steps he intends to take to ensure that Britain’s voice is still heard under QMV?
Mr Hoban
That takes us back to the answer I gave to the hon. Member for Rhondda (Chris Bryant)—that when it comes to discussions about future institutional changes in the EU, we need to ensure that Britain’s interests are safeguarded. Matters such as competition, financial services and the single market should be dealt with by all 27 member states, and we will be relentless in our pursuit of the national interest in that context.
Jeremy Corbyn (Islington North) (Lab)
Does the Minister agree that condemnation of the Greek people’s right to have a referendum is entirely incorrect and that they do have that right to hold a referendum; that the people of Greece have suffered greatly through cuts, wage reductions, cuts to pensions and everything else—and they are due to suffer even more—and that it is entirely wrong for the eurozone leaders to try to impose a Government of so-called national unity on the people of Greece to drive through an austerity package without giving the people a choice to decide themselves on their own future?
Mark Lancaster (Milton Keynes North) (Con)
What would be the consequences of the UK failing to pay its IMF subscription?
Mr Hoban
We would lose our seat on the IMF board; we would lose credibility in international economic debates; and we would lose our influence on measures to solve global economic problems. We would become marginalised—rather like Labour Members when it comes to their contributions to economic debates.
Mr Ben Bradshaw (Exeter) (Lab)
In 2009, when the world faced economic catastrophe after the banking collapse, there was real leadership at the G20 summit in London, which helped to avert a disaster and put Britain back on to a path of growth. Where is that leadership now, and where is the plan for growth?
Mr Hoban
I thought that the outcomes of that G20 summit were very impressive. I particularly welcomed the achievement of the previous Prime Minister in agreeing a commitment to treble the resources available to the IMF, but the right hon. Gentleman, along with his colleagues, voted against that commitment.
Joseph Johnson (Orpington) (Con)
According to the BBC’s economics editor, Stephanie Flanders, the European Commission said this morning that any country that left the euro would also have to leave the European Union. Is that the Government’s understanding of the EU treaties?
Michael Connarty (Linlithgow and East Falkirk) (Lab)
It is obvious that, like many other Members in the Chamber, the Minister has not read the Lisbon treaty, because the hon. Member for Orpington (Joseph Johnson) is right. I give way to no one in my support for the IMF—as is clear from the way in which I voted—and my support for the recapitalisation of the banks, but the reality is, surely, that the ordinary people of Greece will go through a massive amount of pain, whereas the bankers, both here and there, will walk off with the money. We are looking after the banks, not the people, so is it really surprising that the Greek people may want to reject the proposal that the Government were involved in placing on their backs?
Mr Hoban
We all recognise that difficult decisions are involved in the tackling of fiscal deficits, and those decisions must be made. It is owing to this Government’s actions that our interest rates are similar to those of Germany, while our deficit is at the same level as that of Greece.
Mr John Baron (Basildon and Billericay) (Con)
May I suggest that my hon. Friend should not listen too closely to what is said by Labour Members, given that this crisis is about debt, and given that the last Labour Government more than doubled the national debt? [Interruption.] Yes, they did.
Having said that, may I ask whether my hon. Friend agrees that the set of measures put together by the euro leaders are nothing more than a sticking plaster? They do not address the central cause of the problem, which is a lack of competitiveness. If countries cannot pay their way, this issue will come back to haunt them.
Mr Hoban
My hon. Friend is absolutely right. We need fiscal entrenchment across the eurozone to take place in the same way as we are tackling a fiscal deficit here in the United Kingdom. However, we also need measures, in Europe and elsewhere, to promote growth. That is one of the key areas in which the Prime Minister has been influential, shaping a debate in Europe and persuading European leaders to recommit themselves to improving measures to promote growth and bring about the recovery that the eurozone economy needs.
Natascha Engel (North East Derbyshire) (Lab)
If UK taxpayer money is being paid to the IMF and the IMF is paying towards the eurozone bail-out, how can the Minister guarantee that no UK taxpayer money is going towards the bailing out of the eurozone?
Mr Hoban
The money that nations contribute to the IMF goes into its general resources. I believe that there are currently 53 IMF programmes, only three of which are in the eurozone. We have made clear that if the IMF needs to increase its resources to tackle some of the global issues that face economies at present, we will listen to its requests.
Mr Julian Brazier (Canterbury) (Con)
While I strongly support my hon. Friend’s tough domestic stance on fiscal matters, may I suggest that, in view of the borrowing problems in Italy, the 20% fall in the monetary base in Portugal and similar problems in Spain, there is a strong case for moving the Cannes conference to the gardens of Versailles?
Helen Jones (Warrington North) (Lab)
The Minister has signally failed to answer the questions put to him about the plan for jobs and growth. Will he now tell us exactly how the Government propose to ensure that we get demand back into the economy and tackle unemployment, which is the only real way out of this crisis, and how we are to exercise influence in Europe to secure a similar euro-wide plan?
Mr Hoban
One of the best ways of putting more money in the pockets of families and giving business men more money to invest in their businesses is to keep interest rates low. Borrowing more, which is the Labour party’s prescription, would simply put our interest rates at risk, so that households would have less money in their budgets and businesses would be strapped for cash. We will take no lessons in how to handle our economy from a party that doubled the national debt.
Laura Sandys (South Thanet) (Con)
The IMF is a collective that is there to build greater economic stability. Why should our approach to funding economic stability in Mexico, the Philippines or Peru be different from our approach to funding it in Greece?
Mr Hoban
My hon. Friend has made an important point about the global role of the IMF. It is there to support economies that face challenging circumstances. There is a range of programmes in 53 states, and it is right for the IMF to have the resources that it needs if it is to help to stabilise the global economy.
Mr David Winnick (Walsall North) (Lab)
Why are the EU leaders so fearful of democracy? In view of the massive cuts that are to be imposed on the Greek people under the deal that was negotiated this week, what sort of democracy would it be if they were denied the opportunity to say yes or no?
Mr David Nuttall (Bury North) (Con)
Does the Minister agree that the International Monetary Fund should not be expected to do what the European Central Bank is incapable of doing simply because of a lack of political will on the part of eurozone countries?
Mr Andrew Love (Edmonton) (Lab/Co-op)
Is not the problem in Greece a lack of growth and no sign of growth in the future? Is not the problem in the eurozone a lack of growth and no sign of growth in the future? Is that not also the problem in the United Kingdom? When will the Government respond to the need for jobs and growth, not just here in the UK but throughout Europe?
Mr Hoban
There must be structural reforms to remove some of the barriers and blockages to growth, not just here in the UK but throughout the eurozone, and that is why we included a plan for growth in this year’s Budget. The Chancellor will return to those matters in the autumn statement. I note, incidentally, that every time we propose a measure that would help to improve job prospects by tackling regulation and red tape, it is opposed by the Labour party.
Mr Desmond Swayne (New Forest West) (Con)
Given the interpretation that was placed on his words by the hon. Member for Rhondda (Chris Bryant), will the Financial Secretary confirm that this has nothing to do with a two-speed Europe, and that whatever the speed at which the eurozone hurtles towards fiscal integration, we will not be following it at any speed at all?
Ian Paisley (North Antrim) (DUP)
The Financial Secretary said that the Prime Minister would make a statement on Monday. Will it include the issue of the bilateral loan to Ireland, and will the Financial Secretary insist that if it does, it will address the way in which the National Asset Management Agency is now treating businesses here as a result of a soft loan from the United Kingdom?
Mr Speaker
Order. As the House knows, there is intense interest in this subject, which I am keen to accommodate. However, I must now insist on single short supplementary questions without preamble, and ask for the wonderfully succinct replies from the Minister to continue.
Charlie Elphicke (Dover) (Con)
Does the Financial Secretary agree that, while much progress has been made over the last 18 months—demonstrated most recently by this week’s excellent growth figures—we need measures to protect us from the implosion of the eurozone? What does he think are the best options to shield us from wider economic turbulence in that direction?
Kevin Brennan (Cardiff West) (Lab)
In the wake of the eurozone crisis, the latest polls show that the UK Independence party is within 1% of replacing the Liberal Democrats as the third party in British politics. Is not the relentless logic of both that and the rebellion of the 81 a Prime Minister lurching ever further to the right and isolationism on Europe?
Mr Hoban
That is a slightly bizarre question from the hon. Gentleman, from whom we expect better. We are engaged in the debates in Europe. We need to make sure we stand up for Britain’s interests in Europe, which is why we are keen that areas of vital national economic interest—such as financial services, the single market and competition—are dealt with by all 27 member states rather than just the eurozone countries.
Claire Perry (Devizes) (Con)
I am sure that my hon. Friend is aware that there are only 52 shopping days left before Christmas, so for ordinary Greek families now is a terrible time to be facing such economic uncertainty. Does he agree that Governments must live within their means and deliver stable financial policies for their people?
Barry Gardiner (Brent North) (Lab)
British banks are responding to the increased instability not only by tightening controls, but by tightening credit. How will the Government respond to the reduction in liquidity being made available to British business and ensure that firms are able to borrow and flourish?
Mr Hoban
As I said, British banks are better placed as a consequence of measures taken to strengthen their capital and improve their holdings of high-quality liquidity. We have also agreed lending commitments with Britain’s major banks through Project Merlin, and the Chancellor has said he will announce further measures to improve the availability of credit in the autumn statement.
Christopher Pincher (Tamworth) (Con)
Does my hon. Friend agree that we can only support a financial transaction tax if it applies internationally, rather than just to Europe? Does he further agree that because there is no international consensus in favour of such a tax, it will not be introduced?
Mr Hoban
We have said we are not against a financial transaction tax in principle, but it does need to be applied globally. The EU’s own impact assessment demonstrates that an EU-only financial transaction tax would destroy jobs and increase unemployment. It is a bad idea at a time when Europe needs jobs and growth.
Angela Smith (Penistone and Stocksbridge) (Lab)
Faltering economic growth is damaging economies not only in the EU, but across the globe, yet the Financial Secretary has today refused to acknowledge the damage his Government are doing to economic growth. When will they come up with a plan B?
Mr Hoban
Well, the plan B proposed by the Labour party would increase borrowing by £20 billion a year, potentially lead to higher interest rates—which would affect families throughout the country such as by adding to their mortgage payments—and increase the costs on business. I do not think this economy needs a plan B from the Labour party.
Tony Baldry (Banbury) (Con)
Standard & Poor’s has recently reconfirmed the UK’s triple-A credit rating, but has made it clear that there will be downward pressure on that if the Government falter on fiscal consolidation. Yet is that not exactly what the Opposition are exhorting the Government to do: to falter on fiscal consolidation?
Mr Hoban
That is absolutely right: that is what Standard & Poor’s said in its report last month. When we came into office, the country’s credit rating was on negative outlook; now it is on stable outlook. That is a consequence of the action this Government have taken to tackle the mess left by the Labour party.
Derek Twigg (Halton) (Lab)
Have the Government drawn a line in the sand for the amount of money they will not exceed if asked by the International Monetary Fund to contribute to a greater extent specifically to deal with the euro crisis?
Jessica Lee (Erewash) (Con)
My hon. Friend has mentioned the abolition of the euro preparations unit. In the current circumstances, will he assure the House that there is no prospect of the unit being resurrected as that would be a complete waste of public money?
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Will my hon. Friend assure the House that before the IMF gives any money to bail out the eurozone, sufficient stringent financial conditions are put in place to ensure that there is a realistic prospect of that money being repaid?
Mr Hoban
My hon. Friend makes an important point. Stringent conditions are linked to the packages offered to Greece, Ireland and Portugal, to ensure that the money is used well and wisely, and that the structural reforms that are needed to generate growth in those countries are implemented.
Henry Smith (Crawley) (Con)
I am very pleased that my hon. Friend has said that Her Majesty’s Government are preparing contingency plans for the possible break-up of the eurozone, but can he confirm that they will not include the possibility of our joining the euro, as seems to be still the official policy of the Labour party?
Mr Hoban
I do not think there is any intention for us to join the euro at a time when it is breaking up. The only party in this House that seems to express an interest in joining the euro is Labour, whose leader, when asked when they would join the euro, said:
“It depends how long I’m prime minister for.”
Paul Uppal (Wolverhampton South West) (Con)
Does my hon. Friend agree that one of the most important lessons we can learn from this crisis is that if there had not been a change of Government in this country in 2010, we would be talking today in the Chamber about the UK sovereign debt crisis, not the Italian and Greek crisis?
Harriett Baldwin (West Worcestershire) (Con)
Two-year Greek interest rates reached 100% this morning. Will the Financial Secretary remind everybody how important it is for jobs and growth that despite the fact that we have a higher deficit than the Greeks, our interest rates are closer to those of the Germans?
Mr Hoban
My hon. Friend hits the nail on the head. It is because we took that tough action and are tackling our deficit, and have a credible plan for putting our public spending back on a firm footing, that we have lower interest rates than countries with a lower deficit than ours.
Bob Blackman (Harrow East) (Con)
This week we have witnessed the spectacle of the Greek Prime Minister being summoned, like a naughty schoolboy, to President Sarkozy’s study for having the temerity to call a referendum in order to get the support of his people for the proposed austerity measures. Given that our deficit and debt levels are higher than Greece’s, what does my hon. Friend think would be happening if we had adopted the policies of the Opposition?
Mr Hoban
I think we would find that our credit rating would be under pressure, as Standard & Poor’s suggested in its report last month, and we know that when credit ratings are downgraded, the natural consequence is higher interest rates, which hits families and businesses and makes recovery harder to achieve.
Mary Macleod (Brentford and Isleworth) (Con)
The Leader of the Opposition does not believe that the EU has too much power. Will my hon. Friend confirm that we will never go into the euro?
Bob Stewart (Beckenham) (Con)
My question is about Italy. Its interest rate is floating upwards and currently stands at about 6.5%, which is unsustainable. Will the Minister give us his views on Italy’s problems, especially with regard to its just paying off its interest rather than repaying its debt?
Business of the House
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ms Angela Eagle (Wallasey) (Lab)
Will the Leader of the House give us the business for next week?
The Leader of the House of Commons (Sir George Young)
The business for the week commencing 7 November will be as follows:
Monday 7 November—Money resolution relating to the Localism Bill, followed by consideration of Lords amendments to the Localism Bill. In addition, my right hon. Friend the Prime Minister plans to make a statement following the G20 summit.
Tuesday 8 November—Motion to approve a European document relating to European budgets, followed by motion to approve a reasoned opinion relating to credit institutions, followed by Backbench Business Committee [un-allotted half day], which will include the presentation of the 10th report from the Transport Committee on high-speed rail, followed by a motion relating to the cost of motor insurance.
Wednesday 9 November—Opposition day [unallotted day]. There will be a debate on youth unemployment and jobs, followed by a debate on individual voter registration. Both debates will arise on an Opposition motion.
Thursday 10 November—General debate on armed forces personnel.
The provisional business for the week commencing 14 November will include:
Monday 14 November—Consideration of Lords amendments.
Tuesday 15 November—Motion relating to fisheries, followed by motion relating to fuel prices. The subjects for these debates were nominated by the Backbench Business Committee.
I would like to inform the House that we will meet at 11.30 am on Tuesday 15 November.
I should also like to inform the House that the business in Westminster Hall for 24 November 2011 will be:
Thursday 24 November—A debate on extradition.
Ms Eagle
I thank the Leader of the House for his statement. We meet for business questions in the middle of the first ever Parliament week, which aims to make people more familiar with the vital work that we undertake here. The theme is “Stories of democracy”. From the Levellers to the suffragettes, there are many inspiring stories of the fight for the vote that we should celebrate in this place. It is more important now than ever, in these times of economic upheaval and insecurity, that we cherish and value our democratic traditions.
I am sure that the Leader of the House, like me, is looking forward to welcoming the UK Youth Parliament to these Benches tomorrow. With almost 1 million young people unemployed—the highest level since comparable records began—we certainly need to hear the voices of young people. I look forward to joining them at the start of their debate.
On Monday’s consideration of the Localism Bill, does the Leader of the House feel comfortable with the chaotic way in which the Bill has been handled by the Government? Having resisted our arguments in Committee in this place, they promptly deleted or amended great chunks of the Bill in the other place. Ministers still have a problem with their own side on the national planning policy framework.
Tuesday’s disappointing growth figures confirmed that the UK economy is still bumping along the bottom, when we need strong growth to get unemployment and the deficit down. Thanks to the Chancellor’s rash choice to cut too far and too fast in his spending review last year, we are experiencing the slowest recovery from recession in 100 years. Will the Leader of the House admit that the Government will have to revise down the growth figures and revise up the amount of borrowing for the fourth time in 18 months? How many more times must the Chancellor come to this House and admit that he has got his sums wrong before we get a plan B?
It has been reported in the run-up to today’s G20 meeting that the Treasury is preparing to increase our contribution to the International Monetary Fund bail-out funds, despite the Chancellor giving the impression to this House that there would be no additional contribution from the UK to help solve the eurozone crisis. Has he been entirely frank with the House? Is the attempt to claim that none of this money will end up supporting the eurozone not dancing on the head of a pin?
While nearly 1 million young people are worried about whether they will ever get a pay packet while this Government are in office, one small group of people are doing very well indeed. A report by Income Data Services showed that the total earnings of directors of FTSE 100 companies increased by an eye-watering 49% last year. That comes when public sector workers have a pay freeze and there has been a below inflation increase in the private sector.
In May last year, the Prime Minister trumpeted his creation of the fair pay review led by Will Hutton. The Secretary of State for Business, Innovation and Skills said of out-of-control executive pay:
“It is time to return to planet Earth.”
Yet one year on from those comments and nine months after the Prime Minister received the report, executive pay continues to rocket out of control, unchecked by Government action. When will the Government bring to this House concrete proposals to do something about this matter? Does the Leader of the House not accept that until the Government act, no one will take seriously the Chancellor’s preposterous claim that we are all in this together?
Has the Leader of the House seen today’s damning report from the Fawcett Society, which accuses the Government of being responsible for the greatest risk to women’s financial security in living memory? When will the Government start to listen to the growing chorus of women’s voices that is demanding that they change course?
Finally, the House was shocked to discover that, despite announcements by the Prime Minister’s spin doctors last November that Lord Young of Graffham had resigned, revelations have now surfaced that he never even left the building. We were told that he had resigned for embarrassing the Prime Minister by proclaiming that many people had
“never had it so good”
as since the start of “this so-called recession”. It seems that he has continued to advise the Prime Minister at the heart of the Downing street machine. Can we have a statement from the Leader of the House on this Government’s understanding of the definition of the word “resignation”? Will he please clarify the position of Lord Young—was his resignation a sham or has he somehow been unresigned?
Sir George Young
I look forward to welcoming the UK Youth Parliament to this Chamber tomorrow and to making a short preliminary address along with you, Mr Speaker, and the hon. Member for Wallasey (Ms Eagle). I hope that many of those young people will return in due course as Members when the Chamber is sitting, rather than on a non-sitting Friday.
We are to debate youth unemployment on Wednesday on an Opposition day. I remind the hon. Lady that youth unemployment went up by 40% under the previous Government, at a time when the economy was doing better than it is currently. The Opposition therefore have little to lecture us about on that.
The Localism Bill does not actually include the national planning policy framework. I hope that the hon. Lady will welcome what is happening on Monday, when we will spend a whole day on localism. There are a number of Government amendments that I hope will be welcomed on both sides of the House because we have listened to the debate on the Bill and made some changes.
On forecasts, the hon. Lady ought to know that the Government do not make economic forecasts. That is done by the Office for Budget Responsibility. Its next report will come out on 29 November when the Chancellor makes his autumn statement. Some of the issues that the hon. Lady raised in relation to the IMF have just been dealt with by my hon. Friend the Financial Secretary.
I am sorry that the hon. Lady did not find time to welcome the news from earlier this week about the revival of Stanley dock in north Liverpool, as a result of the regional growth fund, which will help to reduce unemployment in and around her constituency.
Finally, on executive pay, it is worth reminding the House that the average chief executive of a FTSE 100 company earned 47 times the amount earned by the average employee in 1998 and 115 times that amount in 2009, so the gap actually widened under the last Labour Government. I agree with the hon. Lady that there is an unsustainable disconnect between how our largest listed companies perform and the rewards that are on offer. Concern on that comes not just from Government, but from investors, business groups and others. We are considering ways to reform remuneration committees and to empower shareholders, for example by making shareholder votes on pay binding and ensuring that there is shareholder representation on nomination boards. We are consulting on a number of issues, but at the end of the day, it is up to shareholders rather than the Government to determine executive pay.
Philip Davies (Shipley) (Con)
May we have a debate on transport funding? A recent survey showed that Bradford was seen as one of the most congested cities in the country. My constituency is probably the most congested part of the Bradford district. I am not asking for extra funding for transport, given the terrible financial legacy that this Government were left by their predecessor. What I am asking for is that Yorkshire gets a fairer slice of the transport cake and that Bradford gets an even fairer slice than that.
Sir George Young
I understand my hon. Friend’s anxiety that a larger share of the transport budget should be allocated to his constituency to deal with congestion. There will be an opportunity at Transport questions on 10 November for him to press the case for more funding for his constituency with my right hon. Friend the Secretary of State for Transport, whom I will forewarn that my hon. Friend is on the way.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Does the Leader of the House share my concern, in this important and welcome Parliament week, that increasingly there are organisations and individuals in this country who do not believe in equal rights for women? Many of us put our heads in the sand and ignore this issue. It is something that worries me and my constituents, and this House should start to address it.
Sir George Young
I hope that the hon. Gentleman will welcome a number of initiatives that we have taken recently. For example, we are extending child care for women who work for fewer than 16 hours a week. Yesterday’s statement by the Chief Secretary to the Treasury on the reform of pensions had much in it for women, who tend to have part-time and less well-paid jobs. They will gain from the reforms that we outlined. The hon. Gentleman makes his comments in a week when my right hon. Friend the Prime Minister announced proposals to change the rule of primogeniture for the monarchy. If one looks across the board, we have taken a number of steps to promote the cause of women.
Amber Rudd (Hastings and Rye) (Con)
The Government have allocated a welcome £20 million to support advice agencies following changes to the Legal Aid, Sentencing and Punishment of Offenders Bill. May I press my right hon. Friend for more information on that £20 million so that advice agencies such as mine in Hastings can find out more about when and how it will be allocated?
Sir George Young
My hon. Friend is right to say that, in the summer, the Lord Chancellor announced £20 million for those providing advice. Announcements will be made shortly about the allocation of that fund, and I know the anxiety felt by the citizens advice bureaux that are waiting for it. I will remind my right hon. and learned Friend that there is a very strong bid from Hastings.
Valerie Vaz (Walsall South) (Lab)
In a written answer to the hon. Member for Kettering (Mr Hollobone), the Cabinet Office said that the public duty costs allowance for former Prime Ministers amounted to £1.7 million in the past five years. May we have a statement on the actual work that these former Prime Ministers have done and whether they have had to provide receipts?
Sir George Young
The hon. Lady is tempting me out of my comfort zone. I am not sure that the Government have responsibility for these particular payments. Those concerned are, by definition, no longer Members of Parliament—at least many of them are no longer Members. I will make some inquiries with the relevant authorities to see whether any further light can be shed on her question.
Mr James Arbuthnot (North East Hampshire) (Con)
May I thank my right hon. Friend for providing a day to debate armed forces personnel shortly before Remembrance day? However, does he agree that the arrangements between the House and the Backbench Business Committee in relation to defence matters are not working? Although I would sometimes like to blame that Committee, on this occasion I really cannot do so. Will he enter into negotiations with the Chair of that Committee, who is doing as good a job as she possibly can in the circumstances?
Sir George Young
I certainly endorse the last remark. Now is not the time to go into the theology of the Wright Committee and the division of responsibilities between the Government and the Backbench Business Committee. My right hon. Friend will know that the four days for defence debates that were traditionally provided by the Government were transferred to the Backbench Business Committee. I understand why it has not been able to find time for them and, in recognition of that pressure, as he has said, we have now found a day for a debate on armed forces personnel. The Government will continue to do what they can to make sure that we do have adequate time for defence debates, and in the review of the Backbench Business Committee, I will see, in conjunction with the hon. Member for North East Derbyshire (Natascha Engel), whether we can move towards a different regime that meets the aspirations of my right hon. Friend and the responsibilities of the Backbench Business Committee.
Mr John Spellar (Warley) (Lab)
Yesterday, in the Chamber, the Prime Minister roundly and rightly denounced metal theft. But he then went on to say:
“We are working with the Association of Chief Police Officers to put in place an action plan to deal with this, which will involve looking again at the whole regulation of scrap metal dealers.”—[Official Report, 2 November 2011; Vol. 534, c. 918.]
That is totally unsatisfactory. Everyone knows the answer—it is to license the dealers and to prevent them from dealing in cash. So can the Leader of the House arrange for a debate when that can be explored or, better still, could he use the two spare days he has created in the week after next to put it through and stop what the Prime Minister rightly called “this appalling crime”?
Sir George Young
I am grateful to the right hon. Gentleman. It is an appalling crime and the current legislation is basically unenforceable. Dealers are meant to register with their local authority but there are no penalties if they do not do so. The Government are consulting on a range of measures, including the ones he has mentioned—the banning of cash payments, with everything being done by cheque, and having a much tougher regime. We are consulting to see whether we can have a better regime that reduces the damage done by all these thefts.
Bob Russell (Colchester) (LD)
Mr Speaker, I am sure that you and the whole House will rejoice at the announcement that today a contract will be signed to build an airport on the island of St Helena, and I would like to extend the House’s thanks to all involved. This will bring to an end five centuries of isolation for British people who are proud to live on this overseas territory. With that in mind, will the Leader of the House find time for a debate so that we can discuss how the overseas territories are an important part of this country?
Sir George Young
I am grateful to my hon. Friend for that. It is indeed the case that, after protracted negotiations, the Department for International Development has now agreed to fund the airport in St Helena. I would welcome such a debate, and he might like to put in for a debate on the Adjournment so that we can discuss this issue at more length.
Mr Ben Bradshaw (Exeter) (Lab)
Exeter city council and the energy company E.ON have spent considerable time and money preparing to install 500 solar panels on council homes in my constituency, thus reducing tenants’ bills by £120 on average and helping to reduce carbon emissions. That excellent scheme is now threatened with cancellation because of the Government’s decision to more than halve the feed-in tariff. May we have an urgent debate in Government time about this incredible incompetence?
Sir George Young
As the right hon. Gentleman will know, the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker) made a statement on this matter on Monday, explaining why the scheme had to be changed. If we did not do this, all the money would have been mopped up by those few people who are currently eligible; the lower the tariff, the more people that can benefit. We had that exchange on Monday. We are now consulting on how we take the scheme forward and I will take the right hon. Gentleman’s comments on board.
Andrew Stephenson (Pendle) (Con)
On Monday, we heard that the Government will provide £9 million to reopen the Todmorden curve, cutting journey times between Burnley and Manchester. We also heard about an additional £7.5 million in business support for local manufacturing small and medium-sized enterprises being made available through Regenerate Pennine Lancashire. Both those projects were funded by the Government’s regional growth fund which, it is estimated, will create or safeguard more than 55,000 jobs in the north-west of England. May we have a debate on the huge beneficial impact of the fund on the north-west of England?
Sir George Young
I am sorry that some hon. Members have taken a rather dismissive view of the regional growth fund, and I am grateful to my hon. Friend for identifying a number of projects that will go ahead. We announced £950 million of funding in round 2, supporting 119 businesses and creating or protecting 201,000 jobs. There may be an opportunity on Wednesday for him to come in on that debate, amplify the benefit to many constituencies from the regional growth fund and perhaps encourage those who have been less than generous about it to change their mind.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
This week, Merseyside police announced that it is having to cut 250 officers over the course of the next two years because of the Government’s slashing of its budget. Deputy Chief Constable Bernard Lawson has admitted that there will be an impact on the service that the force is able to provide for my constituents and all the people of Merseyside. May we have an urgent debate on the impact that the Government’s spending cuts are having on front-line policing?
Sir George Young
The hon. Lady will remember that, before the last election, the then Home Secretary made it clear that if he and his party were re-elected, they would not be able to guarantee that there would be no reductions in the number of front-line officers. It is the view of the Government that it is possible for police authorities to cope with the budgets they have been allocated and protect the effectiveness and visibility of front-line policing.
Pauline Latham (Mid Derbyshire) (Con)
In response to a question from a Labour Member, the Leader of the House mentioned the Commonwealth discussions that the Prime Minister has had about the royal succession. May I urge the Leader of the House to tell us when we might expect a debate on the royal succession Bill and what that Bill might include?
Sir George Young
When we have a Bill there will, of course, be a debate. I am grateful to my hon. Friend for raising the issue. In his statement, the Prime Minister said that we are intending to legislate
“to end the system of male preference primogeniture and the provision that anyone who marries a Roman Catholic would be ineligible to succeed to the Crown.”—[Official Report, 31 October 2011; Vol. 534, c. 31WS.]
Any legislation that we bring before the House has to work for 16 countries, and to that end a group of senior officials from across those countries is working urgently to agree the necessary legislation. When that has been done, it will be brought before the House.
Keith Vaz (Leicester East) (Lab)
Further to that answer, may I say that the Prime Minister needs to be praised for making his announcement in Perth, which was of course supported by the Leader of the Opposition and the Deputy Prime Minister? Further to what the hon. Member for Mid Derbyshire (Pauline Latham) has said, I have a Bill before the House, which is to have its Second Reading on 25 November, that deals with this very point. I am happy to give that Bill to the Leader of the House so that, instead of drafting new legislation, he can use it and introduce the measures as soon as possible, because when it happens here first, it will then happen in the other 16 countries.
Sir George Young
That is an enormously generous offer from the right hon. Gentleman, but he will have heard what I said a moment ago about a working group that is preparing the necessary legislation. He may well have anticipated the output of this hard-working team of people and perfectly drafted his piece of legislation to anticipate what they will recommend, but I am afraid that the Government do not have that total confidence and it might be best to await the output of the working group before we look again at his Bill.
Paul Uppal (Wolverhampton South West) (Con)
Given the excellent news that Jaguar Land Rover is opening a new engine plant—a £355 million investment, which will create up to 750 new skilled jobs—just outside my constituency, will the Leader of the House find time for a debate on the skills gap, as this can provide a platform and a legacy for learners in Wolverhampton?
Sir George Young
I am grateful to my hon. Friend for balancing the news. There is good news in parts of the country and he has just reminded the House of that particular piece of good news. I understand that Jaguar Land Rover is working with the National Apprenticeship Service, the Skills Funding Agency and the black country local enterprise partnership on the whole issue of skills for the new plant. I hope it will be possible to train those who are currently unemployed to give them the skills that they need to work in this new investment—this new engine plant. We are supporting this particular project through the grant for business investment scheme, which is providing up to £10 million.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Given the fuss last week about the FairFuel petition, does the Leader of the House accept that No. 10 and the Government may have misled the public into thinking that e-petitions that achieved 100,000 signatures would automatically be debated here? Does he agree that they may also have misled Back Benchers into thinking that the Backbench Business Committee would be there to represent our interests? I know that he would not mislead anyone, but is not the solution to reserve some additional days exclusively for e-petition debates so that the Backbench Business Committee can do the job it was set up to do?
Sir George Young
I am grateful to the hon. Gentleman. If he looks at the coalition agreement, he will see that we made it absolutely clear that once an e-petition got 100,000 signatures it would be “eligible for debate”—I think that is the wording—so there is no question of my or anyone else’s misleading anyone about that. His suggestion that there should be extra time specifically for e-petitions is a helpful one. He will know that the Procedure Committee is reviewing the parliamentary calendar and that we are committed to reviewing the work of the Backbench Business Committee. It may be that those two reviews work together in tandem and that we are able to find extra space within the calendar to debate e-petitions. I know that this is an issue on which the Chair of the Backbench Business Committee has strong views.
Tessa Munt (Wells) (LD)
The Government’s cancer strategy for England recognises that access to radiotherapy is critical to improving outcomes. Radiotherapy takes only 5% of the estimated total NHS spend on cancer care but 50% of patients can benefit from it. May I ask the Leader of the House whether he has seen and supports Cancer Research UK’s “A voice for radiotherapy” petition, which has been signed by more than 36,000 people and will be handed in to Downing street this afternoon? As 2011 is the year of radiotherapy, may we have an urgent debate this year on better and fairer access to radiotherapy in England?
Sir George Young
I am grateful to my hon. Friend for raising the profile of Cancer Research UK’s petition. I agree that it would be helpful to have a debate and to see what more we can do to reduce any delays in the use of radiotherapy or, indeed, chemotherapy once people have had their operation. There will be an opportunity at Health questions to raise this issue quite soon but, in the meantime, she might like to put in for a Westminster Hall debate so that we can do justice to the important issue she has just touched on.
Andrew Miller (Ellesmere Port and Neston) (Lab)
The last time the Minister for Universities and Science, whom I hold in very high regard, appeared before the Select Committee on Science and Technology, he made a statement that affected the science budget stemming from the break-up of the regional development agencies and the redistribution of moneys. That has subsequently been the subject of a series of exchanges about what he actually said versus what he meant to say. Coincidentally, over the summer a very good paper has been published by the Campaign for Science and Engineering in the UK showing that the Government’s science budget is affected by smoke and mirrors. May we have an urgent debate in Government time about the truth around the science budget?
Sir George Young
On 8 December, which is some time away, there will be an opportunity to raise the issue. In the meantime, I should like to raise with my right hon. Friend the Minister for Universities and Science the issue that the hon. Gentleman has just touched on to see whether there is any gap between what my right hon. Friend said and what he meant to say—I am sure there was not—and to deal with the allegation that there are smoke and mirrors in the science budget.
Sir George Young
It sounded as though the hon. Gentleman was blaming him. None the less, I shall raise the matter with my right hon. Friend and ask him to write to the hon. Gentleman.
Guto Bebb (Aberconwy) (Con)
May we have a debate on the impact of the VAT threshold on micro-businesses and their growth potential? In my constituency, many small businesses involved in the tourism sector are in the process of closing for the winter period. They are closing not because they are scared of work or because there is no opportunity for them to create a market and carry on working, but because the current VAT threshold creates a cliff edge that penalises them for being successful.
Sir George Young
I am grateful to my hon. Friend and of course we will take on board what he says. The current VAT threshold, at £73,000, is one of the highest in the EU. It is the case that some traders would like it to be raised so that they are outwith it, but others would like it to be reduced to avoid unfair competition from those who are exempt. I believe that we have got the balance about right, but in the light of his comments I am sure that Treasury Ministers will want to keep this under review.
Jessica Morden (Newport East) (Lab)
We have just passed the fifth anniversary of the collapse of Farepak, but my constituent Deb Harvey, who was a Farepak agent, and her customers have not received any compensation and are still waiting for justice to be done in relation to the people who caused the collapse of the company. Does the Leader of the House feel that we should find time to revisit this issue, not least to ensure that it never happens again?
Sir George Young
I am grateful to the hon. Lady for raising this issue. I think we have had debates on Farepak in the past—possibly in the last Parliament. I will raise this with appropriate Ministers to see where we have got to in the process of getting funds for those who lost money. I would welcome a debate on this matter and she might like to apply to you, Mr Speaker, for a debate on the Adjournment.
Christopher Pincher (Tamworth) (Con)
May we have a debate on student visas? I am conscious that the Government have already barred 470 colleges from accepting new students as part of their immigration crackdown, but a debate would enable us to explore the extent of the abuse that has been going on and to understand what the Government are doing to stop it.
Sir George Young
I understand that there is an e-petition on the slightly broader issue of immigration and if that got through the 100,000 threshold, there would indeed be a debate in which it would be relevant for my hon. Friend to raise this issue. [Interruption.] There might be a debate—indeed. In addition to the 470 colleges that my hon. Friend has touched on, 302 have had their licence revoked and a further 172 have been allowed to continue to teach current students but may not sponsor any new ones from the EU. I hope that he is assured that Ministers at the Home Office have this matter under serious consideration.
Grahame M. Morris (Easington) (Lab)
The Leader of the House has previously told us that he is not keen on having any debate that involves the expenditure of additional resources. However, I wonder whether we might prevail upon him to persuade the Health Secretary to have a debate on NHS procurement, not least because we desperately need a credible plan for jobs and growth, and NHS procurement could provide a way of securing such a commitment.
Sir George Young
I am grateful to the hon. Gentleman. I think I am right in saying that the Select Committee on Health, or possibly the Public Accounts Committee, has recently produced a report on NHS procurement—I think it was the PAC—in which case the Government will want to respond to that in due course. If there are lessons to be learned in order to procure more efficiently, get better value for money and, indeed, create jobs by so doing, of course the Government would like to pursue that.
Kris Hopkins (Keighley) (Con)
Ilkley business forum in my constituency has established a new scheme to protect local independent traders and to save the town centre. May we have a statement making clear the Government’s support for small traders and outlining what they are doing to protect such traders from national chains and internet shopping?
Sir George Young
I am interested to hear what my hon. Friend’s local authority has done. I believe that our planning proposals will give more weight to local authorities to take the sort of initiative that he has just touched on to protect independent stores and local traders. As for protecting them from unfair, predatory trading from some of the giant chains, the draft Groceries Code Adjudicator Bill may give some protection. Of course, the Government have in the pipeline the broader agenda of deregulation, which I hope will help all the small shopkeepers in his constituency.
Graham Jones (Hyndburn) (Lab)
We heard today that house building fell to an all-time record low of 121,000 and that the Select Committee on Communities and Local Government has produced a report that condemns the Government’s regeneration policy. Areas such as Woodnook in my constituency are really suffering. Last week, Shelter revealed that in 55% of local authorities people are being priced out. When will the Housing Minister come to the Floor of the House and debate the debacle that is the Government’s housing policy? Let us get to the bottom of this because it is a disgrace.
Sir George Young
There was an exchange on housing on Monday when we had Communities and Local Government questions. We have taken a number of initiatives to promote housing. There is the new homes bonus to encourage local authorities, there is our streamlining of the planning system to remove unnecessary delays and, crucially, as we heard in the previous statement, there are low interest rates, which are crucial to enable first-time buyers to get on to the housing ladder. I hope that a combination of those measures will lead to a revival in house building, and it is worth reminding the hon. Gentleman that we had the lowest output in peacetime since the 1920s under the previous Government.
Mr Bernard Jenkin (Harwich and North Essex) (Con)
I thank my right hon. Friend for his sympathetic tone about the lack of defence debates that we have had so far in this Parliament. We are still waiting for debates on procurement and defence policy, for example, and we are also still waiting for the annual debate on the civil service. Is not the right answer that we should move swiftly towards having a fully fledged business Committee so that we can end the division of responsibility that has led to these problems?
Sir George Young
The proposal in the coalition agreement envisages, certainly in the short term, two Committees: a BackBench Business Committee dealing with Back-Bench time, and a House business Committee dealing with Government time. In the longer term, we may move to a single, integrated Committee, but the initial proposal was that there should be two, side by side. Whether that would resolve the dilemma on which my hon. Friend touched, I am not sure because there would still be tension between, on the one hand, providing more time for Back-Bench business and, on the other, providing adequate time to scrutinise Government legislation. [Interruption.] We are sitting longer in the first two years of this Parliament than in the first two years of the previous Parliament. In the remaining days of this Session, I will see whether there is headroom to provide for more debates on defence, which is what prompted my hon. Friend’s initial question.
Pat Glass (North West Durham) (Lab)
This week, the Government announced a review of feed-in tariffs, which will put at risk jobs across the country, not least at Romag in my constituency which, among other things, is responsible for the security screen in the Commons. At the same time, the Government have provided a regional growth fund so that companies can import solar panels from China for assembly in the UK, so that the onward sale is British. May we have an urgent statement on that piece of economic insanity?
Sir George Young
We have had a statement on this enlightened policy, if I may phrase it slightly differently. I am sure that the hon. Lady was in the House when the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle (Gregory Barker) replied to that question. The return on solar panel investment will be roughly what it was when the Labour Government began the scheme. We have recalibrated it to take account of the falling costs of solar panel installation. We are consulting on what replaces the regime after 12 December, and her thoughts will be welcome.
Bob Stewart (Beckenham) (Con)
May I reinforce what my right hon. Friend the Member for North East Hampshire (Mr Arbuthnot), the Chair of the Select Committee on Defence, and my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) have said? I am quite shocked, as a new Member, that while we are fighting what looks increasingly like a guerrilla war in Afghanistan and are taking casualties, the House has not spent time generally looking at what we are doing in defence.
Sir George Young
I detect the serious mobilisation of the armed forces on the Benches behind me, pressing for a further defence debate. As my hon. Friend knows, we have provided one day and, as I said in response to my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), between now and the end of the Session, now that most of the major Bills have gone through the House, there may be headroom to provide some of the debates that were provided in Government time in the previous Parliament but which, for whatever reason, have not been forthcoming so far in this one.
Fiona Mactaggart (Slough) (Lab)
The right hon. Gentleman will be aware that I apologised to the Economic Secretary to the Treasury for my patronising tone in my question to her on Monday, but will he ask her to come back and apologise to the House for misleading it when she claimed that unemployment under the previous Government reached 30%?
Mr Speaker
Let us hear the response from the Leader of the House, but I must say, while I note what the hon. Lady has said, that we need to be very careful about accusing Members of misleading the House. She may wish to insert the word, “inadvertently”.
Fiona Mactaggart
I am sure that it was inadvertent. Perhaps the Economic Secretary would come to the House and explain how she arrived at that figure.
Sir George Young
In fairness to the hon. Lady, I welcomed what she said at the outset of her remarks about apologising for any offence that she may have caused my hon. Friend the Economic Secretary. I will draw my hon. Friend’s attention to this exchange, and ask her to write to the hon. Lady clarifying the use of the figures and, I am sure, justifying any figure that she used in the Chamber.
Richard Graham (Gloucester) (Con)
Given the recent publication of the Justice and Security Green Paper, which includes proposals on the reform of the Intelligence and Security Committee, and covers the protection of sensitive material, which is especially relevant to my constituents in Gloucester who work at GCHQ, will the Leader of the House consider providing time in the near future for the annual debate on the ISC?
Sir George Young
I am grateful to my hon. Friend, and I recognise his constituency interest. We have both seen the ISC annual report, as well as the consultation exercise announced by my right hon. and learned Friend the Lord Chancellor a few days ago and the recently published Justice and Security Green Paper. I shall reply in similar terms to the reply that I have given on an earlier occasion. I hope that it will be possible to find time to debate this important matter during the remainder of the Session, but whether in Government or in Backbench Business Committee time is something that needs to be resolved.
Ian Lavery (Wansbeck) (Lab)
In Ashington in my constituency, 20.7% of 16 to 18-year-olds are classified as NEETs—not in education, employment or training. Will the Leader of the House make time to discuss the bleak future faced by hundreds of thousands of young people as a result of the Government’s policies?
Sir George Young
I announced in the business statement that there would be a debate in Opposition time on youth unemployment on Wednesday, so the hon. Gentleman will have an opportunity to raise those issues. There will also be an opportunity for Ministers to explain the initiatives that they have taken, including the Work programme, investment in apprenticeships, and universal credit, which were all introduced to try to help the people in his constituency who hope to get into work.
Mr Mark Williams (Ceredigion) (LD)
May we have a debate on the appalling human rights situation in Iran, made worse by the spectre of 3,250 Iranian citizens who are in Camp Ashraf and who will be forcibly removed in 57 days, probably back to Iran, potentially with catastrophic consequences?
Sir George Young
I understand the concern expressed by my hon. Friend. I will contact the Foreign Secretary and ask him to write to him outlining what representations the British ambassador and the Foreign Office have made on this issue.
Nic Dakin (Scunthorpe) (Lab)
A report by the Fawcett Society shows that women are affected worst by Government cuts. Notwithstanding the earlier comments by the Leader of the House, may we have a clear statement from the Government about what they are going to do to ease that pressure on women’s lives?
Sir George Young
Women have an interest in the Government’s economic policies, which lay the foundations for sustainable growth, enabling the country to remain competitive. They have an interest in the success of the action that we have taken to get the deficit down and rebuild confidence in the country. Women have much to gain from the success of that policy.
Mr Peter Bone (Wellingborough) (Con)
At the start of Parliament week, and with a leading Parliamentarian at the Dispatch Box, one thing that the Government could do very quickly is move towards the establishment of a business of the House Committee, so that Parliament timetables everything? The commitment, I accept, is not to go beyond 5 May 2013, but could we have it earlier, and may we have a statement from the Chief Whip welcoming that measure?
Sir George Young
I know that my hon. Friend has a good working relationship with my right hon. Friend the Patronage Secretary, particularly in the light of the private Member’s Bill that my hon. Friend introduced to abolish the Whips Office.
The Wright Committee recommended the measure but, at the end of the previous Parliament, the outgoing Government failed to accept that recommendation. We remain committed to doing it in the third year of this Parliament. Whether it makes sense to bring it forward before the review of the Backbench Business Committee is complete, I am not certain. However, we are committed to further reform of the way in which the House manages itself, and we are committed to the establishment of a House Committee to work alongside the Backbench Business Committee so that there is a slightly broader basis on which Government business is decided.
Barry Gardiner (Brent North) (Lab)
Will the Leader of the House take a careful look at the timing of consultations? Many Members have long believed that consultations are not necessarily the most effective way of changing Government policy, but the consultation on the feed-in tariff is the first occasion on which that which is being consulted on has been announced to come into effect 12 days before the end of the consultation. Considering that point would help the Government, if only to avoid judicial review.
Sir George Young
That seems to be a repetition of a question that the hon. Gentleman put on Monday to the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Bexhill and Battle. We had to have a cut-off point to stop the erosion of funds under the current scheme. We are now consulting on what should replace that scheme, which is a sensible way forward.
Mr David Nuttall (Bury North) (Con)
May we please have a statement on the Commonwealth Heads of Government meeting? Apart from the agreement in principle that was reached to amend the rules relating to royal succession, many other matters were discussed. The Prime Minister routinely makes oral statements to the House after European Council meetings, and it would help reflect the great importance of the Commonwealth if it became routine for oral statements to be made following Commonwealth Heads of Government meetings in the future.
Sir George Young
I am grateful to my hon. Friend for his recognition that the present Prime Minister regularly makes statements to the House. He has made 23 so far this Session—a higher average strike rate than his predecessors. With statements after Commonwealth Heads of Government meetings, we have followed the procedure adopted after earlier such meetings. There was a written statement to the House in 2005, in 2007 and in 2009, and we have simply carried that procedure forward.
Diana Johnson (Kingston upon Hull North) (Lab)
I have been contacted by Mr Les Bennett, a small businessman in Hull. Seven weeks ago he took to market a new software application that would assist the solar panels industry. His business is now in ruins because of Monday’s announcement about the feed-in tariff. May we please have a debate on the Government’s commitment to small businesses and the renewables industry?
Sir George Young
Obviously, I am sorry to hear about the hon. Lady’s constituent. I am not quite sure why a software application should not continue to be relevant even though the tariffs have changed. I hope Mr Bennett can recalibrate whatever product he has, in order to cope with the new regime.
Joseph Johnson (Orpington) (Con)
Heathrow and Gatwick are operating at 99% capacity, leaving little scope for the UK economy to take advantage of the growth opportunities in the BRIC economies—those of Brazil, Russia, India and China. After the debate on the airstrip on the island of St Helena, in which the Leader of the House expressed such interest, might we perhaps find time for a further debate on UK aviation strategy and proposals for a new hub airport for London, so that such important opportunities do not go begging for a moment longer than necessary?
Sir George Young
There will be an opportunity at the next Transport questions for my hon. Friend to raise that issue. He raises a serious point about the future of aviation policy. I would welcome such a debate in Westminster Hall, either according to the guidance of Mr Speaker or in Backbench Business Committee time, so that the Government can set out their current aviation policy and those who are in favour of alternative provision can make their case.
Jonathan Ashworth (Leicester South) (Lab)
Could the Leader of the House find time for a debate on the future of local and regional newspapers, many of which have been under some strain recently? Is the right hon. Gentleman as delighted as I am that following my representations, the Leicester Mercury is now available in the Library?
Sir George Young
I congratulate the hon. Gentleman—but I hope that he is not going to start a bidding war in which all hon. Members seek to catch Mr Deputy Speaker’s eye and raise the fortunes of their local newspaper. We have just had Department for Culture, Media and Sport questions. I am not sure whether the hon. Gentleman was in his place, but I am sure that the Leicester Mercury will adequately record this exchange.
Mark Pawsey (Rugby) (Con)
There is concern in my constituency over the intention to close Birch ward, at the hospital of St Cross in Rugby, later this month. That action arises because of the need to reduce the deficit within the hospital trust, which includes a large private finance initiative hospital based at Coventry. May we have a debate to consider the consequences of PFI funding, which was so favoured by Labour in the delivery of health care?
Sir George Young
I am sorry to hear of the problems that confront my hon. Friend’s local hospital as a result of the private finance initiative scheme. We have done a review of PFI schemes that has produced annual savings of about 5% on NHS PFI schemes. I will draw the case of my hon. Friend’s hospital to the attention of the Treasury to see whether that scheme is one of those under review. Twenty-two NHS trusts have identified their PFI payments as an issue in terms of being financially sustainable, and plans have now been agreed for most of those at local health economy level, to ensure that that does not undermine their sustainability.
Bob Blackman (Harrow East) (Con)
Will my right hon. Friend join me in wishing Hindus everywhere a belated happy Diwali last week? As well as welcoming that important festival, will my right hon. Friend join me in welcoming the decision of the Department for Education to grant initial approval to St Chaitanya’s school, a new Hindu free school for the borough of Harrow that will provide 1,470 young people with a faith-based education as part of this Government’s excellent free schools programme?
Sir George Young
I join my hon. Friend in welcoming that initiative. I am glad the Government are taking it forward. It is the second scheme in this country sponsored by I-Foundation. It will be a free school, but like all schools that have a broad, balanced curriculum, it will build its ethos on the faith values of integrity, respect, courage, empathy, self-restraint and humility. I wish the school and its promoters every good fortune in the future.
Henry Smith (Crawley) (Con)
Recently a constituent came to me concerned that in the space of five days she had received seven separate letters, almost identical, from the Child Support Agency, each envelope containing an identical large booklet. Can we find time for a debate on the efficiency of the Child Support Agency?
Sir George Young
I think we all know from our advice bureaux that the current child maintenance system is not working properly. We have in mind a major child-centred reform promoting, where possible, agreement between the parents on the financial regime. I very much hope that once this new maintenance system is up and running, my hon. Friend will have fewer problems such as the one he has just described.
Glyn Davies (Montgomeryshire) (Con)
One of our great concerns is the low number of organ donations in the United Kingdom compared with other European countries, which has led to discussion about possibly introducing presumed consent, which I personally oppose. May we programme a debate in the Chamber to consider how we might increase that number, taking as an example what has happened in other European countries?
Sir George Young
I am grateful to my hon. Friend, and I have here my own donor card—which I hope will not be activated in the very near future. We have taken a number of initiatives. For example, when people renew their driving licence they are encouraged to take out a donor card. The issue of presumed consent raises a whole lot of ethical questions, and I am sure they should be debated, but at present the Government’s energy is devoted to encouraging the take-up of donor cards.
royal assent
Mr Deputy Speaker (Mr Nigel Evans)
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:
Coinage (Measurement) Act 2011
Armed Forces Act 2011
Pensions Act 2011
Bill Presented
Household Safety (Carbon Monoxide Detectors) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Barry Sheerman, supported by Jason McCartney, Meg Munn, Julian Sturdy, Steve Baker, Andrew Percy, Laura Sandys, Dr Hywel Francis, Karl MᶜCartney, Andrew Stephenson, Chris White and Heidi Alexander, presented a Bill to introduce a requirement that a functioning carbon monoxide detector must be installed in residential properties; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 25 November, and to be printed (Bill 245).
Commission on Devolution in Wales
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Wales (Mrs Cheryl Gillan)
I beg to move,
That this House has considered the matter of the Commission on Devolution in Wales.
Before I commence the debate, may I—with the permission of the Speaker, which I sought earlier—say to the right hon. Member for Neath (Mr Hain), who speaks for the Opposition on Wales, that I was shocked to hear of the incident at the Aberpergwm mine at 3 am, but I was also exceedingly glad to know that all three men have been brought out of that mine successfully? It reminds all of us, particularly after the sad events at the Gleision mine, that men are putting their lives on the line each and every day to recover coal. Because both those incidents involved the right hon. Gentleman’s constituency, I thought we should acknowledge that.
Mr Peter Hain (Neath) (Lab)
I am very grateful, and thank the right hon. Lady for that, as will the families and the individuals involved. I thank her too for her support for the miners appeal fund and for her support over the tragedy at Gleision. Today’s incident, although obviously serious, particularly for those concerned—they have suffered injuries, but fortunately they are okay—is in a very different category from Gleision, which was a major disaster and tragedy. Aberpergwm pit is run extremely efficiently by a company with high levels of investment, recruiting miners and apprentices, and in all respects an admirable company. The incident is rather an exception, but it is the third one in my constituency in the past couple of months.
Mrs Gillan
The right hon. Gentleman knows that my door is always open. We have already spoken to other Departments from my office and we will continue to deal with these matters on a cross-party and non-political basis, as is the proper and right way to deal with them.
I am pleased that we have been able to give the House an opportunity to debate in Government time the work of the Silk Commission, the commission that I announced on 11 October would examine devolution for Wales.
The coalition agreement contained three specific items on Wales. First, we promised to take forward the housing legislative competence order that had been held up by the previous Government, and I am pleased to say that we delivered on that. Secondly, we promised a referendum on granting primary legislative powers in devolved areas to the Welsh Assembly Government, and we delivered on that, although on taking office I found that preparations were—how shall I put it?—behind the curve.
Mr Wayne David (Caerphilly) (Lab)
Before the right hon. Lady moves on from the subject of the coalition agreement, may I point out that her party, in opposition, blocked the housing LCO during the wash-up period before the general election?
Mrs Gillan
The hon. Gentleman, who was serving in the Wales Office at the time, arranged the timetabling so that the LCO would fall in that period; he could have delivered it much earlier.
Thirdly, we promised that following the referendum we would establish a process for Wales, in the vein of the Calman commission, and I am pleased to inform the House that we have delivered on that.
Huw Irranca-Davies (Ogmore) (Lab)
Before the right hon. Lady takes credit for every achievement, may I ask her to acknowledge that although the Government put the legislative framework in place, the referendum was delivered by the people of Wales, who voted for it? I am sure she will want to acknowledge that.
Mrs Gillan
The hon. Gentleman is dancing on the head of a pin. This Government gave the people of Wales the opportunity to vote in the referendum, as indeed they did, and I was pleased by the outcome. It was only as a result of a great deal of work and application by the Wales Office and others in government that we were able to deliver that on time and to the schedule anticipated.
I am pleased that today, before the first meeting of the Silk commission, we have given all Members an opportunity to register their views by allowing a full-day debate. It is fair to say that Westminster politicians rarely get the time to stand back and thoughtfully consider the future shape of our country’s constitution. We react to events, perhaps to political and tribal allegiances and timetables and, as John Major said in his Ditchley Foundation annual lecture, the Union cannot be maintained by constant antagonism—for example, between Wales and London.
Like our former Prime Minister, I opposed devolution because, as a Unionist, I believed it could be the slippery slope to separation. I am now less fearful of separation and more hopeful—
Mrs Gillan
The hon. Gentleman suggests that not all Members are less fearful. That is fair and, in the spirit of the debate, I want to hear from Members who do not share the views that he and I hold. My fears about separatism, which have diminished, might be reflected in some Members’ contributions. I am more hopeful that there will be a mature debate and reasoned solutions, delivering a degree of self-determination without threatening the strength of the Union. With the advent of the commission, we are getting time to contribute and reflect.
Geraint Davies (Swansea West) (Lab/Co-op)
Is not the real Conservative agenda to offer tax-raising powers in order to freeze the block grant and end up with a semi-detached Wales, with less representation, thereby securing a permanent Tory-run Westminster, fracturing or destabilising the Union?
Mrs Gillan
I do not know what tortuous mental processes the hon. Gentleman goes through, but I assure him that I have no ambitions in that direction whatsoever. He has been spending too much time with the right hon. Member for Neath, who sees conspiracy theories in every quarter. This is a genuine open consultation, and the hon. Gentleman will hear as I develop my speech that the Silk commission is giving us an opportunity to reflect and try to shape the architecture of devolution in Wales.
The commission provides a coherent opportunity to review the working of devolution in Wales and the financial accountability of the devolved institution. Assembly Members are accountable to the people of Wales at the ballot box. They are judged on their record, on the decisions they make and on the outcomes of their policy decisions. We all know that government is a difficult business that involves administering complex issues and looking after the totality of the system for the people of Wales. We therefore need the commission to examine how the devolution system is working, and whether changes might improve its performance.
Mr David Hanson (Delyn) (Lab)
Will the Secretary of State ensure that the commission looks carefully at the impact of the border? My constituency, and that of many others, is close to the English border. People who live in my constituency work in England, and people who live in England work in my constituency. The differing rates of VAT, corporation tax and quarrying tax, and of expenditure, are important on both sides of the border. I do not want the commission to look specifically at Welsh issues without taking representations from the English side of the border.
Mrs Gillan
I could not agree more with the right hon. Gentleman. I refer him to the commission’s specifications, in which we state that it should
“consider and make recommendations on how best to resolve the legal and practical implementation issues from devolving a package of fiscal powers”.
I think that says it all: we are keeping an open mind. The right hon. Gentleman knows that since becoming shadow Secretary of State, I have been concerned about the implications of the permeability of the border. The commission offers us the chance to look not only at recommendations that might be made but at the practical difficulties.
Mr Hanson
Does the Secretary of State agree that one of the factors that the commission should take into account is that Welsh Members of Parliament such as me, whose constituents use hospitals in England and work in English businesses, should have the right to vote on those matters, too?
Mrs Gillan
We proposed to hold this debate before the first meeting of the commission to enable Paul Silk and the other commissioners to hear Members’ views. The right hon. Gentleman’s point is well made, and I know that when the commissioners read Hansard they will take it on board. I do not want to tie the commissioners’ hands; they must decide how they will work.
Alun Cairns (Vale of Glamorgan) (Con)
The right hon. Member for Delyn (Mr Hanson) makes a principled point, the logic of which should have been extended to the previous referendums on devolution. Why did that not happen?
Mrs Gillan
If I recall correctly, the Richard commission reported before the Government of Wales Act 2006 was enacted. Reaction to the commission—a pick-and-mix effect—was interesting. The 2006 Act contained some items that had not been telegraphed quite so clearly, and the House certainly did not have the opportunity to debate it as fully as I am trying to ensure that we debate things today and in future. My hon. Friend is quite right about that.
Mrs Gillan
I am glad that the right hon. Gentleman agrees that we did not have enough time to debate the Richard commission, which is indeed a fact. I was thinking of the changes to the Assembly’s electoral system, which were not telegraphed extensively and we did not have a chance to discuss—
Mrs Gillan
We may have had plenty of time in Committee, but not beforehand, and there was no wide or extensive consultation. I take the right hon. Gentleman’s point, however.
Hywel Williams (Arfon) (PC)
May I just recommend to the House in general, and perhaps to the Silk commission, that the commission look at the reports of the Welsh Affairs Committee on cross-border issues—which were what started this little exchange? Although the reports recognised that there were problems, they also recognised that there was a great deal of good will across the border, and that the systems were working very well indeed.
Mrs Gillan
That is a very constructive intervention, and in my experience the system does work exceedingly well in some instances, but that will be a matter for the commission to consider, and it will want to look at examples of what is working well and what needs adjustment.
Mrs Gillan
I will give way to the right hon. Gentleman, then I must make some progress.
Mrs Gillan
The right hon. Gentleman will be very pleased, therefore, that the Assembly now has primary legislative powers, and I am sure that he will be spending a lot of his time constructively trying to encourage the Welsh Government to come forward with some legislation, because it is now many months since the election, and correct me if I am wrong—I see the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) and the hon. Members for Carmarthen East and Dinefwr (Jonathan Edwards) and for Arfon (Hywel Williams) nodding their heads—but we have not yet seen any draft legislation from the Welsh Government, even though they were well prepared in advance of the referendum.
David T. C. Davies (Monmouth) (Con)
My right hon. Friend will be aware, of course, that the loyal county of Monmouthshire voted no in the recent referendum, as it always has in previous referendums.
Mrs Gillan
That shows the advantage of this approach to constitutional change: all hon. Members, no matter where they come from, how they speak and from what direction they approach constitutional matters, will have an opportunity to express their views. I am grateful to my hon. Friend, and I am sure that he will speak later in the debate and let the House know what he feels the Silk commission should consider.
Before I took that series of interventions, I was saying that neither the Assembly nor the Welsh Government are accountable to the people of Wales for the money that they spend on the policies that they implement. The Welsh Government simply receive the Welsh block grant voted by Parliament, and spend it.
That cannot be right. With power comes responsibility, and it is surely better for the devolved institution to be accountable to the people of Wales not just for decisions on public spending in Wales, but by being responsible for raising some of the money needed to pay for those decisions. Even local authorities, despite receiving block grants, have responsibility for raising local council tax, and consequently they recognise the difficulty of raising tax moneys before they spend money. There is no reason why one institution—
Mrs Gillan
I have been very generous, and would now like to make some progress.
There is no reason why one institution should be immune from raising taxes, and instead simply spend money and continue to ask for more—but the Labour party seems to think that that should continue. Only last Friday the right hon. Member for Neath said in The Western Mail that seeking more accountability for the Assembly and the Welsh Government was a “curiously disturbing motive”, so I certainly look forward to hearing his further observations in a minute, because I should like him also to explain the contradiction between his position and that of the Labour First Minister, who welcomes the commission and its objectives.
The first part of the Silk commission’s remit is to look at financial accountability. It will consider the case for devolving fiscal powers and recommend a package of powers that could improve the Assembly’s financial accountability. Those powers would need to be consistent with the United Kingdom’s wider fiscal objectives.
The commission will consider the tax and borrowing powers that could be devolved to the Assembly and the Welsh Government. Those include powers in relation to landfill tax, air passenger duty and stamp duty, but they are not limited to those taxes. The commission’s remit, however, is to recommend the devolution only of taxation powers that are likely to have wide support, and it will need to consult broadly to secure that support not only in Wales but in other parts of the United Kingdom.
Huw Irranca-Davies
I thank the right hon. Lady for giving way again; she is generous. I wish to ask about her position as Secretary of State on a point of principle underlying the Silk commission’s consideration of such fiscal powers. Does she agree that it would be wrong of any review to make recommendations that were to the financial disadvantage of the people of Wales, recognising, good Unionist that she is, that the nature of the Union depends on ensuring that economically disadvantaged areas receive greater subsidy from other parts of the UK? On that point of principle, does she concur that today we should all agree that any review of fiscal union does not disbenefit the status quo in Wales, and should if anything improve its lot?
Mrs Gillan
The hon. Gentleman makes a valid and good point, but once again I do not want to prejudge or tie the hands of the Silk commission, although I cannot imagine a situation in which an agreed solution, as I have anticipated and laid out in the terms of reference, would disadvantage Wales. That is far from my motivation, as he will see as I progress with my speech.
The commission already has contributions to its evidence base from work such as the Holtham commission’s reports, which were prepared to a Welsh Assembly Government remit, but crucially, unlike Holtham, the Silk commission can take things a step further. The terms of reference require the commission to consider implementation and to make recommendations on how best to resolve the legal and practical implementation issues that arise from devolving a package of fiscal powers and having consistency within the United Kingdom.
The commission will aim to report on part 1 of its remit in the autumn of next year, and the Government will consider its recommendations very carefully. Members may wish to contribute directly to the commission as well as in today’s debate, but I very much hope that we will be able to hold a debate, again on the Floor of the House, at some stage following the delivery of part 1 of the commission’s findings, because the intention is to take the matter forward as consensually as possible.
The commission will then turn its attention to the second part of its remit—to look at the current constitutional arrangements in Wales. Specifically, it will consider the powers of the Assembly and the boundary between what is devolved and non-devolved, and make recommendations to modify the boundary, if they are likely to enable the Welsh devolution settlement to work better. Again, the commission will need to consult broadly on its proposals and make only those recommendations for change that are likely to have wide support.
Currently, the Assembly has powers in all 20 devolved areas, and it will be for the commission to decide whether there is a requirement to tidy up the devolution boundary, but any further changes to the settlement will need to be right for Wales and right for the United Kingdom as a whole. I anticipate the commission reporting on part II of its remit in 2013.
With the exception perhaps of the right hon. Member for Neath, there is broad agreement on the basis for moving forward and considering issues of both fiscal devolution and accountability. The Government have moved forward collaboratively with all four political parties in the Assembly, in establishing the terms of reference and the members of the commission, and I thank in particular all four party leaders in Cardiff Bay for the positive and co-operative spirit in which they are engaged with me and my office to agree the way forward.
David T. C. Davies
We are at an early stage in proceedings, but will my right hon. Friend and, perhaps, the right hon. Member for Neath (Mr Hain) when he speaks explain whether those nominees will be representatives who represent what their parties think, or delegates who simply pass on what their parties suggest?
Mrs Gillan
That is a matter not so much for me, but for the right hon. Gentleman, who I am sure will want to deal with it when he addresses the House. As far as the Conservative party is concerned, I want to be as inclusive as I can of people’s views, and that is why I am trying to create a period in which any member can make a contribution. The Conservative party, in particular, will make contributions to the Silk commission’s proceedings.
Hywel Williams
I merely wish to note that some distinguished members of the commission are not strictly aligned to political parties. I am sure that they will make a contribution that might even satisfy the hon. Member for Monmouth (David T. C. Davies). Given the quality of the representation, it would be strange if they were there merely to be mouthpieces for political parties. Clearly, they have a great deal to contribute as individuals.
Mrs Gillan
I am about to come to the composition of the commission, and I will pick up the hon. Gentleman’s point then.
Huw Irranca-Davies
On a point of detail about the possible extension of powers that the Silk commission is considering, will that include energy consents? The matter has been debated a lot recently, as the Secretary of State knows, and it has some support, and opposition, on both sides of the House. Ministers have made it clear that they do not think that it should be part of the commission’s deliberations. Will she clarify the situation?
Mrs Gillan
I am grateful to the hon. Gentleman for raising that matter, particularly as before the debate I was looking at the party manifestos for the Assembly elections. He will know that I regularly receive requests for powers over all sorts of areas, and I expect those areas to be looked at. It is fair to say that I expect the commission—this is subject to the way in which it wishes to conduct its business—to consider requests for energy consents for projects of more than 50 MW, and to consider trust ports, rail and separate Welsh legal jurisdiction, all of which have been raised up the agenda by one or other party, or the Welsh Government. It is right that it should have the opportunity to consider energy consents, but I have an extremely long list of things that other parties want fully devolved, which will not stop until the point of separatism is reached. He and I agree that that is not the way to go. The commission may find itself having to consider several other areas, but I am not going to restrict its operation by anything we say in the House. Indeed, I am looking forward to seeing the outcome.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Will the Secretary of State give way?
Mrs Gillan
May I make a little progress? The commissioners bring a wealth of experience to their important task. The commission is chaired by Paul Silk, a distinguished former Clerk to the National Assembly and to this House, whom we all know. Paul is already getting to grips with his task and introducing himself to those with an interest in the commission’s work.
The hon. Member for Arfon referred to the two independent members, and they are very distinguished. Dyfrig John CBE is chairman of the Principality building society and a former deputy chairman and chief executive of HSBC bank. Professor Noel Lloyd CBE is a former vice-chancellor and principal of Aberystwyth university. Neither is on the commission with a political remit. They are there as independent members to offer their best advice and to support the other members. I am sure that absolutely nothing from them will have a political bias. They will consider matters objectively and with expertise.
There are also four party political nominees on the commission, each nominated by one of the four political parties in the Assembly. Professor Nick Bourne is the Conservative nominee, and former leader of the Welsh Conservatives in the Assembly; Sue Essex is the Labour nominee, and a former Welsh Assembly Government Minister; Rob Humphreys is the Welsh Liberal Democrat nominee, and director of the Open university in Wales; and Dr Eurfyl ap Gwilym is the Plaid Cymru nominee, and best known for giving Jeremy Paxman a run for his money. I am sure that the commission’s debates will be lively. I believe that that is a first-class team, and it will meet for the first time tomorrow to consider how it will work through the next two years. The commission has a challenging brief because, importantly, we hope that it will build consensus on its proposals.
Mrs Gillan
I will give way first to the hon. Member for Carmarthen East and Dinefwr—I have not given way to him previously—and then to my hon. Friend.
Jonathan Edwards
Based on what the Secretary of State says about consensus, which we hope the commission will be able to achieve, will she outline the process, how its recommendations will reach the statute book, and the time frame? No one in Wales is interested in a kicking-into-the-long-grass game.
Mrs Gillan
It depresses me a great deal to hear hon. Members say that I am kicking the matter into the long grass. I am certainly not. I am trying to take a mature and adult look at the financial structures and the constitutional and legislative structures affecting Wales. However, I will not prejudge the outcome, and I will not be prescriptive, but I have to look at potential timetables. Three have been set out. One has a shorter time scale, which assumes that, whatever the recommendations, no manifesto commitments or referendum would be necessary. In fact, it would be very difficult to produce a Bill by the time of the next general election, and the time scale could be unfeasibly short. However, again, I am not ruling that out; I am simply saying that it would be difficult. If we did that, and if there were new fiscal and constitutional powers, they would be implemented post-2015.
Another scenario is based on a manifesto commitment and no referendum, which would lead us to believe that there would be legislation after the next general election. However, I do not know what the Silk commission will recommend, or whether it will require both manifesto commitments and a referendum, in which case the time scale would be slightly longer.
I would like the hon. Gentleman to take me at my word. We are taking a long, hard look at the matter in a genuinely cross-party way. I think he knows that I made some effort to ensure that his party was included, because I thought it was important to start as we mean to go on. I hope that we will continue in that vein, although I appreciate that anything could happen at any time.
Mrs Gillan
My hon. Friend can reassure his constituents that no member of the commission is being remunerated. They have all agreed to waive remuneration, but their expenses will be met from my Department. We have set aside a sum of money over three years to meet those expenses. At this stage, we are not sure how they will pan out, because I want the commission to decide how it will do its work, as it rightly should, and I do not want it to be restricted. He can reassure his constituents that the commission is doing this work for its love of Wales.
Jenny Willott (Cardiff Central) (LD)
I apologise for my voice being about an octave lower than normal. This is not a point I often make, but there is only one woman on the commission. Will the Secretary of State assure the House that it will take evidence from and talk to a wide range of people to obtain a broad range of views from both genders and across all communities in Wales, including different ethnic minority groups, so that it can take account of different perspectives?
Mrs Gillan
That point was well made. I, too, was concerned, and I looked at the gender balance, having been a former Minister for women. I think Sue Essex will be a doughty and robust member—[Interruption.] As my hon. Friend the Member for Lichfield (Michael Fabricant) says, she is equal to two men. I am sure she will give us a run for our money.
I agree entirely that many of the matters that the commission will discuss will be of great interest not only to women, but to ethnic minorities. I am sure that Paul Silk will take on board the concerns of my hon. Friend the Member for Cardiff Central (Jenny Willott).
We now have 12 years of experience of devolution in Wales. That has involved not one but two pieces of legislation that have been used to try to shape devolution to the purposes of the previous Government. There is obviously much that could be said about the effectiveness of the Assembly and the Welsh Government, but that can be better examined and tested with more accountability and the benefit of that experience.
The Government are now trying to ensure that we have a process to assess the position of Wales within the United Kingdom and to take a detailed, objective and structured examination of the architecture of devolution. This is a mature way to ensure that the Assembly and the Welsh Government get the responsibility they need to ensure accountability, and that the dividing lines on devolution benefit Wales and do not leave the Administration perpetually demanding more powers and more money rather than getting on with the business of running the devolved areas for which they have responsibility.
This is also an important statement of intent by the coalition Government. The Welsh Government receive nearly £15 billion a year from the Treasury, but, as I have said, are not accountable for raising a penny they spend. We do not think that is right, and I am certain that taxpayers do not think it is right either. I want the argument, for once, to move away from whether there is enough money to how it is spent and whether it is spent effectively. It is true to say that a Government who take from Peter and give to Paul can always rely on the support of Paul. We are asking the commission to see whether Paul can also make a contribution.
I look forward to hearing Members’ contributions and maintaining an open mind on how we can improve devolution and, through that, the economy of Wales and the well-being of its people. I hope that we will hear moderate, realistic and interesting views on the balance of powers between Westminster and Cardiff. I am sure that everyone in this House will send Paul Silk and the members of the Silk commission their best wishes for the task ahead.
Mr Peter Hain (Neath) (Lab)
Let me begin, Mr Deputy Speaker, by welcoming the fact that we have a Welshman in the Chair for this debate—a Swansea boy who is, I am sure, delighted that Swansea City is in the premiership playing some very good football this season.
Just for the record, I cannot let the Secretary of State continue to repeat the fiction that when she arrived at the Wales Office in Gwydyr house in early May, the cupboard was bare and nothing had been done about the referendum. She knows that that is not the case. She will also know that a couple of days before she went up the stairs at Gwydyr house to occupy the office, I had sought confirmation that we could have delivered the referendum by the autumn, if we really had to; it would have been a tight squeeze, to repeat the phrase used. Let us hear no more nonsense from her about that, or about the housing legislative competence order. As my hon. Friend the Member for Caerphilly (Mr David) reminded her, the housing LCO was ready for Royal Assent, and she sabotaged it; the Conservative party refused to carry it through. She knows that that is true, so I am surprised that she is continuing to say these things.
Mr Hain
I am happy to take an intervention a little later.
I am intrigued by accountability; that is why I picked up the Secretary of State on that issue in The Western Mail. I am glad that she reads The Western Mail, and my comments in it, assiduously. It is not for the Secretary of State for Wales to decide in which way the Welsh Government or the Welsh Assembly should be accountable to the people of Wales. The Welsh Assembly is elected by the people of Wales; she is not elected by anybody in Wales. That is the true line of accountability that operates.
Mrs Gillan
All I can say is that, as my hon. Friend the Under-Secretary once remarked, I am a Welshwoman born in Wales and therefore have a great interest in the land of my birth.
I read the right hon. Gentleman’s article in The Western Mail very carefully, and one of the things I objected to was his fear-mongering among the people of Wales. He gives the impression that we would halve public spending in Wales, and that is absolutely not the case. He should be ashamed of even suggesting that and frightening people in Wales in that way. He knows that this is an open consultation to see how we can do things better. Any fool can spend money, but those who spend money need to have some responsibility for raising it so that they can spend it rightly.
Mr Hain
My, my—the Secretary of State sounds rather furious. I seem to have touched a sensitive spot. I shall deal with this point later.
We welcome the establishment of the Silk commission, which, as the Secretary of State said, has been established on an all-party basis. The Welsh Assembly, which is well over a decade old, is now truly embedded into Welsh civic society, so there may be a case for looking at increasing its financial powers and flexibility. As the First Minister, Carwyn Jones, has indicated, devolving stamp duty, aggregates tax and new borrowing could be advantageous to the Welsh Government and, indeed, to the people of Wales.
I agree that Paul Silk is a very good choice for this task—a distinguished Clerk in this House before he became the first, and even more distinguished, Clerk of the Assembly. I welcome what the Secretary of State has said about wanting to go forward on a consensual basis. It is important that any Bill emerging from the work of the Silk commission is born out of consultation and consensus, unlike the Parliamentary Voting System and Constituencies Bill or the Fixed-term Parliaments Bill, which were forced on Parliament with little or no engagement with Opposition parties, the public or interested groups and experts.
Mrs Gillan
May I put the record straight? As the right hon. Gentleman knows, I gave every Welsh MP the opportunity to meet the relevant Minister on an open-ended basis. The PVSC Bill was debated on the Floor of the House for 53 hours and 40 minutes; there were plenty of opportunities for Members to contribute.
Mr Hain
Let me say this to the Secretary of State: when in a hole, stop digging. She knows that she denied Members the opportunity of a Welsh Grand Committee debate, which was requested by my right hon. Friend the Member for Torfaen (Paul Murphy) and by the leader of Plaid Cymru, the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd). Every member of the Welsh Labour group and other Members wanted that debate as well, because Wales is being savagely penalised by this Bill, on which there was no consultation at all.
Mrs Eleanor Laing (Epping Forest) (Con)
I speak as someone who was here in this Chamber for most, if not all of the 54 hours on the Bill that the Secretary of State mentioned. Does the shadow Secretary of State accept that that Bill, in changing the parliamentary boundaries, affects not only Wales but the whole of the United Kingdom, and that matters that affect the whole of the United Kingdom, including Wales, have to be dealt with in this House?
Mr Hain
Of course it had to be dealt with in this House, but the impact on Wales received virtually no debate. There is clearly a lot of sensitivity among Conservative Members on this matter, and I am not surprised. The Secretary of State rejected the request for a Welsh Grand Committee to discuss the fact that Wales is suffering a cut of 25%—a quarter—of our representation, which will affect a lot of parties and communities in Wales. That was never debated properly.
May I make one other point—
Mr Hain
If I am allowed to finish my response to the hon. Member for Epping Forest (Mrs Laing).
My other point is that such constitutional matters, particularly parliamentary boundaries, have traditionally always been dealt with on a consensual basis. This is the first time that a politically partisan rigging of the parliamentary boundaries has been introduced in this House and forced through.
Huw Irranca-Davies
This is very pertinent in learning the lessons in terms of how the Silk commission operates. We cannot have a debate when none of the voices are heard. The Secretary of State has said that she wants these voices to figure as part of the work of the commission, but that did not happen in the boundaries review. None of the Welsh concerns was heard and none was acted on; it was a travesty of democracy.
Mr Deputy Speaker (Mr Nigel Evans)
Order. As was intimated by the intervention by Huw Irranca-Davies, we are now straying off the subject of the Silk commission, so could we get back on to that, please?
Mr Hain
Indeed, Mr Deputy Speaker, I am happy to, and I will not be led astray any more by interventions from the Conservative Benches.
The Labour Government, recognising the call from the majority within the Scottish Parliament, commissioned the Calman report, to instigate a serious and thorough analysis of how a new settlement in Scotland might be achieved. Crucially, it was based upon cross-party consensus, expert analysis and real engagement with the Scottish public. It is fundamentally important that this Government adopt a similar approach to Wales. I am encouraged by what the Secretary of State said in that respect, but in truth I am deeply suspicious of the real Tory agenda that lies behind the Silk commission.
The commission’s terms of reference state that any devolution of powers must be
“consistent with the United Kingdom’s fiscal objectives”.
Can the Secretary of State explain what is meant by that? I wonder whether, in drawing up the terms of reference, the Chancellor, the Secretary of State and others were thinking of Switzerland, which has a highly federalised and separate tax system in its various cantons, and which demonstrates how such a system can lead to lower public expenditure—not a model that we desire or will accept for Wales. Silk must not become an excuse for this right-wing Government to offload their financial obligations to lower-income parts of the UK, such as Wales.
Geraint Davies
Does my right hon. Friend accept that given that gross value added in Wales is 74% of the UK average, and that we therefore have a lower tax base to tax from, if an equivalent to the Scotland Bill passed 10 points of marginal taxation over to Wales, we would end up raising only 74% of the money possible? We could end up with 20p taxpayers contributing only 17.5p in the pound. That may be one of many methods used to reduce the amount of public expenditure in Wales, but the Government could say, “Oh, don’t worry, you’ve got tax-raising powers. You’ll be all right.”
Mrs Gillan
The right hon. Gentleman asked me a direct question, and I will give him a direct answer. Devolved funding rules, as set out in the statement of funding policy, operate within the UK’s fiscal framework. We therefore expect any changes that come out of the commission’s work or intergovernmental talks to be consistent with that framework, for example as set out in the programme for government. As he knows, that is because macro-economic policy is a reserved matter for the UK.
Mr Hain
I am grateful. The Secretary of State is confirming, then—I am not challenging her on this point—that should there be a derogation in the case of, for instance, stamp duty, that would be taken from the Welsh funding block. That is what I understand her reply to mean.
My second element of disappointment is that the Silk commission will not consider the Holtham commission’s proposals for funding reform in Wales. It was the previous Labour Welsh Government who established the Holtham commission, and it produced conclusive evidence that Wales is now underfunded compared with its needs. As I think both Government parties here in Westminster now acknowledge, it was either naive or cynical of them to promise in their manifestos swift and radical reform of the Barnett formula—a promise that they had to betray after just one week in government.
We are aware that Holtham does not offer a quick solution, and that there would be impacts on the other devolved nations and regions. The introduction of a Barnett floor, which was a Labour manifesto commitment and a proposition featured in the Holtham commission’s two reports, would have ensured that Wales’s position did not become worse. Why have the Government not considered introducing a floor similar to the one that we proposed, which was agreed with the Treasury? It could be implemented relatively straightforwardly, again with the agreement of the Treasury.
The green budget published last year by the Institute for Fiscal Studies entirely vindicated Labour’s approach to the funding of Wales. By showing that the Barnett formula is only now beginning to disadvantage Wales for the first time, it proved that we were right to stick with it until last year, and equally right to proceed with reforming it thereafter. Make no mistake, up until that point the Barnett formula had served Wales well. There is no doubt that had we ripped it up several decades ago, as the nationalists advocated, Wales would have lost out. The collapse of the banks and the scale of the financial crisis suffered by Iceland and Ireland have been devastating to the nationalists’ arguments for fiscal autonomy.
Mr Llwyd
I take it that the right hon. Gentleman read the deliberations of the Holtham commission. If so, he will have seen that Gerry Holtham opined that the year-on-year underfunding of Wales went back quite a few years. It is absolute revisionism to suggest that it goes back just to the last year of the Labour Government.
Mr Hain
If the right hon. Gentleman looks at the whole Holtham commission report, he will notice that spending was converging with the English average and coming towards the point that it reached last year, when it started seriously to disadvantage Wales. That was the point I was making.
Huw Irranca-Davies
To the best of my knowledge, the Holtham report did not mention the fact that in successive years of the Labour Administration, it was vital that we recognised Wales’s particular needs through the Barnett-plus funding settlements, which increased funding for Wales from some £7 billion to something in excess of £14 billion—way above Barnett. That reflects how the Labour Government ensured that Wales had the proper funds to do the work we needed to do.
Alun Cairns
The right hon. Gentleman underlines the fact that the Welsh budget doubled in that period, but will he recognise that Holtham also reported that in a period of spending constraint and public spending reduction, the Barnett formula protects the Welsh budget?
Mr Hain
I accept the hon. Gentleman’s point to the extent that Holtham did recognise that when there is a period of spending restraint, or even cuts, underfunding and funding convergence do not happen to the same degree. However, I am not sure what the hon. Gentleman is arguing. Is he saying that spending cuts and restraint have a good impact on Wales?
Roger Williams (Brecon and Radnorshire) (LD)
Does the right hon. Gentleman agree that reform of the Barnett formula is about not just Wales but Scotland as well? Of course, circumstances are very different in Scotland, and trying to reform the formula when there is a contracting economy would be very difficult for Scotland.
Mr Hain
We are talking about Wales, but I think most people, including the Scots, would concede that Scotland has done pretty well out of the formula compared with Wales. Wales is now losing out under it.
As the Barnett formula reaches the end of its life, now is the time to act. In refusing to address the convergence problem that is now occurring, the Government are penalising and disadvantaging Wales. We always acted responsibly and in the interests of Wales, and we are the only party with a deliverable and fair funding plan for Wales. Silk cannot be used to let the Government off the hook on Barnett. Although we are open to the idea of Wales raising some of the money that it spends—perhaps, as the First Minister has indicated, through stamp duty and aggregates tax—that must not be at the expense of the needs-based settlement that is vital for Wales.
Jonathan Edwards
As the right hon. Gentleman knows full well, the issue of Barnett will now be dealt with through discussions between the Welsh Government and the UK Government. Rather than try to undermine the Silk commission, would he not be better off turning his guns on the First Minister so that he gets his act together?
Mr Hain
I will make a bit of progress, then I will happily take interventions.
Holtham calculated that approximately £17.1 billion of tax revenue is raised in Wales every year. Total public spending in Wales is about £33.5 billion—almost twice the amount raised. We should not be ashamed or embarrassed by that. Wales’s needs are greater than those of other parts of the UK. We have a history of relatively high levels of ill health, caused by our industrial legacy of mining and heavy industry. Also, we suffered the cataclysmic shock of sudden and mass unemployment, with the wholesale pit and traditional industry closures in the 1980s, which left high levels of economic inactivity and, because the then Tory Government did not drive investment to create new industrial sectors, relatively lower levels of business activity. That is why we should look before we leap. The so-called devolution-max or independence-light settlement advocated by the nationalists —and, I suspect, tempting to the Tories—could be disastrous for Wales.
Jonathan Edwards
The shadow Secretary of State is quoting figures from the Holtham commission, but that commission reported that the revenue raised in Wales by UK-wide taxes was £17.1 billion and that UK expenditure was £25 billion, not the £33 billion that he has been quoting in the press today.
Alun Cairns
I am not sure whether the right hon. Gentleman has a brass neck or simply selective hearing or a selective memory. Does he not recall that Wales, in the 1980s, was not the poorest part of the UK, and that, in spite of Labour Governments in Cardiff Bay and a Labour Government in Westminster, Wales is now the poorest part of the UK?
Mr Hain
I am astonished that a Member of Parliament for a Welsh seat is trying to defend the Government’s impact on Wales in the 1980s. As a result of Tory policies, there was mass unemployment and people were smuggled on to incapacity benefit to disguise the unemployment figures and left there—a whole generation of young people—never to work again. I am astonished that he is trying to defend that.
Geraint Davies
I have figures from the House of Commons Library on the difference between expenditure and revenue showing net contributions of £14.6 billion in Wales and £14.3 billion in Scotland. Does that not demonstrate that independence for Scotland and Wales would only result in an impoverished Scotland and Wales? We need a fair system based on needs.
Mr Hain
That is exactly what I have been arguing.
Under devolution-max, as we understand it from the Scottish model, Wales would be responsible for raising all its own revenue, but we simply could not do it. It would be impossible suddenly to halve public spending in Wales. With devo-max, income tax and other taxes would literally have to double overnight just to maintain current spending levels, which is clearly a preposterous scenario—if ever implemented, it would have a devastating impact upon the Welsh economy and people’s way of life. However, I can see how it would be an attractive solution to some Tory stockbrokers in the south-east—people in Chesham and Amersham, for example—because it could mean massive tax cuts for them. Devo-max is yet another example of shared interests by the Conservatives and nationalists. It is no wonder that Plaid Cymru is so reluctant to criticise the Government, preferring to focus all its fire on Labour, as has happened in the past few minutes. They have much in common, which explains why they have consistently refused to rule out a coalition in Wales.
We should celebrate both the successes of devolution and the economic, social, cultural and political ties that bind us together—they are probably stronger now than ever before—but devo-max, or independence-light, is not the answer to the economic problems that Wales still confronts. Labour’s vision is of a Britain in which the stronger, richer parts support the weaker, poorer parts—a Britain fairer, more just and more equal, not an unfair, unjust, unequal Britain where the weakest go to the wall. I hope that the Silk commission will take close account of that important principle.
Mr Hain
If that nonsense is true, why did we have record employment under our Labour Government, why were there more jobs in Wales than ever before in our history under our Labour Government and why were there higher levels of business activity under our Labour Government? We had a record of economic success before the global financial crisis that was second to none. I am astonished that the hon. Gentleman is seeking to dispute that.
Alun Michael (Cardiff South and Penarth) (Lab/Co-op)
Does my right hon. Friend agree that it is amazing to hear Government Members trying to rewrite the history of the ’80s? Many of us entered the House because of the experience of seeing young people abandoned by a Conservative Government and their economic policies so that they were unable to make their way in the world.
Mr Hain
My right hon. Friend makes a powerful point with great passion precisely because he was one of the people who entered Parliament to fight for the rights of young Welsh citizens who were denied by that callous Conservative Government.
I hope that the Silk commission will take account of the principles of fairness and justice in its deliberations. Some resources from the south-east of England are, and in future should still be, redistributed to Wales, the north-east of England and other areas of England with lower levels of economic activity and prosperity in order to help everywhere in Britain to become economically more sustainable. However, I remain suspicious that this right-wing Government do not share this vision for Britain and may exploit the Silk commission for their own ulterior motives.
Compared with Scotland, there is a much more significant amount of commuting across our border with England, as pointed out earlier by my right hon. Friend the Member for Delyn (Mr Hanson). Traffic flows across the Wales-England border are substantial. North-east Wales is highly integrated into the economy of Merseyside and north-west England, while in south Wales the bulk of traffic movement is focused along the M4 corridor. About 80,000 people live in Wales but work outside Wales in the UK, and about 50,000 people work in Wales but live in the UK outside Wales. This gives a total of about 130,000 people who travel across the border to work every day. A little over half of this cross-border traffic is accounted for by people commuting in and out of north Wales. Despite Scotland’s much larger population, the number of commuters crossing its border is roughly one third of the number commuting in and out of Wales.
More than 1.4 million people in Wales—nearly half its total population—live within 25 miles of the border with England, and nearly 5 million people in England live within 25 miles of the border with Wales. In aggregate, 30% of the population of Wales and England—nearly one third, or more than 16 million people—live within 50 miles of the border between the two countries. In contrast, the number of people living close to the Scotland-England border is much smaller. Only 5% of the combined population of Scotland and England—just one sixth of the equivalent for Wales, or about 3 million people—live within 50 miles of the border between those countries. Given that the Welsh economy is much more closely bound into the economy of England than is the Scottish economy, the potential for economic distortions and tax avoidance as a result of tax devolution is of greater concern in Wales than in Scotland, which is why the Calman agenda cannot simply be transposed wholesale on to Wales. We would like a clearer indication from the Government of how they intend to deal with these crucial cross-border issues, and I hope that the Silk commission will address them.
Something else is not within remit of the Silk commission, however, but the issue is much bigger than the Barnett formula or tinkering with the constitution—it has felt like the elephant in the room during today’s debate. There is a serious jobs crisis in Wales, and the Government need to wake up urgently to that. For example, Tata Steel employs 20,000 people in the UK, of whom 8,000 are in Wales, in overwhelmingly highly skilled, well-paid jobs, with three to four times that number of dependent jobs in the economy outside. In Wales, that means perhaps 25,000 or more jobs. Last week, MPs were briefed by Tata’s European chief executive. He did not mention corporation or any other tax, which the Silk commission is considering. Instead, his overriding criticisms of Government policy, which he worried was threatening the future of steel manufacturing in the UK—at Port Talbot, for example—were very different. He said that the Government had to act on raising demand for UK steel through infrastructure investment—in other words, through more growth and jobs. He also argued that energy costs were far too high—fully half as high again as in France. What are the Government going to do about that? Nothing.
David T. C. Davies
I had similar representations from Tata. The company is clearly worried about energy costs rising as a result of environmental taxes, which are being implemented because of a perception of increased temperatures, which do not seem to be increasing at the moment. Does the right hon. Gentleman think it is time to look at the issue again?
Mr Hain
I know that the hon. Gentleman has a reactionary view on the climate change agenda—perhaps that is reflected in his question—but the briefing that we had from the European chief of Tata Steel was clear. He said that it was overwhelmingly the lack of Government support and investment in the economy—and the demand for steel that comes from that—that was hitting his industry so badly, along with energy prices, thereby risking future investment. Incidentally, the hon. Gentleman’s question also gives me the opportunity to remind him that although he celebrated the county of Monmouthshire’s no vote, the fact is that 49.36% voted yes, while 50.64% voted no. That does not seem to be a massive rejection of devolution in Monmouth.
Huw Irranca-Davies
Will my right hon. Friend confirm from the discussions with Tata Steel and others that they are not opposed to environmental taxes per se? They are opposed to the Government’s inept handling of taxes such as the CRC, or carbon reduction commitment, and the carbon floor price, which are rightly perceived not as stealth taxes—there is nothing stealthy about them—but as a deliberate blow to our energy-intensive users. What they are saying to the Government is: “When you’re dealing with taxation issues”—as the Silk commission is—“you should do it with industry, not tell industry what’s happened to it after the event.”
Mr Hain
My hon. Friend, who has expertise in this matter from his previous shadow ministerial job, makes a valid point. Indeed, Tata Steel also talked to us about the carbon price element that is threatening the future of its industry in areas such as Llanwern and Port Talbot.
Mrs Gillan
The right hon. Gentleman will therefore be greatly reassured to know that I was at Tata Steel for our business advisory group meeting at the end of last month, where I had long discussions. I am sure that he would not want to cause any anxiety to the work force. I was pleased to hear that long-term investments continue to be made by Tata Steel and that it welcomes its good relationships and exchanges with my colleagues in the Cabinet on matters pertaining to the success of that business.
Mr Hain
I am glad that the Secretary of State had that conversation, but all I can do is report to the House—and it is important that she hears it too—what the European chief of Tata Steel told a group of Members who met him last week, which is as I have described it. He was not concerned about any of the issues to do with the Silk commission, as we are in this debate. It is important for the Government to recognise that they should not ignore the economic realities and flirt with tax devolution—by, for example, devolving corporation tax—when that is not even on Tata’s agenda.
As for investment, Tata Steel’s European chief pointed out that the new and welcome investment at Port Talbot might not have been made had he been aware of the climate now affecting the company as a result of the Government’s incompetence, which is damaging steel production. Instead of addressing that, the Government are, through the Silk commission, considering matters such as devolving corporation tax.
A review undertaken in 2007 by Sir David Varney for the Treasury pointed to academic research that suggested that only about half the impact of a corporation tax cut was usually recovered through increased growth and investment. The question is: would lowering corporation tax in Wales to, say, the Irish level—if the Silk commission is to consider that—generate enough extra tax, including income tax, to compensate for the £400 million or so that is likely to be lopped off the Welsh block grant to comply with European Union state aid rules and compensate the Treasury for lost revenue?
The Secretary of State for Northern Ireland is an enthusiast for devolving corporation tax. Nevertheless, he told me that he thought it would take at least 15 years for the Northern Ireland economy to generate the growth and jobs that he anticipated from halving corporation tax, as is planned there, that would be sufficient to produce an equivalent income to compensate for the loss to the Northern Ireland block grant. What Welsh Government would choose to lose around £400 million now and each year for the best part of two decades in the hope—and only the hope—that extra inward investment and business activity would eventually make up the shortfall?
Mr Hanson
To return to the cross-border issue, in the event of the Silk commission determining that corporation tax could be varied, would not the north-west of England then make the same demands on the Treasury for varying powers for its region? The point that my right hon. Friend should emphasise to the Secretary of State is that the Silk commission should look at the consequences of those variations for both Wales and the English side of the border.
Mr Hain
My right hon. Friend makes a powerful point that I hope the Silk commission will take account of.
It is simply no answer to offload tax-raising powers to Wales that will at best have a marginal impact and at worst—because of the compensating cuts in the Welsh budget—worsen the prospects for jobs, business and infrastructure investment in Wales. Meanwhile, in the real world, unemployment in Wales is rocketing. Six people are chasing every vacancy—many more in some areas of Wales—and the Government have no plan to deal with the problem. Unless they change course, it will get worse and worse.
Mr Hain
Absolutely. I have had many discussions with businesses in Wales that have been severely damaged—some have even been threatened with extinction and bankruptcy—as a result of public spending cuts, because they depend for their activities, whether they be providing services, procurement or whatever, on the public purse.
By all means consider the Silk commission agenda, but unless the Government change course, things will get worse and worse for Wales. It is the most vicious of circles: fewer working means fewer people paying taxes, which means less money to pay off the deficit. As Wales gets poorer, how can it be expected to raise its own money through taxes, as the Secretary of State would like, if the revenue coming in is being cut? There are serious questions for the Silk commission to consider, because the Government’s cuts are choking off growth, and tax revenue in Wales is diminishing substantially. I do not want the Welsh budget to be cut because of what might be deemed to be the gap in the revenue going to the Treasury arising from devolving taxes—which might happen as a result of the Silk commission—only to find that those taxes do not make up that gap.
Huw Irranca-Davies
My right hon. Friend is generous in giving way again. May I urge him to advocate from the Dispatch Box a tax change that we can introduce right now, namely a national insurance tax holiday for small businesses? That would encourage far more people to take on more employees, including women, who are significantly disadvantaged at the moment. We do not have to wait for the Silk commission; the Government should adopt our five-point plan right now.
Mr Hain
I completely agree, and I have been urging that on the Secretary of State in this debate. Cutting VAT to 5% for businesses involved in home maintenance and repairs could revitalise a building industry that is on its back in Wales. That should be the priority for the Secretary of State.
Families across Wales are struggling with rocketing food prices and electricity, oil and gas bills, and are worried about their jobs and their children’s futures. Far from our economy being a safe haven, our recovery was choked off last autumn, well before the eurozone crisis. Our economy has stagnated for over a year now. However, there is a better way. We need a plan for jobs and growth to get the Welsh economy moving again and help get the deficit down in a steadier and more balanced way. That is what the Secretary of State should be focusing on for Wales, not simply the Silk commission’s tax and powers agenda.
Jessica Morden (Newport East) (Lab)
My right hon. Friend has been generous in giving way, and I agree with him wholeheartedly. What my constituents want more than anything is for the Government urgently to come up with a jobs and growth strategy, which is currently missing. Does he agree that the establishment of the Silk commission, although a great thing in the long run, should not deflect from the urgency of the current situation?
Mr Hain
I completely agree; I could not have put it better myself. I hope that the Silk commission will consider the context in which it is operating, and that, if it does advocate some tax devolution, which I think would be sensible in some respects, it will consider the wider picture and the impact of the lost revenue, indirectly, to the Welsh budget.
Mr Hain
I want to make some progress, if my hon. Friend does not mind. If there is time at the end, I will certainly give way to him.
Labour has set out a clear five-point plan to create jobs, to help struggling families and to support small businesses in Wales. Our jobs plan includes tax breaks for small businesses taking on extra workers, a temporary VAT cut that would give families a boost of around £450 a year, and a tax on bank bonuses to fund jobs and training for young people. I urge the right hon. Lady’s Government to implement it, alongside the work of the Silk commission. If the Chancellor were to come to the House with such a plan for growth, we would support him.
Thanks to devolution, Wales is showing that there is an alternative. The Welsh jobs fund will provide 4,000 job and training opportunities for 16 to 25-year-olds each year, along with an extra 500 police community support officers for safer communities, and support for Welsh students so that they do not have to pay higher tuition fees. Labour First Minister, Carwyn Jones, is proving that, although cuts are unavoidable, they do not have to be allied to the chaos of a privatisation plan for the NHS, or to a plan to close down opportunities in our universities, or, with the greatest hypocrisy of all, to the simultaneous devaluation of vocational education while making it even harder for young people leaving school to get a job.
Guto Bebb
Was it not rather unreasonable of the right hon. Gentleman to say what he did about the health service in Wales, given that the National Assembly is cutting health expenditure in Wales while those cuts are not happening in England? My constituents are very aware that the Betsi Cadwaladr health trust is facing serious financial difficulties, not as a result of changes in Westminster but as a direct consequence of choices made by the Labour Government in Cardiff.
Mr Hain
Labour’s Government in Wales are not adopting a back-door privatisation plan for the health service in Wales, thank goodness—unlike what is happening in England. In addition, did the hon. Gentleman not see the important report in the media recently that leading health officials and clinicians are now stating conclusively that the health service in England is being cut as a result of his Government’s policies? All services in Wales are having to be reduced—of course they are—but why does he think that is happening? It is a result of the programme of cuts by the Government whom he supports.
Of course our Labour Government in the Welsh Assembly cannot insulate Wales from this Government’s damaging policies. But they can show that, for schools, for hospitals, and for jobs and skills, even in the toughest of times, there is and always will be an alternative to this right-wing Westminster agenda. It was wrong to say that there was no alternative to Margaret Thatcher’s destructive policies in the 1980s. That was paid for by hundreds of thousands of people across Wales in lost jobs, futures and, yes, even lives as that Government systematically undermined the national health service.
In Wales, thanks to devolution, we can protect ourselves just a little from the consequences of Tory-Liberalism. It is not full protection—it never could be—but it makes a real difference, a Labour difference, because the people of Wales voted for the only party committed to standing up for Wales: the Labour party. Wales is an example to the rest of the United Kingdom of devolution working as it should do. We have in Wales a new devolution generation led by Carwyn Jones. That new generation are not devo-sceptics or nationalists, but devo-realists who are at ease with devolution and who recognise the benefits of empowering people.
The strength of Welsh devolution is a testament to Labour’s achievements in office. We should not forget that the Prime Minister and the Secretary of State tried to prevent it from happening. They both stood on an anti-devolution platform as Tory party candidates in 1997. They both voted against the Government of Wales Act 2006, which I brought in as Secretary of State, and which delivered the full law-making powers now enjoyed by the Assembly. Now, in 2011, we will not allow them to use the Silk commission to diminish the devolution project, or to cut Wales adrift to appease the little Englanders on their own Benches. We will give the Silk commission a cautious welcome, but we are suspicious of the Government’s motives, as are the more than 130,000 people in Wales who are now out of work, and who are desperate for the Secretary of State to focus on jobs and growth, not on contriving devices to abandon her responsibilities in Wales.
For us, devolution has always been a means to an end. Labour has never fought elections solely on the issue of constitutional change. That would be a diversion from the real task, which at this moment requires above all taking a stand on the side of the people in the face of the most reactionary Government since the 1920s. Our vision for Wales does not involve a defence of the status quo. Our stance is one of modernisation and progress, even as we face the most difficult of policies inflicted on us by this Government. We urge the Silk commission to join us in standing up for Wales, and not to be seduced by this Government’s real agenda of hiving off their obligations to Wales.
David T. C. Davies (Monmouth) (Con)
It is always a pleasure to be here on a Thursday discussing Wales. Unlike some Members, I shall not be offering a welcome, cautious or otherwise, to the Silk commission. I have no doubts about the motives or the knowledge of any of those taking part in it, some of whom are well known to me, but I feel that we could save ourselves a lot of time and money by doing away with the commission and getting on with what we all know is going to happen. We know that the commission is going to spend until the summer of 2012 looking into the granting of fiscal powers to the Welsh Assembly. I suspect that all sorts of things will appear in the newspapers and on BBC Wales, and that there will be a debate or two. The usual faces of the great and the good in Wales will be wheeled out in support of all of this, and there will be public meetings on wet weekday evenings in various parts of Wales, to which a small representative sample of the public who all like the idea of giving further powers to the Assembly will turn up. At the end of it all, we will be told that the vast majority of people who responded were in favour of giving further powers to the Assembly, and those further powers will be given. Then phase 2 will begin, in which, I see from the report, we will consider “varying” the powers of the Assembly. Well, we all know what that actually means. It means increasing the powers.
Hywel Williams
The hon. Gentleman seems to be taking a rather “conspiratorial” view of these developments in Welsh politics. Does he think that the referendum, too, was a conspiracy?
David T. C. Davies
It is not a conspiratorial view; it is a view based on the history of what has been going on. We seem to be locked in a kind of constitutional groundhog day, with the same sequence of political events repeating itself over and over again. The process starts with the Welsh Assembly being granted a whole load of powers and saying, “That’s it, we’ve got all the tools we need for our toolkit.” That seems to be the popular term at the moment. “We’ve got everything we need now. We’re just going to get on with the job.” Then, a few years—or, in this case, a few months—later, it says, “Well, actually, we can’t do the job we need to do. We just need a few extra powers.” Then a commission of the great and the good is set up, often with the same people appearing time and again. They go off and consider the matter, public meetings are held, and they come back and say, “Yes, we need a bit more.” Perhaps a referendum is held, or perhaps there is just another Act of Parliament or some statutory instrument. The Assembly gets what it is given and everything goes quiet for a few months. Then the whole thing starts up again. We are in the first phase of the cycle at the moment. This is not a conspiracy; it is just how things have been happening in Wales since about 1999.
I would be delighted if we really were going to consider varying the powers of the Welsh Assembly, because I assume that varying can cut both ways. It could mean that, rather than just handing the Assembly new powers, we could look at taking a few powers away from it, once in a while. I suggested that in a Westminster Hall debate a few years ago, when Wales was doing particularly badly on the health service, but it did not seem to meet with much approval from anyone—certainly not anyone in my political party. The very fact that it had been suggested was a source of outrage to many.
The Welsh Assembly can take powers away from local authorities that are failing in Wales and, quite rightly, it has used them from time to time, so I see no reason why the Silk commission should not look realistically at the possibility of removing powers from the Welsh Assembly in devolved areas if standards have clearly dropped below those that all in the United Kingdom are entitled to expect.
Another area that I suspect the Silk commission will not look into—the right hon. Member for Neath (Mr Hain) mentioned it—is environmental taxes. To my mind, that would be very interesting indeed. As the right hon. Gentleman rightly said, Tata and other manufacturing companies in Wales that use large amounts of electricity are very angry about the way in which the environment has been used as a means to impose all sorts of extra tax burdens. The issue of the environment is worth exploring, but now is not the time or place—[Hon. Members: “Come on.”] It is very tempting, but I see Mr Deputy Speaker imperceptibly shaking his head at me. It is not for me to pose the question of why the temperature has not got any hotter since 1998, despite the fact that large amounts of carbon dioxide have gone into the atmosphere. That is not a question for today, but it is a very interesting one none the less—and I have never heard a satisfactory answer to it.
Let me move on to a more important question. If we accept that things will at some point start getting hotter because of carbon dioxide, requiring us to put all sorts of taxes on our industries, and if Welsh industries such as steel are affected, surely it is only right that those taxes be applied not just across the whole of the European Union or Europe but across the whole world. If we do not insist on that as a starting point, all that will happen is that those manufacturing industries—so important to us in Wales for jobs—will simply relocate to other parts of the world where those taxes are not being applied. It will not make a jot of difference to global carbon emissions, which will continue to come from wherever those factories relocate, but it will make a difference to jobs and the amount of tax that the Treasury collects within the UK. I would love to see the Silk commission looking into that idea, but I am afraid that I shall probably be disappointed.
You might conclude, Mr Deputy Speaker, from what I am saying that I am in some way against devolution—[Hon. Members: “No, never!”] I am not. I am devo-realist. I was against the idea of a Welsh Assembly and I have voted no at every opportunity ever since, but I say genuinely that I have a very high opinion of the abilities of the individual Members of the Welsh Assembly. I had the pleasure of working with them for eight years. I do not doubt their motives. I do not doubt the credibility of people like Rhodri Morgan, Dafydd Elis-Thomas or Nick Bourne, even though I might disagree with them on many fundamental issues.
My problem with what we are doing is very simple. The West Lothian question is the elephant in the room here. Every time we give further powers to the Welsh Assembly, we are weakening the United Kingdom. I believe that even some Labour Members, in their quieter and more reflective moments, share some of these concerns. Surely the priority for us constitutionally should not be thinking about granting further powers to the Welsh Assembly, but ensuring that all citizens of the UK have the same constitutional powers. The issue is about addressing the fact that we here in the Westminster Parliament vote on how the English run their schools, discuss how the English run their hospitals, yet we do not accept the right of anyone, including Members of Parliament, to have any say in how these issues are dealt with in Wales.
Jonathan Edwards
May I take it from the hon. Gentleman’s comments that he is arguing for a fully federal United Kingdom, whereby all the historic nations of the UK are treated on an equal basis?
David T. C. Davies
The hon. Gentleman is right. I have made that view public in the past. I think there is a strong case for looking at some form of English Parliament or some means to prevent Welsh and Scottish MPs from voting on matters that affect only England. I repeat that I have already made that viewpoint public. I do not pretend to know the exact answer, but I am in favour of something along those lines. It might well be that at that point, we would have to consider increasing the powers of the Welsh Assembly in line with those of the other parts of the United Kingdom. The hon. Gentleman will know, however, that that is something that happens in many countries across the world—in Canada, Germany and countries with a Commonwealth tradition such as Australia, for example. If that is thought through properly, it can work. My current difficulty is with the asymmetric nature of our arrangements. Giving further powers to Wales in this way—through the Silk commission if that is what it decides—is going to make them even more asymmetric.
Mark Tami (Alyn and Deeside) (Lab)
Would the hon. Gentleman not accept that in a border area such as mine, people go across the border to use hospitals, for example, so it is quite reasonable for me to be concerned about what is happening to the health service in England, because many people in my area use it?
David T. C. Davies
Of course I agree with the hon. Gentleman. I live on the border as well. Many of my constituents go across the border, but what right do he and I have to tell the English how to run their health service if we are not prepared to accept that English MPs whose constituents might come over into Wales should also have a voice over what happens within the Welsh health service?
Mrs Gillan
No doubt my hon. Friend will therefore give a warm welcome to the statement made on 8 September by the Parliamentary Secretary, Cabinet Office, my hon. Friend the Member for Forest of Dean (Mr Harper), the Minister responsible for political and constitutional reform, announcing our intention of establishing a commission to look into the West Lothian question. I understand that in the not too distant future there will be further statements on the subject, which will of course address the important questions that my hon. Friend is raising today.
David T. C. Davies
I do indeed welcome that statement, and I look forward to participating, but I hope that we do not end up putting the cart before the horse. I hope that we do not all go off in different directions, rather than getting things done in an orderly fashion. The constitution is a very delicate thing, and it needs to be balanced.
Mr Hain
I agree with the hon. Gentleman that the constitution is delicate and needs to be balanced, but is not the answer to his question—the answer to the English question, if you like—that we should remedy the asymmetrical nature of devolution in the United Kingdom by devolving powers to the English regions, not just to the London region, which already has considerable powers? [Interruption.] The Secretary of State mutters from a sedentary position that that has been rejected, and I accept that it was rejected under our Government in the north-east referendum, but I felt at the time that that was a very low-grade form of devolution. One of the things that people told me on the doorsteps in such places as Middlesbrough and Tyneside was that they did not believe in another form of regional government if it did not involve any real powers. If it did involve real powers, however, that would be the answer to the hon. Gentleman’s question.
David T. C. Davies
I suspect that there may be something in what the right hon. Gentleman says. The referendum on powers in the north-east took place quite early in the process, and there is now a much wider understanding of the implications of devolution throughout the United Kingdom. Nevertheless, there is still a problem.
We devolved powers to Wales, Scotland and Northern Ireland on the basis of their historical roles as nations within the United Kingdom. I do not see how we can just come along and artificially create nations within England where nations have not previously existed. I also suspect that this is not a debate that any of us here should be having. It must ultimately be for English MPs to decide for themselves whether they are content to remain representatives in England or would prefer to be representatives in the regions thereof. Let us not forget that there are 6 million people in Scotland, 3 million in Wales and 1.5 million in Northern Ireland. We have not so far devolved powers on the basis of the numbers of people in the countries concerned, and we therefore have no real right to say that because there are 50 million or 55 million people in England, they do not have the right to have a Parliament based on their own historic nation.
Mr David
Does the hon. Gentleman not accept that until now the primary motivation for devolution has been not a recognition of nationhood, but the need to enhance democracy? That is what devolution is ultimately all about. It is not about placating nationalism; it is about enhancing democracy.
David T. C. Davies
There have been several motives for devolution. Nationalists saw it as a stepping stone towards independence—I imagine that they would be fairly honest about that—while others, some of whom are now on the Opposition Benches, were afraid of nationalism, and saw devolution as a way of preventing the nationalist genie from getting out of the bottle. I think that they were mistaken. I fear that some may have taken the narrow political view that Wales would always be dominated by Labour whereas Britain would not necessarily be, and that therefore it would not be a bad idea to carve out little corners of the United Kingdom where Labour could always have an inbuilt majority and a left-wing Government could rule. I dread to think that that is the case, but, being a bit cynical, I suspect that there may be some grounds for believing that it is.
Owen Smith
The hon. Gentleman is, as usual, being generous in giving way. Does he agree that a further crucial aspect of the rationale for devolution in Wales and Scotland was demand, and that that may have been a greater consideration than nationhood? Does he also recognise that, because of a feeling that—for reasons related to distance and divergence in economic performance—people are getting worse deals from the Government in some parts of England than in others, such as the south-east, there may well be a growing demand in some areas for a fresh look at the possibility of English regional devolution?
David T. C. Davies
The answer to the hon. Gentleman’s first question is that despite the enormous amount of money spent on the referendum in 1999, only one in four people went out and voted yes, so the demand could not have been that great. As for his second question about the issues that are bubbling away in the various regions of England, I do not profess to know the answer, and I certainly will not be trying to pose that question. As I said to the right hon. Member for Neath (Mr Hain), the English will have to work out for themselves whether they wish to base a future settlement on England itself or on regions thereof. It is not for us to tell them what to do.
Huw Irranca-Davies
It would be wrong for English MPs alone to discuss, and decide on, such matters. As a UK parliamentarian, I agree that English devolution is the great unanswered question. However, Welsh MPs—along with Scottish and Northern Ireland MPs—will want to have a say in that because it will have a considerable impact on the UK as a whole. I ask the hon. Gentleman to consider this point in his peroration, because we would not want non-England MPs to be shut out from the debate on English devolution. Nor would I want England MPs to be shut out from our debate here today, and it is great that some England MPs are present.
David T. C. Davies
That is a sensible point, but my peroration has become more of a conversation now, and I wish to return to it. I shall think about what the hon. Gentleman has said, however, and I suspect that all of us will want to contribute in various and different ways if and when the England question arises.
The Silk commission is addressing fiscal powers. The leader of Plaid Cymru—I think he is still the leader—said that that could have an historic effect on Wales, by which I assume he means that it will lead to all sorts of extra powers being acquired and Wales heading much further along the road that he wishes to travel down. I am very concerned about the prospect of giving fiscal powers to Wales, however. It is hard to see how we could maintain the integration of the various parts of the United Kingdom if we were all doing different things fiscally. The Silk commission has apparently ruled out borrowing, but I have been told by those in a position to know that it has ruled out only some kinds of borrowing, and anything can be examined. There are certainly ongoing discussions about different kinds of borrowing.
Mrs Gillan
The Silk commission can look at future borrowing, whereas current borrowing is at present the subject of bilateral discussions between the Treasury and the Welsh Government. The Silk commission can look at future borrowing.
David T. C. Davies
I thank my right hon. Friend for that clarification, but what she says will not help me sleep any more easily tonight.
Before this debate started, an urgent question was asked on the Floor of the House about what has been going on in the eurozone area. That is, in fact, fairly simple to understand. There is a central bank and a currency area with all sorts of individual parts within it—we call them nation states still, although Brussels will probably want to change that in a few years—and those individual parts have all been doing their own thing. The Greeks have been borrowing as much as they wanted, and have been spending it on allowing their civil servants to retire at 50 and on buying off strikes. In short, they have been spending it on doing things we would never even consider doing—filling people’s mouths with gold, as Nye Bevan would have put it. As a result, there is now an enormous crisis across the whole area because the taxpayers of Germany are simply not prepared to bail out nations that have been behaving in an irresponsible fashion.
Yet we in the United Kingdom, having escaped the economic servitude of the euro—which many Opposition Members would have liked to put us into—now seem to want to create a situation whereby exactly the same thing could happen on a smaller scale. We have a central bank and Government responsible for interest rates and general financial policy, but there is now a proposal that the constituent parts of the United Kingdom—specifically, in this instance, Wales—should be free to go off and borrow at low interest rates, knowing that ultimately somebody else could pick up the bill.
Jonathan Edwards
Does the hon. Gentleman not recognise that currently local authorities in Wales can borrow and raise their own revenue, so what is the difference?
David T. C. Davies
They can only do so under fairly strict terms of engagement. There is no major difference, but what I am saying is that I do not want any more bodies to be able to do that. I certainly would not welcome the idea of the Assembly doing what Westminster Governments have done before—let us be honest about it—which is wait until a general election is coming along and then suddenly borrow billions of pounds on the international markets knowing that not many people understand the difference between debt and deficit, and are therefore unlikely to be able to work out the probable consequences of what is happening. Governments buy themselves elections in that way. I do not want to put that temptation in front of Members of the Welsh Assembly.
Finally, I am even more concerned about the idea of a separate judicial system for Wales. That would be costly and complex.
Geraint Davies
Before the hon. Gentleman leaves the subject of taxation, on the important issue of inward investment and growth, which various speakers have focused on, does he agree that what business needs to provide inward investment is certainty? If there can be changes in corporation tax, income tax and all sorts of other tax, that will put companies off investing in Wales. The only tax that people want to get rid of is the tax that everybody is charged when they cross the Severn bridge—the Severn bridge toll. That is a real barrier to inward investment and trade. We should get rid of that and forget the rest.
David T. C. Davies
The hon. Gentleman knows perfectly well that getting rid of the Severn bridge toll is impossible, because he and I helped to write the report. It is not a matter of law, but a matter of a commercial contract between four companies that came together to build the bridge under certain agreements. There is nothing that we can do about it. Of course the Welsh Assembly, or even the UK Government, could decide to take on the costs of the Severn bridge if they wanted to. However, the hon. Gentleman knows very well that the Government do not have any money at the moment. We have a £1 trillion debt, most of which we inherited from his colleagues in the previous Government, and we are overspending by £168 billion every year. We are not really in a position suddenly to take on the burden of the Severn crossing.
I do praise the hon. Gentleman, however, because he has said something with which I entirely agree: business needs certainty. Businesses are already annoyed that they have to pay the cost of coming over the Severn bridge. The last thing they want is the potential for a load of extra taxes when they come into Wales, and a lack of certainty over whether those taxes may be applied at a later date if they decide to relocate there. To my mind, that is a very good argument for not devolving the power over such taxes to the Welsh Assembly.
I will finish on my point about the judicial system. The last person to toy around with the judicial arrangements in Wales was Henry VIII. He formed a judicial area for Wales, but people in Monmouthshire were so incensed that they decided to opt out of it and in to the Oxford assizes. That caused confusion all the way through to the local government reorganisation of 1974. Various people passed legislation, and some of it applied to Wales, some to Monmouthshire and some did not apply anywhere. Nobody knew what they were doing. People were driving to Chepstow to get a drink in the pub because the chapels had banned it, or something. It was absolute chaos. The last thing we want is a repeat of that. I say to all Members of the House that Monmouth is an integral part of Wales, Wales is an integral part of the United Kingdom, and for as long as I represent this constituency, long may that remain the case.
Paul Murphy (Torfaen) (Lab)
It is always interesting and a pleasure to follow the hon. Member for Monmouth (David T. C. Davies). I am not a great fan of Henry VIII, for obvious reasons. I agreed with some parts of the hon. Gentleman’s speech and disagreed with others. The thrust of his argument, I think, was that he was not keen on the Silk commission and its activities. I remind him that it was the Secretary of State for Wales who took the responsibility to initiate the commission, as she told us today. Government Members really have to get their act together on what they do and do not want.
I welcome the commission and I certainly welcome its members. I have known Paul Silk for at least a quarter of a century. I know all the other members in one capacity or another. I think that they are excellent people who will doubtless do a very good job. It would have been better, however, if the House of Commons had debated this issue before the commission’s terms of reference had been agreed, so that Members, including me, had the opportunity to contribute the ideas that are put before the House this afternoon.
I warn this House, my colleagues in the National Assembly and, I suppose, the members of the Silk commission that I, like the hon. Member for Monmouth, have some misgivings, warnings and suspicions about what lies behind this initiative. As with the Bible, people have different interpretations. Wars have been fought on interpretations of the Bible, but in this case people have different ideas as to what the Silk commission should or should not do, or as to why it should do it in the first place.
The first point to make is that the Secretary of State mentioned “consensus” at least six times. My right hon. Friend the shadow Secretary of State referred to the fact that there has been no consensus on constitutional issues in this House of Commons since the coalition Government took over. So I find it strange that we are now going to have consensus on this commission, given that we did not have consensus on the most important constitutional development that Wales has seen for generations: the 25% reduction in the number of our Members of Parliament. That is what I am concerned about. How can we accept that the Secretary of State or the Government are serious about consensus given not only that they did not give us time to debate that matter in the Welsh Grand Committee, as she knows we should have done, but when various debates were held in the other place, any sort of so-called consensus fell to bits and the decision was made anyway? Why should we, at this stage, believe that there is consensus on the Silk commission?
Alun Cairns
The right hon. Gentleman makes an extremely important point about consensus and it is a strong message that needs to go to the Silk commission, but is not the original root of all these inconsistencies that we now face the lack of consensus in 1997, when Labour let the genie out of the bottle and we started on the devolution road? I am mixing my metaphors, but I hope that I have made the point.
Paul Murphy
The hon. Gentleman knows that historically I was opposed to devolution—I changed my mind as the years went by—but we had to accept what the people of Wales decided. In 1997, they decided on devolution, albeit by a small majority—we must remember that the Conservative party did not get a majority of Members of Parliament, but we still have a Conservative-led Government—and in the referendum held earlier this year the overwhelming view of people in Wales was that there should be extra powers. It was the people who decided what they wanted in the end, and I agreed with them this time.
I repeat that we do not want to hear about consensus, given that that was abandoned by this Government when they introduced the Bill to reduce the number of our Members of Parliament. For the first time since 1832 we will have fewer than 40 Members of Parliament representing Wales in this House. I am not arguing about the nature of equal constituencies—that is for another debate—but I am saying that the reduction from 40 to 30 in the number of Welsh MPs reduces the influence of Wales within the United Kingdom. I will address that in a few moments’ time.
Part I of the commission’s remit is to deal with money: the financial responsibilities and the remit of the Welsh Assembly. We are told that this is all about accountability, but the hon. Member for Vale of Glamorgan (Alun Cairns) just referred to the devolution settlement of 1997. Such a settlement also took place in Scotland and later in Northern Ireland, where I played a part. In all those settlements that issue of financial accountability was raised, and it was argued by some, “If a parish or community council can raise revenue, why cannot a Government in Edinburgh, Belfast or Cardiff do so?”
When I chaired the talks in Northern Ireland on whether there should be income tax powers in Northern Ireland, the meeting lasted less than an hour. People in Scotland decided that they would have the possibility of tax-varying powers, but those have never been used. We in Wales rejected this from the beginning, and there was a reason for that: the resource base of Wales is much lower than that of Scotland—the resource base of Northern Ireland is even lower than that of Wales—and therefore the amount of money that could be raised by income tax in Wales or Northern Ireland, and, to a certain extent, in Scotland, is infinitesimally smaller than the amount that could be raised in England. This proposal was therefore abandoned.
The idea of how we finance our devolved Administrations, therefore, came down to the idea of the block grant. That system is not unique. The hon. Member for Monmouth (David T. C. Davies) referred to asymmetrical devolution, and that is what occurs in Spain, except that there they have devolution everywhere. They get their money through a system of distribution of block grants and, as my right hon. Friend the Member for Neath (Mr Hain) said, they are able to ensure that there is proper distribution of money so that poorer areas are helped by richer areas such as Catalonia.
Hywel Williams
There is of course the exception in Spain of the Basque country. I am not arguing for us to adopt that model, under which the Basque country is taxed and money is sent down to Madrid, rather than the other way around.
Paul Murphy
Yes; I am talking in general terms and that may well be an exception. A block grant, based on need, going to various parts of the devolved administration is the system that was decided on. That is why we have to be very careful; we tinker with this at our peril.
An issue on which the Secretary of State and I had an exchange back in May was about whether, were there ever to be income tax-raising or varying powers in Wales, we should have a referendum to approve that. She stated in her answer to me:
“He is quite right that giving tax-raising powers would involve another referendum”.—[Official Report, 11 May 2011; Vol. 527, c. 1148.]
It would not be constitutionally right or proper for there to be tax-raising or tax-varying powers in Wales, so far as income tax is concerned, without the people’s saying so.
Roger Williams
I do not think it has ever been suggested that the block grant should be replaced entirely by tax-raising powers. Most systems rely on a hybrid system, as with local government systems, in which there is a block grant as well as tax-raising powers.
Paul Murphy
I think that if the National Assembly for Wales ever had any tax-raising powers, the system would involve such hybridity. However, I say to the hon. Gentleman that there is a concern, which I suspect is shared by people in Northern Ireland, although the comparison between Northern Ireland and Wales can go only so far because there is a land border between Northern Ireland and another sovereign state on the island of Ireland and, obviously, we have no such border. It is suggested that if a corporation tax were introduced in Northern Ireland, although some interesting benefits could result from it, the block grant would be reduced correspondingly. If that is what is happening in Northern Ireland I would say to the Silk commissioners to beware, because the same could happen in Wales. We might be told, “You can have this tax or that tax, but we’ll cut your block grant,” and that will address the accountability gap that has been referred to. That would be dangerous because it would mean that what we are entitled to through the United Kingdom taxation system would be reduced by even more than is the case at the moment.
In recent months, other Members of Parliament have said in the House of Commons, including, doubtless, in this debate, “Wales, Scotland and Northern Ireland do much better than we do in the English regions. Look at the Barnett system that they have had for all these years. Look what they can do in Scotland—they can change student fees and pay to have their old people in homes and all the rest of it.” But those people forget that those countries might not do other things in the way that England does. That is what devolution is all about.
The thrust of that argument is that we in Wales are somehow or other getting more money than any other part of the United Kingdom. That is the case for some parts of the UK, but an interesting fact was referred to by the Holtham commission and in the House of Commons note in relation to the Oxford Economics report, which my hon. Friend the Member for Swansea West (Geraint Davies) mentioned. If we say how much money goes to Wales from central Government and how much money is raised in Wales, of course there will be a deficit. In Wales, the deficit between the money raised and the money going in is £14.6 billion. Some might say that that is a great deal of money, but in the south-west, across the Bristol channel from us, the deficit is £15.6 billion. In the west midlands, across the border from Powys, it is £16 billion, whereas in Yorkshire and Humberside it is £16.9 billion and in the north-west of England it is £23.9 billion. Let no one in this House, or anywhere else, tell us that somehow or other we are getting some sort of better deal in Wales than the English regions. It simply is not true.
There are two other issues on finance including, first, the Barnett formula, on which my right hon. Friend the Member for Neath touched. I cannot for the life of me understand why it is impossible for the Silk commission to consider the Holtham commission and, indeed, what happens to Barnett as part of its remit. I am not suggesting that it should hold up discussions between the Secretary of State, the National Assembly for Wales and the Welsh Government, but to say that a commission that is dealing with the Assembly’s financial responsibilities cannot look at how the block grant is dealt with is daft.
Roger Williams
I agree, but it has been suggested that such an approach would not be welcomed by the Welsh Assembly Government.
Paul Murphy
That is for the two Governments to discuss. In the House of Commons, we are debating what it is sensible for the Silk commission to consider. I said that I did not want that to hold up any discussions that are under way, because there are implications for Scotland and Northern Ireland, but it is crazy that that cannot be discussed while all the other issues affecting money are being discussed.
I cannot understand from the response of the Secretary of State to the hon. Member for Monmouth the difference between current and future borrowing. Either one agrees with the concept of the Welsh Government being able to borrow, or one does not. The Northern Ireland Executive and the Scottish Government will be able to borrow, and local government can borrow, so why on earth can the Welsh Government not borrow? It is quite incongruous that that is the case, and I am glad at least that they can discuss borrowing, even if they cannot discuss borrowing at the moment.
Part II of the terms of reference is about powers and functions, and I agree that there is a case for looking at incongruous and difficult cross-border issues, which need to be tidied up. Most Members of the House of Commons would be wary of transferring policing and justice to the Welsh Assembly. We have a different system from Scotland, and we are so bound up with the English judicial and legal system that I would not agree with such a transfer. Another issue that will not be discussed at all by the commission—this is why it would have been useful for the House of Commons to discuss its terms of reference before we had the debate—is the way in which the Assembly is voted in. If there is going to be a reduction in the number of constituencies, presumably to 30, with a relationship between Parliament and the National Assembly, which is voted on, it is unusual that that issue should not be debated or discussed by the Silk commission, particularly as any decision on how we elect the Welsh Assembly should be based on a proper mandate at a general election. I hope that the Secretary of State and her Government will not even contemplate discussing those matters until after the next election.
Nick Smith (Blaenau Gwent) (Lab)
I am interested in my right hon. Friend’s point about constituencies and coterminosity. Wherever possible, Assembly constituencies should align closely with boroughs and parliamentary constituencies, because that leads to better government, better democracy and better services.
Paul Murphy
But the Parliamentary Voting System and Constituencies Bill had nothing to do with better democracy and everything to do with partisanship. The Government were so stubborn in the other place in refusing 10% flexibility that taking local government boundaries into account is hardly possible because of the rigidity that has been introduced in the system. If there had been consensus, that might have been considered, but there was no such consensus.
Finally, we have to be careful that the proposals are not based on a hidden agenda from the Government—what I call the Trojan horse. The hon. Member for Monmouth referred to the West Lothian question, and the Silk commission’s hiving off financial responsibility to the Welsh Assembly, and perhaps—we do not know for sure —taking away the block grant is part of the agenda of the new Conservative party. It used to be the Conservative and Unionist party, but it has long since ceased to be Unionist.
The West Lothian question means that the Government want to have two classes of Members of Parliament, not British-United Kingdom Members of Parliament who speak on everything because we have been elected by our electors to talk about the United Kingdom—every part of it: Northern Ireland, Scotland, Wales and England. I referred to the complaints time and again that we are getting too much money in Wales and Scotland. Perhaps the most obvious thing is that out of 117 Members of Parliament representing constituencies in Wales, Scotland and Northern Ireland, only nine come from the Conservative party. It will probably be wiped out at the next general election in Scotland and who knows where else. The combination of all those things, to me, means that the Conservative party has now become a party of little England. I am sure the hon. Member for Monmouth, who represents a Welsh constituency, would agree.
David T. C. Davies
Does the right hon. Gentleman share my concern, then, about colleagues in his own party who refuse to appear before the Welsh Affairs Committee to discuss devolved issues? Does he not think that that smacks of a little Wales mentality?
Paul Murphy
No, I do not. I accept, though, that there are people in my own party who may agree with some of the things that I think the Conservative party is guilty of—that is, not being awfully worried if Scotland and Wales left the Union. I have been thinking that for over a year now.
The New Statesman published a very good editorial last week, which finished with this:
“For the Tory right, an independent England—economically liberal, fiscally conservative, Eurosceptic, Atlanticist—is an attractive prospect. The United Kingdom, one of the most successful multiracial, multi-faith, multinational states the world has ever known, remains a cause worth fighting for. Yet, over the past weeks, fixated by the EU, the Conservative and Unionist Party seemed less aware of this than ever.”
The Trojan horse is not Welsh nationalism, but the English nationalism of the Conservative and former Unionist party.
Mrs Gillan
I am enjoying the right hon. Gentleman’s contribution and I know that his words will be passed on to the Silk commission. I assure him that I remain a firm Unionist, not the sort of Tory that he describes.
On a point of information for him on the borrowing powers, the Welsh Government have the ability to borrow under the powers that they inherited from the Welsh Development Agency. The bilateral talks on those borrowing powers are about how that borrowing could be used more effectively. What the Silk commission has been entrusted with is examining new borrowing powers in the context of the package of tax and borrowing powers. I hope that that clarifies the position on borrowing, which I know has been the subject of some speculation.
Paul Murphy
Indeed; I am grateful to the right hon. Lady for telling the House that. In a sense, it confirms my view that there is confusion about what is happening with regard to Barnett and to borrowing. There appear to be simultaneous discussions on borrowing and on what happens to Barnett on the one hand, and the Silk Commission on the other, whose job it is to look at financial responsibility as well. I am saying, “Don’t stop the talks.” It is obvious that Governments have to talk to each other, particularly as we live in difficult times, but I am also saying—she has clarified the position with regard to borrowing—that it is important for that to be part of the Silk commission’s remit.
Although I welcome the Silk commission, I warn the people of Wales that the position is not as simple as it might seem on the surface. I believe that the Secretary of State is generally in favour of the Union, but—judging by the actions that have been taken in the House of Commons over the past year or so—I do not believe that that is true of much of the rest of her party. Those of us who are genuinely in favour of the Union want the Silk commission to be about helping the people of Wales ultimately to have a better deal from the United Kingdom.
Roger Williams (Brecon and Radnorshire) (LD)
It is always a privilege and a challenge to follow the right hon. Member for Torfaen (Paul Murphy). He put forward some considered and powerful arguments that I am sure the commission will read and take into account when they set out their programme for the work that they have to undertake.
As we look forward to Armistice day and remember the men and women who have made a sacrifice for this nation, we also remember the Welsh men and women who are currently serving in the British Army. Just today I had an e-mail from Brigadier Russ Wardle, who recently finished his tour of duty as brigadier of 160 (Wales) Brigade in Brecon. He told me that 40 servicemen are still in Baghdad performing important roles, training the Iraqi army and police in the duties they will take up shortly. I will meet the new brigadier, Brigadier Napier, shortly. I am so pleased the 160 (Wales) Brigade will stay in Wales, contrary to speculation just before the Welsh Assembly election.
I thank the Secretary of State for securing this important debate, which has already proved its worth. It is a great day for Wales. It is fantastic that there is cross-party consensus on the commission’s terms of reference to take a considered view on the funding and future of the Welsh Assembly. Liberal Democrats have consistently supported a commission to look at the funding arrangements between Westminster and Cardiff, and it is to the credit of the coalition Government that the Silk commission will go ahead after 13 years of Labour inaction on this crucial issue. Notably, the three promises on Wales made in the coalition agreement—the housing LCO, the further powers referendum and the commission—have now been met, and I commend the right hon. Lady for that. With good Conservative support, Liberal Democrat policies are helping the people of Wales.
Paul Murphy
The hon. Gentleman refers, rather provocatively for him, to Labour inaction and the fact that great events have taken place, but does he accept that it was a Labour Government who brought in devolution in the first place?
Roger Williams
I absolutely accept that and am sure that he would accept that Labour had the full support of the Liberal Democrats, including those in Wales. Indeed, my predecessor, Richard Livsey—sadly, deceased—played an important part in that and, I am sure, would have liked to play a part in the Silk commission, too.
That is not to say that the Secretary of State’s work is over; many other things need to be done for Wales, including nurturing and supporting the devolution settlement. I look forward to working closely with her in the near future.
Mr Mark Williams (Ceredigion) (LD)
Does my hon. Friend take some assurance, as I do, from the Secretary of State’s words on timetables? When questioned by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), she set out a range of timetabling scenarios, which was a relief to many of us. There is a hope and expectation that that can be achieved before the general election, but the fact that there is a timetable reassures those of us who were concerned about this being shoved into the long grass or into a cul-de-sac. The Government have proposed that as a real commitment.
Roger Williams
I thank my hon. Friend for his intervention, which brings me to a point I had intended to make later. The present coalition agreement sets out the programme for the first half of this Parliament. Work now needs to be set in hand to take forward the coalition for the second half, which will obviously include proposals for Wales. When Wales said yes to having a Welsh Assembly in 1997, the devolution package was missing one critical element. The Welsh Government have the luxury of spending money handed out by others, but unlike those in Scotland and Northern Ireland they have no power to borrow or raise money; as has been suggested, they have fewer powers than local authorities. I believe that the lack of accountability has led to some irresponsibility in the Welsh Government’s spending of money. Indeed, when the Chief Secretary to the Treasury visited Wales in April he said that the commission
“will aim to develop the financial autonomy of the Welsh Government to give Wales more opportunity to create the right environment for encouraging growth”
and jobs. I thank him for his support. As a Scottish MP, he brought knowledge of the Calman commission to the proposals, whose usefulness should not be underestimated. Welsh Liberal Democrats will engage fully and constructively in this process. We will urge the commission to bring more accountability and responsibility to the Welsh Government and to give Wales further power to drive forward economic development, creating jobs and prosperity in Wales.
Huw Irranca-Davies
I thank the hon. Gentleman for giving way in the midst already of several very good contributions, but will he clarify what he understands by “financial accountability”? We all understand it in broad terms, but will it be financial accountability with some additional tax-raising or tax-varying powers, or accountability from within a deficit that has been lopped off the block grant? Robbing Peter to pay Paul and then asking the Welsh Government to be accountable for money that the UK Government have taken away from them, and for which the Welsh Government are then able to raise taxes, does not seem like real accountability. I want to protect what is already in Wales, and if there is accountability let it be for additionality, not for something that has been taken away from Wales.
Roger Williams
I recognise the hon. Gentleman’s first point, but not his second. We would all like to see local authorities raising more of their spending power locally so that they become more accountable, and I believe that the situation would be the same for the Welsh Assembly Government, although I do not see any reduction in the spending proposed for them. I may come on to that later, however.
I thank also the Deputy Prime Minister for his work in broadening the commission’s terms of reference and composition. There were people who wanted a much smaller commission, of perhaps only three people and without political appointees, but I am glad that the consensus was for a much larger and broader one. The political appointees are a huge boost to the commission, and they bring vital political experience to its work.
I commend the choice of Paul Silk to chair the body. Paul has worked in this House, where he had a fine reputation, and in the Welsh Assembly, so he is perfectly placed to understand the workings of both. I cannot think of an individual who is better informed to carry out this important task, and I wish him well. I and my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes) went to the same school at the same time as Paul, so I can vouch for his high academic attainment.
Dyfrig John brings to the table 35 years of experience in financial services, and his financial know-how will be invaluable to the commission. He and I were members of the Development Board for Rural Wales, along with the hon. Member for Montgomeryshire (Glyn Davies), who was chairman at the time, and Dyfrig was instrumental in maintaining a banking presence in Llandrindod Wells, which on its own would be enough to recommend him for the job.
Professor Noel Lloyd is a distinguished academic from Aberystwyth university, and before he became its highly regarded vice-chancellor he was a practising mathematician, so his ability to do sums means that Wales will not fall into the same trap as Ireland, which underestimated its reserves by €3 billion, or Germany, which did so by €50 billion.
Rob Humphreys, the Liberal Democrat representative, has long been a champion of devolution. He was heavily involved in Swansea’s yes campaign in 1997; he served on the all Wales convention; and he was the Liberal Democrat representative on the yes campaign steering group in 2011. Rob’s leadership of the Open university gives him a knowledge and understanding of young people and adults, and he will bring real expertise to the commission.
I also pay tribute to Nick Bourne, who served the people of mid-Wales very well during his time as an Assembly Member. His commitment to Wales, all things Welsh and, particularly, the Welsh assembly made him an example to all political leaders in Wales—and I look forward to his memoirs.
It is also great to have the ministerial experience of Sue Essex. She became the Minister for Finance, Local Government and Public Services following the 2003 election, so she has first-hand experience of the financial arrangements between Cardiff and Westminster.
Last, but certainly not least, there is Dr ap Gwilym, whose performance against Paxman showed his commitment to, knowledge of and passion for devolution. It is a dedicated and highly talented team with a range of expertise.
It was almost inevitable that we would talk about the Barnett formula, because it is an essential part of delivering a prosperous Wales. I am disappointed that it is not included in the Silk commission’s remit, but I understand that the Welsh Assembly’s Labour First Minister was not keen that it should be included.
I understand that bilateral discussions are taking place between London and Cardiff, and they will include not only the Secretary of State, but the Treasury.
Guto Bebb
I was surprised by the comments of the right hon. Member for Neath (Mr Hain) when he said that the Silk commission’s lack of consideration of the Holtham report is an omission. I, too, have heard the First Minister state categorically that the Holtham report should be subject to bilateral discussion between the two Governments. Are we seeing a split in the Labour party’s approach to the issue?
Roger Williams
I am sure that if there is a split, my hon. Friend will comment on it later in the debate.
I understand that bilateral discussions will take place, but I ask for more openness and transparency in that dialogue, because other people can play an important part in that work.
We can learn lessons from the Calman commission, which concluded that the devolution settlement had established a Parliament in Scotland that could be held to account for spending choices, but that lacked accountability in raising revenue. It proposed a reduction in block grant funding from the UK Government to Scotland in exchange for power for the Scottish Parliament to raise its own taxes. The Scotland Bill implements the recommendations and creates a Scottish rate of income tax. That will apply alongside existing UK-wide income tax.
In Scotland, the lower, higher and top rates of income tax will be reduced by 10p. The Scottish Parliament will then make a tax decision to levy an additional rate, which may match rates elsewhere in the UK, or be higher or lower. That will replace the Scottish Parliament’s existing power to vary income tax in Scotland by 3p up or down. Such a change, implemented by a Liberal Democrat Secretary of State, gives Scotland more accountability for its spending, and can be only good for the country. I would be pleased if the Silk commission recommended something similar for Wales.
The Calman commission addressed the rebalancing of the boundaries between devolved and reserved policy matters. It recommended devolution of further powers, including administration of elections, licensing power in relation to misuse of drugs, power to set the drink-drive limit, and power to set the national speed limit. It recommended that some powers be retained by Westminster, including regulation of health professionals and corporate insolvency. Aggregates and air passenger duty are not being taken forward for various reasons.
Luckily, this debate includes hon. Members on both sides of the House with first-hand experience of the devolved Welsh Assembly. They include the hon. Members for Monmouth (David T. C. Davies) and for Clwyd West (Mr Jones) and the right hon. Member for Cardiff South and Penarth (Alun Michael). I look forward to their contributions, and have enjoyed some of those that have already been made. My hon. Friend the Member for Montgomeryshire (Glyn Davies) also has considerable knowledge of the matter, but because of his Government role, he will not be able to speak.
Although the new arrangement has been simplified since the referendum, a lot of relevant legislation is spread among many Acts of Parliament. The Government would provide a service if they introduced a consolidation Bill to simplify and make accessible those elements of law that have been devolved, or if there were a 180° turn so that legislation sets out matters that are reserved to Westminster, and all others are devolved, instead of having the present position of legislation setting out devolved matters, and everything else being reserved.
Mr Mark Williams
The hon. Gentleman makes an important point, because there is confusion among the general public about which areas are devolved and which are reserved, as my hon. Friend will know from his constituents, and as I know from mine. We have an important duty to get the message of devolution out there to the general public. Does he hope, as I do, that the Silk commission will also reflect on that?
Roger Williams
My hon. Friend makes an important point. Even politicians sometimes have a less than perfect grasp of which issues are reserved and which are devolved. More importantly, the legal profession finds it very expensive to maintain an up-to-date record, or database, of changes in legislation. If something could be done to simplify that, it would benefit not only the public but the legal profession and people who have to deal with the legislation.
With the commission due to publish in autumn 2012, that leaves two and half years for this Parliament to see the implementation of measures on the issues on which agreement can be achieved. Will the Minister ensure that the report on those issues is produced as quickly as possible?
This is a historic opportunity for Wales. Finally, 12 years after the Welsh Assembly was set up, we can give it the ability and financial responsibility to do that which it was set up to do. It is building a better Wales—a strong nation, firm within the United Kingdom, and active in the European Union and on the world stage.
Mr Wayne David (Caerphilly) (Lab)
I am long-standing supporter of devolution. I believe that it is fundamentally correct for decision making to be as close to the people as is practicable. I consider myself to be a proud Welshman, and British, and I am also an internationalist and a European. I see no contradiction between those various identities.
In practical terms, I strongly supported the work conducted by Gerry Holtham, whose report is seminal. In particular, I strongly endorse his recommendation of the introduction of a Barnett formula, and I am pleased that that was in the Labour party’s manifesto at the last election. It would have been appropriate and sensible for it to be part of the wider consideration of fiscal issues. Nevertheless, that does not alter the fact that it is an important statement, and I look forward to its being acted on.
I welcome the establishment of the Silk commission. Like other hon. Members, I have enormous respect for Paul Silk, who has worked in the Assembly as well as in this institution. He is a long-standing occupant of the Welsh Room here in Westminster, and therefore, in some ways, follows in the footsteps of David Lloyd George. I also welcome the appointment of Sue Essex, whom I know personally and who has a profound understanding of finance and devolution. However, like my right hon. Friend the Member for Torfaen (Paul Murphy) and others, I have reservations about what might be the motivation behind some aspects of the establishment of this commission.
I think that the shadow Secretary of State, my right hon. Friend the Member for Neath (Mr Hain), has been very unfair on the Secretary of State for Wales.
Mr David
Yes, very unfair indeed. He asked how a Member from the south-east of England can have a proper understanding of the situation in Wales—but of course, as we all know, Chesham and Amersham is not in the south-east of England; it is in Buckinghamshire, which is a lot closer to Wales. However, I doubt whether that fundamentally alters the lack of understanding, let alone empathy, for the people of Wales on the part of our current Secretary of State. That is clearly shown in the way that the boundary changes that we are soon to see enacted were pushed through the House of Commons against the interests of democracy and without proper discussion in this House. Unfortunately, therefore, when the word “consensus” is used regarding constitutional matters, a question mark has to be put over whether that involves a genuine statement of intent.
I am concerned that the terms of reference are written in such a way that the work of the commission will be conducted within the parameters of the United Kingdom’s fiscal objectives. We all know what those central Government objectives are—to make cuts, cuts, cuts, and nothing but austerity, austerity, austerity. It is important to realise that when we are talking about fiscal matters regarding Wales, we are talking about not increased resources but fewer resources. The question is how that reduction in resources will be introduced.
We all know that Wales is very dependent upon the block grant, which has been cut by 1.3% since the Conservative-Liberal Democrat coalition came to power. The big danger is that there will be bigger cuts before too long, which is why the context of the commission is very important.
Another of the commission’s terms of reference is worth noting—the need to ensure consistency of fiscal powers within the UK. The hon. Member for Monmouth (David T. C. Davies) made the point that devolution, by definition, is asymmetrical, so why does consistency have to be a bedrock principle of the commission? We ought to recognise that whatever is proposed for Wales will be different from what happens in other parts of the UK, and so it should be.
My third and final reservation about the commission is the fact that Wales has historically been, and currently is, very dependent upon public expenditure. We all know that the Barnett formula and the block grant are important, but let us also recognise that there are other elements of public expenditure in Wales, which are often not recognised but are nevertheless crucial to its well-being.
One of the strengths of the United Kingdom is that, contrary to the nationalist interpretation of British history, Wales is not a subjected nation, under the heel of England. The reality is that there have been transfers of resources from the richer parts of the United Kingdom, particularly the south-east of England, to the poorer parts, and that is how it should be. That is the strength of the UK, and I would not like to see any measures adopted that placed a question mark over the integrity of the UK. Anything that did that would be not just a retrograde step for the concept of the United Kingdom, but potentially damaging to the people of Wales.
I mentioned Gerry Holtham, and we must recognise the importance of his in-depth analysis of the possibilities and options for the development of fiscal powers for Wales. In his introduction to that report, he stated:
“To be sure, economic reality and the integrity of the UK impose constraints on what it is practical or advisable to devolve.”
It is extremely important to bear that in mind, not least because he is an eminent economist but also because he is passionately committed to the principle of devolution. He is saying, in other words, that there is no point having devolution for devolution’s sake. We have to take a pragmatic approach of bringing power closer to the people, but we also need measures that enhance the material well-being of the people of Wales.
Nick Smith
I, too, support the principle of devolution, but what people in the towns of Tredegar, Ebbw Vale, Abertillery and Brynmawr are interested in at the moment is jobs. With long-term youth unemployment having risen by 60%, they want a Government who deliver real jobs to boost our economy in Wales.
Mr David
My hon. Friend makes a very important point. It is essential that we do not consider this as an abstract constitutional debate, because it has a direct bearing on the well-being of the people of Wales, their economic prosperity and the levels of employment that they enjoy.
I have sought to emphasise the importance of public expenditure to Wales. It remains important and will continue to be so well into the future. We are in the process of changing the nature of the Welsh economy, but by definition that process will take a long time to work through. It is important to recognise that. My hon. Friend the Member for Blaenau Gwent (Nick Smith) is correct, therefore, about the need to ensure that this is not an abstract debate, because it impinges on the lives and realities of the people of Wales.
I hope that this will be the start of the ongoing debate that unquestionably we need to have. I also genuinely hope that if we are to have change, there will be a political consensus, not only in the House, but among our colleagues in the Welsh Assembly and many people in Wales, too. That is a desirable outcome to work for, and I hope that it will be achieved, but at the end of the day, whatever course of action is decided upon, our acid test must be: what is best for Wales and its people?
Guto Bebb (Aberconwy) (Con)
I welcome the opportunity to speak in this debate, which is an important debate—although that could have been questioned last night when I was out dining with colleagues. As some Members will realise, we are on a one-line Whip, but I was explaining to colleagues last night that the Welsh Members were on a three-line Whip and that I had to take part in a debate on the Silk commission. One of my colleagues looked at me in a slightly surprised fashion, before asking, “What has silk production got to do with Wales?” Unfortunately, if we talked about the Silk commission to most people in my constituency, apart from the two or three who contacted me about the remuneration of its members, most people would probably give the same response as my colleague, so we need to get out there and talk about the commission so that people can engage with the process.
I fully recognise the description given by my hon. Friend the Member for Monmouth (David T. C. Davies) of how devolution has developed in Wales. Too often, something has been asked for as a means to an end, because the Assembly has argued, “If we get a little more power, we will change the situation in Wales”, and time and time again, further power has been given to the Assembly, only for the complaint to be made that more power is needed. It is crucial, therefore, that we have a real public debate in Wales.
Mr Mark Williams
Is the hon. Gentleman reassured by the breadth of the commission and the fact that there are representatives of all four political parties? Is he also reassured by Mr Silk’s assurance that he intends to take the commission out to the different communities in Wales in order to reassure them and further advance the debate?
Guto Bebb
I am grateful for that intervention; it is an issue that I shall touch on later, but yes, I welcome the fact that the intention is to ensure significant public engagement. However, we have experience in Wales of public consultation in relation to the Assembly that resulted in a pint and a curry and very few people turning up. It is important, therefore, that we have proper consultation on the commission.
Some of the comments made by the hon. Member for Caerphilly (Mr David) need clarifying. We hear a lot from Opposition Members about the cuts being imposed upon the Welsh Assembly by the Westminster coalition Government, but often those cuts are not placed in any context—no recognition that we face a financial crisis or recognition of the £150 billion deficit this financial year. I do not blame all those things on the previous Labour Government, but to make those comments about the cuts to the Welsh Assembly budget without any recognition of the context is irresponsible.
Guto Bebb
It is interesting to note that the Labour Government in Cardiff Bay were planning for 3% cuts per year for four years, yet, as we saw from the settlement granted by the coalition Government, the actual cut is in the region of 2% per year. That would be manageable in any small or medium-sized business in Wales, so I see no reason why it should not be manageable for the Welsh Assembly Government.
Some Members will have noticed that when the right hon. Member for Neath (Mr Hain) was commenting on the boundary changes, indicating, once again, that Wales was being extremely harshly treated, he refused more than once to allow me to intervene. The reason I wanted to intervene was that I was of the opinion that the hon. Member for Pontypridd (Owen Smith) had been promoted to the Opposition Front Bench as a result of his superb understanding of financial matters, because it transpires that he has written in a pamphlet that there is a need to reduce the number of Welsh MPs. However, the shadow Secretary of State for Wales argues otherwise, so now we understand why there has been a change on the Opposition Front Bench. The reason is simply because of disagreements between the two spokespersons.
Owen Smith
I would merely ask the hon. Gentleman to clarify this reference, which he appears to have plucked out of thin air.
Guto Bebb
The reference is to a pamphlet to which the hon. Gentleman contributed that was quoted at length by Professor Wyn Jones in a recent article in Barn. If he has misquoted the hon. Gentleman, the hon. Gentleman can take it up with the professor, but that article has been printed in a taxpayer-supported publication in Wales, and I shall stick by my comments.
We need to ask ourselves a simple question: why are we here today? We are here because the Wales Office has delivered on the promise in the coalition agreement to establish a Calman-like commission to consider how the Welsh Assembly is accountable to the people of Wales. I accept entirely that the Assembly is accountable to the people of Wales because they elect its Members, as several hon. Members have said. However, every Member in the Chamber will also recognise that local authorities are accountable to the electorate because local councillors are elected; yet they are accountable through the council tax increases they impose as well. Therefore, it is certainly arguable that there is a need for some financial and fiscal accountability in how the Welsh Assembly operates. We should welcome the fact that the coalition Government have recognised the need to consider the issue. It is a strength of the coalition that we are willing to look at difficult questions and consider them at length.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
Does my hon. Friend sympathise with companies such as those in my constituency that have said to the Silk commission, through us, “Please recognise that we are UK companies competing in the UK and global markets. We are proud to be Welsh, but we are UK-based companies when it comes to tendering for important work”?
Guto Bebb
I fully accept that. Indeed, I was recently at a CBI event in Flintshire at which exactly the same points were made, albeit not specifically in relation to the Silk commission, about how devolution has to work for Wales, while also recognising that small and large businesses—especially in parts of north Wales such as my constituency, where one can reach the English border in 45 minutes or less—must be treated equally to those across the United Kingdom. The commission that is being established will look into those issues. I would encourage businesses in my constituency and across Wales to engage fully, as I did to the CBI audience in Flintshire recently.
Huw Irranca-Davies
Does the hon. Gentleman agree that even though the commission’s terms of reference do not include the West Lothian question and the Barnett formula, it would be hard for the commission entirely to ignore them? It must proceed with some cognisance of the additional work being done across Government, because otherwise its conclusions may be aborted before they have even been published.
Guto Bebb
I thank the hon. Gentleman for what was again a thoughtful comment. It is recognised that there is a debate to be had on the Barnett formula between the Government in Cardiff and the Government in London. Where the Welsh Assembly wants to speak up on behalf of the people of Wales about the implementation of Holtham, that is the proper way to proceed. I welcome the fact that the coalition Government have announced movement on the West Lothian question. It has received a lot of attention in this debate, but when there was a Back-Bench motion on the West Lothian question, my hon. Friend the Member for Carmarthen West and South Pembrokeshire (Simon Hart) and I were the only two Welsh Members present. However, it is important to take the issue into consideration, because ultimately—I think it was the hon. Member for Alyn and Deeside (Mark Tami) who also said this—it is important that, for example, Members from north Wales should have a voice on health issues in England. As someone who is dependent on health services provided in Liverpool and other parts of England, I sympathise with that view. Another argument, however, asks why we should have a voice on the health service in England if we do not allow any English Member to have a voice on the health service in Wales.
Mr Robin Walker (Worcester) (Con)
As an English Member, and a member of the Welsh Affairs Select Committee, I recognise that problem. Does my hon. Friend acknowledge that the cuts being made by the Welsh Assembly Government are placing an extra burden on those parts of England whose health services are used by people coming from Wales? Does he agree that the commission should take that into account?
Guto Bebb
I agree with my hon. Friend; that issue is being brought into sharp focus by the health service cuts in Wales. We have heard a lot about spending the health pound in Wales, which is something that I generally welcome, but sometimes the expertise for those services happens to exist in Liverpool or Shrewsbury—
Guto Bebb
Indeed. In those circumstances, it is crucial to recognise that there is an issue that needs to be addressed.
There are other reasons why we should welcome the Silk commission. When the referendum in 1997 produced a narrow decision by the people of Wales in favour of establishing the Welsh Assembly, Ron Davies, the Secretary of State for Wales at the time, famously said that devolution was a “process, not an event”. The reason for welcoming the commission is that, for too long, the devolution process has been one that has been internal to the Labour party. It has been driven by a need to keep the Welsh Labour party united, rather than by a need to ensure that the people of Wales have the best possible governance.
Mr Mark Williams
One subject that has been mentioned in the debate is the legislative competence orders, which many of us had to endure in the Select Committee. Attempts were made to set them in stone as an illustration of good government, rather than the real devolution that some of us are committed to.
Guto Bebb
It could be argued that the legislative competence order procedures and the Government of Wales Act 2006 were very successful in the context of what they were supposed to do, which was to keep the Labour party united. In terms of providing for good governance in Wales, however, they were an absolute disaster, and recognised as such by the people of Wales. The 2006 Act was also a belated party political attempt to create a situation that was favourable to Welsh Labour. It could be argued that my hon. Friend the Member for Montgomeryshire (Glyn Davies) lost his Assembly seat as a result of the changes to the way in which Welsh Assembly Members were elected, as implemented by the Act. Those changes were made for internal Labour party purposes, not as a result of any demand by the people of Wales. Not a single individual in my hon. Friend’s constituency argued that he should lose his seat because of changes that had been implemented to keep the Labour party happy.
Alun Cairns
Does my hon. Friend also recall that those changes to the electoral system were introduced against the advice of the Electoral Commission?
Guto Bebb
The hon. Gentleman should be aware that the system was changed specifically as a result of pressure within Labour party. There was no call for such change from the Welsh public. It has been argued that change should be made as a result of demand from the Welsh people, and I recollect no such demand.
Hywel Williams
I am sure that the hon. Gentleman will recall that that kind of dual mandate was allowed in Scotland. In fact, if my memory serves me correctly, I think that there was a Minister who held that kind of mandate when he was in the Labour Government there.
Guto Bebb
I thank the hon. Gentleman for that contribution. I do not doubt that his comment is accurate.
Another reason for welcoming the announcement is that it creates a cross-party and non-party commission, which is something very fresh and new in the Welsh context. As I have said, however, it will not work unless the people of Wales take an interest in the issue. I would therefore stress that we, as Members, need to go out and persuade our own electorate to take an interest in the commission and its work.
A second reason why we need to welcome the commission is the fact that although there have been numerous commissions and inquiries into the powers of the Welsh Assembly Government and how it should work, the Silk commission is different because it has been created by the Westminster Government. The Holtham commission produced a superb piece of work. I have read the documentation, and the arguments in the research are persuasive, showing that Wales has for several years suffered a degree of unfairness in the funding provided by central Government. The degree of unfairness was not as great as was claimed by Plaid Cymru Members, but the main point—that the Barnett formula was unfair—was, I think, proven by the report.
The Silk commission is different and more advantageous. Because it is a commission established by the coalition Government in Westminster, the ability to act on its findings is stronger. We are still waiting for the Holtham recommendations to be implemented, but our ability to act on the findings of the Silk commission is clear, which is another reason why we should welcome its establishment.
Huw Irranca-Davies
I thank the hon. Gentleman for being so generous in giving way. Having praised the Holtham report, as I do, does he agree that in respect of the Silk commission, one thing that we do not need to wait for is putting a funding floor in place to protect the interests of Wales as we go forward? As the Secretary of State said, we could be expecting to receive the Silk commission report just before the next election, perhaps just after it or even a bit longer after it. If we got on with the Holtham recommendations and put the funding floor in place, we would at least be doing our job for our constituents right now.
Guto Bebb
I thank the hon. Gentleman for that intervention. Given that an intergovernmental approach has been applauded by the First Minister, it is imperative for him to get down to the Treasury as soon as possible to discuss the issue. We are often told that there is a respect agenda between Westminster and Cardiff. It is not therefore for us to say to the First Minister that he must act now, but I would certainly recommend that the discussions should start—and the sooner they start, the better.
Mrs Gillan
Let me reassure my hon. Friend that the bilateral discussions on the Holtham floor are already taking place between the two Governments. It is quite right that those matters have been reserved for bilateral intergovernmental conversations.
Owen Smith
I do not intend to refer to the quotation in the pamphlet now—I shall do so later, if I may, and perhaps seek to get it withdrawn. I am intrigued to hear the hon. Gentleman say that he thinks the discussions should conclude as quickly as possible. Do I take it that he will urge his right hon. Friend the Secretary of State to do just that—to conclude the negotiations as soon as possible and then to implement them? As my hon. Friend the Member for Ogmore (Huw Irranca-Davies) has said, we do not need to wait for Silk; we could have this now.
Guto Bebb
I am slightly surprised by that intervention, because I thought it was self-explanatory. The sooner the discussions between the Government in Cardiff and the Treasury are concluded, the better. [Interruption.] My understanding is that this is a matter for the Welsh Government and the Treasury. I am sure that the pressure is being brought to bear by my Front-Bench colleagues.
Huw Irranca-Davies
I am genuinely trying to be helpful. I think the hon. Gentleman is saying that he would support the principle of the Holtham commission— that there should be a funding floor at this time. I understand what he says about the respect agenda. As a strong pro-devolutionist myself, I say that the respect cuts both ways. If parliamentarians like the hon. Gentleman and my hon. Friends were to express our clear opinion today, it would help our Welsh Assembly Government colleagues and the First Minister to come to a rapid conclusion, while also assisting the hon. Gentleman’s Front-Bench colleagues.
Guto Bebb
I thank the hon. Gentleman for his intervention. For clarity, let me say that I am previously on record as stating that the Holtham report was persuasive, and the sooner the recommendations were implemented the better—recognising, of course, the financial constraints faced by the Westminster Government. I hope that fully clarifies the matter.
Before I turn to the detail, let me say that when we talk about the process of devolution in the Welsh context, there is often a misunderstanding about exactly what the people of Wales are saying. Many Members will claim that the result of the referendum in March was a clear indication of the will of the people of Wales. Like many of my colleagues, I was surprised by the extent of the support for change, but it must be said that that change happened on the basis of a comparatively low turnout. I am not one to argue that those who do not turn out have an equal voice: democracy means that people must take part in order to ensure that their voices are heard. However, I think it should concern all of us who want to ensure that we have an Assembly that works for the benefit of the people of Wales that only 35% or 36% of the Welsh population turned out to vote in that referendum.
There is currently a disengagement with the political process in Wales, which, unfortunately, is more pronounced in relation to elections to the Welsh Assembly than it is in relation to Westminster elections. For example, I was elected to the Aberconwy constituency on a turnout of 70%, one of the highest turnouts in any Welsh constituency for a Westminster election. The turnout for the Assembly election was about 40%. Those who argue that the voice of the people of Wales was heard clearly back in March are actually arguing that a turnout of 35% and a yes vote of 60% constitute a clear democratic mandate. They do not. A great deal of work remains to be done to persuade the people of Wales that the Assembly is working on their behalf, and I think that the commission will have an opportunity to engage with them.
Other myths are being peddled by those who do not support the Assembly. There are plenty of them in Wales, and they tend to hear what they want to hear. They say that when they mention the Assembly, people complain that it is not delivering on health. I think that that is true, and it is a complaint that we hear on the doorstep. They say that people also complain that educational standards in Wales are extremely poor in comparison with those in England and many other parts of the European Union. I think that that is true as well, and again we hear about it on the doorstep. However, I believe that the enemies of the Welsh Assembly often misunderstand complaints about its performance. They consider those complaints to be an indication that people are fed up with the Assembly and do not want it, but I do not agree.
I think that the people who complain are not dissimilar to a mother who criticises a badly behaved son or daughter. The mother will be more than happy to complain about the behaviour of that son or daughter, because after all she has a right to do so, but when she hears someone else complain about it, she immediately goes on the defensive. I think that the same applies to the attitudes of people in Wales towards the Assembly. Yes they criticise, yes they complain, but ultimately there is a feeling—which I think those who are unhappy about the Assembly must take on board—that it is “our” Assembly. Perfect? No, it is not. Could do better? Undoubtedly. But there is, I believe, an acceptance that it is the Welsh Assembly, and I think that those who are unhappy about the way in which it is developing should engage in the process that we are discussing to ensure that we have a better performing Assembly to serve the people of Wales.
The first part of the Silk commission’s work will relate to fiscal responsibility—an issue that I believe we should consider seriously. Yes, the Assembly has a responsibility to answer to the people of Wales, and yes, its members are elected by the people of Wales, but ultimately we need a degree of accountability for fiscal decisions. Time and again during the 18 months for which I have been a Member of Parliament, we have heard members of Opposition parties criticise the cuts being made at Westminster, and we have heard Assembly Members criticise them as well. It is easy for them to make such criticisms: there is no need for them even to think about the deficit, because it is not the Assembly’s responsibility. The cuts being made in Wales—which are much lower than expected, and lower than cuts in many other parts of the United Kingdom—are being made in a context, and the problem with the current set-up in the Welsh Assembly is that that context is missing from its debates. That is why I think we should think about fiscal responsibility.
Welfare reform provides a useful analogy. The changes proposed in the Welfare Reform Bill, which has completed its passage through the House of Commons and is currently in the other place, are built on the concept of giving people who receive state benefits a degree of accountability and responsibility. There is a difficult argument to be had. I have been talking to housing associations in my constituency about the importance of ensuring that housing benefit is paid directly to claimants, to enable them to have the same respect and dignity as any other member of society in terms of paying rent and taking responsibility for their financial position. The same responsibility should apply to Governments. After all, the smallest community council in my constituency will raise local taxation, and I see no reason why the Welsh Assembly should not have the same degree of responsibility and accountability.
Having said that, it is important to point out that there are difficulties. The right hon. Member for Delyn (Mr Hanson) is no longer present, but he made an important point about people commuting across the border to work in jobs in north Wales. One of the jewels of the Wales economy is the Airbus factory in Broughton, which is committed to apprenticeships and training, and giving young people from north-east Wales genuine employment opportunities. We should be proud of that, and we should also be proud of the support Broughton has received from the Welsh Assembly, but we cannot deny the fact that many of the workers at Broughton travel in from England—or that many of the workers at the Ellesmere Port factories producing Vauxhall cars travel in from north-east Wales.
Hywel Williams
I am slightly disappointed that the hon. Gentleman and other Members seem to think of such cross-border traffic as a problem. As I have already said, a Welsh Affairs Committee report acknowledged that there were some problems, but noted that in general the arrangements were working quite well. To give just one example, more people from England are registered with GPs in Wales than vice versa. There is a technical reason for that, by my point is that cross-border travel need not be a problem.
Guto Bebb
The hon. Gentleman is mixing up the question of fiscal changes, which is what we are discussing, with the issue he raises about GP surgeries. The fact that Northern Ireland has an uncompetitive tax regime compared with that of the Republic of Ireland is a huge political issue, and it is also well known that the republican factions in Northern Ireland have financed themselves through smuggling operations because of the different rates of duty on petrol.
I do not want to overstate this issue, but we should take it seriously. I am sure that we can successfully address it, and the Silk commission has been set up precisely to examine such matters. Members of Plaid Cymru often refer to the Holtham report as a document that is beyond criticism, and it highlights this issue in some detail. I think the Silk commission needs to look into it and come to a conclusion.
On fiscal responsibility, I was intrigued by an article in today’s edition of The Western Mail. I do not read The Western Mail often—after all, I am a north Walian, and we tend to read the Daily Post up in north Wales—but in that article it appears that the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) said that he did not support fully devolving fiscal responsibility and tax-raising powers to Wales at this point in time, as he thinks that would be inappropriate.
Guto Bebb
I agree with that; I think it would be inappropriate. We know that there is a huge funding gap between the amount of money raised in taxes in Wales and the public expenditure in Wales. I would therefore ask the hon. Gentleman whether he disowns the policy of his party, which is to call for independence—a policy that I am pleased to say the party never advocated when I was a member of it.
Hywel Williams
On a point of order, Mr Deputy Speaker. Do you agree that when a Member mentions another Member, it is usually proper for the Member mentioned to be able to respond?
Mr Deputy Speaker (Mr Lindsay Hoyle)
That is not a point of order, as the hon. Gentleman knows, but it is a customary courtesy in this House that if a Member mentions another Member they then give way to them. That is up to the Member concerned, however.
Jonathan Edwards
I thank the hon. Gentleman for his courtesy in giving way. As a former Member of my party, he will know that independence for our country is an aspiration, but that does not mean that we want it tomorrow. One reason for gradually devolving fiscal powers is to empower our economy to be strong enough to achieve that ambition.
Guto Bebb
That is an interesting clarification, which is contradicted somewhat by an article by one of the Plaid Cymru leadership contenders that appeared in the Daily Post last week, and in which it was stated that the constitutional aspiration of the party of Wales was clear. It was not a very clear statement, I thought.
Owen Smith
This is not a point of order, but just a request for clarification. Is there a reason why the hon. Gentleman did not approach me in the Tea Room before mentioning me and misquoting me in the Chamber?
Guto Bebb
The hon. Gentleman was not in the Tea Room when I was there. I hope that he accepts my apology.
On part I, it is important that we consider the issue of fiscal responsibility. Some of the areas that the First Minister has said are appropriate for change are not acceptable, because they are not significant changes. For example, I do not think that the average person who votes in an Assembly election will be motivated to vote one way or the other because of a slight change in the aggregates tax. We need to look at proper fiscal changes.
Paul Murphy
The hon. Gentleman refers to significant changes. Does he accept that the most significant change in income would arise from income tax? Does he also accept that before that could be introduced, the people of Wales would have to decide on it in a referendum?
Guto Bebb
I am not sure whether the most significant change would have to be in income tax. There is an argument for changing the rates of employers’ national insurance contributions, which could be beneficial from a Welsh economic perspective. Whether the changes require a referendum depends on the range and the outcome of the Silk commission. I would not want to commit myself on that at this point in time.
The concept of fiscal responsibility is something that everybody in Wales should welcome. I find it difficult to understand how anybody in this Chamber who believes that the Welsh Assembly should have a degree of accountability to the people of Wales can be opposed to the concept of fiscal responsibility. I look forward to the findings of the Silk commission on part I. I believe that they will contribute to the debate. It is crucial that all stakeholders in Wales contribute to this debate, because otherwise we will end up with a discussion not dissimilar to what the hon. Member for Monmouth described.
Finally, part II deals with constitutional changes and what further boundaries we need to consider, beyond the changes that have already been made. It is important to state that we are talking about boundaries within policy areas, not physical boundaries. Several individuals I know who live in Oswestry are slightly concerned about the comment that we are looking to change the boundaries. Personally, I would be delighted to welcome back Croesoswallt—or Oswestry—to Wales, but I do not think that that is the intention of the Silk commission.
When we talk about boundaries, we are talking about whether there are aspects of the relationship between the responsibilities of the Assembly and those of Westminster that we need to look at again. As has been said, matters such as transport are not fully devolved. That may be a good or a bad thing, but the main arteries going in and out of north Wales and south Wales go from east to west. Therefore, if there were improvements to the A55 in Flintshire they would be wasted unless there were improvements to the M56 in Cheshire. There are clearly transport issues that need to be examined. We have also spoken about the fact that health is not fully devolved.
Finally, we need clarification on energy policy. The opportunity for economic and employment growth in Wales as a result of large-scale energy projects is something that we should all welcome. However, there is confusion over whether permission for such projects is granted by the Welsh Assembly or Westminster. Businesses looking to invest in hydro, wind power or tidal power need clarity about where the permission comes from and where the responsibility lies. That would be beneficial to the Welsh economy. I sincerely hope that that will be considered as the Silk commission moves on to part II.
Jonathan Edwards
I thank the hon. Gentleman for giving way again; he is being extremely generous. He will be aware that his party and the Lib Dems fought the National Assembly election in May on the basis that they would extend energy consenting powers. Does he agree that it is a disgrace that the UK Government down here are ignoring those pledges that were made to the people of Wales less than six months ago?
Guto Bebb
I again thank the hon. Gentleman for his contribution. This is a difficult subject. There is clearly a need for clarity for the business community. Having said that, I would be extremely concerned if I was a resident of Anglesey who supported the new nuclear power station and the issue was completely devolved to the Welsh Assembly, which has a pathological hatred of anything nuclear. Clearly this is an issue that needs to be examined. The point that I am making is that the Silk commission will allow us the opportunity to consider this subject in detail.
Ultimately, what we do have—this is probably why the shadow Secretary of State was so churlish in his response to the announcement of the Silk commission—is a coalition Government who are willing to consult on a cross-party and non-party basis, and to talk to the people of Wales about the way in which Wales should be governed in the future. The Silk commission is being established to try to create real accountability for the Welsh Assembly, and in particular, it is examining the way in which some devolved areas need to be considered again to ensure that we have a settlement that works for Wales. I am astounded that any Opposition Members would oppose a consultation process.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the next speaker, I remind hon. Members that we have six speakers and one hour and 20 minutes left. We ought to make sure that we get everybody in, as this is an important debate for all who wish to take part.
Hywel Williams (Arfon) (PC)
I am somewhat surprised to be called now. I hope that my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) will have the opportunity to make a contribution, and I will be very brief.
First, may I apologise to the House on behalf of my right hon. Friend the Member for Dwyfor Meirionnydd (Mr Llwyd), who has had to leave because of a medical appointment? I was glad to hear the hon. Member for Aberconwy (Guto Bebb) expressing his interest in and loyalty to the Assembly. I shall briefly regale the House with a malapropism that came out on Radio Cymru—only the Welsh-speaking Members will understand this. A farmer from Ceredigion phoned in and called the Cynulliad “the cyn lleied” [Laughter.] I will now explain. The Cynulliad is the Assembly whereas “cyn lleied” means so little. By just a simple transposition he was able to make his point.
My party of course welcomes the establishment of the commission. We are very glad that all four parties in Wales are represented, in addition to the distinguished independent members. It is a great improvement on the Calman commission in Scotland, in which, for whatever reason, not all the parties took part. We are seeing some of the consequences of that in Scotland, where there continues to be extreme controversy about the constitutional settlement. I hope that in Wales we are one step ahead of that problem.
As all hon. Members would hope, Plaid Cymru will participate in and contribute positively to the work of the commission, trusting that its recommendations will lead to better governance of Wales, in the gradualist fashion that my party has always followed. Reference has been made a number of times to our ambition for independence for our country, but I think all hon. Members would concede that in the way we have operated over the years we have been a gradualist party aiming towards independence but prepared to work with everyone else to improve the governance of our country, with growth and prosperity for our country as our aim.
Where others shy away from seeking greater responsibility for the Welsh people and our Government, my party wants them to take it. We want them to do so because by taking responsibility for ourselves, we can create and build the better Wales—the Wales that we all want to live in. Devolution should not stop—indeed, it cannot stop, as Ron Davies said all those years ago—and it will not stop, despite the Secretary of State’s apparent call for a moratorium, which I saw in The Western Mail about three weeks ago. It is clear that in respect of the requirements of good governance, this Government take action, as did the previous Government, to transfer powers to Welsh Ministers. We see statutory instruments appearing fairly regularly to transfer powers. They are perhaps minor powers—they are not changes of principle —but that process will continue.
Mrs Gillan
May I reassure the hon. Gentleman that what I had envisaged was that the major questions—such as energy, ports and the other areas that have from time to time come across my desk, with demands having been made that powers in those areas be passed down—should rightly be looked at by the Silk Commission, but I am certainly not ruling out transfers of administrative matters from time to time where it makes sense? To rule that out would be nonsensical and the door is always open on those issues. I think it is a question of common sense, but we must not undermine what the Silk commission will look at in part II.
Hywel Williams
I am grateful to the Secretary of State for making that point, because her comments and those of other hon. Members could easily be misinterpreted if looked at briefly.
It seems clear that the current arrangements are not sustainable in the long term. The settlement between London and Cardiff is complicated, but that need not be a bad thing—sometimes complicated is good if the system works very well. The system does seem complicated but it is, thankfully, now much clearer than it was under the highly unsatisfactory legislative competence order system that we struggled with under the previous Government. The Under-Secretary was on the Welsh Affairs Committee with me and I am sure that he was tempted to jump to his feet when the housing LCO was mentioned. However, I shall not intrude into that particular piece of history.
Roger Williams
Does the hon. Gentleman agree that the system is not only complicated but is spread over a great body of law, making it very difficult to use that law for its proper purpose? Does he agree that the Silk commission could look at that as well?
Hywel Williams
There have been persistent complaints from members of the legal profession in Wales and others, including academic lawyers, who have looked at the changes to the body of law in Wales and found that it is difficult to keep track. There are people who are doing a heroic job of trying to keep track of the implications and I only wish that they were better resourced. Unsurprisingly, my opinion is that there should be a devolution of jurisdiction to Wales, which would make things rather clearer, but I shall say something about that later.
Huw Irranca-Davies
Does the hon. Gentleman agree that the Silk commission, whatever its outcome, will not get rid of complexity entirely? Indeed, some complexity is a necessary—if not evil—part of the devolution process. The level of maturity of this stage of devolution means that there is often administrative negotiation, including over aspects that the Welsh Assembly Government want to pass back or to be retained here because it makes more sense to do them on a UK-wide basis. For example, some aspects of marine matters have been devolved, but the Assembly has later returned to say, “Actually, we’d like that little bit to be done on a UK-wide basis, because that is where the resources lie.”
Hywel Williams
I thank the hon. Gentleman for that intervention. As I said, sometimes complexity is good and necessary. I do not want to appear too Panglossian about this, but it seems to me that we have a system that works fairly well. However, as we say in Welsh, nid da ble gellir gwell—it is not good if it can get better. Certainly that is our ambition.
The principle of the system for Wales inevitably still leads to a lack of clarity and some confusion for the public. I am glad to see that the commission will be looking at systems of devolution in other parts of the world. The hon. Member for Brecon and Radnorshire (Roger Williams) referred to the Scottish model as one under which everything is devolved other than that which is not, as compared with the situation in Wales, where nothing is devolved other than that which is. There is a great deal to commend that particular system.
I also encourage the commission to look beyond the boundaries of the UK. In an intervention on the former Secretary of State, the right hon. Member for Torfaen (Paul Murphy), I pointed out that the system in the Basque country, in terms of money, is slightly different to that in the rest of Spain, which generally operates on a block grant principle, whereas the Basques have historically, over many centuries, raised their own taxes and then sent a certain amount of money down to Madrid. That is easier for them given that the gross domestic product in the Basque country is currently 140% of the average across the country, so they are in the rather lucky position of having the money to do that. It is interesting that the Basque country has a steel industry and a history of heavy industry, but seems to have managed to go beyond that with the Mondragon co-operatives and various other methods that it has adopted. The area is similar to Wales in population and culture, with a smallish linguistic minority, but there we are—it seems to be succeeding where Wales is not.
I would say this, but I think that the will of the people of Wales was made clear in the referendum. I take the point made by the hon. Member for Aberconwy about the turnout, but unless we have compulsory voting there will be variations in turnout and I do not think that the lowish turnout for the Assembly elections indicates disenchantment with that body—rather, it is growing in popularity and interest. He made a good point about defending the institution. It may be a body that we are not always particularly keen on, but at least it is ours, and people must defend it. I hope that the commission’s timetable allows for legislative change before the next election, but I am grateful to the Secretary of State for setting out the options, which will repay close study.
I am conscious of the fact that time is passing and that other hon. Members wish to speak, but I will make a couple of further points. There is plenty that could be done, and I recommend that the commission look at two excellent private Member’s Bills, which happen to be mine: the Bilingual Juries (Wales) Bill, which I introduced in 2007 and which failed abjectly to proceed; and the Jobcentre Plus (Wales) Bill that I introduced earlier this year and which the hon. Gentleman opposed very successfully indeed, along with many of his friends across the border.
Those are two practical changes that could profitably be looked at by the commission, and I am sure that there are more. In my party at least, we have an appetite for change. We have done the work, and we have the imagination to think about what sort of changes might be introduced, so I commend both those measures.
If hon. Members want an example of why the devolution of certain measures is necessary, I refer them to the recent shenanigans of S4C and my early-day motion 2316. The scrutiny of the Public Bodies Bill by the majority of Members from Wales was entirely deficient as far as S4C was concerned. There were five Members from Wales on the Committee that considered the Bill. Two were unable to speak because of the role that they played, but the other three Members worked very hard indeed, and I pay tribute to the hon. Members for Clwyd South (Susan Elan Jones) and for Ceredigion (Mr Williams). We were able to debate the issue at length, and I was glad that we could do so. Subsequently, I secured a Westminster Hall debate on the subject, which was well attended.
When the Public Bodies Bill was on Report, however, we did not, for reasons that I will not go into—I shall not begin to point fingers—reach the amendment on S4C, so the majority of Members from Wales did not have an opportunity to express their opinion. That is one reason why the commission should look at an area that is difficult and complicated to devolve.
Alun Cairns
In view of the fact that the hon. Gentleman is commenting on S4C, will he congratulate the Secretaries of State for Wales and for Culture, Olympics, Media and Sport on the fantastic deal that S4C has secured with funding from the BBC?
Hywel Williams
The deal that was eventually reached has pleased no one and has pleased everyone to some extent because S4C has taken a hard hit on money. However, I pay tribute to the Secretary of State, and to Members from all parties, including Lords Wyn Roberts, Dafydd Wigley, Dafydd Elystan-Morgan and John Morris, who pressed the case, along with the BBC Trust member for Wales, Elan Closs Stephens, Cymdeithas yr Iaith Gymraeg, my hon. Friends and, perhaps, me. Everyone is included—success has many parents—so let us leave it at that. All I want to say is that broadcasting should be subject to fair scrutiny.
Alun Cairns (Vale of Glamorgan) (Con)
I am grateful for the opportunity to contribute to this extremely important debate for Wales, for the constitution, and for the stability of devolution, both in Wales and across the United Kingdom.
I congratulate the Secretary of State on securing the debate in Government time and on the way in which she introduced it. This is a genuine debate about the need for greater accountability and stability in the devolution settlement. It will set the scene for the Silk commission. Of course the commission is independent and I congratulate each and every one of its members. They need the freedom to investigate the issues, but this is an important debate about Wales, in Government time, in the Chamber.
In the past the Conservative party and the Conservative Secretary of State have been accused by Opposition parties of being devo-sceptics, but the reality is very different. Few predicted that it would be a Conservative Secretary of State who delivered a referendum on further powers for the Assembly. Even fewer would have predicted that a Conservative Secretary of State would move to advance the settlement to secure its stability over the longer term.
Stability is the key point. Over the past 13 years, Wales has experienced significant constitutional change in a piecemeal approach that has served the interests of the Labour party. There is no doubt about the mess created by the Government of Wales Act 1998. We started off with the National Assembly for Wales. Then we had a change in the voting system, which was opposed by the Electoral Commission. Then we had the Richard commission, which was generally ignored, and the legislative competence order model taken from that was unworkable. The Holtham commission’s report has not been debated even in the National Assembly for Wales. That was followed by a second referendum. All that was done to serve the partisan interests of the Labour party and to try and overcome the differences between the Labour Members in the Welsh Assembly and those on the Opposition Benches in this Chamber.
The churlish way in which the shadow Secretary of State responded to the opening comments from the Secretary of State for Wales demonstrated that the Opposition do not know how to react. There is obviously some enthusiasm from the Labour party in Wales for the Silk commission, but Labour Members here are worried about their personal futures, rather than thinking about the needs of Wales and the ability of the Silk commission to address them in order to deliver stability.
In view of the previous constitutional upheaval, the outcome of the Silk commission must be sustainable and must deliver stability, leading to a settlement that will not require further changes for a generation. Such confusing changes over recent years have led to a confused model of accountability. The public find it difficult to understand who is responsible for what because of the changes since the Government of Wales Act 1998, the referendums and other developments. The Welsh Government choose to perpetuate the confusion by blaming Westminster for anything that goes wrong in Wales, regardless of their own responsibility. They have learned from the early Blair years to become masters of spin.
Take the recent controversy over the establishment of wind farms. This is a subject that is extremely important to my hon. Friend the Member for Montgomeryshire (Glyn Davies), who is fighting hard for his constituents. The applications for wind farms in some of the most beautiful parts of Wales stem directly from the First Minister’s technical advice note 8 policy, which established strategic search areas identifying specific parts of the country that would be looked on favourably for wind farm applications.
As soon as the impracticality and unpopularity of the policy was exposed, we had a statement from the First Minister that he wanted to lead the charge to the Westminster Government to try and stop it happening. But the application was rooted in the TAN 8 policy developed in 2005, when Carwyn Jones was Minister for Environment, Planning and Countryside and had responsibility for driving that policy. The Welsh Government enjoy the resulting confusion, blaming Westminster when the responsibility lies on their desk.
That brings me to the respect—or should I say lack of respect?—agenda shown by many Labour politicians in Cardiff Bay. The agenda is a one-way street. Anyone listening to First Minister’s questions on a Tuesday in the Assembly will hear that everything that goes wrong is the coalition Government’s fault, yet it was Labour, here and in Cardiff Bay, that left Wales the poorest part of the United Kingdom and left an education system and standards that trail those in the rest of the UK, an inferior model for cancer care, longer waiting times for any medical interaction and every Welsh economic indicator—inactivity rates or unemployment rates—scoring much worse than those in any other part of the UK. That has not changed over the past 18 months, but anyone listening to First Minister’s questions will recognise the audacity shown by the First Minister, reflected today by the shadow Secretary of State, in blaming Westminster for anything that suits them. Labour is happy to perpetuate confusion and use a publicly funded publicity machine to criticise the Westminster Government.
The reason for the decline in health, education and the economy is that since 1999 the Welsh Assembly Government have chosen to make the argument about structures, strategies and powers rather than deal with the real issues. The Welsh Assembly Government have become unaccountable because they can blame Westminster for anything that goes wrong.
On the economy, we began with the national economic development strategy. A few years later “A Winning Wales” came out. Later, the Assembly came out with “Wales: A Vibrant Economy”. Running in parallel were the entrepreneurship action plan, the European aid programmes, which began with 600 partnership models, and a 90% target for GDP by 2010, which has not been met. The Assembly must be held responsible and accountable.
Alun Cairns
My hon. Friend underlines my point about the failure of the Cardiff Bay Government to seek to improve the quality of life: the economy, social care and education standards. In the 1997 referendum and the first Assembly elections in 1999 we were told that the devolution dividend would change all those things. Labour has failed, and it has not changed in the past 18 months. It blames Westminster for the underfunding that Holtham identified.
Owen Smith
The hon. Gentleman and his colleagues call for accuracy in the context in which we set our remarks about the public spending cuts in Wales, but should they not set themselves the same standards when discussing the profundity of the long-term, systemic economic problems facing Wales, which are reflected in our once again qualifying for objective 1 funding? I profoundly regret that, as I am sure he does, but the fact that we qualify shows how deep seated the problems are.
Alun Cairns
I am grateful for that point, but the hon. Gentleman misses the key issue: Labour’s failure over 13 years. Labour Members salivate in decrying the 1980s. Wales was not the poorest part of the United Kingdom at the time, but it was when they left office. [Interruption.] The hon. Gentleman says from a sedentary position, “It is not true”. Well, I will happily hear about the economic indicator that points out that Wales is not the poorest part of the United Kingdom.
Owen Smith
I did not say, “It is not true”, and the hon. Gentleman makes a semantic point, because we are talking about fractions. Many parts of the UK have not benefited in lots of respects; in fact, they all share the characteristics of being post-industrial parts of Britain with the same deep-seated economic problems as Wales. Those problems are not something to be solved quickly, but the Assembly has worked extremely hard and been extremely effective in all sorts of areas of public life in Wales.
Alun Cairns
I am stunned by the complacency of the hon. Gentleman, an Opposition Front-Bench Treasury spokesman who really should have a better handle on these issues. He talks about semantics and very small percentages, but when Labour left office after 13 years of government Wales was the poorest part of the United Kingdom, despite all the great announcements that we heard during the period, on the Barnett settlement, Barnett plus, European money, match funding, PES—public expenditure survey—cover and how lucky Wales was to have a Labour-run Westminster Government as well as a Labour-run Welsh Assembly Government. The data are quite clear that there has been blatant failure. They highlight the fact that Wales is the poorest part of the United Kingdom, and I am aghast at the hon. Gentleman’s complacency.
Guto Bebb
When the Welsh Affairs Committee visited Germany recently, the business people whom we met had no idea of any business organisation or Welsh Assembly Government Department with responsibility for inward investment, but every single one of them was aware of the Welsh Development Agency, an organisation that served Wales well in the 1980s but was abolished by the Welsh Government on the basis of a personal decision by the First Minister, who did not even have the courtesy at the time to inform the agency’s chairman of his intentions.
Alun Cairns
I am grateful again to my hon. Friend, who highlights an important point. The hon. Member for Pontypridd (Owen Smith) looked on favourably when the Welsh Development Agency was mentioned, and so many businesses in Wales would love to see it returned.
We heard from my hon. Friend the Member for Worcester (Mr Walker) earlier. When his father was Secretary of State for Wales, Wales attracted 20% of the UK’s inward investment with just 5% of the population. How great it is to have another Walker family member showing such an interest in Wales. That is the difference—from the time in the ’80s when those jobs were being created and the economy was being restructured, to the failure that we have seen over the past 13 years. I also seem to recall the right hon. Member for Neath (Mr Hain) questioning the judgment of the then First Minister, Rhodri Morgan, in seeking to abolish the WDA and bring it into the Welsh Assembly Government.
Those differences are similar to the differences today between Labour Members at Westminster and Labour Members in the Welsh Assembly, who are far more enthusiastic about the Silk commission. Indeed, it is quite obvious that Labour Members here are in an uncomfortable position on Silk. They do not know how to react, and the shadow Secretary of State for Wales, in today’s article in The Western Mail and in his response to today’s debate, has tried to position himself by thinking, “How can we get out of this with some sort of political advantage?”, rather than recognising that Assembly Members need to be more accountable for their policies.
I have listed the failed policies and, ultimately, the one on the economy, and we could go on to health, cancer care or any others that I have mentioned, because Opposition Members need to accept and recognise their part in that failure, rather than simply looking up the M4 and blaming everyone else when they quite honestly know that they are responsible.
Many Members have referred to the need for engagement, and I cannot underline that point enough. Advocates of devolution point to the outcome of the recent referendum, when 63% voted in favour, yet the turnout was only 35%, which demonstrates that a significant number in the population are not engaged. The key challenge for the Silk commission and the Welsh Government is to capture their imagination, hear their concerns and get them involved, because, troublingly, the views of anyone sceptical of devolution are almost dismissed, and I suspect that they largely make up the 65% of people who did not vote at the time.
Jonathan Edwards
The hon. Gentleman is using, as did the hon. Member for Aberconwy (Guto Bebb), the turnout for the referendum as a battering ram to try to hold back the whole process. The referendum was fought on an extremely technocratic question, and I was amazed that more than 30% of the people of Wales voted on a question that hardly anyone understood.
Alun Cairns
I am surprised at that intervention, and the low sights that the hon. Gentleman sets for himself. He was amazed by a 30% turnout. That almost sounds as though he was delighted with it. If that had been the case in the referendums in Scotland and Wales back in the late ’70s, they would have been dismissed.
There is a need for engagement on the issue. I do not for one second use the low turnout as a reason to batter devolution, but it underlines the fact that many people throughout Wales and in almost every local authority area—ironically, the highest turnout was in Monmouth, at 50%—are troubled about devolution or do not understand it. Their views are as important as those of the strongest advocates, who I suspect are within Plaid Cymru.
Alun Cairns
I could not agree more with my hon. Friend, who further underlines the point.
The key theme is accountability, which was covered extremely well in the excellent report of the Holtham commission, which set the backdrop to the Silk commission, highlighting key issues relating to accountability and some of the points that I tried to make earlier. The report states that the public sector, and I would say the Welsh Government specifically, is
“in some ways detached from the economic circumstances of the citizens it serves”—
that is the need for better accountability—and
“simply blaming Westminster for inadequate resources”
is not an option. That is effectively the position we are in.
The change of Government at Westminster has produced a chorus of an argument from the Welsh Government in Cardiff Bay, to the extent that the level of debate is stymied to mere rhetoric. The best description of the Welsh Government’s approach came from a former Labour Member of this House who said that the Welsh Government is in danger of becoming an
“institutional chip on the Welsh shoulder.”
That encapsulates the approach. The accountability argument must be underlined time and again.
It is too easy for the Welsh Government to play the blame game, and I hope that the Silk commission will consider accountability extremely seriously. The Holtham report offers useful pointers. It states that if it is decided that there is merit in devolving fiscal powers, the tax should be one that
“is paid by a high proportion of Welsh residents…raises substantial revenue”
and
“is ‘visible’ to most citizens”.
It is not surprising, therefore, that in seeking to avoid my accountability argument the Welsh Government and the First Minister call for air passenger duty, stamp duty, aggregates tax, landfill tax, and other obscure taxes. The more obscure they are, the less accountability there is, so they can continue the blame game. That is unacceptable, and I hope that the Silk commission will reject that.
Owen Smith
Again, I intervene on a point of accuracy. The hon. Gentleman quoted extensively from the Holtham report, which he purports to have read, so he will know that those are the very taxes that Gerry Holtham refers to as potentially being among the minor taxes that would be transferred to Wales.
Alun Cairns
The hon. Gentleman mistakes my recognition of the quality of the Holtham report for an indication that I agree with all its conclusions, and I simply do not agree with all the conclusions. I said earlier that it is a useful backdrop to the Silk commission. That should be recognised.
To pursue the argument about accountability and the approach taken by the Welsh Government, in a similar vein it needs to be noted that over the past 12 years the Labour party in Wales used council taxes to raise additional funds and then put the responsibility on to local authorities, most of which, as a result of 13 years of Labour Government, were not Labour. The Conservative party ran the same number of councils in Wales as the Labour party, and that is a far cry from how it was at the time of devolution. Most of the funding for local authorities comes from the Welsh Government, so I would suggest that over the past 10 years or so there has been a deliberate strategy of squeezing funding from local government in Wales, forcing local authorities to raise more money in council tax. That is demonstrated by the fact that over the past five years the average council tax increase in England was 2.6%, compared with 3.8% in Wales. That amounts to a plan to make local authorities responsible for the additional revenue that they are raising instead of becoming accountable for themselves. I could go on to talk about the re-banding mistakes that were made in some areas, which squeezed even more council tax out of some of the people who were least able to pay.
I will close by sounding a note of caution about the volatility of many taxes. Whatever the Silk commission develops and comes up with, I hope that it will recognise the volatility between the level of income tax raised three years ago in Wales compared with the level raised now. There is a significant difference, and that will be another important factor for Silk to consider.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We have to be very careful about time now; I think that the length of that speech was rather excessive. We still have four Members to get in and roughly 44 minutes left for them to speak.
Owen Smith (Pontypridd) (Lab)
It is always a pleasure to follow the perfectly formed hon. Member for Vale of Glamorgan (Alun Cairns). I had hoped to follow the hon. Member for Aberconwy (Guto Bebb), as that would have given me an immediate opportunity to respond to his curious remarks—
Owen Smith
In a moment.
I could have responded to the hon. Gentleman’s curious remarks about some mysterious article that I have ostensibly written.
Owen Smith
I will give way in a moment.
The hon. Gentleman said that somewhere in an article I had advocated a reduction in the number of Welsh MPs. If I had been mistranslated, that would have been a different matter, but I have certainly never advocated that. However, the article in question is relevant, and I will talk about it in a moment. Over to the hon. Gentleman.
Guto Bebb
I am grateful to the hon. Gentleman for allowing the facts to be stated clearly on the record. The article is called “Towards a New Union” and it was published by Compass. In talking about how to ensure that the West Lothian question is dealt with without moving to federalism, it states:
“Such a reformation of English local government, allied to the reduced number of Welsh and Scottish MPs at Westminster, would go a long way to answering the English Question.”
I think that the article was translated correctly and that my statement was also correct.
Owen Smith
I suggest that in future the hon. Gentleman needs to do more than take selected excerpts from things. He should read all 5,000 words of the article, in which he would clearly see that I am talking about the fact that we are going to have the number of Welsh MPs reduced—not that it is desirable, not that it is justified, but that it is a matter of fact as a result of the shameless gerrymandering of the electoral map in Wales that we have seen as a result of the Parliamentary Voting System and Constituencies Bill. I suggest that the hon. Gentleman needs to read it all—or if he would like to withdraw his remarks, which are wholly inaccurate, he can do so now.
Owen Smith
I do not, at all. I am quoting accurately from my article. I suggest that the hon. Gentleman read it and that in future he does his homework a little better lest he be in danger of misleading the House about my opinions, if nothing else. [Interruption.] He can withdraw his remarks whenever he wants.
I thank the Secretary of State for scheduling today’s debate. Labour Members and, I am sure, Members right across the House are extremely grateful that after 18 months we have a debate about a Welsh matter on the Floor of the House. We did not have a substantive one, of course, about the Welsh aspects of the Parliamentary Voting System and Constituencies Bill, we have not had one about growth, and we have not had one about the disproportionate effect of cuts in Wales, but we are having one today, for which I am very grateful.
I asked the Library staff to look into when we last had such a long interregnum between substantive Welsh debates on the Floor of the House, but once they got back to the 1940s I told them to stop bothering.
Mrs Gillan
The hon. Gentleman will no doubt make absolutely every effort to ensure that the Backbench Business Committee, which is now responsible for scheduling our St David’s day debate, allows us to have it. It did not do so last year, despite my letters to it and despite other Members appearing before it to ask for that debate. If we have that debate, we can cover all the matters that he mentions.
Owen Smith
With the greatest respect, I find it extraordinary that the Secretary of State should now view it as the job of the Backbench Business Committee to decide whether we have a debate on Wales. I am surprised that she should go to that Committee to request a debate, rather than go to her colleagues around the Cabinet table such as the Chief Whip and ask for a debate in Government time.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are having a debate on devolution in Wales, so I am not quite sure whether a future debate is relevant. We ought to stick to the agenda.
Owen Smith
Indeed, and thank you, Mr Deputy Speaker.
Today’s debate and the Silk commission are extremely important, and I welcome them for two reasons. First, they enable the discussion of issues of genuine magnitude. Part I of the commission’s role on fiscal powers, and part II on the boundaries between the competences of Westminster and Wales, both cover enormously important issues that will have an impact on people in Wales in particular and across the rest of the UK. Secondly, the debate is important because it provides an opportunity to discuss the wider issue of the Union, to which my article referred, and the wider context in which the Silk commission is set. A lot of Members, particularly my right hon. Friend the Member for Torfaen (Paul Murphy) in his excellent contribution, have taken that opportunity. I wish to talk about that wider context.
Government Members, including the Secretary of State, have looked askance today at Opposition Members who have said that they are suspicious of the motivation that may lie behind some of the remarks that have been made, and perhaps even behind the Government’s whole direction of travel with regard to the Union. We are seeing diminishing support from the Conservative party for the concept of the Union.
Those concerns are not plucked out of thin air, and they are not illegitimate. They are born of our reading and listening to comments made by Conservative Members, and of hearing comments such as those of the former Prime Minister, Sir John Major, who said that Scottish ambition was “fraying English tolerance”. They come from reading the conclusions of the report commissioned by the Prime Minister, when he was in opposition, from the current Justice Secretary. It recommended that the only way to deal with the West Lothian question was to create an English Parliament with English votes on English issues, denying Welsh, Scottish and Northern Irish Members a vote.
Owen Smith
The Secretary of State shakes her head, but that was the conclusion drawn by a commission led by the Justice Secretary.
Owen Smith
No, it has not been done, as the hon. Lady says. It is very good to see her today—I am very pleased that we have an English Member taking part in the debate, which is extremely important. However, I say to her that what came out of that report was a commitment in the Conservative manifesto and the coalition agreement, which has now been enacted, to begin a debate on the West Lothian question. We are concerned about the direction of travel and the trajectory that many Members now feel has been set.
In recent debates in Westminster Hall and elsewhere, many Members have referred rather aggressively to resentment felt by English constituents about the supposed unfair stipend or subsidy afforded to, and enjoyed by, citizens in Wales, Scotland and Northern Ireland. As Opposition Members have tried to point out today, that is not an unfair stipend, but a reflection of the accurate needs, born of the industrial heritage and present problems, of Wales, Scotland and Northern Ireland. Neither, as my right hon. Friend the Member for Torfaen mentioned, is it a reflection of the relative receipt of revenues in Wales versus parts of England where a needs-based formula already applies: for example, greater subsidy—if we want to use that word—and support is afforded to the north-east, the north-west and even the south-west than is afforded to Wales. It is legitimate, therefore, for us to voice our concerns about the Government’s attitude to the Union. That is not scaremongering; it is merely a question and a set of observations on our part.
The other reason we are worried, of course, is that, traditionally, Conservative and Labour Governments have not been partisan in how they have addressed the constitution, but for the first time, judging from how the Parliamentary Voting System and Constituencies Act 2011 was addressed in this place, a partisan attitude has been taken to the constitution. I hold that view absolutely fully. It is a view that I have heard expressed on many occasions by Conservative Members, not in the House, but outside. They view the Act as being underpinned by partisan motivations, and I fear that we might be seeing a similar set of motivations here. I sense that the Tory party has been seduced by the prospect of hegemony in England in the long term, even if it means a truncated, fragmented UK. I, for one, as a Welshman and proud British citizen, do not want that to come about.
Alun Cairns
Speaking as a Conservative Member, I do not accept that point. In my mind, the purpose of the Silk commission is to provide accountability and stability for the long term, but the motives about which the hon. Gentleman talks were behind devolution in 1997, when it suited the Labour party in Wales, rather than Wales as a nation.
Owen Smith
I wholly dispute that. Devolution in 1997 was born of need and demand in Wales. It had been developing for a long time. It perhaps had not come fully to fruition in 1979, but by 1997 there was a clear demand for it, and that demand has thickened over the past 13 years, right through to the referendum, when we saw it greatly increased.
Alun Cairns
I am grateful to the hon. Gentleman for giving way; he is being extremely generous. If demand was so strong, why was there only a 50% turnout and 7,000 majority? That is how strong his demand was.
Owen Smith
Several Government Members have talked about what, to put it bluntly, is ancient history now and pointed to the size of the mandate and turnout, but we all know that politics is a precarious, parlous business. The Tory party clearly thought that it had a sufficient mandate at the last election. It did not get a majority, but nevertheless it is the ruling party. We have to bury that argument and move on. Right now, there is clear support for devolution in Wales, as was shown in the recent referendum. That is not in dispute. It ill behoves Government Members, who purport to support devolution, to keep dredging up these ancient concerns and this ancient history, because, frankly, it gives us the suspicion that they still have not quite bought into it.
I have a second concern, which, actually, I share with some Government Members—even, perhaps, the hon. Member for Monmouth (David T. C. Davies)—about the constant, cyclical nature of the interaction between demands and desires, legitimate or otherwise, for additional, incremental powers in Wales, Scotland, Northern Ireland and even, perhaps, England. That is a problem. It leads to perpetual pressure for change and to very few instances in which we—legislators in this place and the devolved Administrations, which have their own particular locus—can put our foot on the ball and contemplate the broader picture, the country’s longer-term trajectory. That is hugely important. The Silk commission ought to consider that wider context.
In particular, however, this House needs to consider that wider context and be the place in our country where we contemplate the aggregate impact of the changes to the particular discrete functions and powers of different parts of the UK and where we think long term about what the benefits and disbenefits might be. That is not to take an anti-devolutionist perspective, however. I am thoroughly committed to devolution and the principle of subsidiarity—pushing down power and democratic accountability as low as we can—which is why I talk in my excellent and recommended article for Compass about reinvigorating local government democracy in England, which would be a jolly good thing. However, I am also British—indeed, proudly so—and I feel that my values and those of the Labour party transcend national boundaries and the identity politics that stem from an obsession with national boundaries. My concern is that the wider picture—the longer-term perspective—is too infrequently considered in this place or, in particular, the devolved Assembly. I do not want Wales to be as politically peripheral in Britain as it is de facto geographically peripheral. I worry that at some point that will be the net consequence—the aggregate impact—of these things.
Let me turn briefly to some of the specificities of what Silk will consider. I will take only one—corporation tax—but for me, they all highlight the risk that we might face. Anyone picking up the Financial Times this morning could have read an article about Peter Robinson, the First Minister of the Northern Ireland Assembly, who has advocated adopting a 10% corporation tax rate to compete with the 12.5% rate in the south. My view is that this would be hugely difficult and dangerous. Although it might be advantageous for Northern Ireland in the short term, we should also consider the risk that it would necessarily lead to arbitrage between the two areas and to different pricing arrangements. If we had variable taxation bands between different parts of the mainland, we would certainly see arbitrage across the borders and we would need internal transfer pricing policy and legislation in this place and the other jurisdictions. Given the difficulties with legislative vehicles to deal with transfer pricing between European countries—the disaster, even—what on earth would they be like within the UK?
Westminster needs to hold the ring. Westminster needs to consider the risks. Westminster needs to be the place where this debate is thought about, in conjunction with the discrete and—from the perspective of the local jurisdictions—eminently reasonably changes that may be wished for. This place also needs to be where the broader economic context is considered, because, bluntly, some of the peripheral changes to taxation that we are talking about and that Holtham talks about—indeed, perhaps even the larger changes too—will not lead to the growth, jobs, wealth and opportunity that would be created by measures that the Government could be implementing right now, such as those in Labour’s five-point plan.
Nick Smith
I congratulate my hon. Friend on his support for subsidiarity and decisions being made at the right level. The success of the Welsh Assembly, particularly in the last few months, has been based on its good ideas, such as the Welsh job fund and introducing local police support officers, all because people in Wales are fed up with the horrible attacks that we have seen from the Government.
Owen Smith
My hon. Friend is absolutely right. The Welsh Assembly has understood that in order to stimulate our economy we need a stimulus. We cannot sit on our hands and assume, as the Government do, that laissez-faire economics will drive economic progress in our country.
Owen Smith
I will not give way; I am going to finish in a moment.
We need a stimulus, which is why the five-point plan that Labour has produced is absolutely what we should consider implementing. It is also why we should be celebrating what Carwyn Jones and the Welsh Assembly Government have done along the same, as it were, Keynesian lines.
I will conclude with the broader economic picture. It is for this place to bring the global and European context to bear in this debate. However, it is ironic that at a time when Members in all parts of the House are advocating greater collaboration and greater cohesion and integration of states’ fiscal powers on the continent—it is particularly ironic that Conservative Members should be doing that at all—we in the UK are contemplating disaggregating those fiscal powers. That is a profound irony—one perhaps born out of the peculiarity of how our constitutional thinking has developed. It is for us—and, in particular, the Secretary of State for Wales and her Northern Ireland and Scotland colleagues—to ensure that those thoughts are brought to bear round the Cabinet table and to subjugate any party political interest beneath the national interest, for all our citizens right across the UK.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. There are three speakers to go, and we have 25 minutes left for them. If they can divide that time equally, that would be very helpful.
Mrs Eleanor Laing (Epping Forest) (Con)
I thank the hon. Member for Pontypridd (Owen Smith) for his kind words in welcoming me to the debate as the only Back Bencher not representing a Welsh constituency. I am here quite deliberately because I agree with the hon. Gentleman, as well as the right hon. Member for Torfaen (Paul Murphy) and, of course, all my hon. Friends on this side of the House, that it is this Parliament, the Parliament of the United Kingdom, that ought to debate matters concerning the Union. I am very much a Unionist, and I will never be anything else. If we start to draw lines and say that people who are elected to seats in Essex should not speak on Welsh matters, or that those who represent Cornwall should not speak on Scottish matters, we are negating the very concept of the Union, which most of us wish to defend.
I am sorry to see that the shadow Secretary of State, the right hon. Member for Neath (Mr Hain), is no longer here, because I have saved up all my political arguments to put to him across the Floor. He made some appalling remarks in his speech, but it is his right to do so. I can tell the House that, just as he has Scottish roots, my maiden name is Pritchard, and you cannot get much more Welsh than that. I do not think that my father ever set foot in Wales in his life, however, and I do not think that his father, or his father before him, did either. I must have some Welsh blood somewhere, but that is not the point.
The point is that we are the Parliament of the United Kingdom, and the devolution settlement that we have put together for certain parts of the United Kingdom affects all of the United Kingdom. It is like a tube of toothpaste; you cannot press one part of it without making an impression on the other parts. Anything to do with devolution, and anything that affects our constitution in any way, affects the whole of our country. There ought to be more Members from other parts of the United Kingdom here today, so that they might understand that we, as a whole, have responsibility for what happens in any part of the United Kingdom.
I also agree with the hon. Member for Pontypridd—this is getting disturbing—that the distribution of taxpayers’ money to Wales, Scotland and other parts of the United Kingdom is fair because it is based on deciding which part needs the most input from taxpayers’ investment in our country as a whole.
Owen Smith
On a point of fact, the distribution to Wales is not based on need—that is why we have long argued for a needs-based formula—but it is reflective of need.
Mrs Laing
I appreciate what the hon. Gentleman is saying. I do not believe that we should have a needs-based formula. I would always argue that the Barnett formula distributes taxpayers’ money in a reasonable manner, even though it obviously needs to be reformed and brought up to date. Just as Newcastle does not require the same sort of taxpayer subsidy as Surrey, and just as the centre of Birmingham does not require the same amount as the leafy lanes of Kent, so it is important that we get the balance right in Scotland and Wales.
Jonathan Edwards
Does the hon. Lady recognise that London gets a higher percentage of public expenditure per head than any other part of the British state, including Wales?
Mrs Laing
Of course, because some areas of London are desperately in need of help from taxpayers’ money. There are enormous areas of poverty, deprivation and need in London; that is why it happens. Of course it does. If the hon. Gentleman is not willing to be fair to people who live in London, why should the rest of the country be fair to his constituents?
That brings me to the other points made by the hon. Member for Pontypridd and the right hon. Member for Torfaen. Although I would argue that the distribution of taxpayers’ money is currently done fairly, the democratic balance between different parts of our United Kingdom has not, until now, been fair. It is totally outrageous that the hon. Member for Pontypridd should describe as “shameless gerrymandering” the equalisation of constituencies. In what way is it democratically fair that Pontypridd has 58,000 electors, Torfaen 61,000 and Neath 57,000, while the Secretary of State’s constituency has 70,000 and mine has 72,000?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We are debating devolution, not constituency size. We are in danger of dragging the debate somewhere we should not be going to at this time of the evening.
Mrs Laing
Of course, Mr Deputy Speaker. I was merely illustrating the balance of fairness, and saying that if we are to distribute funds fairly, we should distribute democracy fairly, too. Many Opposition Members have made that point this afternoon, and it was time for it to be corrected. I am glad you allowed me to do so, Mr Deputy Speaker. I appreciate that we have had a long debate and that Opposition Members still wish to speak, so I shall be brief.
The constitutional development of our country is ongoing and continuous. Like other Members, I was not in favour of devolution to begin with, but I have come to realise the benefits from having devolved government, so I warmly welcome the Secretary of State’s setting up the Silk commission. This is a genuine commission. The Secretary of State has made it clear that she has no “pre-conclusions” about what the Silk commission should do or where it should go. Just as the Calman commission did an excellent job for Scotland, resulting in the Scotland Bill, I am sure that the Silk commission will do the same for Wales.
It is important for the commission to look seriously, as I am sure it will, at the issue of accountability as its first duty. Democratic accountability obviously comes through accountability for spending money and therefore for raising money. At present, the settlement in Wales gives the power to spend without the responsibility to raise taxpayers’ money. I argue that accountability is possible only if there is a link between the casting of the vote, the paying of the taxes and the outcome of the election.
Owen Smith
Is not the logic of that argument that all spending should be devolved to Wales in order for it to be fully accountable, or is it enough for just a tiny fraction of spending to be devolved? Does that take the trick?
Mrs Laing
No, that is not the logic at all. If the hon. Gentleman argues in that way, he is arguing against himself. He agrees with me and with many of his hon. Friends that it is this Parliament that represents the whole of the United Kingdom, so this Parliament must have the responsibility not only for raising most taxes but for spending them. He has argued, as have others, that devolved Assemblies and Parliaments must bear responsibility as well as wielding power. As I say, if that is his argument, he is arguing against himself.
Mrs Gillan
My hon. Friend is making a valuable contribution to the debate. It is interesting to note that regional-level Governments in other countries raise a percentage of their own expenditure. For instance, in Germany regional Governments raise 56% of the 63% that is spent, and in Spain they raise 23% of the 49% that is spent.
Mrs Laing
As ever, I thank my right hon. Friend. Those examples illustrate my argument extremely well.
There is no doubt that there cannot be proper accountability without a well-constructed democratic system involving fiscal responsibility as well as democracy. At present Wales benefits enormously from public spending. The public expenditure cuts in Wales are considerably smaller than cuts in the rest of the United Kingdom, and public spending is currently 12% higher. As I have said, I entirely support that position. No one is trying to do Wales any harm; quite the opposite.
I am pleased that my right hon. Friend has given the Silk commission the duty of examining the future scope of devolution. Wales can learn much from what has happened in Scotland. There is a significant difference between the situation in Scotland and the situation in Wales because Scotland has, historically, its own legal system and other institutions that Wales does not have—I say that as a Scots lawyer who is perpetually confused by English law when we discuss it in the House—but the commission is nevertheless likely to bring Wales great benefits for the future.
Huw Irranca-Davies (Ogmore) (Lab)
I had intended to speak for about an hour, but I probably intervened for about an hour instead, all told, and I apologise to my colleagues for that. I shall therefore make my speech as short as possible.
The hon. Member for Epping Forest (Mrs Laing) opened her speech by saying that she was she was a proud Unionist. I would describe myself as a proud Unionist as well, but also as a proud devolutionist. I am a Unionist not on the basis of any ideology or fixed arbitrary principle, but in recognition that—as in the old trade union cry, “Unity is strength”—the constituent parts of the United Kingdom together add not only to social cohesion but to economic activity, and to our political clout on the world stage. That should be recognised in today’s debate.
The theme that I want to adopt in my brief speech, and to convey to members of the Silk commission if they hear today’s debate, is that we should not be talking about loosening ties. Instead, we should engage in a mature debate, recognising that there is a positive, welcome tension between our Government and the Governments in Scotland, Wales and Northern Ireland—although I must add, perhaps to the disappointment of my colleagues in the Plaid Cymru camp, that that is not necessarily a recipe for independence. I think that we carry much more clout if we work together. If devolution constituted a settlement, I think that on the basis of today’s debate we can all agree that it is still settling. If it is a process, I think what we have learnt from the debate is that we need to know where it is processing to.
Let me begin by paying tribute, as others have done, to the calibre and quality of the members of the commission—not least the political appointees, but in particular Paul Silk. He will be known to my right hon. Friend the Member for Torfaen (Paul Murphy) and other Members not just because of his extensive experience, but because he was a House of Commons Clerk for nearly 25 years during three different periods. He is also a former Clerk of the Welsh Grand Committee. He has lectured and written extensively on Parliament and the constitution; he co-authored the seminal book, “How Parliament Works”. I think we can all agree, therefore, that no one better appreciates the very sensitive balance of our constitutional settlement.
Professor Nick Bourne was a colleague of mine—not political, but academic—at Swansea Institute in my lecturing days. He was also shadow Minister for Finance and Public Service Delivery, in addition to his role as Leader of the Opposition. I am sure he will also make a good contribution to the Silk commission.
Sue Essex is very well known, and there is a huge amount of cross-party support for her on a number of issues. She is a former Minister for Finance, Local Government and Public Services. She is clearly of high calibre, therefore. Dr Eurfyl ap Gwilym is an economics expert and a long-standing adviser to Plaid Cymru. He has for many years advocated revisiting the Barnett formula. Rob Humphreys has been a strong advocate of devolution for many years, and was also a member of the all Wales convention. The Silk commission is in good hands with them and its other members.
My right hon. Friend the Member for Torfaen gave a warning about a possible Trojan horse. I welcome the fact that we are debating this subject today and that the Silk commission will undertake the work assigned to it, but I suggest to my right hon. Friend that the danger is not so much of a Trojan horse, but of a horse and trap, in that this could lead us into a trap.
The Secretary of State must understand that concern; these are not idle worries. Although there is significant merit in addressing the two matters that the Silk commission will examine—power and fiscal responsibilities—there is a worry that Wales will be done down. To her credit, the Secretary of State has made it clear today that she does not want that to happen, but there is a great deal of concern among Opposition Members that we might end up in that situation, particularly given the coalition’s approach to constitutional affairs since it was formed. The concern is that this process will not be about looking after the best interests of the people of Wales, or even the best interests of the institutions of Wales—that is, in fact, a decidedly secondary consideration—but that instead it will be a way to look as if we are giving with one hand, while in reality taking away with the other. That is a concern, and we must monitor what happens.
Although I welcome today’s debate, it must not be the only one on this topic. We must find opportunities to address it in the Welsh Grand Committee or a different forum, because we need to discuss the burning issues of the day facing Wales, such as the state of the economy and of society and, as I see in my constituency, the attacks on our communities.
My family has not consistently been on the same side in the devolution debate. My late uncle, the Member for Gower for many years, was a strong defender of the status quo back in 1979, along with many other notable people at that time. Times move on, however, and it is right for us to address this issue again as things progress, and we must also acknowledge that it involves not only the Wales question but the England question too. That also needs to be addressed. I should add that I welcome the involvement of England MPs in today’s debate, and that engagement must continue and deepen.
The England question becomes more important the more Scotland considers its powers in respect of fiscal autonomy and other areas, and the more Wales considers such matters too. If we do not address the England question, there will not only be political asymmetry in the old Celtic and Pictish nations; there will also be asymmetry here in England.
Through the years, numerous suggestions have been made as to how to address the England question, and many of them have been rejected out of hand. The idea of having an England-only Parliament has been proposed, as has the idea of restricting the ability of Welsh, Scottish and Northern Ireland MPs to “interfere”, as some would say, in England-only matters. As we have learned in today’s debate however, there appears to be a general consensus that it is pretty hard to identify England-only matters, and it is also hard to identify Wales-only matters. We need to speak loudly in defence of the ability of this place to continue putting its opinions forward strongly on all matters.
Alun Cairns
The hon. Gentleman is making an important point, which I think is recognised on both sides of the House. Does he think that that principle also needs to apply to his colleagues in the Welsh Assembly, and that they should recognise that the decisions that they take affect policy making here? There therefore needs to be dialogue between the Welsh Affairs Committee and Ministers in Wales, between Back Benchers and Ministers, and between Ministers here and Ministers in Wales.
Huw Irranca-Davies
Indeed. People who, like me, are very positive about devolution welcome such maturity and two-way engagement. We should look for ways to enhance that. That is to do with respect and, as I said earlier, that respect goes both ways.
Huw Irranca-Davies
I am sorry, but I will not give way because I need to leave enough time for another person to speak.
I will try to fit in another couple of key points in one minute. We are looking at the reverse of the Boston tea party—the “No representation without taxation” principle. Perhaps that could be called the Bangor tea party, or the Barry tea party. It has been asked what proportion of the fiscal arrangements is needed for financial accountability. Is it a tiny element and just tinkering around the edges, or is it more substantial? I ask the Secretary of State to expand on the timetable. She said something about it in her opening remarks, but it seems to be in the medium grass, if not the long grass. Perhaps she can say something a little more concrete about when the commission will report and when we might see something in Parliament.
A critical factor that has been mentioned several times is the Holtham commission. It has been praised repeatedly by Conservative Members. In that case I say to them, and to the Secretary of State, let us get on with implementing it, regardless of waiting for the Silk commission. We would do a great service to the people of Wales by implementing it right now. The point has been made that Wales is not over-subsidised compared with other parts of the UK. That has long been a myth, but we are not, we are not, we are not. All we are calling for is fair treatment. Implementing the Holtham report would help us to copper-bottom that.
To add an element of caution, what we do not of course want at the end of this commission is what we might refer to as “Silk cuts”. We want an enhancement for Wales, not a diminution of our financial power or democratic clout.
Finally, the Assembly is only just over 10 years old. It is still, by the standards of democratic institutions, something of a stripling. Let us take these decisions wisely, cautiously and with careful consideration. Just as devolution had many fathers, some of whom were in this House, we need to be engaged as this process goes forward.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Before I call the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), I suggest that he can speak until 28 minutes to 6, because of everything that has gone on.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I am very grateful, Mr Deputy Speaker. I have curtailed my speech a fair bit because of the time constraints, but I am not too upset because most of it was trailed in The Western Mail this morning. I have no idea how it got there, but perhaps it was lucky that it did.
This is a timely debate and I congratulate the Secretary of State on securing this time on the Floor of the House, because the nature of the British state is clearly changing. The strength of the yes vote in March has given huge momentum to the growth of the political autonomy of our country. Events in Scotland, with the historic victory of the Scottish National party in May, mean that there will be a referendum in the next three or four years on independence for Scotland. I am not a betting man, but I know where I would put my money if I was. There will be serious repercussions for the British state. We know that it will be a multi-option referendum. Even if the SNP does not win the referendum, and I am increasingly convinced that it will, there will be a devolution-max settlement.
There is currently a dual process on the funding of Wales with the Silk commission and the bilateral negotiations on the reform of the funding formula. It is important that we have progress on the latter as we discuss the former, and that the debate is as open as possible. Three parties are included in the debate on the important issue of Barnett reform: the Labour party, which leads the Welsh Government, and the Lib Dems and the Conservatives, who lead the UK Government. We have been excluded. The information on that debate needs to be open and we need to hear about its progress before we start talking about the fiscal measures that the Silk commission will address.
My party fully agrees with the points made by the Secretary of State and Tory Back Benchers about accountability. Before I came to this place, I served as a town councillor in Carmarthen. We were responsible only for very local matters, but we had taxation powers. For the life of me I cannot understand why anybody would oppose giving the Government of Wales similar powers, as this would, not least, focus the minds of Assembly Members on wealth generation, which is very important. If we are serious about creating a more prosperous and just society, we have to focus on wealth generation, as do the Welsh Government. Giving them tax-raising powers would make them focus more on such issues and on some of the give-away processes that we are seeing at the moment.
Taxation powers and borrowing go hand in hand, and I am grateful that the Silk commission will be able to look at borrowing powers. In a situation where we will have a varying income stream as a result of having taxation powers, borrowing is the best measure for smoothing out those differences, and it is right and proper that the Welsh Government will be able to have those powers if the commission so recommends.
We know that there are two phases to the commission, the first of which will examine taxation powers. We have been scouring the world for best practice in federal states, and I do not think that there is anything new about what is on the agenda. There are many examples from across the world that we could use to best effect in Wales. Any submission that my party gives will be a compromise, because clearly our policy is for the devolution of all taxation matters ultimately. However, we will be trying to engage with this process constructively and we hope that parties from across the spectrum will engage in the same manner.
The second phase of the commission will examine further areas of power. The Parliamentary Voting System and Constituencies Act 2011 has given added momentum to this, because we know that we will lose a quarter of our Members of Parliament. Unless further areas of power are devolved to the Assembly there will be a democratic deficit, because there will be fewer Members scrutinising decisions made on Wales. We argued during consideration of that Bill, with those on the Labour Benches, that it was not proper to cut the number of Welsh seats based on the referendum result. All the referendum did was enshrine sovereignty over current devolved matters. I still hope that Lib Dem colleagues might rebel when the matter comes back to the House and I might be able to keep the constituency of Carmarthen East and Dinefwr. If not, and if my fantastic constituency and the fantastic constituency of Arfon disappear into the annals of history, further fields of power need to be devolved to the Assembly to avoid that democratic deficit.
My last point relates back to my intervention on the Secretary of State. I was grateful to receive a very detailed response, as I did not think I would. If there is a consensus on the commission between the political parties and among civil society, there needs to be a clear process map to make the recommendations become law.
Nia Griffith (Llanelli) (Lab)
We have had a long and full debate, and we have wandered over many subjects. We heard the hon. Member for Monmouth (David T. C. Davies) ensure that we heard a plurality of views. In his own completely inimitable style he told us that the Silk commission should have a remit to consider clawing back powers from the devolved Administration. That view must be unique to him.
Mrs Gillan
The Silk commission can look at the boundaries, and that means adjustments in either direction.
Nia Griffith
I thank the Secretary of State for that clarification.
My right hon. Friend the Member for Torfaen (Paul Murphy), a former Secretary of State for Wales, spoke with passion and conviction, standing up firmly for Wales and pointing out the deep mistrust of the current Government’s attitude to Wales, which is exemplified by the roughshod way in which Ministers are cutting the number of Welsh constituencies from 40 to 30. That fuels deep suspicions about what the Government’s motives are for setting up the Silk commission.
My hon. Friend the Member for Caerphilly (Mr David) stressed the need for a pragmatic approach that brings power nearer to the people but which does the best for the people of Wales. The hon. Member for Arfon (Hywel Williams) referred the Silk commission to his private Member’s Bills, the Bilingual Juries (Wales) Bill and the Jobcentre Plus (Wales) Bill. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who had very little time, unfortunately, urged the Lib Dems to rebel on the constituency boundary issue.
My hon. Friend the Member for Ogmore (Huw Irranca-Davies) stressed the importance of this Parliament in taking decisions for the whole UK and urged that we move forward wisely, cautiously and with careful consideration of the issues. The hon. Member for Brecon and Radnorshire (Roger Williams) pointed out the importance of the Calman commission and stressed the excellent credentials of its members, and his words have been echoed by many hon. Members.
The hon. Member for Aberconwy (Guto Bebb)—I am not sure whether he is listening—stressed the importance of accountability and talked about practicalities. He spoke of the importance of treating businesses across the whole UK equally, but he then talked about different national insurance rates, so I am not sure quite where he was coming from.
The hon. Member for Vale of Glamorgan (Alun Cairns) talked about the need for stability and there being no further changes for a generation. He stressed the need for the Silk commission to consult effectively and to reach out to those who have not been effectively engaged before, pointing out concerns about the volatility of some taxes. The hon. Member for Epping Forest (Mrs Laing) reaffirmed her strong Unionist credentials and welcomed the commission, which she sees as an important step towards accountability.
My hon. Friend the Member for Pontypridd (Owen Smith) referred to the difficulties of having continual change and to the need to take a long-term view. He also stressed the need for economic stimulus, as set out in Labour’s five-point plan, and pointed out the measures that the Assembly Government are taking to implement elements of that in the areas for which they have responsibility, such as with the successor to the future jobs fund—the jobs growth fund—and with some investment in infrastructure, where they are able to do so.
The Opposition very much welcome the establishment of the Silk commission and the important tasks it has to do. Its first task is to review the case for the devolution of fiscal powers and to recommend ways in which the financial accountability of the Welsh Assembly could be improved. It will no doubt refer to the work done by the Holtham commission in its analysis of some of the possible ways of transferring revenue-raising mechanisms to Wales. It can examine the practicalities and the likely consequences of implementing any such measures. We should not underestimate the complexity of this issue or the dangers of people being, quite naturally, tempted to play the system by switching from one side of the border to the other. That issue has been mentioned by several hon. Members, particularly my right hon. Friend the Member for Delyn (Mr Hanson). Most importantly of all, the Silk commission will need to consult and take account of public opinion. It is vital that a move towards any change has the support and backing of the people of Wales.
We are disappointed that the Secretary of State has decided to make setting up the Silk commission a priority over tackling the challenge of delivering a fairer funding system for Wales—an issue that is specifically excluded from the commission’s remit. If her Government were really interested in delivering the best for the people of Wales, they would have made it a priority to introduce the so-called Barnett floor—a concept that was explored in the Holtham reports and adopted by Labour in our 2010 manifesto as the most practical and immediate step to protect funding to Wales.
Roger Williams
Does the hon. Lady agree that the floor has less applicability in these straitened economic times than it would if there were an expanding economy?
Nia Griffith
As the hon. Gentleman will have heard my right hon. Friend the Member for Neath (Mr Hain) explain, we are at a tipping point. Until now, the Barnett formula has served the people of Wales well, but from this year onwards the balance will tip slightly in the other direction. Putting a floor in would offer additional protection and would be a straightforward measure. It could be implemented with the agreement of the Treasury and without having to go into the difficulties of trying to work out a needs-based analysis, which is much more complex but is something that we might wish to see in the long term. So, as Holtham identified, the Barnett formula has served Wales well up to now, but if nothing is done it will begin to disadvantage Wales. The whole point of putting in the Barnett floor is to prevent that from happening and to protect funding. The Holtham commission recommended moving to a needs-based analysis, and it produced evidence of how a needs-based funding system could be made to work in a way that is fair to all parts of the United Kingdom. In its second report, it demonstrated that a needs-based funding formula that is fair to Wales would deliver £117 to Wales for every £100 that is spent in England on devolved activities. It recognised, too, that moving to a needs-based formula would take time but, in the meantime, the Barnett floor could protect Welsh funding. Instead of making that a priority, as it could be implemented quite easily, the Secretary of State has set up a commission that specifically will not consider the issue of funding reform.
Nia Griffith
I hope very much indeed that that bilateral work is progressing quickly and effectively.
It is small wonder, given the Conservatives’ track record on devolution, that many Opposition Members have expressed suspicions about the Government’s motives for setting up the Silk commission. There are suspicions that the Government might be trying to sell Wales short and push through measures that would seriously disadvantage Wales. The concentration of wealth creation in London and south-east England means not only in Wales but in Scotland, Northern Ireland and the other regions of England that public expenditure is greater than the income from those areas, which are all net beneficiaries of the UK tax regime, while London and parts of the south-east and East Anglia are net contributors.
That is for historical reasons, including the early emergence of London as the commercial capital and its importance as a world financial centre, and it is in contrast to other European countries, where the importance of the city state and, much later, unification has produced different patterns of wealth distribution. The disparities have existed in the UK for many years: they are deeply embedded and cannot simply be eliminated by a few years of regional policy or European funding, helpful as that is to compensate for the differences. Nor can they simply be eliminated by substantial growth in the private sector, vital as that is to Wales and across the UK.
With such deep-seated historical differences in wealth distribution, complete financial independence for Wales, as advocated by Plaid Cymru, is an absolute non-starter. With a gap of £14.6 billion between public spending and the revenue raised in Wales, it would mean every man, woman and child in Wales contributing an extra £4,800—nearly £5,000 each a year just to maintain current levels of spending.
Jonathan Evans
The Labour party has been using those figures quite heavily today, and it has based them on the Holtham report, but that is misleading. The report indicates a gap of £6 billion. Will the hon. Lady correct that statement and the statements of the right hon. Member for Neath (Mr Hain)?
Nia Griffith
Those figures were recently provided by the House of Commons Library, on 2 November, and I am sure that it has checked them thoroughly.
We are suspicious about the Government’s motives in setting up the Silk commission, whose remit excludes fair funding. It looks as if the Government might be using it as a back door to cutting funding to Wales, or seeking to adopt measures that could leave Wales subject to fluctuations in funding that would be impossible to cope with. The Labour party will strongly resist any moves that would disadvantage Wales.
Many people have been puzzled by the timing of the debate, as the remit for the Silk commission has already been set, so it did not offer an opportunity to influence its terms of reference. Perhaps, when the commission has had a chance to study the issues, it may wish to seek views or raise questions in an interim report, and that would be a more appropriate time for a debate. Having the debate now, before the commission has even begun its work, but after the terms of reference have been decided, is somewhat bizarre. [Interruption.] I think that the Secretary of State is trying to intervene, but the point was well made by my right hon. Friend the Member for Torfaen that that does make us question the reason for the debate.
Mrs Gillan
I should like to inform the hon. Lady and the House that the terms of reference were agreed with the Labour party in the Assembly.
Nia Griffith
The irony being that today we have discussed the importance of Parliament; many Government Members have referred to the importance of the commission being set up by Parliament.
Nia Griffith
No, I think that I have made my point. Opposition Members felt that they would have had more chance to influence things if the timing of the debate were different.
Up and down Wales, as far as the person in the street is concerned, the Silk commission is set up and can get on with its work. What those people are worrying about today is the empty order book in their company, the shops that are closing in their high street, the cuts in their council services, losing their job or their home, their children not being able to find work, and the daily struggle to make ends meet as prices for essentials such as food, vehicle fuel and energy bills spiral upwards. They understand something that the Government seem to have forgotten—that before the Government can raise any revenue or talk about any formula to distribute it, they need wealth creation. Indeed, what is the point of talking about taxation without wealth creation?
This week the Government have sent completely the wrong message to potential investors in Wales. Only days after the head of Tata Europe told MPs that he has been having serious doubts about future investment in Wales because of this Government’s lack of a long-term manufacturing strategy, the Government confirm his doubts by trying to sneak out in a written statement yet further cuts to the feed-in tariff scheme, with devastating effects on the industry. This is not about feed-in tariffs. This is not just about manufacturing industry. This is about raising the proper revenue and then being able to do something with it. It is about wealth creation, setting the right long-term strategies that will encourage manufacturing to come to Wales, attracting the investment that we need and providing the wealth so that we can talk about what we do with it. [Interruption.] I still have two minutes to go, I believe.
Why do we remain wary of the Government’s motives and suspect that they might be setting up the Silk commission to try to reduce funding to Wales? Because daily we see funding being sucked out of Wales, whether in higher VAT, the change from the retail prices index to the consumer prices index for the calculation of pensions and benefits, or the winter fuel allowance being cruelly cut for the over-80-year-olds from £400 to £300 this month, leaving many worrying about whether they can afford to put the heating on. It is this sucking money out of Wales that worries us considerably.
Although we welcome the Silk commission, wish it well with its work and look forward to debating its findings, in the meantime I again ask the Secretary of State to make it a priority to establish the so-called Barnett floor to protect funding for Wales, and I urge her Government to adopt fiscal policies that will stimulate the economy in Wales.
The Parliamentary Under-Secretary of State for Wales (Mr David Jones)
This has been an important debate and, as it turns out, one that is particularly well timed because the Silk commission will hold its first meeting tomorrow. I am sure right hon. and hon. Members in all parts of the House will wish it well, and that the members of the commission will be grateful for the opportunity to take into account the numerous points that have been made by Members on both sides of the House this afternoon, not only on the commission’s work but on the matters that it should take into consideration when arriving at its conclusions. I am pleased that so many hon. Members were able to contribute to the debate today and make a variety of important points that I am sure the commission will find extremely valuable.
As the Secretary of State pointed out, this is a Government who have delivered for Wales. Despite the doubters and the nay-sayers, we delivered the referendum on primary legislative powers for the Assembly in March and now we are taking that further by delivering on our coalition commitment to establish a commission to consider, first, the question of the financial accountability of the Welsh Government and of the Welsh Assembly, and secondly, the powers of the Assembly, and to recommend modifications to the present constitutional settlement that may enable Welsh devolution to work more effectively within the context of the United Kingdom.
It is timely that the commission should start this work now. The Welsh Government spend some £15 billion of public money each year. They and the Assembly now have considerable powers, which extend to primary law making in the devolved areas. It is widely accepted not only in the Chamber but outside that that level of power should be matched by accountability to the people of Wales for the money that those institutions spend on their behalf. The issue of financial accountability is a hugely important part of the Silk Commission’s remit. Seeking to build consensus around the extent and form of accountability is a challenging aspect of that remit.
The second part of the commission’s task, which will commence towards the end of next year, is also important. By then, Wales will have experienced more than 13 years of devolution. People will have had considerable time to assess whether the suite of powers vested in the Assembly and in the Welsh Government are working as well as they could be in the interests of Wales and, importantly, in the interests of the United Kingdom as a whole. It will be an appropriate time to assess whether modifications to the devolution settlement should at least be considered, so the work of the commission is extremely important. As my hon. Friend the Member for Vale of Glamorgan (Alun Cairns) pointed out, we will need to listen carefully to the views of people across Wales and the United Kingdom and seek to establish a consensus on the way forward. I am sure that Members’ interesting and varied points will be extremely valuable to the commission as it starts its important work.
Huw Irranca-Davies
I am trying to get my head around the idea of the level of financial devolution that will give accountability to the Welsh electorate. In local authorities it is typically up to 20%. Do Ministers envisage such a figure, or 2% or 3%?
Mr Jones
My right hon. Friend the Secretary of State has already indicated the levels of fiscal accountability that are devolved in other parts of Europe. Ultimately, these will be matters for the Silk commission, which, as the hon. Member for Arfon (Hywel Williams) pointed out, will no doubt take into account what prevails in other parts of Europe in arriving at its conclusion, as it should.
In the brief time remaining, I will respond to the various points made. The shadow Secretary of State has explained to me the reasons for his absence, which we fully understand. He was less than enthusiastic about the commission, giving it a “cautious welcome”, which was as cautious as it gets and gave a whole new meaning to “welcome”. Resorting to the oldest rhetorical trick in the book, he set up the straw man of “devo-max”, under which Wales would be responsible for raising all its own revenue. He seemed to suggest that the commission’s recommendations might result in Wales having to raise all its own revenue, as a consequence of which public spending would be halved. I hope that it is unnecessary to point out, but I shall anyway, that the people of Wales should ignore these scare tactics.
Mr Jones
I shall not, as I have very little time left. I am sure my hon. Friend understands.
Fiscal devolution will work only where there is consensus on the powers to be devolved and in circumstances where the transfer of powers does not put unsustainable burdens on either the devolved Administration or the UK as a whole.
The shadow Secretary of State and other hon. Members mentioned Holtham and inquired why it was not being brought within the remit of the Silk commission. Separate bilateral discussions continue between the Government and the Welsh Government on all the Holtham commission’s proposals, including the idea of a funding floor and its wider proposals for reforms—an approach supported by the Welsh Government. The Government and the Welsh Government have started discussions, which will include work to gain a shared understanding of trends in Welsh spending, of previous studies on Welsh needs and of the operation of existing borrowing powers. Once consideration of spending trends and previous needs studies has been completed, and subject to Government and Welsh Government Ministers agreeing that a problem exists, the next step will be to look at options for reform. I put that on the record because of the concerns that right hon. and hon. Members expressed.
I believe that we must rely on the good sense of the commission, which will seek to find consensus—I make no apology for repeating the word because it is crucial to the commission’s work—on the extent to which the Welsh Assembly and Government should become more financially accountable.
I found the shadow Secretary of State’s negativity and tribalism most disappointing, and it was not typical of the debate. He appeared to have little or no faith in the capacity of the people of Wales to run to any extent their own financial affairs and, perhaps more importantly, to decide whether at an election a politician is making an unsustainable promise, which of course is crucial to what it falls to us to consider.
I found the contribution of my hon. Friend the Member for Monmouth (David T. C. Davies) disappointingly and uncharacteristically cynical. [Hon. Members: “Oh!”] I have to say, I found it quite hurtful. He said, almost in terms, that the conclusions of the commission were a fait accompli that would lead inevitably to more powers for the Assembly, but the commission has been asked to consider the boundaries of the devolution settlement and modifications that could work well for the benefit of Wales within the United Kingdom.
I am sorry that the right hon. Member for Delyn (Mr Hanson) is not here, but he made the important point that significant cross-border issues fall to be considered, and it is well within the commission’s remit to decide that in certain cases powers should be repatriated from the Assembly. That is what the Calman commission found in its consideration of the Scottish devolution settlement, and it is quite open to the Silk commission, which has a wide-ranging remit, to do so, too, so I hope that that offers some reassurance to my hon. Friend—who looks very reassured, I am bound to say.
The right hon. Member for Torfaen (Paul Murphy) praised the excellence of the commission members, and I feel it appropriate to echo that praise: we have a very well constituted commission. He raised the spectre of a Trojan horse, however, and doubted whether there was any real consensus on the commission, so I think it fair to point out once again that all the party leaders in the Assembly, including the Labour First Minister, co-operated in agreeing the commission’s terms of reference, and each party has a political appointee on it. I hope that gives the right hon. Gentleman some reassurance that it is not by any means an evil Tory Trojan horse; it is a genuine attempt to see whether it is possible to arrive at a settlement that will benefit the people of Wales in the long run.
The right hon. Gentleman also raised the issue of whether there will be a referendum on additional tax-raising powers, but that very much depends on what the Silk commission itself recommends. I for one find it hard to see how, for example, if there were recommendations on any significant changes to income tax, it would be possible to go forward without consulting the people of Wales as to whether that was what they wanted; after all, that is what happened in Scotland, and I have no doubt that it should happen in Wales.
The hon. Member for Brecon and Radnorshire (Roger Williams) took considerable credit on behalf of our Liberal coalition partners for the establishment of the commission, but I have to point out that it was a joint coalition commitment and one to which the Conservative party is very much wedded. He, too, praised the excellence of the commission members, and he paid tribute to Nick Bourne, the Conservative nominee. I can only echo the hon. Gentleman’s view that Professor Bourne will be an excellent member of the commission.
The hon. Member for Caerphilly (Mr David) did give a welcome, which I believe was genuine, to the commission, and I was very pleased to hear it, but he referred to the terms of reference and queried the reference to the United Kingdom’s wider fiscal objectives, pointing out that we live in a time of stringency that has resulted in spending reductions. Well, of course, it has, and I will not intrude into his private grief by pointing out the reason why we have to cut our public spending, but nevertheless it is quite right that whatever the commission decides should operate within the wider fiscal objectives of the United Kingdom as a whole.
There were excellent contributions also from my hon. Friend the Member for Aberconwy (Guto Bebb), the hon. Member for Arfon, my hon. Friend the Member for Vale of Glamorgan (Alun Cairns), the hon. Member for Pontypridd (Owen Smith) and my hon. Friend the Member for Epping Forest (Mrs Laing), who came up with a memorable toothpaste tube metaphor, which I shall use regularly when talking about the effect of devolution on the United Kingdom. There was also a supportive contribution from the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards).
This has, as I say, been—
Female Genital Mutilation
(13 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Jane Ellison (Battersea) (Con)
I am grateful for the opportunity to raise this important issue again in the House. Female genital mutilation—FGM—affects millions of girls and women around the world, including here in the UK. My remarks this evening are focused on FGM in the UK, and what we can do to prevent it.
FGM is a gross violation of girls’ human rights, and is nearly always carried out on minors. In the UK, the girls most at risk are usually aged between eight and 12, but are often much younger. We should therefore be clear from the outset that FGM is a form of child abuse. FGM is defined by the World Health Organisation as the full or partial removal of, or injury to, the external female genitalia for non-medical reasons. Although it occurs in countries across the world, it is particularly prevalent in sub-Saharan Africa. There are no benefits to FGM. Indeed, quite the opposite is true. The girl’s health is damaged for ever.
There are various types of FGM, but the most extreme, which is the most common in larger FGM-practising communities settled in this country, is type 3. That is total removal of the victim’s external genitalia. The girl is then infibulated—effectively sewn up. I am sure that hon. Members can imagine the dreadful impact of that on the quality of life and the health of those girls in childhood, and the long-term damage to their sexual and mental well-being.
It is a source of great frustration to those who campaigned against FGM for many years that the UK has in place everything that might reasonably be expected to be needed to end FGM in this country, yet it continues and is apparently a growing problem. The necessary legislation is already on the statute book. FGM has been illegal in the UK for more than a quarter of a century under the Prohibition of Female Circumcision Act 1985, which was strengthened in the Female Genital Mutilation Act 2003 by making it illegal to take a girl abroad for cutting, as FGM is often referred to colloquially. Indeed, new guidelines for prosecuting the perpetrators of FGM were published here only this autumn.
As well as having the right legislation, the UK has a solid child protection framework in place which, on the whole, does a good job of protecting vulnerable children from other forms of abuse. The Government have recently published fresh multi-agency guidelines to aid professionals —for example, teachers, social workers and health workers—to identify children at risk and what steps must be taken to assist them. Despite that, all the anecdotal and medical evidence suggests that FGM is a growing, not a diminishing problem here. Why is it proving so difficult to right this wrong?
First, to meet the challenge, we need to know its scale. As part of the Mayor of London’s strategy to tackle all forms of violence against girls and women, the Greater London authority will shortly publish a policy document on addressing harmful practices in London. It will focus on, among other things, FGM. That report and others identify the fact that the lack of up-to-date figures is a significant stumbling block in efforts to tackle the problem.
Most of the FGM data for the UK that inform most parliamentary speeches, media articles and reports, including that from the Greater London authority, comes from a respected 2007 study by the charity FORWARD—the Foundation for Women’s Health, Research and Development. This report extrapolated data from the 2001 UK census, and its finding were startling, even then. Over 174,000 women residents in the UK had been born in an FGM-practising country. The estimated number of maternities in England and Wales in women with FGM stood at just over 6,000 in 2001 and had increased by 44% to just over 9,000 in 2004. FORWARD estimated that by 2009, that figure would be around 7,000 in London alone. Those are astonishing figures. That study is sound, but it is based on decade-old data.
As the Minister will know, with the trends in migration to this country over the last decade, especially from countries with a high prevalence of FGM, such as Somalia and Ethiopia, one can only conclude that those figures dramatically understate the extent of female genital mutilation in the UK today. We urgently need to update the evidence base.
Another reason the evidence base needs to be updated is that FGM is adding to existing health inequalities for these girls and women. How many women are not attending routine cervical smear testing because they do not want to alert the authorities to what has happened to them? How many parents do not take their children to the local GP when they are unwell because they fear that an examination will reveal that the girls have been cut? If, as the evidence suggests, FGM is a growing problem in the UK, the burden that it puts on the NHS in the long run will grow to match it.
Valerie Vaz (Walsall South) (Lab)
I thank the hon. Lady for bringing this debate to the Chamber. It is an extremely important subject, and she should be congratulated on the stance she has taken nationally and internationally. She is right when she points to the effects on the NHS. A midwife has shown me a video of the effects that FGM will have and what she needs to do when the women and young girls who have, in effect, been abused have to be cut again in order for them to give birth. It is having a huge effect, not only physically but on their mental state.
Jane Ellison
I thank the hon. Lady for that intervention. She is doing marvellous work to highlight this problem as well, and I know that she has seen recent evidence that was quite shocking and brought the problem into stark relief. I ask the Minister to consider, perhaps on a cross-departmental basis, supporting research to update the evidence base better to inform public policy in health, which the hon. Lady mentions, and in other areas. I understand that the FORWARD study cost about £30,000 to put together and that a more in-depth and qualitative report would cost in the region of £120,000.
Another area of major concern is that some professionals, especially teachers, are not confident enough of their role in protecting and supporting girls who are at risk. Although the multi-agency guidelines are excellent and we have a robust child protection framework in place, FGM remains under-reported. Recent feedback from a focus group with young women who had been affected suggested that not all professionals who deal with at-risk girls are clear about what they should do. Perhaps they do not feel that they can rely on the support of senior colleagues or that they have the political cover to step into what they perceive to be a cultural minefield. I very much welcome the current inquiry by the Select Committee on Education into how the child protection framework might be improved. I am pleased that the Committee identified FGM as a particular problem, and I have submitted evidence to its inquiry.
Since I have been speaking about this subject in the media over the past year—including on Radio 4’s “Woman’s Hour” in August—I have received a steady stream of letters and e-mails from around the country, many of them from retired teachers, telling me of their frustrations in reporting their suspicions about a girl who was at risk or had already suffered this abuse, but then finding that their information was not taken any further. This is child abuse, as the hon. Member for Walsall South (Valerie Vaz) says, and our professionals must feel that they can, and indeed must, speak up when they see the signs, and that once reported this information will be followed up swiftly by the relevant authorities.
Members will perhaps be astonished, as I was, to learn that one child who asked her teacher for help, saying that she was frightened that she was to be taken on holiday to be cut, was advised by her teacher to write a letter to an FGM charity. Perhaps some professionals feel that they cannot speak out because they fear that an accusation of racism would damage their career; I think that we, as politicians, can understand that fear. However, my argument is that by not protecting girls at risk of FGM, we are treating these girls less equally. If this abhorrent practice were happening routinely to little white, middle-class girls from long-settled parts of the community, would there not be a greater outcry among professionals, politicians and the media? There would be headlines every week.
While reflecting on the leadership role that we as politicians have, it is incumbent on all of us, as Members, to ask the difficult questions of our contacts in all communities and not to allow issues to be swept under the carpet, because some community leaders have issues that they do not want to talk about. I hope that when the Minister responds she will comment on whether information from front-line workers is being gathered and reviewed centrally to build up a clearer picture of patterns of behaviour—for example, recording school absences of at-risk girls.
On the subject of gathering evidence, I understand that the Crown Prosecution Service is in the process of collecting data on the FGM cases considered for charge. Everyone campaigning on this issue recognises the deterrent impact that just one successful prosecution would have. It remains a source of astonishment that there has not been one prosecution in the UK in the past 25 years, even though, throughout that time, a growing number of African and other European countries have secured convictions.
If we accept that FGM is child abuse, why do we not treat it as such? In other cases of child abuse, arrests are made, people are charged and convictions are secured. It is very difficult territory, but elsewhere, even when witnesses are very young or unwilling to testify, convictions have been secured and vulnerable siblings have been identified and registered as being at risk. Are we really doing enough to protect girls from abuse? Does it make a difference to the police that those girls are overwhelmingly from immigrant communities? In France, compulsory physical checks make the job of the prosecutors easier. That is not part of our tradition here in the UK, but is that hampering the police? Should we at least be challenging and discussing that received wisdom?
Will the Minister tell us more about the work that the Crown Prosecution Service is doing, and whether she feels that a prosecution under FGM legislation is becoming more likely? What does she feel are the main sticking points for the police when it comes to pursuing cases?
Of course, for the girls involved prevention is much better than prosecution, so as well as considering the action that we can take in this country, we have to take more effective action to prevent families from taking girls overseas to be cut. I have learned a lot about FGM over the past year or so from one of the world’s leading experts, Efua Dorkenoo, who is advocacy director on FGM for the charity Equality Now. She has been looking around the world for ideas that work. The Dutch and French Governments use what they call a “health passport” for girls who are at risk. That simple document, carried with them overseas, states clearly that FGM is a criminal offence in the country of residence and a form of child abuse. It details the appropriate criminal penalties, and in the case of Dutch residents, explains that if convicted of having their daughters cut, parents could lose the right to remain in the country if they are not citizens. The parents are then asked to sign the document before they travel to show that they have understood, and accept, their responsibilities.
I believe that such a document could be a powerful tool here. It would send a strong message to families that FGM is not to be tolerated and would empower girls to assert their own human rights. It may also empower parents who have their doubts about FGM. There is some evidence that some parents, perhaps those who have grown up in this country, are having doubts about whether they want it to happen to their daughters. They could show such a document to relatives from the extended family who were putting pressure on them to have a girl cut, and say, “Look, we can’t do it, we’ll be prosecuted.”
Valerie Vaz
Another problem is that the cutters abroad see such things as a loss of their income, so one solution could be that any aid sent out to relevant countries could be linked to retraining the cutters for a somewhat more useful job.
Jane Ellison
That is a very powerful intervention. That is a Department for International Development responsibility, as the hon. Lady knows, and DFID is being urged to do more on the matter. It is doing things, and astonishing grass-roots movements are growing up all over sub-Saharan Africa, with women in the lead. They are going from village to village urging people to stop the practice, and re-educating the cutters to do something else. She is absolutely right to highlight that as one way in which we can help. There is an extraordinary link on this issue between communities in the UK and the diaspora communities around the world.
Does the Minister think the health passport could help prevent FGM from happening to British girls when they are taken overseas? Should we consider whether it could work here?
I do not believe there is any argument about the fact that female genital mutilation is a terrible thing, yet for too long the issue has been talked about at the margins of public life, if at all. If we are to send a clear signal to the girls affected by this abhorrent practice that they are not at the margins of our national life, we in this Parliament must take every opportunity to address the issue. I am grateful for the opportunity to do so this evening, and I thank colleagues for their support and pay tribute to those campaigning outside the House. I very much look forward to hearing from the Minister, who I know has been very supportive of us and feels very strongly about the issue. We must aim to stop FGM in this generation and break the cycle of abuse that blights the lives of so many girls and women in the UK.
The Minister for Equalities (Lynne Featherstone)
I thank my hon. Friend the Member for Battersea (Jane Ellison) and congratulate her on securing this debate on an incredibly important topic for women and girls both in the United Kingdom and internationally. We have to protect girls from this abuse, and we have to ensure that all those living with the consequences of female genital mutilation are given the care and support they deserve.
I want to answer my hon. Friend’s specific points first, so that if time runs out I do not miss answering them. On updating the statistical and quantitative evidence base, she made a powerful point about the fact that the records are outdated. We shall certainly look at what the Greater London authority comes up with. Although £120,000 is small in governmental terms, it is not easy to come by, but we can commit to considering it. I am happy to give her that commitment.
My hon. Friend also mentioned health inequalities, the tackling of which is a Government priority, as part of our wider focus on fairness and social justice. In the Health and Social Care Bill we are proposing the first ever duties, on the Secretary of State, the NHS commissioning board and clinical commissioning groups, to have regard to the need to reduce health inequalities—and of course, victims and survivors of female genital mutilation would fall into that category. We expect there to be action, therefore, under that banner.
My hon. Friend raised the important point that everyone works with the best of intentions, but that perhaps teachers are uncomfortable or do not use the multi-agency guidelines that the Government have published, and she asked what feedback the Government are receiving centrally. Currently, we are not receiving or collating feedback resulting from those guidelines, but there will be a review of the use and effectiveness of the guidelines in February 2012, and we will evaluate their success by examining how extensively they have been used. Depending on the review’s findings, we will consider how we might improve or adapt the guidelines. If front-line workers are not using them properly, there must be another barrier that we have not recognised in dealing with victims of FGM.
My hon. Friend raised the possibility of health passports for at-risk girls. I can undertake to explore and investigate the feasibility of such a measure. I do not know enough about the Dutch system to make a commitment, but I can commit to considering the idea.
The Government have recognised the need for a joined-up approach, co-ordinated by several Departments, to tackle FGM. We are trying to raise awareness of that barbaric practice. We have made progress, but I want to make it clear that the long-term and systemic eradication of FGM in the UK also requires communities affected by the practice to abandon it themselves. I cannot emphasise that point too strongly. We all work hard and are committed, but the pace is slow.
Our key focus is on prevention, and we have undertaken considerable work in the past year, across nine Departments, to take forward our efforts to prevent and tackle FGM. In February, I was pleased to launch the multi-agency practice guidelines for front-line professionals at the Manor Gardens centre, with which my hon. Friend and the hon. Member for Walsall South (Valerie Vaz), who has also contributed to the debate, will be familiar. Both are committed to that agenda. I spoke there to committed and dedicated community practitioners, and I want to commend and thank them publicly for their work.
As I said, the guidelines aim to raise awareness of FGM, highlight the risks of the practice and set out clearly the steps that should be taken to safeguard women and children from this abuse. I remember reading the guidelines myself. We talk about guidelines, and I sometimes wonder whether people know what they are like. I shall give an example for a teacher: if a girl spends half an hour going to the toilet, which is an inordinately long time, the teacher, if it happens more than once, should be alert, because it might be a signal that the girl has been cut, and so signpost and refer it on. The guidance focuses in particular on ensuring a co-ordinated response from all agencies, which is key to ensuring that professionals are able and confident to intervene to protect girls at risk. That is the objective. In addition, we continue to distribute leaflets and posters about FGM, which are key to bringing the issue to more people’s attention. More than 40,000 leaflets and posters have been circulated to schools, health services, charities and community groups around the country. In July, the Metropolitan Police Service’s Project Azure worked alongside Kids Taskforce to produce a film for secondary schools to raise awareness of FGM, which is now available for download on the Kids Taskforce website. Last summer the project also worked at Heathrow airport, talking to families with young girls going to countries where FGM is practised.
Jane Ellison
I watched the film, and I was astonished to see the young teenagers who made it say towards the end, “We want girls to have an informed choice about this.” No one can have an informed choice about a crime that is committed against them. However, those involved in campaigning on the issue are often forced to make such compromises in their language, essentially because of concerns about how they will be dealt with in their communities, which goes exactly to what the Minister said about changing attitudes in communities.
Lynne Featherstone
My hon. Friend makes a powerful point. Some of the attitudes and sensitivities—or perhaps over-sensitivities—associated with this issue have sometimes meant that what needs to be said is not said as directly as it should be.
The Government are frustrated by the lack of prosecutions in the 25 years since the practice became a criminal offence. Indeed, as a Minister, I am intensely frustrated by that, as I stand at the Dispatch Box at Question Time and am asked why there have been no prosecutions under Labour, Conservative or coalition Governments. We have worked to strengthen the current legislation and we keep trying to encourage prosecutions. As my hon. Friend said, in September the Crown Prosecution Service launched FGM legal guidance so that prosecutors can better understand the background of FGM-affected communities and identify evidential challenges, so that they do not work in a vacuum, but understand the issue.
Research suggests that the most likely barrier to prosecution is pressure from the family or wider community, which makes it difficult for girls and women to come forward and notify police about what has happened to them. Victims may be too young, vulnerable or afraid at the time of mutilation to report offences to the police or give evidence in court. There could be other evidential difficulties if cases are reported many years after the event. I had not heard about the compulsory examinations that take place in France, which my hon. Friend mentioned. That is not the way we do things here, but one does sometimes think, “What other way is there to know whether a girl has been cut?”
The aim of the legal guidance is to provide prosecutors with advice on building stronger cases to bring to court. Prosecutors will now work closely with the police to investigate cases and consider evidence from social services, schools or local authorities, which may have crucial information to help build a case. The guidance has not been launched in isolation, but is part of a concerted approach to building prosecutions. The CPS will be monitoring and reviewing every case referred to it by the police for 12 months. That will allow the CPS to identify why cases are failing to proceed to court and what issues need to be addressed in building a successful case. That reflects the CPS’s commitment to taking positive action to address the problem.
I want to talk about abandonment. I recently met representatives from the Orchid project, who introduced me to Tostan, a non-governmental organisation whose mission is to empower African communities to bring about sustainable development and positive social transformation based on respect for human rights. It takes a respectful approach that allows villagers to make their own conclusions about FGM and to lead their own movements for change. By helping to foster collective abandonment, Tostan’s programme allows community members to share the knowledge. Through this process, entire villages and communities—men and women—have decided together to end FGM. This is incredible work, and I am looking into it. I do not know whether it is directly transferrable, because, geographically, such villages are quite different from the communities here, in the midlands or wherever. There must, however, be something to be said for a community making a decision about the value being put on women being cut. If the whole community accedes to that decision, it will be something that has been done collectively.
A couple of months ago, at the conference on FGM at Manor Gardens, religious leaders met for a forum on female cutting. They represented all the religions, although the Jewish representatives could not come, but did send a message of support. What was so amazing was that all the speakers made it clear that religion played no part in FGM. Afterwards, 80% of the people who had attended said that that was beginning to break the link. Somewhere in all this, there is something that we need to look at that is more than all the things that we have been trying to do for so long.
Claire Perry (Devizes) (Con)
I apologise for joining the debate after the start; I was selling poppies in Westminster tube station. I commend my hon. Friend the Member for Battersea (Jane Ellison) for bringing this important topic to the Floor of the House. I hear what the Minister is saying about getting the whole community involved, but I am concerned that this practice, which is illegal in the UK, is an underground practice. We need to give the young women in our communities a safe way to come forward, to understand the problems with the practice and to report it. I fear, however, that those groups of vulnerable young women are not yet being given a voice to raise the issue and express their concerns.
Lynne Featherstone
We are working hard to provide those avenues, and to provide the people to listen to those voices, so that such young women will have the freedom to come forward. We have been trying for a long while to make those things come true. As a Minister, I have to say that we continue to pursue avenues such as the new guidelines and the CPS approach, but it would be wrong of me not to look further and wider when people bring me ideas that might have some value. I am not saying that they do have value or that they do not; I am simply saying that I am open to new ideas as to how we can tackle this intransigent issue. There has been a great deal of work and genuine commitment on both sides of the House, and we are moving forward with that, but we have not really succeeded. In fact, my hon. Friend the Member for Battersea said that the incidence of FGM was growing. In addition, perhaps the diaspora is at a different stage from what is happening in the countries of origin, where people are making moves that are not happening in the diaspora.
Our efforts to prevent the practice continue, and in October we launched the FGM fund, a £25,000 fund for front-line organisations that work to prevent FGM. They have been able to bid for grants of £2,000 to £5,000 to further support their commendable work in strengthening the voice of women to speak about FGM and work to abandon the practice. I thank my hon. Friend for raising the issue and I congratulate her on securing the debate. I hope that my comments have gone some way towards reassuring her that this crucial issue remains on the political agenda in order to ensure that girls and women are protected, and that we are working, united, to eliminate this unacceptable form of abuse.
Question put and agreed to.
Ministerial Corrections
(13 years, 1 month ago)
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Transport
(13 years, 1 month ago)
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Maria Eagle
To ask the Secretary of State for Transport what the projected change is in the number of investigators at the Marine Accident Investigation Branch over the period of the current spending review.
[Official Report, 31 October 2011, Vol. 534, c. 418W.]
Letter of correction from Mike Penning:
An error has been identified in the written answer given to the hon. Member for Garston and Halewood (Maria Eagle) on 31 October 2011.
The full answer given was as follows:
Mike Penning
[holding answer 24 October 2011]: Under plans to reduce its costs in line with the outcome of the October 2010 spending review, the number of MAIB investigators will be reduced from 21 to 16.
The correct answer should have been:
Mike Penning
[holding answer 24 October 2011]: Under plans to reduce its costs in line with the outcome of the October 2010 spending review, the number of MAIB investigators has already been reduced from 21 to 18, and will reduce further to 17 by the end of this month and to 16 by March.
Treasury
(13 years, 1 month ago)
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Fiona Mactaggart (Slough) (Lab)
4. What assessment he has made of the effects of the 2011 Budget on unemployment amongst women.
The Economic Secretary to the Treasury (Miss Chloe Smith)
The Office for Budget Responsibility published its unemployment forecasts in March 2011, taking full account of announcements at Budget 2011, but it does not publish forecasts by gender. The Government are committed to tackling unemployment and helping support women into work. The hon. Lady will be aware that female employment has remained broadly steady since the start of 2008. Employment among women aged 25 to 64 is up more than 100,000 since the start of 2008, and has risen by 15,000 in the last three months.
Fiona Mactaggart
I was welcoming a young woman to the Front Bench, and I am glad to see young people representing people in this Parliament, but I do think it is shocking that we currently have the highest level of unemployment in more than 20 years—
Miss Smith
I have a number of things to say to the hon. Lady, none of which would include any personal questions, of course.
I can assure the hon. Lady that the Government are reducing the deficit fairly, and I would point out in particular that we are taking 1.1 million of the lowest-paid workers out of tax entirely, and the majority of them are women. She will welcome that as much as I do. Furthermore, she should know that unemployment rose to its level of 30% under her party’s Government.
[Official Report, 1 November 2011, Vol. 534, c. 745.]
Letter of correction from Miss Chloe Smith:
Errors have been identified in the oral answers given on 1 November 2011. The correct answers should have been:
The Economic Secretary to the Treasury (Miss Chloe Smith)
The Office for Budget Responsibility published its unemployment forecasts in March 2011, taking full account of announcements at Budget 2011, but it does not publish forecasts by gender. The Government are committed to tackling unemployment and helping support women into work. The hon. Lady will be aware that female employment has remained broadly steady since the start of 2008. Employment among women aged 25 to 64 is up more than 100,000 since the start of 2008, and has risen by 15,000 in the three months to August 2011.
Miss Smith
I have a number of things to say to the hon. Lady, none of which would include any personal questions, of course.
I can assure the hon. Lady that the Government are reducing the deficit fairly, and I would point out in particular that we are taking 1.1 million of the lowest-paid workers out of tax entirely, and the majority of them are women. She will welcome that as much as I do. Furthermore, she should know that female unemployment rose by 30% under her party's Government.
Petition
Port of Falmouth Masterplan
Westminster Hall
(13 years, 1 month ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Shale Gas
(13 years, 1 month ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Roger Gale (in the Chair)
I will explain the process for the debate this afternoon, which is slightly unusual because we have two reports. We have agreed—I hope that Members present will approve—to split the debate in two, although not necessarily into two equal halves. I understand that the first report may attract more comment than the second, and on that basis I am prepared to let the first debate run for slightly longer than might otherwise have been the case. The second debate will therefore be slightly shorter; I hope that is okay. In such cases, the convention that a Member may speak only once falls by the wayside. As we will treat our proceedings as two debates, I am perfectly content for Members who have participated in the first debate to contribute also to the second, should they choose to do so. I trust that whoever takes the Chair at 4 o’clock will feel the same. If that is not clear, hon. Members should ask and I will clarify the matter further.
Mr Tim Yeo (South Suffolk) (Con)
Thank you for that clarification, Mr Gale. I know that it will be welcome to members of the Energy and Climate Change Committee, who regard the reports as separate and would prefer to have two separate debates, and it is helpful of you to accommodate us. I shall begin by drawing attention to my entry in the Register of Members’ Financial Interests regarding a number of businesses that relate to the energy and transport industries.
I am pleased to have this debate; its timing could hardly be better and it is almost prescient in its choice of subject. Since the Committee published its report on shale gas last May, the subject has become even more topical. Potential UK reserves now appear to be much larger than first thought, and the conclusions of the team that investigated the seismic events—what I would think of as earth tremors—were also published this week. This debate gives us the chance to address concerns about the potential impact of shale gas development, and to consider those concerns in the context of the fact that enough shale gas reserves may exist in the UK to make the country self-sufficient in gas supplies once again, possibly for a long time.
Like conventional natural gas, shale gas is mostly methane. In conventional gas exploration, when a well is drilled into the formation in which the gas is held, the gas comes to the surface under pressure. In the case of an unconventional gas such as shale gas, the gas remains trapped in the pores of the rocks. To create a pathway for the gas, the rock is fractured by injecting large volumes of high-pressure fluid—mostly water but with sand to keep the fractures open—and chemicals to reduce the friction of the fluid in the well pipe, and prevent anything from growing in the well. That process is known as hydraulic fracturing and has been going on for many decades, particularly in the United States. There are, however, concerns that the chemicals used in hydraulic fracturing, and the methane released from the shale formation, could get into underground water aquifers—those concerns have been well publicised. The Committee’s report addressed that and other issues directly, and made several recommendations.
In particular, we noted that,
“hydraulic fracturing itself does not pose a direct risk to water aquifers, provided that the well-casing is intact before this commences. Rather, any risks that do arise are related to the integrity of the well, and are no different to issues encountered when exploring for hydrocarbons in conventional geological formations. We recommend that the Health and Safety Executive test the integrity of wells before allowing the licensing of drilling activity.”
We also recommended that,
“the Environment Agency should insist that all companies involved in hydraulic fracturing should declare the type, concentration and volume of all chemicals they are using.”
That practice is not universally followed in the United States.
The report continued:
“We recommend that before the Environment Agency permits any chemicals to be used in hydraulic fracturing fluid, they must ensure that they have the capabilities to monitor for, and potentially detect, these chemicals in local water supplies.”
Finally, we recommended that both the Department of Energy and Climate Change and the Department for Environment, Food and Rural Affairs,
“ensure that the Environment Agency monitors randomly the flowback and produced water from unconventional gas operations for potentially hazardous material that has been released from the shale formation. In order to maintain public confidence in the regulators—and in the shale gas industry—we recommend that both water and air be checked for contamination both before and during shale gas operations.”
Yesterday the Environment Agency published a follow-up to its evidence to my Committee, which included data from samples of flowback fluid—the fluid that returns to the surface through the drilled well—that the agency has taken over the past six months at the Preese Hall site operated by Cuadrilla. It stated: “We have found that the flowback fluid contained high levels of substances dissolved from the rocks such as chloride, sodium, iron and dissolved materials. They also contain very low levels of naturally occurring radioactive minerals, principally radium-226, at levels similar to those found in granite rock. At the levels found, we would not anticipate any threat to human health or the environment. The results of this analysis have to be viewed with caution; they are only indicative of the radioactivity present.”
Maintaining the confidence of the public—again, something that has not been universally achieved in the United States—is absolutely essential if UK shale gas reserves are to be exploited. Cuadrilla is sensitive to that, and I urge it to continue its policy of engagement with the local community, and to be as open as it can about its activities, the materials it uses, the practices it follows and so on. Such an approach is even more necessary in light of the seismic events that have occurred since the Committee visited the site earlier this year.
In connection with those seismic events, members of the Committee also visited Texas and had discussions in Washington DC with regulators, legislators, industry representatives and environmental groups. We discussed the induced seismic events that occurred in Arkansas, which related to the underground injection of waste water generated from shale gas exploration and production elsewhere, rather than from a process of fracking. In evidence from the Geological Society, the Committee was told that induced seismicity is not thought to be a significant risk in the UK. During oral evidence from Professor Richard Selley, a petroleum geologist at Imperial college, we asked whether there is evidence to suggest that mini-earthquakes could happen as a result of fracking. He told us that individual claims often produced what is called the Francis Drake effect; they show something that was already there but the oil company gets the blame.
The tremors near Blackpool on 27 May had a magnitude of 1.5, and those on 1 April a magnitude of 2.3. Cuadrilla responded by postponing any further fracking operations while the British Geological Survey shared seismic data on the events with Keele university and DECC. The British Geological Survey issued a press release and stated that fracking may have been the cause, although it added:
“It is well established that fluid injection can induce small earthquakes…We would not expect earthquakes of these relatively small magnitudes to cause any damage.”
To put that into context, the European microseismic standard classifies a magnitude 1 earthquake as one that is not felt, a magnitude 2 earthquake as scarcely felt, and a magnitude 3 earthquake as weak. A quick inspection of the British Geological Survey’s seismology webpage shows that, in the past month, the following earthquakes have taken place in the United Kingdom: Caernarfon, magnitude 1.2 on 24 October; Shrewsbury, magnitude 1.1 on 22 October; the northern North sea, magnitude 3.5 on 21 October; and Glen Sheil, Highland, magnitude 2.4 on 20 October. There were several others, the details of which I will not bother to read out to the Chamber, but that shows that a range of such events is occurring almost every week.
Small-magnitude earthquakes are by no means uncommon in the British isles. Nevertheless, any potential correlation between one of these events and hydraulic fracturing activity must, of course, be examined carefully. The report published yesterday concluded that Cuadrilla’s activity triggered—the word used was “triggered” rather than “caused”—very low level seismic activity and that that posed no identifiable threat to people or property in the nearby area. The report concluded that it was a unique series of events and circumstances; 850,000 wells have been explored around the world with virtually no similar events recorded.
The seismic activity was caused by a very unusual combination of factors, including the specific geology of the well site, coupled with the pressure exerted by the injection of the hydraulic fracturing fluid. The Preese Hall-1 well encountered a critically stressed fault, requiring just a small energy input to initiate seismic activity. The fault was sufficiently porous to accept a large volume of fluid and brittle enough to be prone to failing seismically. Those conditions existed before the hydraulic fracturing. That combination of factors was rare and is therefore unlikely to be repeated. Cuadrilla’s hydraulic fracturing events take place far below the earth’s surface, reducing the likelihood of a seismic event of less than 3 on the Richter scale having any impact on the surface. The report also concluded that the fluid used in the fracking process cannot escape the rock that is deep underground and therefore cannot contaminate the local environment.
The findings of the study have enabled scientists to establish a system to monitor seismic activity at Cuadrilla’s site, and facilitate the creation of an early-warning system that would allow Cuadrilla to detect the first signs of any seismic activity and to take steps to limit its escalation. The study concludes that even without the early-warning system, the largest seismic event that experts suggest is possible is one of magnitude 3, which is unlikely to be noticeable on the surface if it occurs at a depth of 3 km, where the fracking takes place. The proposed system already operates successfully in Germany and in the Netherlands.
Cuadrilla is, of course, in close contact with the Department, the local council and representatives of the local communities. I realise that my hon. Friend the Minister may want a little more time before deciding what the Department’s view is about continuing drilling on the site. For what it’s worth, my judgment is that on the information available at present, there is no need to impose a moratorium. Any decision about a moratorium must recognise that a degree of risk exists in all operations to explore for and exploit mineral resources, whether that is oil, gas or coal. The judgment for Ministers must be whether that risk is acceptable in the light of each set of circumstances. I believe that the regulatory regime in Britain is robust and effective at assessing risks and enforcing any necessary safety measures.
In this context, it is also important to assess potential benefits to the UK of exploiting our shale gas reserves. On that subject, matters have moved on significantly since our report was published in the spring. In our report, we concluded that
“shale gas resources in the UK could be considerable. However, while they could be sufficient to help the UK increase its security of supply, it is unlikely shale gas will be a ‘game changer’ in the UK to the same extent as it has been in the US.”
During our inquiry, the only calculations available were based on analogies to similar shales in the US. The British Geological Survey’s estimate that UK shale gas reserve potential could be as large as 150 billion cubic metres was the most up to date at that time. For comparison purposes, in 2009, UK total demand for natural gas was approximately 100 billion cubic metres and we imported about 10 billion cubic metres of liquefied natural gas.
On 21 September this year, Cuadrilla released its estimates, based on samples from exploratory drilling, of the gas in place in its area of operations in Lancashire. “Gas in place” refers to the estimated total amount of shale gas in the formation. It is not the same as reserves. The actual amount recoverable depends on a range of factors. Cuadrilla’s results from the first two wells suggest that the gas in place equates to 200 trillion cubic feet. That does not translate directly into 56 years-worth of gas for the UK, because it will not be able to recover all that, but it does mean that a significant amount of gas will be recoverable and it will alter the picture.
During our inquiry, the British Geological Survey told us that the Bowland formation was only part of one of four good plays in the UK, encompassing many areas of the country. On that basis, it seems clear that shale gas has the potential to be a game changer for the UK and to restore the self-sufficiency in gas supplies that we enjoyed in the heyday of the North sea. Of course, the existence of those reserves does not automatically mean that they should be exploited. As our report pointed out,
“in planning to decarbonise the energy sector DECC should generally be cautious in its approach to natural gas”.
That of course includes unconventional gases such as shale. The report continued:
“Although gas emissions are less than coal they are higher than many lower carbon technologies.”
There are five main studies on the greenhouse gas emissions of shale gas. Two say that shale gas emissions could be higher than those of coal, while the three others debunk that analysis and conclude that shale gas is only slightly worse than conventional gas. Either way, the strong probability is that if UK shale gas reserves are exploited, significant new investment in gas-fired power stations will occur. Our report therefore concluded:
“The emergence of shale gas increases the urgency of making carbon capture and storage (CCS) technology work for gas as well as coal.”
Now that negotiations for the first proposed CCS demonstration project at Longannet have failed to reach agreement, the £1 billion set aside in the comprehensive spending review for CCS is available for other projects to be pursued. I strongly urge the Government to apply that to developing CCS for gas.
The decisions taken during this Parliament about energy policy will shape the UK’s energy infrastructure, especially its electricity generating capacity, for decades. The drivers of the policy remain security and independence, lower emissions, and price. Shale gas could help significantly by contributing both to improving our security and independence and to keeping prices down. In the short term, if gas replaced coal, it could also help to lower emissions, although without CCS, gas by itself cannot remain a large component of our energy mix beyond 2030 if we are to achieve the aim set out by the Committee on Climate Change of largely decarbonising the electricity generation industry by then.
I am increasingly sympathetic to the views of Dieter Helm, who suggested that the cost and security advantages, in the short and medium term, of using more gas over the next 15 years are considerable. During that period, the cost of some renewables, such as solar photovoltaics, energy from waste and others, may fall substantially. There is a possibility that new nuclear may also start to make a significant contribution. At a time when consumers are understandably concerned about rising bills, the wisdom of betting the farm on the more expensive and intermittent renewables, such as offshore wind, is increasingly questionable.
It is against that background that decisions about shale gas must be taken. I urge the Government to consider the potential benefits to Britain. There are legitimate concerns, of course, about the environmental impact, and those concerns must not be ignored. However, those who call for fracking to stop completely must produce scientific evidence to justify their demands, and I do not believe that at present such evidence exists.
Dr Alan Whitehead (Southampton, Test) (Lab)
I took part in the Energy and Climate Change Committee inquiry into shale gas, and in the course of that inquiry, I took part in a number of visits, not just to the one site in the UK that is currently being drilled, but to areas where intensive drilling was going on, has been completed, is producing or—in many instances—has been abandoned. What I found particularly useful about those examinations of existing practice was that they not only helped us to consider the overall theoretical picture, but enabled us to see what a shale gas producing economy might look like in the UK, based on what we now know about the in-principle availability of shale gas in the various plays in the UK.
I want to concentrate my remarks on these questions: if we were to proceed with the extraction of a sizeable amount of gas from the reserves that we currently know of, what would be the best, safest and most environmentally prudent way of doing so? If we consider that to be a minimum starting point for extracting shale gas, what will that make the UK’s shale gas market look like? What effect will that have on the overall availability of gas?
Looking at the matter from another end, a number of people have recently made quite wild claims about what the existence of the shale gas reserves means. Some people, in pursuit of particular agendas, have gone so far as to say that all we need to do is extract as much shale gas as possible, run the economy on that gas, and not worry about renewables any more. They say that that would lead to an age of plenty for gas; gas prices would rocket downwards, we would have energy security for the foreseeable future, and we could abandon expensive alternative energy sources forthwith. Some of those statements are partially true; most are not fully true; and some, in my view, are completely off-beam.
On the starting point for shale gas extraction in the UK, the regime under which extraction takes place must be such that the free-for-all drilling taking place in parts of the United States cannot and will not be allowed here. The US’s experience is not comparable, and can never be compared, to what might happen in the UK, for a number of reasons. First, in the areas that the Select Committee looked at, the regulation of mineral rights is entirely separated from the regulation of property rights. One can literally fetch up in a truck outside someone’s front garden and say to them, “I own the mineral rights to the land behind your back garden as far as the eye can see, and I am going to start drilling in your back garden. There is nothing you can do about it. I might give you some money to compensate you, but that will be it.” Consequently, certain plays in the United States, called sweet spots, have gone ahead with intensive drilling. In certain parts of the US, areas literally look like Swiss cheeses, with lots of drilling sites pockmarking the surrounding area. They even extend to urban areas and literally to people’s back gardens.
There is not only intensive drilling, but intensive drilling that goes horizontally out from the pads, which are the size of two football pitches; those are the typical starting points for shale gas drilling. There can perhaps be 16 to 20 wells per pad—intensive drilling indeed. As a result, a large amount of shale gas is produced, but wells continuously deplete, which means that each well is not producing an enormous amount of shale gas. The issue of depletion rates for shale gas wells is addressed in the Select Committee’s report. It is the cumulative effect of a large amount of drilling for multiple wells in particular places that produces the overall volume.
Plays in Texas, Pennsylvania and other parts of the US are infinitely easier—perhaps twice as easy—to extract from than is ever likely to be the case in the UK. We therefore need to treat the reports of overall reserves under the soil in the UK with some caution, because in practice, perhaps not more than 10% to 15% of the gas that is theoretically there will be extractable, even over a long time and with repeated fracking in particular wells.
I completely concur with the caution expressed—caution is the watchword in the Select Committee’s report—regarding the conditions under which drilling may take place. Under a regime with conditions, I think that a substantial amount of shale gas can be extracted over a long time, but probably not a volume that will be the price-reducing game changer that some people talk about. A recent report by Bloomberg looking at, among other things, the likely future effects of shale gas on UK prices suggested that there would not be a significant effect on prices. There may well be a significant effect on energy security; we would replace at least a proportion of the nearly 40% of gas that is imported with gas produced in the UK. That is potentially important, but it seems unlikely to be a price-reducing game changer.
The conditions are important because in the UK it will be necessary to obtain proper licences, maintain the right safety procedures in all wells, and ensure that wells are correctly sheathed, so that there is no danger of the contents of particular geological levels permeating and contaminating other levels. It will also be necessary to be careful about the use, disposal and—I hope—recycling of the large volumes of water that are used in shale gas extraction. That subject is another feature of the Select Committee’s report. There is considerable tension about water in certain parts of the country, so even the use of 1%, 2% or 3% of the water supply could put substantial and increasing pressure on the amount of water available. Keeping a close monitoring eye on the use of water will be important.
David Mowat (Warrington South) (Con)
I am listening carefully to the thrust of the hon. Gentleman’s remarks. I think he will concede that there has been a significant price differential in the US on the Henry hub, for whatever reason. Gas prices have fallen by about 50%, and that has been attributed to shale. I have listened to the logic of his remarks, but I have not heard the specific reason why he does not think that that will happen, not in the UK—the UK is not where the issue is—but in Europe; that is where the issue is.
Dr Whitehead
I think that the reason why that will probably not happen is that the US, as recently as five or six years ago, was in the process of building substantial quantities of liquefied natural gas delivery depots, which were anticipated to take up a substantial shortfall in gas in the US; that shortfall was even greater in the US than in the UK. The US economy was therefore in a position where, as a result of the anticipated introduction of that large amount of LNG, prices reflected the situation regarding indigenous gas in the US, imported gas, investment prospects, and the likely prospect of a need to procure further large amounts of LNG for the US, at a time when there was increased worldwide demand for LNG in various other economies.
Since five or six years ago, that particular metric has been entirely flipped over. The United States is now exporting, rather than importing, LNG. That has had a substantial flip-over effect on prices in the USA. I am not an expert in these matters, but that is my understanding of the situation. The position is not comparable with that in Europe or the United Kingdom. As I say, the production of shale gas will perhaps have some effect on the stabilisation of prices over a period of time, and some effect on the requirement for a secure gas supply within the UK, rather than us importing it through interconnectors or through LNG. We have, of course, fairly efficient gas interconnectors between the UK and the rest of Europe, although whether gas flows down them is another matter. However, the two propositions are entirely different in their likely effect on prices.
The two propositions are similar, however, to the extent that there will be a significant effect on what one might term the energy security front—on what would otherwise be the question of where the UK will source its gas supplies from in future—although the UK interconnectors are pretty secure; they mainly go to Norway and other European destinations. Sourcing that gas from within Europe arguably brings us close to the energy security that we would have if we had an entirely indigenous supply. That is my take on why the price effect will not take off in the way that some people think it will.
I want to emphasise and underline that point, as the Committee’s conclusion is that there is not a case for banning or stopping the exploitation of that shale gas resource through drilling, but that there is a case for ensuring that there are careful, secure environmental guidelines to ensure that it is done in the best way for the protection of the environment. There is also a case for ensuring that, unlike the USA, we have careful continued regulation of not only the drilling but the capture of the gas, and regulation covering the fate of wells as they deplete and go out of commission.
The point about multiple wells is that they do not have long productive lives compared with more conventional forms of drilling. One of the issues in the United States has been that in a number of areas, because wells have often been drilled in a speculative and unorganised way, there are large numbers of abandoned wells scattered across the landscape, some of them well capped, some not capped and some not very well capped. Indeed, the magnificently named Texas Railroad Commission, which regulates the whole business in Texas, is in the process of finding where those abandoned wells are and putting in place a programme for capping them. That is a regime that we cannot afford to have in the UK, because of the implications of gas leakage and the danger of those uncapped and untreated wells from an environmental point of view.
The overall picture is that, with careful regulation, a reasonable contribution can be made to UK energy supplies from shale gas over the next period. We should not, however, run away with the idea that it will solve everything or that it should not be properly and fully environmentally regulated, to ensure that some of the things that we have heard about elsewhere in the world do not, by accident or by negligence, take place in a UK energy environment. I believe that that is a balanced view, and that the Committee has taken a balanced view on the future of shale gas. It is important for future debates on the energy economy that we keep that balanced view of what various elements of the UK energy mix can contribute to the overall welfare of our future energy supplies.
John Pugh (Southport) (LD)
My constituency is right on the edge of the latest find. I have to declare a sort of interest, because when I originally bought my house, under a 999-year lease, I found the local feudal landlords had mineral rights over my front garden. When I bought the freehold, I obviously took over those rights. My house suffers from tremors, but that is only because eight trains an hour from the Northern line go past my front door. None the less, there is a genuine concern in the area about the exploitation and extraction of shale gas. I will be visiting Cuadrilla tomorrow, coincidentally, to put to it some of the questions that will no doubt come up in this debate.
When I read the report, I was delighted by its excellence and balance. It may surprise you to hear this, Mr Gale, but I do not know much about geology and oil exploration. I was extraordinarily well educated by the report. What I understand, however, is politics, which I have been in for a long time. The two motives that move people in politics are greed and fear, and both greed and fear are in play in this particular issue.
On one side, pictures are sketched of a shale bonanza. The Lancashire find is put at 200 trillion cubic feet. I am reliably informed—well, informed—by a Cabinet Minister that that is almost equivalent to half the entire reserves in the USA. One ponders, I guess, why that has not dramatically affected the share value of Cuadrilla in the way that one might expect, but, none the less, it is by all acknowledgment an appreciable find. That offers the possibilities of making the UK energy-secure, of lowering energy prices and of generating wealth, although there could be an argument about how that wealth will be spread and who will benefit the most. There is no doubt that with energy comes wealth. The people buying up our premier league football teams, by and large, tend to be energy barons. That is one side of the equation.
On the other side, there is not the hype, but the fear. There is the fear of environmental destruction, the fear of wells being aborted over a period of time or rather more rapidly and there is the fear of poisoned water supplies. [Interruption.] I am sure that hon. Members have seen the flaming house taps in the USA, although I wonder what the American water authorities are doing in allowing gas to contaminate—
Mr Roger Gale (in the Chair)
Order. I am sorry to interrupt the hon. Gentleman, but someone’s mobile phone is switched on. Can everyone check their phone, including those sitting in the Public Gallery?
John Pugh
I suspect that it was my phone, unfortunately. I am interrupting myself.
There are also arguments about water depletion, tremors, geological instability and so on. Given the degree of hype on one side and of panic on the other, the report is most timely and helpful. I genuinely think it is a good report, which enables us to form a judgment about how and whether to extract. There is, however, one view that the report perhaps does not deal with sufficiently. It is at one extreme of the debate and it goes something like this: even if extraction is safe and profitable, it should not be done, either because it produces a carbon fuel, and we should not get more carbon fuels out of the ground, or because it augments and influences the use of carbon fuels and the carbon fuel market elsewhere. Organisations such as the Tyndall Centre have put that argument very seriously and would still oppose the extraction of shale gas in the UK for the same reasons, even if they found out tomorrow that it was perfectly safe.
People who argue like that believe a range of different things. They might believe that renewables can plug the UK energy gap quickly, that the British public will dramatically and quickly reduce their energy consumption through energy conservation or energy efficiency or that nuclear energy can easily plug the gap and step up to the plate. When we go through those alternative assumptions and the general argument for doing nothing about shale gas, however, it becomes clear that none of them has general support from informed opinion, and I share none of them myself. I do not think renewables will plug the energy gap as quickly as we would like, that the British public will dramatically or rapidly alter their behaviour in the next decade or that nuclear energy can easily fill the gap.
Given that most people believe and accept that gas is part of the mix, the debate can then centre on whether we should have UK gas or imported gas. People can be against natural gas extraction full stop or shale gas extraction full stop, or they can simply be against shale gas extraction in the UK. As I understand it, most people’s anxieties are not about shale gas per se, but about particular propositions in the UK and about whether the process followed here might emulate bad practice elsewhere in the world. Most people are concerned about safety, either because they are not convinced that shale gas extraction is safe or because they are not convinced that all companies can be trusted to make it safe—even where it has the potential to be safe, they think one should be suspicious of oil companies.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
On safety, does the hon. Gentleman think that it was perhaps a mistake for the report on the seismic activity to have been commissioned by Cuadrilla, given that many residents in the area already have questions about the report’s true independence? There have been press reports today that although the report refers to a few seismic activities, Cuadrilla has now admitted to there having been 50 in just eight months, which undermines the confidence of people in the area.
John Pugh
If one were extraordinarily suspicious, one would expect Cuadrilla simply to produce a whitewash report, because there is no advantage to the company, in the current circumstances, in admitting liability for the tremor—it has not helped Cuadrilla and, in terms of its public relations operation, it has been a disaster. I guess that that leads one to believe that Cuadrilla is prepared, in certain contexts, to admit to some of the flaws that might arise during drilling.
The great thing about the Committee’s report—this is a considerable reassurance—is that it indicates that the process is not, as in America, taking place in the wild west. A series of robust arrangements are in place, and the report refers to
“a suite of environmental legislation”.
There are controls at various stages, and they seem—at first blush, at any rate—to be relatively robust. There is licensing, which is subject to conditions in the first place, and there is drilling permission, which is subject to planning regulations. There are also environmental effects, which are subject to impact assessments and monitoring by the Environment Agency. Similarly, the site is covered by health and safety legislation. Finally, people in the UK—unlike the people with methane in their taps in the USA—presumably have the advantage of water companies that test their water before sending it through the system.
The might, and should, offer a degree of reassurance, although there is an argument about how much reassurance it offers. However, there is a point at which reassurance runs out, because none of these things can totally get rid of the known unknowns, to use Donald Rumsfeld’s splendid expression. I did not realise this before, but there is talk about the effect of extraction or any sort of mining on the mobility of other sorts of gases and minerals that are not directly investigated or extracted from the strata affected. People cannot always say what will happen to those, but, then, they cannot say what putting Crossrail under London will do. Similarly, I have spoken to people in my constituency, and some of them have said, “That reassurance is all very well, but there might be things wrong with the process that we don’t currently know about. There might be some dangers out there we can’t identify.” This is where we get on to Donald Rumsfeld’s unknown unknowns.
There is a rational view of all these things, which goes something like this: if we are to have any conventional extraction, unconventional extraction or even large-scale development, we should do everything reasonable and necessary to ensure that it is as risk free as it can be, but we cannot eliminate risks that we cannot anticipate. There is, therefore, a strong case—particularly where there is genuine public concern—for taking a proactive approach towards monitoring any shale gas extraction process. Such an approach would mean having an open, transparent process, with frequent monitoring, genuinely hard and enforceable regulations and a body that is resourced to enforce those regulations. The Committee’s report makes it clear that the Environment Agency will have more work to do if shale gas takes off in the UK, and it will need to be resourced appropriately, subject to current Government restraints.
Importantly, we also need to be assured that whoever promotes large-scale developments has the public indemnity to act if something goes wrong, and that includes dealing with the unknown unknowns. They should also be in a position to clear up. As the hon. Member for Southampton, Test (Dr Whitehead) has said, wells are simply abandoned in the USA, and people leave their detritus behind them. That simply cannot take place in the UK, where it would be wholly unacceptable.
There is a lot of good advice along those lines in the Committee’s report. Recommendation 14 states:
“We recommend that the Government consider the future funding for the Environment Agency”.
Recommendation 15 states:
“We recommend that the Health and Safety Executive test the integrity of wells before allowing the licensing of drilling activity.”
Recommendation 16 states that
“the Environment Agency should insist that all companies involved in hydraulic fracturing should declare the type, concentration and volume of all chemicals they are using.”
And recommendation 17 states that:
“before the Environment Agency permits any chemicals to be used in hydraulic fracturing fluid, they must ensure that they have the capabilities to monitor for, and potentially detect, these chemicals in local water supplies.”
In other words, the Committee is making a plea for a robust regime to govern what is a new process for many people in the UK. In many of its technological aspects, fracking or shale gas exploitation is not that new, but it is certainly a new concern for many people in my part of the world.
My concern about the Committee’s report relates not to the report itself, but to the fact that the Government’s responses to some of our clear-cut recommendations allow a little more wriggle room than I am comfortable with. There are too many “mays” and “cans”, too many expectations and too many statements to the effect that things might be done, could be done or, optimally, would be done, but there is no assurance that they always will be done. If we are to get any benefit from shale gas in the UK, we must be able to guarantee safety at every stage. Therefore we must have appropriate and effective monitoring and enforcement. Without those things, there will not be public support for shale gas, and there will be much anxiety about it, and we will have to accept that we have an asset perhaps to bequeath but not necessarily to use. The ball is in the Government’s court. If they and the agencies that want to exploit shale gas can show to all and sundry that they will hold the various companies concerned to the fire until they agree to what is appropriate, safe and satisfactory and that it passes all reasonable scientific tests, there may be an answer in shale gas for British energy supplies. If not, the issue will be coupled to an unnecessary degree of anxiety.
Ian Lavery (Wansbeck) (Lab)
As a member of the Select Committee I have been involved in the report and all the stages leading up to it. I am sure that my colleagues agree that the investigation into shale gas has been enlightening.
Shale gas has been declared to be an energy revolution and a game changer in the US, and heralded as a game changer for policy and for energy security. The real question here is whether it can be a game changer in the UK. It is an unconventional gas, and is classified as a fossil fuel. The three main types of unconventional gases are shale gas, tight gas and coal bed methane gas. The reserves of shale gas are known, as has been explained this afternoon, as plays, not fields. They cover a larger geographical area than a field and, because of the way in which the gas is exploited, need many more wells to be drilled than conventional gas, which will present a problem for communities in itself.
Cuadrilla has been the subject of everyone’s discussions this afternoon. It describes itself as an English independent company, and it has completed phase 1 of its exploration at Preese Hall, five miles east of Blackpool. Phase 2 of the exploration commenced in 2011, and on its completion Cuadrilla plans to equip one of its other four approved sites in Lancashire. As has been explained by the hon. Member for South Suffolk (Mr Yeo), the Chair of the Select Committee, the results were divulged today or possibly yesterday, and unfortunately I have not seen them. However, it is alarming that the hydraulic fracking process was paused because of seismic events in Poulton-le-Fylde last year.
We must understand, as politicians on both sides of the House, that people have the right to be frightened of seismic events in their area. Someone may say, “Don’t worry; it’s only a seismic event,” but when people hear things like that they go to the council or their representatives, or they go on the internet, and eventually they go to their MPs’ surgeries wanting answers. We must understand that. What the hon. Member for Southport (John Pugh) has said about fear and greed is right, and it is probably what the issue is all about.
The seventh special report of Session 2010-12 outlines the work of the Select Committee on Energy and Climate Change and the Government’s response. The whole issue of shale gas needs much more detail and clarification on a range of fronts: there are the cost implications; there is the impact of exploration and production on the environment, which is an essential issue; there are the advantages and disadvantages of shale gas production and exploration; there is the carbon footprint; and there are the possible hazards. Having sat in Committee while witness after witness gave very good statements, we heard wide and varied views before we took the view outlined in the report.
The cost of shale gas exploration and production, and the cost to the consumer, are at present relatively unknown. My hon. Friend the Member for Southampton, Test (Dr Whitehead), has explained his view of different costing elements and the potential future costs.
Of the environmental issues, fracking, which leads to seismic events, is the one that people are talking about, and it is one of the most important. In a nutshell, fractures or fissures are created in underground formations to allow natural gas to flow. Water, sand and other chemicals are pumped under high pressure into the shale formation to create such fractures and fissures, and the sand then props them open to allow the gas to flow to the surface and be collected. Interestingly, giving evidence to the Committee, Professor Selley of Imperial college London observed—I would be the first to accept that this is an example of the fear factor, but it was put to the Committee—that hydraulic fracking had been blamed in the United States for the contamination of shallow water aquifers, microseisms, which are faint earth tremors, and flocks of dead blackbirds falling from the sky.
Christopher Pincher (Tamworth) (Con)
The hon. Gentleman has discussed the pollution dangers from fracking. Does he accept that because fracking happens thousands of metres underground, whereas aquifers are probably only a couple of hundred metres below ground, with thick layers of rock between the two, the likely reason for pollution is not seepage of dirty water upwards, but failures in the well head or the bore itself?
Ian Lavery
That was the view of many experts, as well. I am merely highlighting points raised by experts who appeared in Committee. I understand what the hon. Gentleman has said, and it was the view of probably the majority of those experts, but it is important to look at other aspects of the matter. I have read about blackbirds falling from the sky three or four times, and I think it is the fear factor. When that point was raised in America, the response was that blackbirds were falling from the sky long before fracking. I probably agree with that response, but, again, the point was put before the Committee.
The report makes a number of recommendations on the environmental issues. There are still major concerns about the environmental impact of shale gas exploration and production.
We must listen to the general public because we need them onside if we are to succeed in making shale gas a major contributor to the energy requirements of the UK for many years, as people believe can be the case. There is no doubt that we must take the general public with us. If they are not with us, it will be terribly difficult to do anything.
Eric Ollerenshaw
My hon. Friend the Member for Southport (John Pugh) has referred to “fear and greed”, but is there not another concept that relates to what the hon. Gentleman has just said, which is, “What is in it for us?” Many of the people in my local area are too used now to wind farms being built on hills, which are owned by financiers miles away and the local people see no benefit from them, and wind farms being built out at sea, which are driving the fishing fleets away and, again, they are yet to see any benefit themselves. Local people’s fear about shale gas—or their view about, “What’s in it for us?”—is that suddenly these companies will come along, that they will extract the shale gas and that there will be very few job opportunities for the local area. Potentially, millions will be made out of shale gas production, but not for the local area.
Ian Lavery
I think that the hon. Gentleman is right, which is why it is imperative that we try, at all stages, to take the general public in the areas affected along with us.
I think that it was the hon. Member for Southport who said that, whatever new types of energy we come up with, people will automatically oppose them. It does not help when certain people say that they are in love with these new wind turbines and that they are beautiful to watch. Wind turbines are probably beautiful to watch from somebody’s back garden but perhaps not from other people’s back gardens.
The hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) is right that these industries are not labour-intensive. Local people think that there is employment coming to the area with the new energy industries, but it does not really happen, and it has not happened so far. Generally, these new technologies do not create much new employment, but people can see them and wonder why they are being developed. I agree with that point.
The fracking process has been the focus of much consternation. Could the gas from fracking make its way into the general water supply? Could the fracking fluids leak into the shallow water aquifers, an issue which we have already discussed? What type of fluids would be used? The Tyndall Centre has said that, of the 260 substances used in fracking, 58 could be carcinogenic or mutagenic, while other organisations have suggested that all the substances used in fracking are also used in everyday household goods. Those are the varied views that the Committee heard from industry experts, some of whom said that the fluids are carcinogenic, and some of whom said that they are just fluids used in ordinary household goods. We must get much more detail on that subject. Also, could fracking lead to the groundwater contamination that has been experienced elsewhere?
The Energy and Climate Change Committee report tackles all those issues, as has been outlined already this afternoon. However, the World Wide Fund for Nature has clearly stated that shale gas is a fossil fuel and that
“world fossil fuels should stay in the ground and shale gas is likely to increase the net carbon emissions.”
The Campaign to Protect Rural England has drawn on evidence from Canada, which shows that the majority of wells in Quebec leak large doses of methane.
Another issue is the carbon footprint of shale gas production, which is very much unknown, although there are some very interesting and varied views about it. The British Geological Survey has stated:
“The overall greenhouse footprint of shale gas, including direct and indirect emissions of both CO2 and methane is not yet fully understood.”
Representatives from the Select Committee visited Texas in the United States at the end of last year, or possibly at the beginning of this year. One of the first presentations that they saw began by noting that, over a 20-year period, the global warming potential, or GWP, of methane is 72 times that of carbon dioxide, while over a 100-year period the GWP of methane is 21 to 25 times that of CO2. That is because methane and CO2 have different lifetimes in the atmosphere. If the short-term GWP measure of methane, which is 72 times that of CO2, is used, coal emissions would come to 1,154 kg of CO2 per megawatt-hour, while gas emissions would come to 781 kg of CO2 per megawatt-hour. The figure that is usually bandied around as being accurate in most cases is that gas production produces 50% fewer CO2 emissions than coal production, but these figures that I have just cited take the figure for CO2 emissions from gas production up to something like 70% of the figure for CO2 emissions from coal production. Again, we need to consider gas production in terms of the environment.
There is also carbon capture and storage, which has been mentioned. If we are to succeed with shale gas production, because of the problems with the environment and the emission levels, CCS must be pushed forward. We have a massive problem after the cancellation of the Longannet plant just two weeks ago. It has taken about six or seven years for that project to be ready to be signed, but it was cancelled at the eleventh hour. It is important that CCS is put back on the table. We have had excellent discussions with the Minister about CCS, and those discussions are continuing. In addition, experts say that the way in which shale gas is extracted largely depends on the emission levels. We did not get into too much detail on what that actually means, but it was certainly something that the experts said to the Committee.
The report clearly outlines that there are now extensive explorations for shale gas taking place in Poland and it recommends that the UK closely monitors the progress of those explorations, which is the right course of action.
In conclusion, shale gas might be the partial answer to future energy supply problems in the UK, but there are so many imponderables at this point that I think that time will tell. Shale gas production has huge potential, and future development and exploration are imperative. We need to continue with that development and exploration, albeit in an extremely safe fashion, stage by stage, and taking the public with us. However, before the UK ploughs ahead with shale gas production, much more clarification is required, particularly in respect of the fracking issue and of the environmental issues.
Mr Roger Gale (in the Chair)
Order. I propose to call Mr Mowat next. I shall then call the two Front-Bench spokesmen. If other Members wish to participate in the debate after that, there will be an opportunity for them to do so.
David Mowat (Warrington South) (Con)
Thank you, Mr Gale, for calling me to speak.
In several contributions, the term “balanced” has been used, both about the Select Committee’s report and the tone of the speeches. My remarks might be a little less balanced, because I think that shale gas production is a very positive development and that we could be on the verge of something significant.
I apologise in advance for using the term “shale gas” interchangeably with “unconventional gas”. The report does that and several Members have also done it in their contributions. In my constituency, we have a fair bit of coal gas. IGas has found coal gas in Warrington.
I will not talk further about the environmental issues around shale gas production; they are genuine and they need to be sorted out. A number of Members have already spoken well about them. I will just say that there is no form of energy—and no choice that we have for sorting out energy—that does not have some kind of environmental issue. We have to make choices.
I want to talk for a minute or so about gas in general, before I get into shale gas in particular. I want to put into context where we are in our decarbonisation targets. In 2010, 2.5% of the UK’s energy came from renewables and 90% came from fossil fuels. Of that 90%, the majority is still coming from what we would call the “dirty” fossil fuels, which are coal and oil. We have a long way to go. There was a debate on this subject recently and it was pointed out that the UK is 25th out of 27 countries in the EU in uptake of renewables. It is my judgment that gas has a role to play in decarbonising the economy. We may debate the matter later, but I believe that we have wrongly placed some efforts by confusing “decarbonisation” with “renewables”. Decarbonisation is necessary and it is a legal requirement. Some of the renewables targets might not always lead to us making the right decisions about how we decarbonise, and at what rate.
Right now, 50% of the UK’s energy still comes from oil and coal, and although it would not be easy to replace them with gas because that would mean transport being sorted out, if we did so we would have a carbon reduction of 30% or 40%, depending on the precise ratio used.
I have mentioned the decarbonisation of transport, and there is a lot of emphasis on electrification and the need for electric cars. That market is moving ahead in a way that this country might not have noticed, with well in excess of 10 million gas-powered cars in the world. Interestingly, the leading countries are some of the developing ones, such as Pakistan, which is making a big effort to decarbonise.
Probably the single most important observation about shale gas—unconventional gas—is that we do not have much of it in the UK compared with other types of energy. I heard the remarks of my hon. Friend the Member for South Suffolk (Mr Yeo), and I agree that it is a fluid thing. I have here a report by the United States Energy Information Administration, which states that the UK has something like one tenth of 1% of the total technically recoverable reserves of unconventional gas. Although the UK might have a lot—the numbers are significant—it is the impact on the gas market in the world around us that will affect us.
We have talked a little about the US experience. The hon. Member for Southampton, Test (Dr Whitehead) said that five or 10 years ago the US was building liquefied natural gas terminals to import the gas, and it is now talking about applying for licences to change them into export terminals. That is because of shale gas; we have already mentioned that unconventional gas prices in the US are now 50% of gas prices in Europe. There is a great phrase in the Select Committee report: “The tyranny of distance”. Gas prices are regionally based, and what happens in the US does not have to happen in Europe or Asia.
It is worth my giving my perspective on what really drives gas prices. I worked in the industry for a large part of my life and I never wholly understood how gas got priced. Gas used to just come off when the oil came off and was then burnt and sold. The truth is that gas has historically been priced under long-term contracts as a percentage of oil price, which is why the gas and the oil prices are linked in the various regions. Oil has gone up and therefore gas has gone up with it. That relationship needs to be decoupled and, notwithstanding the comments that we heard earlier, I postulate that shale gas provides the opportunity for that to occur, whether or not we exploit the gas in the UK. If such decoupling does occur, there will be a set of impacts. We are at the end of the Russian gas pipeline. Poland and France are the big places for shale gas in Europe, apparently with many times the reserves that we have.
Dr Whitehead
Does the hon. Gentleman accept that notwithstanding what he properly identifies as the relationship between gas and oil prices, and the possibility of decoupling, shale gas—unconventional gas—is a relatively expensive part of the gas extraction spectrum, and will remain so regardless of what its plentifulness suggests? Therefore, if gas prices decouple and go below a certain point, the gas becomes uneconomical to extract and regulates itself to some extent on the basis of its unconventionality.
David Mowat
I certainly accept that the market will determine gas prices and that if the price drops to a point at which it is not viable to take the gas out, it cannot be done. It appears possible, however, for the US to exploit and develop shale gas for $4 per million cubic feet, compared with $10 here. That is the market price, because people are obviously making a profit at that level. I can see absolutely no reason why that would not happen in France and Poland, and indeed in Russia. The report interestingly misses out South Africa—it might just be that things are moving very quickly. The Department of Energy and Climate Change figures for worldwide unconventional gas show that South Africa has one of the larger residues.
The thrust of what I am saying is that we have to be careful with all these environmental issues, and we must, of course, bring people with us. The market will happen anyway, and it could be a significant game changer and a big assistance to the decarbonisation effort that we must make in the shorter—and potentially the longer—term. One reason why unconventional gas has perhaps had a slightly weaker profile than it might otherwise have done is that it has a lot of natural enemies. The green lobby does not like it because it is a fossil fuel, and it is worried that it will take our attention away from renewables, and big oil does not like it because it is not at the forefront of this as it has been west of Shetland, for example. I used to work in the industry, but had not heard of Cuadrilla until a couple of years ago—Cuadrilla and IGas are new companies.
Shale gas is not a panacea—nothing is. But it could make a bigger contribution than is perhaps implied by the tone of the Select Committee report and the remarks that we have heard today. I was taken by a line in paragraph 76 of the report, which sums things up rather well:
“we can’t make the perfect the enemy of the good”.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mr Gale, and to take part in this important debate after some excellent contributions from members of the Select Committee and other Members with a local or professional interest. I commend the introduction to the debate by the Chair of the Committee, the hon. Member for South Suffolk (Mr Yeo). From the few short months at the start of this Parliament when I was a member of his Committee, I know that he is an excellent Chair and does very good work.
As Members have said, the debate is important and timely, given the shale gas issues that are high profile following the publication yesterday of the Cuadrilla report. In the three weeks since I was appointed shadow Energy Minister, I have heard Lord Lawson describe shale gas as the biggest energy bonanza since the discovery of North sea oil, the hon. Member for Brighton, Pavilion (Caroline Lucas)—I am surprised that she is not here today—say, “So what?” to the estimate of 200 trillion cubic feet of reserves under the Lancashire coast, and others say that we are in danger of encountering an environmental disaster. We are, therefore, not short of opinions on the matter, but there are some fundamental issues raised in the report and the Government’s response that I want briefly to address.
The Chair of the Committee has set out that the report is generally favourable towards onshore shale gas exploration and does not accept the case for a moratorium. Since the publication of the Committee’s report, the report on the unusual seismic activity in the early summer has been published, and I wonder whether the tone of the Committee’s report might have been more cautious had it been published subsequent to that. The conclusion of the Cuadrilla report, that it was highly probably that the tremors were triggered by fracking but that somehow that is unlikely to be repeated with further exploration, was interesting. Those two statements appear, on first examination, to be incompatible at the very least, and it is important that the Government look carefully at that when they take that report and the work by the British Geological Survey into account. During the past 24 hours, I have heard from geologists who take a different view. It is important that we look into it. However, I also accept that, due to their scale, the tremors were not significant and had no structural impact.
[Mr Dai Havard in the Chair]
I know that additional work will be undertaken and reported to the Minister. I broadly support that approach. As the Select Committee report highlights, public confidence is needed in the safety regime attached to the exploration of shale and other unconventional gases. Public confidence is important. Given the scale of the concerns expressed by groups, individuals and people who live in that part of Lancashire, it is important that the Government’s response takes account of those anxieties.
The other, equally valid side of the issue is that the public rightly expect that new developments, technologies and techniques should be used if they can help balance our energy mix, increase a potential indigenous energy source, reduce carbon emissions and address security of supply. The public also have an interest in getting a better energy mix, as it could affect the rate of increase in the prices that they pay.
Many claims have been made that shale gas can make a huge difference to all those issues, although some seem to be the result of a crude extrapolation of the American experience to the UK, which I do not think is valid. My hon. Friend the Member for Southampton, Test (Dr Whitehead) alluded to that in his remarks. The Chair of the Select Committee repeated today something that I have heard him say before: shale is a game changer whose significance has yet to be fully understood. He might be right, but estimates differ as to the amount of shale gas available on and offshore. That requires significant investigation.
As technology develops and techniques become more practised, the economics might also become more attractive. There are plenty of examples of North sea oilfields that have exceeded their claimed lifetime by several years. One particular field has almost doubled its lifetime and is still going strong due to the dual impact of technological and drilling advances and the fact that complex extraction is more economically viable than it was 20 or 25 years ago.
Shale gas involves many unknowns, which is why robust and effective environmental protection and monitoring are important, as the Select Committee report makes clear. I would like reassurance after reading the Minister’s oral evidence in the report. I hesitate to use the word “complacent”, but I am not sure that he demonstrated enough of the urgency required about providing public confidence and ensuring that we can exploit the technology more fully as we learn more about it.
The Select Committee report makes the point that many aspects of protection and monitoring need clarifying. The offshore regime for the North sea is widely accepted as world-leading. That is due at least in part to Piper Alpha. Many improvements in offshore health and safety and environmental protection were introduced as direct results of that tragedy or, indirectly, through inspections and monitoring by the Health and Safety Executive, the Environment Agency and, in Scottish waters, by the Scottish Environment Protection Agency.
I understand the industry’s reluctance to move towards European regulation of offshore activity, particularly when the need is questionable, but onshore fracking involves factors that must be taken into account, such as water use, recycling, the effect on the water table, the toxicity of the chemical mix, the potential for leaching into drinking water supplies and disruption to the landscape. People have concerns about a range of issues, as the Minister will know. That is why public confidence requires detailed work, as well as investor certainty and environmental standards. Those three aspects can be joined to provide reassurance.
Even if shale gas from onshore sites in the UK does not become more significant in the months and years ahead—my hunch is that it probably will—it is likely to do so in other parts of mainland Europe, most notably Poland. Given those concerns and the present moratorium in France, it would be useful to understand whether the Minister has had discussions with his European counterparts about those issues. Also, what progress has he made in discussions with the HSE, the Environment Agency and his counterparts in the Department for Communities and Local Government, which is responsible for planning policy, to discuss how those agencies can work together to provide the right level of reassurance for those with environmental and community concerns? It would also be useful to hear more about the expected time scale for the Government’s response to the report that they received yesterday and the additional geological survey work that I understand will follow from that.
In addition to regulation, I will mention a couple of issues regarding the potential impact of shale gas on other aspects of energy policy. Other Members have referred to its impact on renewable investment in coal-fired power and on the future of carbon capture and storage. It has been argued that shale gas will precipitate a further dash for gas, and that gas with lower levels of carbon emissions than coal will be at the forefront as a bridging energy, as renewable tidal, wave and other technologies develop. However, there are concerns that that might affect renewable developments and disincentivise the necessary continuing investment.
To risk moving into the subject of our second debate, that would have an impact on the Government’s electricity market reform proposals and some of the assumptions underpinning the various features of that policy. Gas emissions might be lower than those of other fossil fuels, but they will always be higher than those of renewables, and the fracking process is energy intensive. If, as the Select Committee report anticipates, the emergence of shale gas leads to a switch from coal to gas for electricity generation, and to new gas power stations being built close to source, the development of CCS for gas will become increasingly urgent.
However, that should not rule out or relegate the importance of CCS for coal following the Longannet decision a couple of weeks ago. Both are important, and there is a pressing need for urgency in Government progress on alternative demonstration projects in both coal and gas. As BP pulled out from the earlier iteration of a potential CCS project in Peterhead, I hope that the amended project, with SSE leading the consortium, will be considered as a viable option for that technology, given its proximity to deep storage sites in the North sea. What impact do the Government anticipate that the move to shale gas will have on the coal industry and the potential for clean coal? That would be interesting to know.
The hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) mentioned community benefit. On offshore wind licensing, I note that, particularly in parts of Scotland, moves are being made towards direct community benefit. Perhaps that could go alongside the potential benefits in terms of jobs. As he or an hon. Member intervening on him remarked, sometimes job figures are projected that are not necessarily matched in reality.
Several other countries around the world are more advanced in their experience and understanding of onshore shale gas and the horizontal drilling techniques required to release its energy. They are still learning, as are we. The small tremors in Lancashire in early summer were a signal to the Government and regulators that there are still unknown environmental consequences from fracking, just as there are still potential wider implications for energy policies developed in the past couple of years, which might become redundant or less relevant as a result. It is important for the Government to take on board those concerns, examine the evidence carefully and perhaps press for additional scientific evidence if initial investigations are not conclusive. A cautious approach is right.
The Select Committee report sets out the potential but balances it with the need for effective regulatory oversight to ensure public confidence. I implore the Government to take those wise messages on board and work quickly to put protections in place, so that if the game is to change, to borrow a phrase, the right kit is laid out by the captain in the changing rooms before taking the wicket. Without that confidence, shale gas might become an opportunity missed rather than realised.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
It is a pleasure to serve under your chairmanship, Mr Havard, and to respond to what has been an excellent debate. It has been extremely balanced, thoughtful and constructive—words that are also applicable to the Chairman of the Energy and Climate Change Committee, my hon. Friend the Member for South Suffolk (Mr Yeo). The way in which he introduced the debate was helpful. As he said, the issue could not be more topical. It is very much in the news this week, and the way in which it has been debated in this House shows that we are all keen to understand the technology’s potential, but to also ensure that it is developed in a way that takes account of the highest standards in both environmental and safety legislation.
I shall begin by explaining how we as a Government believe that shale gas fits into the potential energy mix in the United Kingdom. Even as we move towards a less carbon-intensive future, oil and gas will undoubtedly remain a vital part of our energy system for many years to come. In that context, the Government are committed to ensuring that we maximise economic recovery of UK hydrocarbon resources, both offshore and onshore. I should say in response to my hon. Friend the Member for Southport (John Pugh) that we see it as in our national interest to maximise returns on our indigenous resources. We are moving to a situation where we are net importers of gas, and there is a multi-billion-pound benefit to the UK economy from optimising our resources. We are keen for that to happen.
We have taken a careful approach to unconventional gas resources. We support industry’s endeavours in pursuing such energy sources, as long as they are technically and economically viable, and have regard to the full protection of the environment. The hon. Member for Rutherglen and Hamilton West (Tom Greatrex) implied that the Government have been verging on the complacent and have not shown urgency, before going on to say that we have one of the best regimes in the world in terms of offshore regulation. It is that exact same regime that will apply to onshore developments and shale gas developments. There will be no difference between the standards that will have to be met by any company wishing to have a licence to explore onshore for shale gas, and those that would have to be met if they were looking for oil and gas resources elsewhere in our territorial waters. That consistency and absoluteness in standards is important.
The hon. Gentleman also asked about our discussions with European Ministers. It is clear that there are different views across the European Union about the role that shale gas can play. Moratoriums have been introduced in France and in other countries, and Poland is actively looking at how shale gas can be explored, but we are in no doubt about the importance of having national regulation rather than EU regulation, because we believe that our standards would only be diminished—this has been shown to be the case in relation to North sea regulation—if we changed to an international approach to regulation.
All onshore oil and gas projects, including shale gas exploration, require planning permission from the appropriate planning authority. The hon. Gentleman listed a number of issues about which he has concerns, but they are all already taken into account by the environmental consents that are necessary. He also asked about our contact with the Health and Safety Executive. The most important thing of all about the relationship with the HSE is that it is not accountable to me. The Department of Energy and Climate Change and I issue the licences, but we do not control the health and safety legislation; that is independent. It is a core part of our safety approach in the United Kingdom, and it comes under a different Department. We have a good working relationship with the HSE and need to understand its concerns, but I am not in a position to put any pressure on it—nor would I seek to—to meet other objectives.
Any applications are subject to environmental regulation by the relevant environmental agency—the Environment Agency in England and Wales, or the equivalent bodies in Scotland and Northern Ireland—and are subject to safety regulation by the HSE or its Northern Ireland equivalent. They also require specific consent from the Department of Energy and Climate Change before drilling activities can commence. My hon. Friend the Member for Southport expressed concern about the use in our response of the words “may” or “might”. The reason for that is that we do not take a cast-iron approach to every single application. Every single application will be judged on its merits, and if there are issues that require us to go further, we will of course do so. For every single licence application, we will be certain that the most stringent environmental applications and measures can be put in place.
The hon. Member for Southampton, Test (Dr Whitehead) and my hon. Friend the Member for Southport have asked about the abandonment of wells. In the granting of a licence, the local authority, which is also involved in the process, can require a provision to be made for restoration if a project is abandoned.
Grahame M. Morris (Easington) (Lab)
The Minister is always generous in giving way, and I appreciate that. Will he offer a clarification on environmental controls? The hon. Member for Tamworth (Christopher Pincher) raised a point about the depth of the fracking compared with the depth of the water table, and said that there was no prospect of contamination. I understand the point that the hon. Member for South Suffolk (Mr Yeo) made about the integrity of the wells, but in the north-east we have had huge problems with mine water pollution and contamination. Will that be a consideration for the Environment Agency in determining licences?
Charles Hendry
The hon. Gentleman raises an important point. One thing that struck both the Select Committee and me when we visited Cuadrilla’s site in Lancashire was the immense separation distance—it is thousands of feet—between the water table and the area where the shale gas was being sought. The company drills below the level of the water table, and then encases it in concrete. Only then, when it has been sealed, do they drill further down to where the shale gas is. The point has been made clearly that, as long as the well retains its integrity, it is very difficult to see how there can be any contamination of the water supplies. The way in which the operation will be carried out and the standards that will be used will be an absolutely integral part of deciding whether a licence should be issued. We do not just look at the application in itself; the company must have the technical and economic expertise to carry out the work to the required standards. There is no question of cutting corners. We are adamant that the highest environmental standards must be applied as the technology progresses.
These are early days for shale gas in the United Kingdom. The pattern of development in a new basin in the US has shown that there are roughly three phases. The first is the initial discovery and the appraisal wells to prove the presence of the gas and the size of the resource. The second is an experimental phase, in which explorers work out the best techniques for obtaining production from the particular shale, which may take some time. The third is the production phase, in which an efficient pattern of production wells can be drilled to extract the gas on a commercial basis. Clearly, we in the United Kingdom are right at the beginning of the process. Only a handful of wells have been drilled, and their production potential has yet to be quantified.
Although it is encouraging that Cuadrilla believes that it has good quantities of shale gas in the rocks underlying its licence area in Lancashire, it is, as I have said, still very early days for shale gas in the UK, and I think that it is too early to know how significant shale gas may prove to be as a contributor to future UK energy supplies.
When he opened the debate, my hon. Friend the Member for South Suffolk talked about the reserves in place. At this stage, we should recognise that these are not reserves but gas in place. The recoverable amount is a small proportion—often about 10%—of the total reserves. Nevertheless, even with a large estimate of gas in place, the reserves could still be significant.
Comparisons have been made with the United States. It is right to recognise that there are significant differences in the United Kingdom that will determine the pace at which things progress here. As the hon. Member for Southampton, Test, has said, there are differences in the ownership of mineral rights, which is a critical issue for development. There are some 30,000 operational shale gas wells in the United States, so the scale is of an entirely different magnitude from anything that we can foresee happening in the United Kingdom.
That leads us to the issue of price separation, to which my hon. Friend the Member for Warrington South (David Mowat) referred. We have seen the separation of gas and oil prices in the United States. My assessment is that that will happen gradually over time in Europe, probably in the middle of this decade. Shale gas in the UK will not be a driver of that. We will look at developments with great interest, but at the moment we should be cautious. We are in no doubt that gas and shale gas can be part of the mix as we progress.
We are aware of reports from the United States of issues linked to some shale gas projects. There have been reports of contamination of water supplies with either methane or fracking fluids, and of explosions, and there is dramatic footage of householders setting light to their kitchen taps, as has been mentioned. I had not heard about the blackbirds tumbling from the sky, but we will, of course, set up a taskforce immediately to assess whether that needs further consideration—actually, we will not. If there is clear evidence that that is a problem—
Mr Dai Havard (in the Chair)
Joy and disappointment for the Royal Society for the Protection of Birds, all in one sentence.
Charles Hendry
All in one sentence. There is certainly joy for the Treasury at the end of that sentence, when I did not commit to setting up a massive taskforce to investigate something that is as yet unproven.
Where those reports have been investigated by the relevant US regulators, the evidence so far is that no incident of water contamination by methane has been attributed to fracking operations, and that the few incidents of contamination of water resources with fracking fluids were caused by accidents on the surface, rather than underground leaks of any kind. Also, some incidents of methane contamination of water were not attributable to oil or gas operations at all; they were caused by methane of recent biological origin.
However, there were cases in which gas leaks had occurred. That was attributed to unsatisfactory well construction or cementing. That confirms, if any confirmation were needed, that drilling for shale gas—like drilling for any other kind of oil or gas—is a hazardous operation that requires careful and consistent regulation. However, that also supports the Committee’s conclusions that there is no evidence that the fracking process itself poses a direct risk to underground water resources, and that the risks are related to the integrity of the well and are not different from those encountered in conventional oil and gas extraction.
The Government and their regulatory agencies will continue to study the experience already gained in north America and its relevance to shale gas activities in the UK. It is, of course, necessary to make the point that UK conditions, including its geology and its regulatory framework, are different, and there will not necessarily be any straightforward read-across. However, it is clearly important that we learn from the US experience, as the Committee recommended.
The UK has a long history of onshore gas exploration, and the range of techniques employed in shale gas drilling and testing operations are broadly similar to those used for orthodox gas production. We have a strong regulatory safety and environmental regime in place, administered by the HSE, the relevant environmental agencies and my Department, to ensure that potential risks to safety or the environment are properly managed. There is scrutiny by the regulators, and that is why we believe that shale operations, as permitted in the UK, are safe, and that there is currently no justification for a moratorium. Again, we welcome the support of the Committee on that point.
I can confirm that, as the Committee recommended, current shale gas operations in the UK are being carefully monitored by the HSE, the Environment Agency and my Department. The three regulators are regularly in touch to exchange information and to ensure effective co-ordination. According to present information, the Environment Agency does not consider that current operations pose a risk to the environment, including water resources. Of course, that has been an important theme of the debate. Some 99.7% of the fluid used in fracking operations is water. If anyone wished to use additives in that process, they would need to be absolutely clear about what those additives were. They would also have to satisfy us on how those water resources will be handled when they are brought back up to the surface. Stringent measures are in place to ensure that they cannot be disposed of without being taken through a proper process. If there is any spillage, a plastic membrane is on the ground to ensure that the fluid cannot leak back into the ground.
The debate has also focused on the seismic tremors experienced near Blackpool in April and May. Following those tremors, DECC had discussions with Cuadrilla and agreed that a pause in hydraulic fracture operations would be appropriate, so that a better understanding can be gained of the cause of the seismic events.
The hon. Member for Wansbeck (Ian Lavery) is an absolute expert when it comes to understanding the nature of the issues. He has spent his entire career in an industry that is involved in underground development. There is much expertise that we can transfer from the coal industry in order to understand the impact of different underground activities. However, I assure the hon. Gentleman that there is often a strong connection between coal mining and seismic activity—much greater than there is in relation to fracking. Of course, those processes take place at different levels. Shale gas development normally takes place thousands of feet further below the surface than coal mining, so there are additional reasons for believing that such operations can be done in a safe and proper way.
A geo-mechanical study undertaken by the company was delivered to my Department yesterday. The implications of that report will be reviewed very carefully in consultation with the British Geological Survey, independent experts and the other key regulators before any decision on the resumption of hydraulic fracture operations is made. I reassure the Committee and others that the highest environmental standards and measures, which we believe will carry public support, will be part of that process. I pay tribute to my Parliamentary Private Secretary, my hon. Friend the Member for Fylde (Mark Menzies), who has been assiduous in understanding the issues. The approach that he has called for—the close monitoring of operations and a gradual progression of shale development—is the right way forward.
In conclusion, this has been a very useful discussion of the issues raised by the Committee’s report. I stress that we have a robust system in place in the United Kingdom to ensure that shale gas activities—and other oil and gas activities—are conducted safely and with proper protection of the environment. When significant new issues such as seismic tremors arise, we must ensure that we have the capacity to deal with them effectively. I assure hon. Members that we will continue to maintain that rigorous approach.
Mr Dai Havard (in the Chair)
Before I call Mr Yeo, I should explain that Mr Gale and I have taken an innovative approach today. The reports under consideration come from the same Select Committee, and there is clearly an interrelationship between them, so Mr Yeo will now be asked to do a very interesting thing: make his summary remarks on the last debate and coincidentally introduce the next subject. I call Mr Yeo.
Mr Yeo
I welcome you to the Chair, Mr Havard. I am grateful for the flexibility that Mr Gale and you have shown in guiding us on how to proceed with the debate. If those hon. Members who were unable to speak during the shale gas debate catch your eye later, they might be able to mention shale gas in relation to electricity market reform.
This debate has shown Parliament absolutely at its best, which is probably why not a single word will be reported in the press or by the electronic media. Hon. Members of all parties have made a genuine effort, and have come to the issue from very different standpoints. Some have a long professional background in the industries, some have a constituency interest, and others are Committee members. Everyone has been trying to find the right solution to a new and interesting but complex issue. If we get the right outcome, it could be very beneficial for Britain. I hope that it might also be economically beneficial to areas where shale gas can be recovered. There could be some benefits in terms of employment, although it is easy for those to be exaggerated. That is all extremely good news.
I pay tribute to my Select Committee colleagues, who are a hard-working bunch. They have taken a thoughtful approach, and I am pleased that we have mostly managed to achieve a bipartisan outcome. We have shown that a bipartisan approach can be achieved on such very important issues—even between colleagues who have slightly different views. The issues have long-term consequences, which makes that approach particularly valuable.
On shale gas, the differences of opinion are more of emphasis than of principle. This is very much a work in progress for the Government, the industry and probably the Committee. I am sure that we will want to return to the matter. I am grateful to colleagues who have praised the Committee’s work and the report. I hope that those comments will be noted by the staff who have assisted us in our endeavours.
I welcome the Minister’s reference to the fact that seismic events also occur as a result of coal-mining operations, and not just because of fracking. We must consider the issues in a general context. I am grateful to him for reminding me of the difference between gas in place and actual reserves. I may have loosely confused the terms when I was speaking. I did not mean to; I understand the difference, which is very important.
I am grateful to my hon. Friend the Member for Warrington South (David Mowat) for rightly distinguishing between the low-carbon and renewables objectives, which also, rather unhelpfully, sometimes get confused. I would like more emphasis on low-carbon targets, and perhaps less emphasis on renewables, because we must focus on emissions reduction.
Electricity Market Reform
(13 years, 1 month ago)
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Mr Tim Yeo (South Suffolk) (Con)
I remind hon. Members of my entry in the Register of Members’ Financial Interests, which relates to a number of businesses in the energy and transport industry.
This debate is also timely. Electricity market reform is very much on the agenda of policy makers, industries, non-governmental organisations and even consumers. We are in a crucial period for energy policy decisions. As I mentioned in the previous debate, the three drivers—independence and security, emissions reductions and price—will be uppermost in our minds. In addition, the consequences of the decisions taken during this Parliament will be far-reaching and long-lasting. With that in mind, I believe that the principles of EMR are right, and I congratulate the Government on moving substantially in the right direction after a period when energy policy was at a bit of a standstill in the UK and time was lost unnecessarily.
With a quarter of our electricity-generating capacity shutting down in the next decade as old coal and nuclear power stations close, more than £100 billion of investment will be needed to build the equivalent of 20 large power stations and to create a new low-carbon energy infrastructure. In the longer term, by 2050, electricity demand is likely to double as more transport and heating is shifted on to the electricity grid.
Let me straight away address emissions reductions, which are the second driver of policy. A clear target for decarbonisation would increase certainty. The Government’s goal to largely decarbonise the power sector by 2030 is a bit too vague for my liking. The Energy and Climate Change Committee’s report recommends that the Government should set a specific target of 50 grams of carbon dioxide emissions per kilowatt-hour by 2030, and should also set out a clear trajectory on how Britain should reach that target. I regret that the Government have so far not accepted those recommendations, but merely reiterated their intention that the sector be largely decarbonised by 2030.
As important as a clear target for decarbonisation is the need for a stable policy framework. Another priority for Government must now be to create confidence for investors quickly, but without setting the level of renewables obligation certificates, feed-in tariffs and other incentives for low-carbon energy at levels that are so generous that the subsidies become unaffordable. The huge spend of more than £100 billion may be beyond the resources of the big six energy companies, so Britain must compete for energy investment in a global financial market at a time when many other countries are also seeking huge funds to increase their electricity-generating capacity. For many years, the major utilities have financed renewable projects as well, but their balance sheets are now being loaded up with increasing levels of debt at a time when there are competing investment opportunities and when prices are under pressure. The challenges of financing the new investment that is needed, especially in low-carbon technologies, are formidable.
The main mechanism for creating certain returns for low-carbon electricity generators in the long term will be feed-in tariffs. The White Paper has improved the proposals for feed-in tariffs, again reflecting the recommendations from the Committee:
“different levels of Feed-in Tariff…are required to support technologies at different levels of maturity and with different financing needs.”
We also said that the Government
“should set out conditions under which it would shift to an auction-based process in the future.”
The White Paper suggests a move to an auction-based approach. It accepts the need to begin with technology-specific auctions before moving to a general low-carbon option in the longer term. It suggests that technology-specific auctions or tenders will start by 2017, and that greater competition between the technologies will be introduced in the 2020s. Again, I support that approach and look forward to learning more details in due course. I invite the Minister to set out the thinking behind those dates if he can. For flexible and base load carbon generation, feed-in tariffs with contracts for difference will be used on a reference price, such as the annual electricity price.
Detail about how that reference price will be calculated is very important and eagerly awaited. For intermittent low-carbon generation, average prices are generally a problem, because when they are generating wholesale prices tend to be low. The best prices are clearly likely to be when the wind is not blowing. Basing the top-up for intermittent generators on the market price they actually receive, rather than an average, would give more certainty, although that might also have cost implications. In the meantime, against the background of rising concern about consumer prices, I invite the Minister to explain how he hopes to ensure that the levels of support offered by the feed-in tariffs will also be economically efficient and affordable.
It is important that lessons are learned from recent experience with ROCs and small scale feed-in tariffs. The Committee’s report recommends that the process of setting subsidies should be transparent. Levels must be set for a defined period, with clear triggers that would activate a review if levels need to be reassessed so that investors are not taken by surprise. The report also states that there must be a clear mechanism to allow levels of subsidy to shift automatically in response to changes in the cost of low-carbon technologies. The contracts for difference regime provides an umbrella mechanism, under which the levels of support for each technology can be set. This makes it possible to stimulate the deployment of different low-carbon technologies by adjusting the strike price. However, I hope that Ministers avoid the temptation to tinker with the regime too often early in the process through too many early reviews of support levels. The regime is open to that, but I hope that that temptation will be avoided. I therefore invite the Minister to put in place an automatic mechanism for feed-in tariff strike prices to respond to changes in cost and thus avoid the problems seen recently with the solar PV feed-in tariffs.
Will the Minister set out in advance the dates when the Government will review the feed-in tariff levels and make a commitment to avoid early reviews? We also need the right kind of institution to implement the feed-in tariffs. The report concludes that the Department of Energy and Climate Change must identify which institution will be given the power to create appropriate contracts and set this up as quickly as possible. If that role is not taken on by Ofgem, a shadow body should be set up in advance of legislation. The agency must be totally independent and not susceptible to political influence.
The Government appear to have agreed to this recommendation, however the details of the kind of institution that will be counterparty for the feed-in tariffs are still rather scarce. Will the Minister shed more light on the details of this institution, and on how responsibility will be divided between the feed-in tariffs institution and the Government? Who will actually decide the levels of support for different low-carbon technologies and the overall energy mix?
On the assumption that substantial investment in low-carbon generation will take place, the problem of intermittency must also be addressed. New capacity is required to fill the gap when generation shuts down, but the capacity mechanism proposed may not be available soon enough to achieve that. In future, however, we are likely to have more inflexible and intermittent generation. Some premium payment may be needed to ensure that enough flexible generation is available to meet demand. The White Paper does not present a finished design for a capacity mechanism, but it sets out two options: a “targeted mechanism” in which a central body would procure a strategic reserve that would not participate in the electricity market and would only be used under “exceptional circumstances”; and the introduction of a “reliability market” to operate alongside the electricity market, in which generators would receive a payment for the availability of capacity, as well as for the actual electricity that they generate. Prices would effectively be capped so that generators receive a predictable but low-level payment from the capacity market in exchange for forgoing very high prices in the electricity market at times of peak demand. Both the targeted mechanism and the capacity market would also be open to demand-side response.
Will the Minister clarify what kind of plant will fill the capacity gap, which could influence the kind of capacity mechanism that is needed? If an existing high-emission plant is expected to run for very short periods—for example, oil-fired generators—an early signal will be needed before these plants shut down. Otherwise, there is a danger that some serviceable plants that could run for a few hours a year will close down and leave us needing new reserve capacity.
I have previously expressed my support for the principle of emissions performance standards. However, the EPS proposed in the White Paper will not have any material impact. An EPS set at 450 grams of carbon dioxide per kilowatt-hour, with exemptions for carbon capture and storage demonstration plants, does not provide any additional environmental benefits beyond existing planning requirements. I note that the Government plan to review the EPS level and the grandfathering arrangements in 2015. I hope that the Minister will recognise the advantages of setting out well in advance how the EPS may become much tighter. Unexpected changes are obviously potentially harmful and a deterrent to investment.
The Government have proposed that the EPS would be grandfathered for a predetermined period—for example, 20 years—rather than for the economic lifetime of a particular plant, as previously suggested. However, even a 20-year period would allow gas-fired power stations built before the 2015 review to operate unabated into the 2030s, which could make achieving our long-term climate goals much more difficult. Some of what was said in the previous debate is also relevant to that point. Will the Minister say how often he expects the EPS level to be reviewed, and whether he would consider setting a long-term trajectory based on the carbon targets set in the fourth carbon budget?
Let me turn briefly to the carbon price floor. In Brussels last week, Commission officials seemed rather baffled by this. They felt that it would do nothing to reduce EU emissions, because any reductions would be soaked up under the cap in the trading sector. In effect, there is a danger that it will mean that the UK pays more for its emissions reductions, provides a subsidy to other member states and reduces the economic efficiency of the emissions trading system. Our report recommends that the Government should explain how they plan to deal with the problem of potential windfall profits arising from the introduction of the carbon price support, as set out in the White Paper. We suggest that the White Paper should set out in what circumstances the Government would take action to address any resulting windfall profits. If such measures were to involve a tax, what would happen to the revenues? Would it be matched by an increase in the support for a green investment bank?
In the event, the White Paper left the issue of windfall profits arising from carbon price support untouched, but the Committee believes that such profits could accrue from the increase in electricity prices resulting from the price floor and that they will be enjoyed by current low-carbon generators without any effect on the proportion of low-carbon generation in the short term. Can the Minister comment on the possibility that the carbon price floor would raise electricity bills until the 2020s without stimulating additional emissions reductions?
The dominance of the big six is another topic much in people’s minds. Reform of the wholesale electricity market is now widely regarded as essential. The big six generate around 80% of the electricity in the UK and supply 99% of electricity to retail customers. Does the Minister agree that real competition is needed in the wholesale and supply markets, so that consumers can be confident that the path to a low-carbon economy is being followed in the most efficient way possible? Does he agree that competition is vital to ensure that consumers get a fair deal? The big six are almost unchallenged in the sector, as they dominate both generation and supply, and little room is left for independent or decentralised generation.
The lack of liquidity in the market makes it hard for potential investors to have confidence in the prices that they will receive. Currently, our electricity market—for GB day ahead—trades volumes of around 40 GWh per day, with a further 200 GWh traded through the brokered markets, compared with markets such as Germany and Nordpool, which clear between 500 GWh and 750 GWh each day. An illiquid and opaque wholesale market poses difficulties for new entrants and can weaken the effectiveness of the feed-in tariffs proposed by the Government. Is the Minister contemplating a more thorough plan for reform of the wholesale and balancing markets—in other words, real electricity market reform?
In that context, the Committee recommended that the Government incorporate a review of the present trading arrangements and of liquidity in their White Paper, but the Government largely delegated the responsibility to Ofgem, which has subsequently proposed that utilities must auction 20% of their electricity by 2013 in a range of products including near-term supply. It is not clear, however, that the 20% will make a sufficiently big difference. Scottish and Southern’s pledge to sell 100% of its electricity in the spot market is welcome, but the details about how SSE will deal with its futures contracts still need to be spelled out if we are to see what benefit will be achieved.
I entirely share the Government’s reluctance to consider a reference to the Competition Commission because of the delay involved in a report and any conclusions. Ofgem has for a long time been responsible for tackling the problem, but we need to do more to ensure real competition by the time that the EMR proposals are finally implemented in two or three years. The White Paper acknowledged:
“To the extent that there are continued barriers to entry that are not addressed through Ofgem’s actions, the Government will work with all stakeholders to identify appropriate solutions.”
That seems to emphasise the option of more Government intervention if Ofgem’s liquidity reforms are insufficient.
My Committee also argued that the EMR proposals could be jeopardised by the lack of competition. A liquid market with clear price transparency is particularly important for small suppliers and generators, and we argued that a strong reference price would need to be given by the market to give confidence to small suppliers wishing to invest, and to give a credible strike price for the contracts for difference. We were glad to hear that the Secretary of State has taken up our call to break up the dominance of the big six. However, leaving the responsibility for improving the sector to Ofgem does not guarantee that that will happen. The Government’s response stated:
“To the extent that there are continued barriers to entry that are not addressed through Ofgem’s actions, the Government will work with all stakeholders to identify appropriate solutions.”
Can Ministers explain when they will judge whether Ofgem has been successful in addressing the barriers to entry, and on what basis they will make that judgment?
Recently, the energy sector has been delivering investment of only £6 billion or £7 billion each year, according to Ernst and Young, and uncertainty about or delays in implementing EMR might even reduce that figure. Will the Minister tell us how much investment there has been in the past year, since the EMR proposals were first mooted? Does he believe that we are on track to achieve the £200 billion figure widely quoted as necessary? If we continue to attract less than £10 billion a year through till 2014, that will leave quite a big burden for the remainder of the 2010s.
Time is short and several of my colleagues wish to contribute to the debate, so I shall conclude. I hope that the Government recognise the urgency of reaching conclusions in the EMR debate, because we are in danger of creating a period of hiatus for investment. I am disappointed that the timetable for publishing the new energy Bill, on which my Committee has been invited to conduct pre-legislative scrutiny, appears to be slipping a bit, and important chunks of the Bill might not even be available in time to scrutinise. However, I look forward to what my colleagues and the Minister have to say.
Mr Dai Havard (in the Chair)
In my estimation, we probably have about 25 minutes for a general debate to leave enough time for the Opposition spokesman and the Minister to speak and for Mr Yeo to reply, should he wish to have a few minutes at the end. Perhaps hon. Members will take that into consideration.
Barry Gardiner (Brent North) (Lab)
My pleasure at speaking under you as Chair, Mr Havard, is exceeded only by my awe at having to follow my own Chairman of the Select Committee, the hon. Member for South Suffolk (Mr Yeo), who in his 16 or 17 minutes did not canter but gallop through the entire report in the most comprehensive fashion.
I often think of the Minister, for whom I have the greatest respect, as sitting in his Department twiddling a Rubik’s cube. The trouble is that someone has peeled one of the colours off this particular Rubik’s cube and put the wrong colour in its place. No matter how hard he tries to get the six sides all looking as they should, the task is pretty impossible. I do not underestimate the challenge faced by the Minister.
We need to replace 25% of our existing generating plant by 2020 merely to keep the lights on—that is one side of the Rubik’s cube. We are obliged by the European Union to have 30% of our electricity come from renewable sources by 2020—currently it is only 7%—and that is another side of the cube, as is energy consumption in the UK being set to double by 2050 if we continue with business as usual. We also need to tackle fuel poverty and to keep prices low, and that is a big side of the Rubik’s cube. We need to decarbonise our economy to combat climate change—yet another side. The sixth side is that we need to incentivise £200 billion of investment in new capacity and infrastructure in the space of only nine years. The puzzle is intractable indeed.
Take any two of those sides at random, such as the renewables obligation and low fuel prices. Professor Dieter Helm, in his evidence to the Committee, dismissed the Government’s projection of only minimal rises in customers’ bills by 2020. He told the Select Committee that to think that energy efficiency and other demand reduction measures could balance the increased costs of low-carbon supply to the extent that the effect on consumers’ bills would be only 2%,
“is again really stretching one’s imagination.”
Let us pick another two sides of the cube: what of delivering £200 billion-worth of infrastructure and of decarbonising our economy? Investment analyst Peter Atherton told the Committee that
“it is going to be extraordinarily difficult to get non-recourse debt into new nuclear in the UK. That basically means that it all has to be done on balance sheet.”
The Government’s strategy is market driven. It is predicated on getting the right incentives and believing that the market will then arrive at the correct solutions.
There are four pillars. Feed-in tariffs will incentivise at two levels. First, by encouraging microgeneration and paying people for the energy they feed into the grid through their solar panels and domestic wind turbines. No doubt we will come back to solar panels later. Secondly, by giving a long-term contract to large-scale low-carbon generators like offshore wind farms. This will guarantee a better price to them in comparison with carbon-intensive generators such as coal or gas-fired power stations. Those are the “FITs”.
Carbon price support is like a tax on carbon, as the Chairman of the Energy and Climate Change Committee said. It simply makes the cost of generating electricity from fossil fuels more expensive, and that means that carbon-free generation like wind becomes relatively more attractive the higher the Government set the carbon price.
Capacity payments, the third of the four pillars, are the price the Government are willing to pay to ensure that back-up is always available. The system needs flexible generation that can respond to the peaks of demand and any gaps in supply. They propose payments to generators that will give them increased certainty of revenues if they guarantee to be available when other supply is not—for instance, when the wind does not blow.
Emissions performance standards is the fourth of the pillars: the final tool in the Government’s incentives box. In reality, the EPS is more a disincentive, because it simply proposes a ban on any generator emitting more than a certain level of CO2 per kWh. The Government want to set that limit at 600 grams of CO2 per kWh. In practice, this would stop only unabated coal—the coal-fired power stations that did not have CCS fitted to reduce their emissions. It would still be enough to allow gas-fired stations. That is not good enough, given the Committee Chairman’s earlier remarks about adopting the Committee’s fourth carbon budget with targets of between 40 grams and 60 grams per kWh.
If the banking crisis should have told politicians anything, it is this: a strategy of “incentivise and then sit back” ignores the fact that markets need more than incentives. Markets need certainty, capacity and regulation. Peter Atherton put it nicely when he told the Committee:
“I warn you that it is not a question of making the rewards more and more, because the more you make the rewards, the less trust investors will have that those rewards are going to be sustainable.”
He went on:
“There are really five big risks: planning, construction, power price, operation and decommissioning.”
The mistake that the Government appear to be making is to think that by putting greater and greater incentives on power price, they can resolve all the problems that need to come within electricity market reform.
The EMR set out three high-level objectives: decarbonisation of the electricity sector, energy security and affordability. I wish to focus for a moment on affordability, because it is becoming—certainly for my colleagues—one of the biggest issues that we find on the doorstep. One in every four households in the UK is now classed as fuel-poor. A fuel-poor household is defined as one where the expenditure required to maintain adequate warmth exceeds 10% of household income. It is a measure of the number of households needing to make impossible decisions on expenditure just to meet their basic human needs.
If we look across Europe, there is no pan-European definition of fuel poverty. In other countries, fuel poverty might fall within general poverty alleviation programmes, or it may simply not be recognised as a major problem. Cross-country comparisons therefore are difficult and they need to employ indicators such as the winter variation in mortality levels or the number of people in arrears with their utility bill payments.
The Labour Government brought in winter fuel payments for the elderly to tackle fuel poverty, and no doubt my colleagues will point to figures that show that excess winter deaths plummeted from almost 50,000 in 1999-2000 to 25,000 in 2009-10. The truth is that while Labour can claim real success by acting to increase household income, if we look at the figures over an extended period, it becomes evident that the net effect of our winter payments strategy was only to hold winter deaths broadly static when otherwise they might have increased. If one goes back to 1993-94, one sees that excess winter deaths were again 28,630. In 1994-95, the figure was 29,720. It rose to a peak in 1999-2000, but in 2007-08 it came down to 27,480. That shows the danger of focusing on just one aspect of a problem.
Winter mortality in other European countries reveals some surprising trends. The countries with the highest winter death rate are Portugal and Spain. That is counter-intuitive, but easy to explain when one considers the low level of home insulation. What emerges clearly from such comparisons is that there is a strong correlation between thermal standards in housing and excess winter deaths. That excess winter mortality is almost twice as high in England as in Finland or Germany cannot be directly attributed to weather. However, precisely because of its cold climate, Finland already has very demanding thermal insulation requirements.
By contrast, the coalition Government have just introduced their warm home discount scheme where energy suppliers will be obliged to give rebates of £250 million in 2011-12, rising to £310 million in 2014-15, to vulnerable customers. It is astonishing that the UK continues to focus on financial solutions to what is essentially a technical problem of building standards. On the Minister’s overview of the industry, I urge him not to repeat the mistake of which I have already accused him once this afternoon by adopting a single focus solution to a problem. I fear that is what happens.
The Government have also failed to control the soaring costs of energy charged by the big six utility companies. Again, the Chairman of the Committee made strong reference to this in his remarks, because it is a major focus of our report. Household bills have increased on average by 71% in just five years. The latest attempts by Government to reform the electricity market once again let those companies off the hook by failing to break up the vertical integration of the companies.
Vertical integration allows a utility company to generate the electricity under one arm of the company, which it sells through an intermediary—often offshore—which they also own, and then on-sells to another arm of the corporation, which supplies it to us as the consumer. The result is a total lack of transparency in the true cost of electricity. All the big six operate similar structures, which prevent real competition and stop new entrants coming into the market.
When the Committee Chairman mentioned the big six and the break-up of the vertical integration of the market, he alluded to the announcement by Scottish and Southern. It is important to try to appreciate why what sounded like a major announcement from Scottish and Southern to auction all its electricity to household suppliers on a wholesale market is perhaps not the concession or big move that might have at first been perceived. One small supplier that it was supposed to help said that the move was “cosmetic” and will do little to help small suppliers gain market share. That is because the Scottish and Southern Energy Group is freeing up only short-term energy and not the long-term market on which small suppliers rely.
The big six gas and electricity firms buy and sell energy on the wholesale market, but energy is traded in two ways—first on the day-ahead price, which is where SSE said it will auction all its energy, and secondly, by smaller energy firms that trade with a longer view, buying up enough energy for up to two years so that they can guarantee a price for customers. The markets are complex and subject to many external factors that can affect price. First Utility, a small company, says that it buys less than 1% of its wholesale energy on the day-ahead market, and claims that smaller, newer suppliers buy wholesale energy on a much longer-term basis. That is why the move from SSE that the Chairman of the Committee mentioned will not free up the market and help liquidity in the way suggested.
Lack of skills is a problem in driving the investment that we need in industry. It is one thing to get £200 billion of investment, but providing the skills to deliver that is a much greater challenge. The Minister must respond clearly and tell the Chamber how he proposes to make skills available to meet the demand should such investment be obtained.
Mr Dai Havard (in the Chair)
Order. I would like to start the winding-up speeches at about five past five and other hon. Members wish to speak. I appreciate that it is a complex report and that huge areas need to be discussed, but I appeal to the hon. Gentleman’s internal discipline.
Barry Gardiner
I apologise, Mr Havard; I thought that we were working to a slightly different time scale than that outlined, so I will rapidly bring my remarks to a close. I must, however, focus on this week’s events and the change in regulation. I do not suggest that the Government are wrong to change the tariff structure and bring it in line with the levy, but they should do it at the end of March next year when the review was originally planned. By bringing the move forward by a meagre four months, the Government have reinforced a perception in the markets and business that they cannot be trusted to deliver a stable regulatory framework. The Minister shakes his head but he knows that to be true. He also knows that he will be subject to judicial review. Some companies are losing up to 45,000 workers, and many will “JR” the Government’s decision because there is a consultation period that extends 11 days beyond the deadline at which the change of tariffs will come into effect. That is dishonest and the Government are wrong to go down that route.
David Mowat (Warrington South) (Con)
I have already spoken this afternoon, so I will be brief to let the hon. Member for Southampton, Test (Dr Whitehead) contribute to the debate. I liked the Rubik’s cube analogy that we have just heard; I will not add to that although I want to raise a couple of points that have not yet been discussed. We have spoken a little about fuel poverty, but we have not specifically mentioned energy-intensive industries. I know that proposals on that are to be published and I await them with interest. It is a major problem. I was recently told that INEOS in Runcorn uses about as much electricity as Liverpool. That is a continuum; it is not a discrete industry, and to a greater or lesser extent, all industry uses electricity. At a time when we are rebalancing our economy, it is worth noting that a unit of GDP obtained from manufacturing will always require more energy than one obtained from services.
I have two specific points. First, paragraph 37 on page 15 of the report states:
“It is important that the Electricity Market Reform package is geared to deliver our renewables targets as well as our decarbonisation objectives.”
The Government agreed with that conclusion and although I looked carefully at the logic behind it to try to find evidence for it, I could not. Cutting 80% of our carbon emissions by 2050 is a difficult challenge, and I am concerned that we are introducing subsidiary targets that will make it harder. Of course renewables are part of the solution, and nothing in my remarks should imply otherwise, but if we elevate renewables over and above other methods of reducing carbon, including nuclear power and a little bit of gas, we could be driven to make wrong decisions. I think that to an extent we are doing just that.
We have just heard an exchange about the cost of solar power, which is still high. A finding by the Parliamentary Office of Science and Technology and Cambridge university suggested that, over its lifecycle, solar power uses three times as much carbon as nuclear power, including the manufacturing cost of PV cells. I support the objectives of decarbonisation, but I wonder whether some of the renewables objectives could be a distraction.
My second comment on the report links to the previous point about fuel poverty. We have a problem with cost, which we are ducking. The danger of doing that is that it could become a cumulative issue, meaning that we will never address head-on the question of why the costs involved may be a price worth paying. We have heard in previous debates about the numbers of people who are dying in our country from fuel-related issues such as hypothermia—I think I heard the figure of 2,500 a year. Page 61 of the report implies that the EMR reforms, which I broadly support as a sensible way of achieving our objective, will have a maximum impact on energy prices over three decades of 7%—that is the highest number on the chart. That figure is based on a set of assumptions that I could not find and that I am not sure have been published. Unless we take seriously the extra costs associated with some of our actions in terms of interfering with the market, we will lose popular support for some of the things we are rightly trying to do.
Dr Alan Whitehead (Southampton, Test) (Lab)
I will limit my remarks to one or two points. One disadvantage of having such a knowledgeable, far-sighted and competent Committee Chair is that after he has spoken there are few sensible contributions left to make. I will, therefore, confine my remarks to one or two less sensible points, which I hope will add something to the debate.
In the Green Paper, and certainly in the subsequent White Paper published after the Committee’s report, one must look a long way to find comments on electricity market reform. Although the White Paper addresses a range of topics, such as capacity, the carbon floor price and energy performance standards, its central oddity is that it leaves the electricity markets as they were designed 10 years ago under NETA—the new electricity trading arrangements. It leaves the electricity markets in pretty much the same place, with the same assumptions and mechanisms. However, it countenances a very different landscape as far as electricity trading is concerned.
When NETA was set up, there was a substantial number of wholesalers selling and retailers buying. That is no longer remotely the case—not by conspiracy, but through the accretion of suppliers, generators and retailers into the big six. By accident, what has come about is, in effect, a cartel—we have to say that—that essentially hedges, using the strategies that my hon. Friend the Member for Brent North (Barry Gardiner) mentioned: it buys on the futures market and sells to itself, using the same market mechanisms, and therefore pretty much bypasses most of the things that NETA was originally set up to do.
When NETA was set up 10 years ago, it was carbon-blind. Its purpose was to secure, among other things, the cheapest price between wholesale and retail. In the early stages, it looked as though it was substantially succeeding in doing that, until other factors took over. However, there was the emergence of what one might call the other things that are central to the electricity market reform White Paper. To some extent, they were mechanisms that mediated that central electricity market. The renewables obligation, for example, was a mechanism attached to the original NETA/BETTA system to bring renewables to market; to underpin emerging technologies; and, in an echo of the recent debate on feed-in tariffs for solar photovoltaics, to recognise that over time the obligations may change as the technologies come to market. Nevertheless, the aim was to underpin those technologies in the first place.
Now, as hon. Members have said, we need to decarbonise our electricity market rapidly and invest substantially, not just in replacing capacity but in providing additional capacity, because of the nature of the capacity that we are bringing on board as far as the low-carbon market is concerned. We are talking about perhaps £200 billion in investment. All but two of the big six companies have pretty much borrowed up to the limit of their balance sheets, so we need important mechanisms to secure not just the good running of the market, but low-carbon investment on the basis of good value for customers. I do not underestimate at all the breadth of the challenge implied by the electricity market reforms.
There are various things in the reform. The central electricity market remaining must have a substantial question mark against it, with regard to whether it is fit for purpose as one of the central mechanisms driving all the demands forward. I think—evidence was submitted to the Select Committee on this—that a single purchaser pool of some description is a necessary way of dealing with the issues of cartelisation and the lack of transparency in the wholesale market that has emerged. There must also be a question mark against the contract for difference as set out in the White Paper.
Barry Gardiner
I absolutely agree with what my hon. Friend is saying. Will he say something about liquidity and the ability of smaller companies to enter the market with regard to the changes that he is discussing?
Dr Whitehead
My hon. Friend has just stressed that point. Given that I have about one minute left, expatiating on liquidity to any great extent is probably beyond my abilities. However, he is absolutely right to raise the question of liquidity in the market and the fact that as a result of the lack of liquidity, small companies are pretty much shut out from gaining a foothold in the market. Whatever is done about the big six, that is a very important issue.
Finally, I want to emphasise two things. First, the contract for difference as currently proposed conflates mature technology, the overall costs of which will not change, with emerging technology, where costs may well change. That is to say, it rewards, and particularly in the future will reward, old nuclear technology, as well as new nuclear power stations, for their output. That seems—the Committee alluded to this—a considerable concern, given the pronouncements that continue to be made that the Government are in favour of new nuclear but with no public subsidy. It is necessary at this stage to say either that there will be no public subsidy—that nuclear will not be rewarded for being a mature technology in the way that emerging technologies are, but will take its chance in the market—or that we need to do something about public subsidies for nuclear, for reasons that may be perfectly honourable to consider, and we must be up front and deal with that. Electricity market reform continues to fudge that essential choice that we have to make.
Secondly, we have to enter into capacity payments with a clear understanding of demand-side analysis, which is substantially missing from the proposals in the electricity market reform White Paper. We need to consider capacity payments for energy efficiency and reduction in output, and in relation to things such as interconnectors and electricity storage, which will be an essential part of a balanced, very low carbon economy that takes serious account of the demand side as well as the supply side.
Trying to deal with the entire landscape of electricity market reform in eight minutes flat was a difficult challenge. I hope that I have contributed a few thoughts to the debate, and I look forward to the Minister’s response to a number of issues that hon. Members and I have raised.
Mr Dai Havard (in the Chair)
I hope that we can give the Minister and Mr Yeo sufficient time to respond to the debate.
Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)
I will endeavour to be brief to provide that time, but I want to say a few things. I welcome the report and the clarity that it brings, because it puts very technical issues into relatively plain English. I congratulate the Select Committee on doing that. I am conscious that in coming months, when the energy Bill is published, the Minister and I will have plenty of opportunities to get into the weeds of these issues, so I do not intend to speak for long.
My hon. Friend the Member for Brent North (Barry Gardiner) outlined a number of the issues arising from the EMR process, as well as some of the omissions from the EMR proposals. I will touch on a couple of issues. I want to re-emphasise the most glaring issue, which has been referred to by the Chair of the Committee, the hon. Member for South Suffolk (Mr Yeo), and by other hon. Members—the omission from the EMR proposals of reform of the wholesale electricity market. I hope that between the White Paper and the Bill, the Government will look to deal with that, or others may well do so, because it is a pressing issue. It has come to the fore in recent weeks, and we know the reasons why. Those reasons have been acknowledged by some of the energy companies themselves. In particular, Ian Marchant of SSE has been candid in acknowledging that there is a trust issue. They have a trust issue because the market in which they are operating and the behaviours that go alongside it bear the hallmarks, in some respects, of a cartel. That is unsatisfactory and needs to be dealt with. The Committee report rightly highlights the proposals from Ofgem in relation to the 20% figure as relatively timid, and much more substantial work can be done on that. I am sure that the Minister will appreciate the support from the Opposition if he attempts to deal with some of those issues or, if not, we will find a way of giving him the opportunity to address those issues in the next few weeks.
I want briefly to touch on carbon price support, which the report is critical of. As my hon. Friend the Member for Southampton, Test (Dr Whitehead) has noted, the report reflects on the issues regarding the encouragement of new as opposed to older development. The report states that carbon price support
“will not influence investment decisions until 2018 at the earliest…Until then, the Carbon Price Support represents little more than an additional energy tax, which will be passed on to consumers.”
The hon. Member for Warrington South (David Mowat) has referred to energy-intensive industries. That is an important issue, particularly with the impact that the carbon floor price could have on some of those industries. I have a constituency interest in the issue, as do many other hon. Members. It is important to ensure, as the Select Committee warns, that UK companies are not disadvantaged in the long term compared with their counterparts in the EU and more widely across the world. I know that the Chancellor is seeking to address that issue in his growth statement at the end of the month, and I implore the Government to look seriously at the impact. I know of energy-intensive companies in my constituency that contribute to other objectives set out in the report and in the EMR process—for example, manufacturers of offshore wind turbine parts—and those companies might end up going to other parts of the world, causing the UK to lose growth and jobs.
Other aspects of energy policy will need to change and feed into the time scale of the reform. The Minister touched on one of them when we debated the potential changes regarding shale gas, and I want to refer to another, transmission charging. I know that the Minister now knows the arguments well. The Select Committee report points out that the TransmiT review will have an impact on the development of renewables, the siting of such developments and their attraction in association with the ROCs regime.
I know that the Minister is aware of the way in which such arguments are sometimes used to support a particular political agenda. The issue is not necessarily about discriminating against one part of the country, but it is a fact that the transmission charging regime was established in a pre-renewables world. That needs to change. I hope that if the outcome of Ofgem’s review is too timid, the Minister will use his powers to ensure that that is addressed to provide the right signals and basis for the market.
Finally, the Select Committee report notes:
“‘Affordable’ electricity in the short term cannot be achieved at the expense of meeting the other objectives of Electricity Market Reform. Lower prices cannot be a primary driver of energy policy, but developing greener and more secure sources of electricity needs to be accompanied by sound social policy to protect vulnerable consumers.”
We have seen a change in recent months that perhaps calls some of the sentiments behind that statement into question. While it is important to consider the security of supply and decarbonisation, we must always keep the people across the country who are struggling to meet energy bills at the forefront of our minds. The issue is not about a small number of people in fuel poverty, because it affects families and businesses up and down the country. Too often, in some of our discussions, we overlook the impact on consumers. We must ensure that we do not do that when reforming the electricity market and as the Bill progresses in the next Session.
The Minister of State, Department of Energy and Climate Change (Charles Hendry)
We have had an interesting debate. This is one of the rare occasions where one can say that we should have had more time to have a debate on energy; we would happily fill a much longer time scale. That says a great deal about the complexity of the issues, the knowledge of many Members on both sides of the House and our joint determination to try to reach the right conclusions.
Mr Dai Havard (in the Chair)
At one point, Minister, I seemed to have managed to stop time, but I cannot stretch time. Carry on.
Charles Hendry
I know that you, Mr Havard, are capable of so many miracles and magical things that we thought that nothing was beyond your capabilities.
The hon. Member for Brent North (Barry Gardiner) made an interesting comparison to a Rubik’s cube, but I think of the issue as more of a complicated jigsaw. With a Rubik’s cube one makes a move and moves everything else out of place, whereas with a jigsaw, one gradually puts in place the elements that build up the whole picture. One has to do that in a structured and sensible way, because some parts are more complicated than others. Nevertheless, we are keen to take forward the challenge.
What we are about here is securing £110 billion of investment over this decade. The £200 billion includes investment in gas infrastructure, the wires and the pipes, but it is still an enormous investment. It is twice the rate of investment every year of this decade than has happened in the past decade. We need to recognise that the old market structure did not bring forward the necessary investment—it sweated assets to try to keep costs down—and could not price in the cost of carbon, which is one of the big issues that we have had to address. Therefore, I do not see market reform as being about subsidising nuclear, but about how we make all forms of low carbon feasible, affordable and economically attractive.
The Chair of the Select Committee on Energy and Climate Change, my hon. Friend the Member for South Suffolk (Mr Yeo), asked a number of questions when introducing the debate—it was like a bullet train going through the energy terrain. A comprehensive range of issues and questions were raised. He asked how much investment we have seen in the past year. Just in the renewables sector, in six weeks between 1 September and early October, we saw £800 million of new investment, offering nearly 2,000 new jobs, and we expect that to pick up. However, he has had to accept that much of the investment is lumpy—a nuclear power station needs £5 billion or £6 billion of investment, and an offshore wind farm needs billions of pounds of investment. Therefore, there will not be a straightforward progression to 2020, but we will have big steps up over time. We are quite clear that without the measures we are putting in place, it will not be achievable.
My hon. Friend also asked why we had not gone for a target such as 50 grams per kilowatt-hour for the electricity sector by 2030. We will set out our formal response to the Energy and Climate Change Committee later in the year. We recognise, through the work that we have done, that there are a number of ways to reach our 2050 requirement, which is that we need to have reduced our carbon emissions by 80%. There is not just one way to do that, and we need to look at what is the best way. At the end of the day, we need to do it in a way that is cheapest for consumers. A common theme in this brief debate has been to ask how we deliver that in a way that will protect consumers, both industrial consumers and people in their own homes.
We have covered a number of measures regarding market reform, and I want to address each of them briefly. We have adopted a system of feed-in tariffs with contracts for difference, because we believe that that is the best way of getting the best deal for consumers and giving the greatest certainty to investors. By clawing back when the wholesale price is high and paying more when it is low, the system is more predictable, and it is easier to bring in investors from outside.
One of the things that Mr Atherton from Citi, who has been referred to, has not fully taken account of is that we are trying to take the system closer to a regulated rate of return. Many institutional investors, such as sovereign wealth funds around the world, are now looking at the opportunities to invest in the UK energy sector precisely because of the structure that is being put in place and the fact that we think that the CFD mechanism delivers the policy more securely than any other mechanism.
My hon. Friend the Member for South Suffolk asked us not to tinker with the policy as it progresses. The history of previous Energy Ministers suggests that I will most certainly be long gone by the time anyone gets a chance to tinker, but if I am still in the position at the time, I guarantee to him that the whole system is designed to stop tinkering. It is not just an agreement or Government policy, but a long-term contract that tells investors over 20, 30 and more years how much they will be paid for each unit of electricity generated by a certain technology. That means that we need to build a system that is as close to automatic as possible in order to recognise how the costs are coming down, so that new entrants coming in beyond a certain point understand how they will be remunerated in the process. The policy will also deliver investment, particularly in renewable energy, at a cost lower than that of the existing renewable obligation. As the policy supports all low-carbon technologies, it will make a greater contribution to our decarbonisation targets than is otherwise possible.
The discussions, particularly my hon. Friend’s remarks, also focused on the emissions performance standard. My intention with such a standard will be to give a long-term signal for what we believe is acceptable and to start to set out how that degression might take place when it is considered. Above all, it has to be a driver for investment. It is easy to set it in place in a way that kills off investment decisions. How we have done it, which is to say that it will not be reconsidered before 2015 and that investments happening before that will have perhaps 20 years of assured production on a certain emissions level, will strike the right balance.
I was intrigued by the comments my hon. Friend the Member for South Suffolk made in the earlier part of the debate. He sees the role for shale gas as having been underestimated. He said that we should be having much more shale gas and gas in general in the mix, with perhaps less energy from renewables, offset by the structure that he was calling for in the second part of the debate, which would be subject to an emissions performance standard. We will not get the investment that he wants to see in new gas generation if there is a much tighter emissions performance standard biting at an earlier stage on gas generation.
We have also said that the capacity mechanism should be part of this process, because we recognise that we need to know exactly how we will keep the lights on at all times of the year, as well as ensuring that there is back-up capacity and, critically, building in that demand-side response, to see whether we can find cleverer ways of dealing with this than building new power stations that will only be used for a small part of the year. If we can find ways of taking demand out of the system during times of particular demand, it will be a big gain for the consumer and save £1 billion on new plant. Clearly, whether that is a new plant or an old plant going for a few hours a day will depend on how that capacity mechanism is structured. We are determined, however, that that demand-side response element should be part of the structure as well.
The final element of the package is the carbon floor price. The carbon floor price is important for giving investors confidence. Currently, if one looks at the history of the European emissions trading scheme, it has been impossible to guess where it will be in a few months’ time, let alone in nine years’ time. The people who are making investment decisions that will not come to fruition until the end of the decade need greater clarity. Putting in place a carbon floor price is all part of that process.
The trajectory that we have taken is to show them that we are serious. If we had said, “Yes, there will be a carbon floor price, and it will be introduced by the next Government after the next election, at a level to be established,” nobody would have taken that seriously. The way in which that has been done shows a much greater commitment to giving the industry the clarity that is necessary. A measure of success in this will be whether we can bring new entrants into the market. Improved liquidity will be one of the benchmarks by which we can test whether market reform is working. Undoubtedly, we want to see more liquidity and more players. That is primarily the responsibility of Ofgem, and we know that Ofgem will look at this further if that proves to be necessary. The Government have said that they will act, if necessary, to address those structural barriers.
My final point is on fuel poverty and feed-in tariffs. One cannot, on the one hand, talk about concern for those suffering from higher fuel bills and, on the other, baulk at every measure that is designed to take pressure off their bills. The cost of solar technology has come down by around half since 2008. Degression was always built into it, from the very first brochure, signed off by the right hon. Member for Doncaster North (Edward Miliband), who is now the leader of the Labour party. He said that degression should be part of that process. As the prices have gone down much faster than anyone anticipated, it was right to do that. We know that a domestic installation can be done in a few weeks and had we not acted quickly—if it had been announced that it will come into place in the spring—there would have been a complete explosion in demand and installations, which would have completely destroyed the budget that has been set for this and led to the complete collapse of the industry, because anything after that would have been much more draconian.
Charles Hendry
I fear that this is not an integral part of the debate on market reform and, while I want to respond to the hon. Member for Brent North, we owe it to the Chair of the Select Committee to give him time to come back.
I do not think that, on the one hand, someone can argue on fuel poverty that they want to take pressure off consumers while, on the other hand, opposing the decisions we take to help consumers, such as the billions of pounds taken off the feed-in tariff costs out to 2020. It is not possible to do both.
Charles Hendry
I am not going to give way, because I want to give time to the Select Committee Chair. I have spoken for less time than the hon. Member for Brent North, so I hope that he will understand if I do not give way. I am grateful for the advice and input of the Select Committee, and I hope that we can put in place a structure that recognises the scale of the challenge, the need to decarbonise and the need to rebuild our energy infrastructure, while doing it at the lowest cost to consumers.
Mr Yeo
With your permission, Mr Havard, I will comment briefly on what has been said. As the Minister has said, it has been another debate that could easily have gone on for longer, which is a tribute to the well-informed contributions. I want to thank my Select Committee colleagues, the hon. Members for Southampton, Test (Dr Whitehead) and for Brent North (Barry Gardiner), who have made useful comments this afternoon. They are also both exceptionally knowledgeable and experienced in these issues. As far as I am concerned, it makes the work of the Committee a pleasure, as well as often being intellectually stimulating. I think that we can continue to prosper together in addressing these issues.
I was also grateful to my hon. Friend the Member for Warrington South (David Mowat) for mentioning the position of energy-intensive industries, which is a real issue. I know that Ministers have confirmed on this and other occasions that it is very much in their minds. One of the things that we do not want to do in our determination to make Britain one of the leaders in moving towards a lower carbon economy is to destroy the competitive position of successful British businesses. That is a tricky balance to strike, and it will need continued attention.
Many points have been raised, and I will not comment on them all. I fully accept what the Minister has said about the potential conflict between a long-term tightening emissions performance standard and my suggestion that we might see significant investment in gas-fired capacity in the short term. We have to find a way of doing that. Obviously, emissions performance standards, which are applied on a per plant basis, would run into that conflict. If the emissions performance standard was applied to a country’s whole portfolio of generating capacity, that might offer the chance for a mix. It might also be an incentive for some companies that wanted to expand their gas-fired capacity to invest in some low-carbon alternatives. There needs to be a bit of imagination applied to how the EPSs could operate in this way, without ruling out the prospect in the near term of some new investment in gas. Of course, the pre-2015 investments will, in any case, be grandfathered for a sufficiently long period for investors to have a return.
I was glad that the Minister confirmed that the Government are keen to see barriers to entry in the market minimised. That is a work in progress. We have to see how Ofgem’s measures apply and whether they are successful. If they are not, we will have to return to that issue urgently, because it is one of the real difficulties, which has blind consequences for consumers as well.
I accept the Minister’s concern about the impact on consumer prices of the cost of various forms of incentive for low-carbon energy. Again, there is a trade-off that we have to reach the right judgment about. We all want to see a substantial, rapid increase in low-carbon electricity generation, but many of those low-carbon technologies require an incentive, which will be either at the cost of taxpayers or, in the present situation, consumers. Those categories are ones that in any case largely overlap.
I want to congratulate the Minister. He has displayed a remarkable grasp of very complex issues in his period as Minister. It is a pleasure to have him before the Select Committee and to hear him on other occasions in the House. He has a real grip, and we get thoughtful and well-informed responses to the questions that we put to him. For that reason, I hope that he will remain in his job for much longer than most of his predecessors, perhaps indeed for the rest of this Parliament. That will enable the Committee to go on engaging with him and means that we can hold him to account for some of the things that he is telling us now in three and a half years’ time.
I am grateful to everyone who has taken part this afternoon. I hope that we have a chance to return to these issues either on the Floor of the House or in another debate in Westminster Hall.
Question put and agreed to.
Written Ministerial Statements
(13 years, 1 month ago)
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Education Capital
(13 years, 1 month ago)
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The Secretary of State for Education (Michael Gove)
I would like to update the House on my Department’s work to address the shortage in pupil places being experienced by some local authorities, and reduce the level of prescription and unnecessary guidance which are a feature of the school premises regulations and hamper the development of new schools.
I would also like to inform members of my final decisions on the Building Schools for the Future (BSF) programme in the six authorities which mounted judicial reviews.
In July, I announced that an extra £500 million would be made available, this year, to local authorities experiencing the greatest need in managing shortfalls in providing pupil places. This additional funding has been made available from efficiencies and savings identified in BSF projects that are continuing.
I can announce today that over 100 local authorities will receive a share of the funding. The allocations have been calculated using figures provided to the Department for Education by local authorities through the 2011 School Capacity and Forecast Information returns. By using the most up-to-date information available we are making sure the savings identified are being targeted to local authorities experiencing the most severe need.
I understand the economic situation means difficult choices need to be made about how to direct funding but I urge local authorities to target resources at managing the shortfalls in pupil places wherever they are most needed, and taking into account the views of parents. This is especially pertinent in light of the data released last week by the Office for National Statistics (ONS) showing that previous projections for population growth were underestimated and by 2020 there will be around 21% more primary age children than in 2010.
Today’s extra funding means that in 2011-12, a total of £1.3 billion will have been allocated to fund additional school places. The Government already announced an allocation of £800 million funding in December 2010, twice the previous annual level of support. The nature of this funding, (capital grant which is not ring fenced) the nature of the projects it will fund, (mainly small primary school projects) and the readiness of local authorities to get projects under way, means that this money will be spent efficiently. Further, I expect much of it to benefit small and medium-sized enterprises and to stimulate local economic activity across the country.
I would like to reassure those local authorities whose needs were not as severe as others—and which, therefore, did not receive a share of this extra £500 million—that future capital allocations for basic need and maintenance pressures will be announced later in the year.
I am also launching a 12-week consultation on the revision of school premises regulations. The consultation document sets out how the Government intend to deregulate and end the confusion and unnecessary bureaucracy surrounding the current requirements. A copy of the consultation document will be placed in the Libraries of both Houses.
I am proposing to make the requirements for independent and maintained schools identical and to reduce the overall number of regulations. Some regulations are duplicated in other pieces of legislation or are simply unnecessary and I propose to remove these regulations completely. I also think that other regulations can be simplified to remove unnecessary bureaucracy and make requirements proportionate, without reducing the quality of buildings. I would welcome views on my proposals, further details of which can be found on the Department for Education’s website.
Finally, today I am announcing my decision on the schools that are subject to the BSF judicial review proceedings, brought by Luton borough council; Nottingham city council; Waltham Forest London borough council; Newham London borough council; Kent county council; and Sandwell metropolitan borough council.
I announced what I was minded to do in July and have received further representations from each of the claimant authorities. I considered these carefully but I am not persuaded that I should depart from the decision which I announced I was minded to take. My final decision is, therefore, not to fund the schools in the claim but, instead, to fund, in capital grant, the value of the claimant authorities’ proven contractual liabilities.
Further information on all aspects of today’s announcements, including a complete list of local authorities receiving extra funding for shortfalls in pupil places, can be found on the Department for Education’s website at www.education.gov.uk.
Farming Regulation Task Force Report
(13 years, 1 month ago)
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The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
I am pleased to announce that the Government published the interim response to the farming regulation taskforce report today.
I established the taskforce in June 2010, asking its members to advise the Government on a new approach to regulation in England, from the point of view of a farmer or food processor, and on how best to achieve a risk-based system of enforcement while maintaining high environmental, welfare and safety standards. Following an extensive review, the taskforce published its report on 17 May 2011.
The taskforce made over 200 recommendations, covering the full range of the regulatory landscape that affects farming. The key messages are that DEFRA, its agencies and delivery partners need to establish an entirely new approach to regulation, strengthen ties with the farming and food processing industry and work in partnership to achieve outcomes, and move to a risk-based approach to regulation, rewarding good practice with less frequent inspection.
The report was bold and ambitious. Government will also be bold and ambitious in finding solutions. I am pleased to announce that the interim response is very positive about our progress to date. It sets out a narrative of the work that is being done, and highlights examples of how the Department and its delivery agents have already started to apply the principles the taskforce set out. We are particularly keen to take forward the principle of earned recognition and to make progress on simplifying and integrating environmental messages for farmers and we are working in partnership with delivery bodies and industry organisations to develop these ideas. I intend to respond positively to as many of the recommendations as possible and will give full details of this, setting out a clear agenda for implementation, in our final response, which is due to be published in the new year.
The interim response is now available on the DEFRA website: www.defra.gov.uk
Thames Tunnel
(13 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)
On 7 September 2010, I outlined in a written statement, Official Report, column 9WS the Government’s support for Thames Water’s plans for a tunnel to reduce the amount of untreated waste water being discharged into the River Thames. I presented an estimate of the costs and impact on customers’ bills, which I said we would continue to scrutinise with Ofwat to ensure value for money. I said DEFRA would update the 2007 impact assessment and that I was minded to consider development consent for the tunnel under the regime for nationally significant infrastructure projects established by the Planning Act 2008.
My statement today reaffirms the Government’s support for Thames Water’s plans and reports on progress we have made since my last update. In particular, it provides an updated estimate for the overall cost and the likely completion date for a project of this size and complexity.
The need to upgrade the sewerage system in London which in places is running out of capacity even in dry weather, and for a solution to the resulting environmental challenges in the Thames Tideway remains persuasive. I will today place in the Libraries of both Houses a paper “Creating a River Thames fit for our future” summarising the strategic and economic case for the Thames tunnel. This builds on the impact assessment produced in 2007. It explains why we continue to believe that a tunnel represents the preferred solution for dealing with the untreated sewage that is polluting the River Thames.
Last year I reported the project costs for the Thames tunnel as £3.6 billion at 2008 prices. This was the cost of the project reported at what is known as the P80 level—that is, there is an 80% probability the project costs will be less than this figure based on probability modelling of cost risks. This figure excluded financing costs. Since then development of the construction plans has continued, more allowance has been made for a later completion date and in response to the first phase of public consultation by Thames Water, greater use of brown-field sites and river transport have been allowed for. The cost base has also been updated to 2011 prices and on this basis the estimates for the project costs are now £4.1 billion. They include £0.9 billion of risk allowance and optimism bias. These estimates have been examined by independent advisers on behalf of Ofwat and confirmed to reflect best practice in the industry. At this stage some uncertainties remain and the estimates will continue to be refined going forward.
Last year I also reported that the estimated average peak impact on annual customer bills was likely to be £60 to £65 in 2008 prices. This figure was based on the then estimate of project costs plus modelling of likely financing costs. Since then, in addition to the revised project cost outlined above, Thames Water has with Ofwat and my Department, made progress in developing the delivery route, risk management processes, and likely financing costs. They have also developed the modelling of the likely impacts on customer bills. This gives a central range for an average maximum annual customer bill impact of £70 to £80 at 2011 prices. The considerably uncertainty in this range reflects the impact that financing costs will have on bills and the difficulty in estimating these for a project of this nature and duration. Relatively small changes in the cost of capital for the project could have a significant impact on bills.
I understand the concern that Thames Water customers may have over this increase in their bills. DEFRA, with Ofwat, IUK, EA and Treasury, has been working closely with Thames Water to ensure that the engineering costs are minimised through value engineering, and that the project is delivered efficiently with a structure and financing mechanism that delivers value for money for customers. We will continue to do this and to ensure that there are no better value solutions that meet the need.
Financing a tunnel of this size at a cost that is value for money for customers is a challenge. The Government believe that the private sector can and should finance this project but accept that there are some risks that are not likely to be borne by the private sector at an acceptable cost. It is willing in principle to provide contingent financial support for exceptional project risks where this offers best value for money for customers and taxpayers. However, I will want to be assured that when offering this contingent support taxpayers interests remain a top priority and that the taxpayer is appropriately protected by measures that minimise the likelihood and impact of these exceptional risks.
On planning, we have completed a 12-week public consultation on proposed secondary legislation (Section 14 Order) which would classify proposed major sewer projects such as the Thames tunnel as nationally significant infrastructure projects (NSIPs). We are currently analysing responses. It will then undergo parliamentary scrutiny and an affirmative approval process. Following such approval, I would anticipate that a Section 14 Order could come into effect in the spring of 2012.
We have revised the draft waste water national policy statement in the light of responses to the public consultation and recommendations from the EFRA Committee. The NPS is to be used by the Infrastructure Planning Commission, or its successor, to guide its examination of development consent applications for waste water projects of national significance. We anticipate that the NPS will be laid before Parliament for approval later this year.
I am very conscious of the impact construction of the tunnel will have on local communities. Thames Water completed their first phase of consultation on the preferred route earlier this year and have amended some of their proposals in response. Tomorrow they launch the phase 2 consultation, which will be further opportunity for people to let their views be known. This consultation is with a view to submitting a planning application to the Infrastructure Planning Commission (or its successor body) in autumn 2012 and construction starting by 2016.
The initial time line for completion of the tunnel was 2020. However, as the parties have worked through the issues relating to planning, financing, procurement and regulation of the project it has become clear while construction time remains at six years, the 2020 date is unrealistic. On the basis of what is now known, and depending on the choices made as we go forward, completion of the construction of the tunnel is now expected to be between 2022 and 2023. We continue with Thames Water to explore how we can minimise the overall time scale.
I propose to provide a further update when we have agreed a delivery route with Thames Water and before they apply for development consent in the second half of 2012.
UK Forestry Standard
(13 years, 1 month ago)
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The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)
I informed the House in February, Official Report, column 791W, that I expected the revised edition of the UK Forestry Standard to be published later this year.
I am delighted to say that we have published the new Standard and its suite of supporting guidelines today. Copies are available on the Forestry Commission’s website at: www.forestry.gov.uk/ukfs.
The documents, prepared by the Forestry Commission and Northern Ireland Forest Service, set out how we must manage our forests in a truly sustainable way. They form the practice code for forest management and detail the conditions that must be met when felling trees, carrying out woodland operations, and receiving grants. They apply to all woodland, irrespective of who owns or manages it.
The Standard ensures that international agreements and conventions on areas such as sustainable forest management, climate change, biodiversity and the protection of water resources are robustly applied here in the UK.
For forest managers, the new Standard encapsulates all the various requirements of sustainable forest management and spells out what they mean in practice. For the first time it includes principles of forest management for carbon benefits, which is a UK Government carbon plan commitment. The UKFS also provides the basis for the new woodland carbon code that gives assurance that woodland projects for carbon capture provide the benefits claimed for them.
For many years the UK has been at the forefront of international moves to protect the world’s forests. The new Standard provides an excellent and up-to-date example of our approach. It is most appropriate that we are doing this in international year of forests.
The Standard will help us strike that vital balance between the economic, social and environmental benefits of forestry. To that end, I am pleased to note the forestry regulation taskforce’s support of the Standard as the cornerstone of long-term sustainable forest management.
I want to thank all the forestry and environmental organisations who have worked with us to bring the Standard together.
Kimberley Process (Zimbabwe Diamonds)
(13 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)
On 1 November the Kimberley Process (KP) plenary meeting in Kinshasa reached an agreement to ensure credible and effective safeguards and monitoring of the diamond mines in the Marange region of Zimbabwe. A copy of the agreement has been placed in the Library of the House.
Following almost a year of intensive discussions amongst KP participants, a robust but fair agreement has been reached which only allows exports from mining sites in the Marange region deemed to be compliant with KP standards. Exports from other mining sites can only take place once those sites are judged to be KP compliant by independent experts. This agreement establishes a credible independent monitoring mechanism, including a role for civil society and independent experts, to ensure ongoing compliance with KP standards and to prevent non-compliant Marange diamonds from being traded under the KP. The agreement also commits Zimbabwe to take action to bring all mining in Marange into compliance with the KP.
Allowing rough diamond exports only from KP-compliant mines in Marange ensures that the credibility of the KP is maintained and guards against the risk of non-compliant mines exporting to international markets because of the lack of any agreement. In addition it means that there is some transparency of revenue flows. This will help the Zimbabwean Finance Ministry to collect tax and royalties owed to it, and thereby ensure the financial benefits of the diamond sales can reach the Zimbabwean people.
We will continue to monitor the situation closely and respond appropriately to any future developments. As the agreement makes clear, the KP will constantly review progress towards KP compliance in the Marange region. We urge Zimbabwe to make every effort to overcome the outstanding shortcomings so that next year the KP plenary will be in a position to declare Marange fully compliant with KP minimum standards. If this is not the case, the KP plenary will have to discuss whether to renew the present agreement or alternatively what other measures are appropriate to address any remaining obstacles.
The Kimberley Process remains an important conflict prevention mechanism. This agreement upholds the credibility of the KP and signals the determination of all Kimberley Process participants, including Zimbabwe, to work together to uphold Kimberley Process principles and standards in the future.
Terrorism Legislation (Anderson Report)
(13 years, 1 month ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
I am pleased to announce the publication today of the Government’s response to Mr David Anderson QC’s report on the operation in 2010 of the Terrorism Act 2000 and part 1 of the Terrorism Act 2006, which will be laid before the House today.
I am grateful to David Anderson QC for his detailed report and I have considered his recommendations fully. Following consultation within my Department and with other relevant Departments and agencies, I am pleased to lay my response to David Anderson’s recommendations before the House today. Copies will be available in the Vote Office.
Justice and Home Affairs Post-Council Statement
(13 years, 1 month ago)
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The Minister for Immigration (Damian Green)
The Justice and Home Affairs Council was held on the 27 and 28 October in Luxembourg. My right hon. Friend, the Secretary of State for Justice, the Scottish Lord Advocate Frank Mulholland and I attended on behalf of the United Kingdom. The following items were discussed:
The Council began in Mixed Committee with Norway, Iceland, Liechtenstein and Switzerland (non-EU Schengen states). The Commission updated on the implementation of the second generation Schengen Information System (SIS II), noting that progress remained in line with the previously agreed Council conclusions. The central system was still expected to go live in the first quarter of 2013. The second milestone test was planned for the second quarter of 2012. The Commission undertook to keep the Council informed.
Next the Commission congratulated member states on the successful rollout of the visa information system (VIS) to north Africa. The UK is not bound by the VIS regulation because it does not participate in the common visa element of the Schengen acquis.
The presidency, supported by the Commission, stressed the importance to local populations of the proposal to extend the local border traffic regulation to the whole of the Kaliningrad region and corresponding Polish oblasts. Insisting it would not create a precedent, they proposed the Council and Commission submit a declaration to the proposal reiterating this. The presidency concluded that a first reading deal could be reached with the European Parliament, whose Committee had accepted the proposal without amendments. The UK is not bound by this legislative proposal since it builds on that part of Schengen in which we do not participate.
The Commission presented its Communication on smart borders, which addressed the possibility of an entry-exit system (EES) and registered traveller programme (RTP) for the Schengen area. Before bringing out legislative proposals next year, they wished to secure the clear support of both member states and the European Parliament on the best way forward. The smart borders package would require time and investment and there were important data protection issues to address. Member states expressed broad support for the communication and highlighted the potential benefits for enhancing internal security, combating organised crime, identifying visa overstayers and reducing border crossing time for regular travellers. However, given the required investment. member states called for a thorough cost-benefit analysis before proceeding. The UK is excluded from these arrangements measures since it builds on that part of Schengen in which we do not participate.
Under AOB, France raised the increasing problem of itinerant crime and called for a debate at the next JHA Council.
The EMCDDA (European Monitoring Centre For Drugs And Drug Addiction) presented the findings from its 2011 annual report on state of the drug problems in Europe, which will be published on the 15 November. Heroin and opiates remained at the heart of the problem. Commissioner Malmström welcomed the report and said that there was a need for further EU action in this area. Commissioner Reding then presented the Commission’s new communication on “Towards a stronger European response to drugs”. It offered a future legislative package and practical action to build a strong framework for combating illicit drugs. The Council also agreed the synthetic drugs pact. The UK welcomed the EMCDDA report and the Commission’s communication. The UK also endorsed the views of delegations who had called for a civil approach to the confiscation of criminal assets and welcomed the presidency’s focus on synthetic drugs, and in particular on precursors used to tackle these drugs.
The Commission provided an update on the negotiations with the United States regarding an EU-US agreement on data protection.
During a discussion on passenger name records (PNR) Commissioner Malmström noted that the European Parliament would vote on the EU-Australia agreement that day. She also reported that discussions with the US had reached an advanced stage, and a political understanding had been reached. Retention periods would be 15 years for terrorism and 10 years for other serious crime, where the latter would apply to crimes punishable by three years under US law. The “push” method would be the norm, but “pull” could be used in very limited cases. There would also be a reference to the EU-US data protection negotiations. The Commission added that on third country transfer they were considering a solution similar to the Australia agreement. The agreement now needed to be transformed into a legal text. They hoped to finalise this in the coming weeks. The UK supported the idea of an EU-US agreement, and was pleased that a political agreement had almost been reached. The UK supported the Commission’s view that security and data protection could both be improved at the same time. PNR data were an absolutely vital tool in the fight against terrorism and organised crime, and we should continue to co-operate with the US for the security of all our citizens.
The presidency invited Greece to update Ministers on progress with the Greek action plan (GAP) on asylum and migration management, on which there were some notable improvements: a reduction in the asylum backlog from 46,000 to 33,000; a rise to an average of 12% in international protection recognition rates and ongoing recruitment of operational staff. The European Asylum Support Office (EASO) referred to their operating plan for Greece, and provided an update on deployment of asylum support teams made up of experts from member states. Frontex gave a brief update on the areas in which they were also supporting the GAP. The conditions in detention centres were very troubling, and the Commission urged the Greek authorities to address the issues at the Greek—Turkish border as a priority. The Commission highlighted that the economic situation in Greece was well understood by member states, but the EU had made significant funding resources available; these resources had to be used. Others agreed. Finally, the Commission stated that co-operation with Turkey was vital, and that agreement with Turkey on readmission would not be forthcoming without a deal on visas and mobility. Greece said that EASO and Frontex, as well as member states, had provided pivotal support but noted that this was not a long term solution and Greece was dedicated to strengthening its own resources.
Discussions on the Greek action plan continued during a closed lunchtime session on wider issues of illegal migration and the impact of visa liberalisation, during which the UK stressed the importance of strong external borders, supporting those who had raised concerns about migration flows from the south-east and across the Mediterranean and about trafficking. A clear focus on upstream migration work in our dialogue with neighbouring regions and countries of origin was essential, while EU action, under the global approach to migration, needed to tackle the key drivers, namely economic instability and political insecurity. The UK also shared the concerns of others about the activities of organised criminal groups in facilitating immigration crime, noting that there were strong links here to the abuse of free movement rights. Forged documents were used to get around the rules and gain access to rights they would otherwise not be entitled to. It was wrong that criminals profited from free movement, while those who upheld its responsibilities suffered.
The presidency summarised the state of play on the asylum package: negotiations on procedures and reception conditions directives continued steadily at expert level; The European Parliament voted for adoption on the qualification directive, solutions for moving forward with Eurodac continued to be scoped; and an early warning and preparedness system continued to develop as a solution to unblocking the negotiations on Dublin. The latter proposal would be discussed in more detail at the forthcoming Strategic Committee on Immigration, Frontiers and Asylum (SCIFA). The Commission congratulated the presidency on the headway being made on the package, and encouraged the Council to continue to look for solutions, while remaining mindful of the views of the European Parliament.
The presidency noted political agreement had been reached on the outstanding issue of correlation tables relating to both the single permit directive and qualifications directive. The UK had not opted into either of these instruments.
The Commission presented their communication on integration of migrants, highlighting the importance of integration and recognising that responsibility for integration rested at a local level. The presidency noted that Council conclusions would be prepared on this issue for the December JHA Council, with work continuing under future presidencies. Cyprus said this would be a priority during its 2012 presidency and informed Ministers that they would organise a conference on integration.
The Commission introduced its communication on co-operation in the area of the JHA within the Eastern Partnership (EaP). Member states noted that clear actions should be in the roadmap which was being developed, co-operation between eastern partners and Eurojust should be further encouraged and the principle of the rule of law was vital to the Eastern Partnership. The presidency announced that on 4 November there would be a conference on the Prague process, which would take forward the Eastern Partnership.
Spain noted that ETA had ceased its campaign of violence. They thanked the EU for its support and noted that the UK had also helped. The Commission was keen to hear views on a possible EU terrorism finance tracking system (TFTS). The main question was whether we needed such a system. The EU counter-terrorism co-ordinator and Europol supported such a system, but it was noted that the EP was divided. Member states noted the need to ensure data protection given the current transfer of bulk data under the EU-US agreement, but expressed concerns about whether the proposal would be cost effective. In addition to the Commissions’ proposals, one delegation wondered if the solution was rather to improve the EU-US agreement. The UK asked for more detail about the added value of the proposals and what the options and costs would look like. The Commission agreed to undertake an impact assessment and consult further with the EP before returning to the Council with proposals.
The justice day began with the Commission introducing its recently published proposal for a directive on minimum criminal offences and penalties for insider dealing and market manipulation. The aim of the proposal is to secure full implementation of legislation on financial services and protection for the financial markets. This directive accompanies a wider Commission proposal for a new regulation, introduced to create a stronger EU framework for tackling insider dealing and market manipulation. The UK noted the presentation.
Next the presidency provided an update on discussions in the Council on the directive on the right of access to a lawyer in criminal proceedings and on the right to communicate upon arrest. This is the third measure on the roadmap to strengthen criminal procedural rights. The UK has not opted into this directive, at the initial stage of the negotiations, because the Government are of the view that the directive as published by the Commission is not proportionate and could have an adverse effect on our ability to investigate and prosecute offences effectively. The presidency reported that progress had been made on many aspects of the instrument, however further discussions are required in the working group in relation to the scope of the instrument and on the admissibility of evidence obtained in breach of or derogation from the rights in the directive. There was no discussion.
The presidency then held a discussion on the draft directive on establishing minimum standards on the rights, support and protection of victims of crime. The UK and other member states supported the presidency’s approach on clarifying the scope of victims’ rights in relation to the role of victims in criminal proceedings and that the vulnerability of victims should be determined on a case by case basis. The presidency expressed the hope that a general approach could be agreed at the December JPIA Council.
The presidency then provided an update on the draft directive on combating sexual abuse and exploitation of children and child pornography. This directive seeks to ensure that criminal activities to sexually exploit children, including misuse of the internet, are more fully covered than in the existing framework decision (2004). They reported that on 27 October the European Parliament had adopted the text agreed by the Council, following agreement between the Council, the European Parliament and the Commission. The UK noted the update.
The presidency and Commission introduced the proposal on an EU common sales law. The Commission confirmed it would be an optional instrument sitting alongside national law that did not harmonise national systems. This was also discussed during the ministerial lunch, the presidency concluded they would analyse the proposal further.
During any other business the presidency informed the Council on the outcomes of the EU-Western Balkans ministerial forum held in Ohrid on 3-4 October and the EU-Russia Ministerial Permanent Partnership Council held in Warsaw on 10-11 October.
The Council also adopted a report on the application of the resolution which establishes the network for legislative cooperation between the ministries of justice of the European Union. The objective of the network is to promote better understanding of the laws of other member states, thus enhancing mutual trust and promoting the application of the principle of mutual recognition.
Police and Crime Commissioners Salaries
(13 years, 1 month ago)
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The Secretary of State for the Home Department (Mrs Theresa May)
I have received the Senior Salaries Review Body report and recommendations on police and crime commissioners pay.
On 20 January 2011 I wrote to the chair of the Senior Salaries Review Body requesting that he consider the role and functions of police and crime commissioners and make an independent recommendation to me as to what the SSRB considers to be a suitable salary, or salary range, for this new office. The report, which today I am placing in the House Library and is available to the general public through the Senior Salary Review Body’s website, sets out clearly the important and powerful role that PCCs will play in delivering policing services from November next year when they will be first elected.
I am grateful for the work undertaken by the SSRB and will reflect on its advice and recommendations. The SSRB has recommended a salary scale for PCCs of £65,000 to £100,000 with each police force area within England and Wales being weighted against this scale. I intend to give this and the other recommendations thorough consideration and report my final decision in due course and in good time to allow potential candidates to be clear on what they can expect their salary to be.
PCCs are established in the Police Reform and Social Responsibility Act 2011 within each force area as powerful individuals, and charged with responsibility for the totality of policing within that area; each force area faces a huge range of policing and social challenges which vary from force area to force area and each PCC will seek to ensure that these challenges are met in the interests of the our local communities.
PCCs will need to be highly motivated, determined to deliver the best for the communities that they serve, and above all be focused on making our communities safe. How PCCs work with and interact with chief constables, police and crime panels and local partners will be crucial to achieving success.
The election of police and crime commissioners will further strengthen the relationship between the public and the police, and allow us to replace bureaucratic accountability to Whitehall with democratic accountability to local communities. As a result the police will have greater freedom and discretion to fight crime as they see fit within a rebalanced and strengthened governance structure. I am keen to ensure that suitable and proportionate remuneration is achieved for such a challenging and rewarding role.
St Helena
(13 years, 1 month ago)
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The Secretary of State for International Development (Mr Andrew Mitchell)
In my statement of 22 July 2010 I confirmed the Government’s willingness to finance an airport for St Helena on condition that:
an acceptable contract price is achieved;
the risk of cost and time overruns after the award of the contract is addressed;
the airport design using engineered material arresting system (EMAS) is approved by air safety support international; and
the St Helena Government undertake to implement the reforms needed to open the island’s economy to inward investment and increased tourism.
I am pleased to announce that these conditions have now been met. A design build and operate (DBO) contract for the St Helena airport will be signed with Basil Read (Pty) Ltd today.
The airport will end five centuries of isolation for this UK overseas territory, which to date has been accessible only by sea. It will provide its British population with the means to build a future which, in the long term, is expected to lead to financial self-sustainability and an end to UK budgetary aid. This vision of a more vibrant, self-sufficient territory would not be possible if we were to provide a replacement ship. Continued sea access as the only way to get to and from St Helena would consign the island to a bleak future of further emigration and economic decline.
The contract will be in the amount of £201.5 million for the design and construction of the airport, with an additional amount of up to £10 million in shared risk contingency, and £35.1 million for 10 years of operation. We are confident that both the negotiated price and the allocation of risk represent value for money for the British taxpayer. In the long run. and including the investment cost, the decision to proceed with the airport is expected to save money for the UK taxpayer.
The contract represents a better deal for the taxpayer than that negotiated in 2008, a saving of more than 20% in real terms, taking into account inflation and the value of the pound.
Historic Vehicles (MOT Exemption)
(13 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Transport (Mike Penning)
The Department for Transport has today published a consultation on a proposal to exempt vehicles of historic interest (vehicles manufactured prior to 1 January 1960) in Great Britain (GB) from the statutory MOT test, as allowed under article 4(2) of the EU Directive 2009/40/EC.
The EU directive of the European Parliament and of the Council, Chapter II, Exceptions, Article 4 states:
“Member States may, after consulting the Commission, exclude from the scope of this Directive, or subject to special provisions, certain vehicles operated or used in exceptional conditions and vehicles which are never, or hardly ever, used on public highways, including vehicles of historic interest which were manufactured before 1 January 1960 or which are temporarily withdrawn from circulation. Member States may, after consulting the Commission, set their own testing standards for vehicles considered to be of historic interest.'”
Sections 45 to 48 of the Road Traffic Act 1988 provide the legislative basis for MOT testing. The purpose of the MOT test is to ensure that cars, other light vehicles (including some light goods vehicles), private buses and motorcycles over a prescribed age are checked at least once a year to see that they comply with key roadworthiness and environmental requirements in the Road Vehicle Construction and Use Regulations 1986 and the Road Vehicle Lighting Regulations 1989 (both as amended).
While it is important to ensure that vehicles are safe to use on the highway, it is also important to ensure that regulations imposed are not excessive. Currently, both the age and the categories of vehicles requiring the MOT test in GB go further than the EU directive on roadworthiness test 2009/40/EC, which only subjects post-1960 registered vehicles to a compulsory roadworthiness test and does not require motorcycles of any age to do a statutory roadworthiness test.
The Government believe that the proposed exemption will reduce regulatory burden on owners of historic vehicles, meet its reducing regulation agenda and the desire to remove unnecessary burdens. It will also bring the age of vehicles requiring the statutory MOT test in line with the Goods Vehicles (Plating and Testing) Regulations 1988, which already exempts unladen pre-1960 manufactured heavy goods vehicles from the roadworthiness test.
Two thirds of pre-1960 licensed vehicles (vehicles manufactured prior to 1 January 1960) are driven less than 500 miles each year. This is significantly less than the 9,000 miles driven on average by all licensed vehicles.
While the pre-1960 licensed vehicles made up about 0.6% of the approximately 35.2 million licensed vehicles in GB in 2010, they were involved in just 0.03% of road casualties and accidents. The pre-1960 licensed vehicles are largely well maintained by their owners. The initial MOT test failure rate for these vehicles in 2009 was less than 10%, while the initial MOT test failure rate for post-1960 licensed vehicles was over 30%.
The purpose of the consultation is to invite views on proposals to exempt vehicles of historic interest from the statutory MOT test in GB. In addition to no change, the consultation offers three options based on vehicle manufactured date—that is, it seeks respondents’ views on whether the Government should exempt from the statutory MOT test pre-1960, pre-1945 or pre-1920 manufactured vehicles.
The consultation also seeks respondents’ views (in all three options) on whether all vehicle categories and vehicles used for commercial purposes should be included in the exemption review.
The consultation will run until 26 January 2012. Copies of the consultation document have been placed on the Library of the House. Further copies are available on the DFT website at: www.dft.gov.uk/consultations/dft-2011-27. Depending on comments received and the Department’s response, amendments may be made to regulations.
Personal Independence Payment
(13 years, 1 month ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)
Personal independence payment will replace disability living allowance for people of working age from April 2013. The coalition Government are committed to supporting disabled people to lead independent lives and exercise choice and control. Personal independence payment will focus support to those individuals experiencing the greatest barriers to living an independent life, while ensuring the benefit remains sustainable.
Parliamentary approval for resource and capital of £0.65 billion for this new service has been sought in the main estimate 2011-12 for the Department for Work and Pensions. Pending approval of the Welfare Reform Bill, urgent expenditure estimated at £5,014,000 will be met by repayable cash advances from the Contingencies Fund. The advance will be repaid at the earliest opportunity following Royal Assent to the Welfare Reform Bill.
Universal Credit
(13 years, 1 month ago)
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The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
The Department for Work and Pensions has obtained approval for an advance from the contingencies fund of £46 million to allow for the continued development of IT for universal credit before Royal Assent. This is a second advance; an earlier advance of £18 million was approved for the same purpose in April.
Parliamentary approval for resource and capital of £80 million for this new service has been sought in the main estimate 2011-12 for the Department of Work and Pensions. Pending approval of the Welfare Reform Bill, urgent expenditure estimated at £46 million will be met by repayable cash advances from the Contingencies Fund.
The universal credit programme has successfully completed the second stage of IT delivery on time. This is a major achievement given the demanding timetable and relatively new “agile” way of working. The second advance will allow the programme to continue to work to its current design and development timetable and enable continuity of third-party supplier engagement. This will support an earlier move to the new simplified benefit than could be achieved without it and achieve better value for money by enabling a more rapid take-up of online claims with lower operational delivery costs.
The amount covered by the advance is part of the proposed £2 billion investment in universal credit agreed at the time of the spending review. The advance will be repaid at the earliest opportunity following Royal Assent.