House of Commons

Wednesday 30th November 2011 Commons Chamber

Wednesday 30 November 2011

The House met at half-past Eleven o’clock

Prayers

Wednesday 30th November 2011 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 30th November 2011 Commons Chamber

The Secretary of State was asked—

[Michael Ellis (Northampton North) (Con)]

1. What progress has been made by the Historical Enquiries Team; and if he will make a statement.

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

Following the devolution of policing and justice in April 2010, matters relating to the Historical Enquiries Team are the responsibility of the devolved Administration in Northern Ireland and the Minister of Justice.

[Michael Ellis]

I much appreciate the Minister’s response and the content of it. I welcome the progress made by the Historical Enquiries Team. May I be reassured that its case work will be completed by 2014?

[Mr Paterson]

I am grateful for my hon. Friend’s question. I spoke to the Chief Constable this morning, who confirmed that the team is investigating 3,268 deaths and that it is on target to finish as planned.

[Jim Shannon (Strangford) (DUP)]

The HET investigated the murder of my cousin, Kenneth Smyth, on 10 December 1971—those on the street knew who committed the murder—and Lexie Cummings was murdered on 15 June 1982. HET investigations into both cases concluded that no action should be taken. The concern is that the investigations might not have been thorough, so does the Secretary of State accept that confidence needs to be instilled in the Unionist community and that the HET therefore has considerable work to do?

[Mr Paterson]

I am grateful for that question. I do not entirely agree. The HET is impartial, and the latest polling commissioned on the reaction of the families is extraordinarily high: 90.5% said they were very satisfied or satisfied with the performance of the HET.

[Sajid Javid (Bromsgrove) (Con)]

The former Northern Ireland Secretary, the right hon. Member for Neath (Mr Hain), rightly set up the Historical Enquiries Team, but disturbing allegations were made yesterday that his computer might have been hacked. Does my right hon. Friend share those concerns, and will he assure the House that the Northern Ireland Office—

[Mr Speaker]

Order. The difficulty with that question, notwithstanding its notable ingenuity, is that it does not relate to the work of the Historical Enquiries Team, so we had better leave it there.

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

Historical inquiries into police officers are conducted by the Police Ombudsman for Northern Ireland. Given that that is a Crown appointment, what recent discussions has the Secretary of State held with the Minister of Justice, David Ford, on the appointment of a successor to the current ombudsman, Al Hutchinson, who has made it clear that he intends to leave his post at the end of January?

[Mr Paterson]

The appointment of the Police Ombudsman for Northern Ireland is a devolved matter. I spoke to the Minister of Justice, David Ford, this morning, and we agreed to meet shortly to discuss Al Hutchinson’s replacement.

[Mr Mark Spencer (Sherwood) (Con)]

Does the Secretary of State agree that it is not for Westminster to set the agenda but that the people of Northern Ireland should decide how and when they look back, and what they look at?

[Mr Paterson]

Yes, my hon. Friend makes a good point. The Government and Westminster do not own the past. Contentious, difficult and fraught issues must be handled with the consensus of local people in Northern Ireland.

[Mark Durkan (Foyle) (SDLP)]

Notwithstanding some of the limitations and differentials that attach to the task of the HET, it has done much good work. In the context of dealing with the past more widely, does the Secretary of State believe that more could be done to draw out the issues, patterns and lessons that can be learned from the HET’s work, which at present has gone only to the families and not to the wider public?

[Mr Paterson]

The hon. Gentleman makes a good point. The HET is building up an extraordinary archive of knowledge. As he knows, I am interested in opening up Government archives so that they may be assessed by professionals. Down the road, this might be a matter that is well worth discussing with the devolved Executive to see whether the HET can form the basis of an archive for historians.

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

2. What discussions he has had with Ministers in the Northern Ireland Executive on economic development.

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

I meet regularly with the First Minister and Deputy First Minister to discuss matters including the Northern Ireland economy, and the Minister of State met last week with the Minister of Enterprise, Trade and Investment to consider a range of issues related to economic development.

[Eric Ollerenshaw]

Does my right hon. Friend agree that improved transport links between Northern Ireland and the mainland will be vital for economic development, and that the completion of the M6-Heysham port motorway link will be vital?

[Mr Paterson]

I admire the skill of that question, and I congratulate my hon. Friend on working for his constituents. I am glad to say that there is a sailing twice daily to Northern Ireland, and I hope the new link will boost trade between Northern Ireland and his constituents.

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

Given the nature of our local economy, does the Secretary of State agree that the economic development of Northern Ireland will depend on stable industrial relations? Does he further agree that the Government must do more to deal with the genuine concerns of public sector workers with their pensions under siege, while those who have caused the economic crisis, particularly bankers, are getting away scot-free?

[Mr Paterson]

I thank the hon. Lady for that question. I do not entirely agree with her. The strikes today are most regrettable. They will not help a single business in Northern Ireland. They will not bring a single job to Northern Ireland. The Government are in talks with the unions and a very fair offer has been made, considering that the cost of public pensions increased by a third over the past 10 years to £32 billion. We are all in this together, and the unions should work with the Government.

[Harriett Baldwin (West Worcestershire) (Con)]

In those discussions with Northern Ireland Ministers about economic development, has my right hon. Friend heard appreciation for the fact that the UK has remained outside the euro and has retained its triple A rating?

[Mr Paterson]

My hon. Friend is spot on. We came to power with interest rates higher than Italy’s. Thanks to the very disciplined and determined manner in which the coalition has addressed the deficit, we now have interest rates level-pegging with Germany’s. That is of benefit to every single person in Northern Ireland.

[David Simpson (Upper Bann) (DUP)]

The Secretary of State will be aware of the pay-as-you-go heating oil tank developed by Kingspan Environmental in my constituency. Could the Secretary of State give us an update on the development of the enterprise zone that he piloted and tell us what benefits that will bring companies such as Kingspan in my area?

[Mr Paterson]

I am extremely interested in that project. In opposition, I talked about turning the whole of Northern Ireland into an enterprise zone. That resulted in the consultation earlier this year looking at ways in which we could help develop the private economy. Quite separately, my right hon. Friend the Chancellor has proposed enterprise zones throughout the UK. Establishing those enterprise zones is entirely in devolved hands and I very much hope the Executive will take up the offer made in the Budget a few months ago.

[Karen Lumley (Redditch) (Con)]

3. What assessment he has made of the state of the economy in Northern Ireland.

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

The Northern Ireland economy is over-dependent on public spending. The Government share a commitment with the Northern Ireland Executive to rebalance it over time by promoting investment and growing the private sector. There are many world-class Northern Ireland businesses. We need more of them.

[Karen Lumley]

Will the Minister confirm that last week the annual survey of hours and earnings showed that Northern Ireland earnings increased by 3.5%, compared with less than 1% on the mainland? Does he agree that rebalancing the economy and the creation of private sector jobs is the key to Northern Ireland’s recovery?

[Mr Paterson]

I entirely agree with my hon. Friend. One survey showed that public spending represents 77.6% of GDP in Northern Ireland. We know that that is wholly unsustainable, and we are committed to rebalancing the economy over time, working closely with the Executive.

[Sammy Wilson (East Antrim) (DUP)]

One of the ways of rebalancing the economy towards the private sector is to ensure that there is a flow of funds from the banking sector to private firms. What steps will the Government take to ensure that the credit easing measures announced yesterday will apply effectively in Northern Ireland, given the lack of market penetration by UK mainland banks and the high dependence on Irish banks?

[Mr Paterson]

I am grateful for the opportunity to clarify that the national loan guarantee scheme, which the Chancellor announced yesterday, applies to Northern Ireland. That will be of great benefit to small businesses right across Northern Ireland.

[Richard Graham (Gloucester) (Con)]

I understand that the average private sector wage in Northern Ireland is £20,000 a year, compared with the average public sector wage of £29,000. What impact does my right hon. Friend believe that yesterday’s announcement from the Chancellor about the ability to set public sector wages locally will have on Northern Ireland?

[Mr Paterson]

My hon. Friend is right. There was a survey which showed a 41.5% difference between a public sector wage and a private sector wage. It shows the task we have in helping to revive the private sector and making it an attractive place for bright, enterprising young people in Northern Ireland to go into. That is very much what we would like to do.

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

Does the Secretary of State accept that the proposed changes to public sector pension contributions will have an even more severe impact in Northern Ireland because of the shape and balance of our economy?

[Mr Paterson]

First, I congratulate the hon. Member on having won the election for the leadership of his party. I look forward to working with him, as the leader, as I worked with him while in opposition, and in recent months since I have been Secretary of State.

I do not entirely agree with the hon. Gentleman’s question. This is basically a good news story. People are living 10 years longer, and that has put huge pressure on the cost of pensions, which is up to £32 billion across the United Kingdom—an increase of a third over 10 years. Lord Hutton, who used to sit on the Government Benches here, came up with a sensible report, and I appeal to all those in Northern Ireland who are in trade unions to continue discussions with the Government because our offer is extremely fair.

[Mr Speaker]

We have a lot of questions to get through and we must get on.

[Mr Philip Hollobone (Kettering) (Con)]

Given the importance of the Republic of Ireland to the Northern Irish economy, and the likelihood of a break-up of the eurozone, what discussions has my right hon. Friend had with the Chancellor of the Exchequer and the Northern Ireland Executive about how the Northern Ireland economy could best cope with such a crisis?

[Mr Paterson]

I thank my hon. Friend. As he knows, the Chancellor and the Treasury are looking at all contingencies, because reports yesterday showed that the crisis in the eurozone is having a real impact on our economy. I am in regular contact with the Government in Dublin and will continue discussions.

[Vernon Coaker (Gedling) (Lab)]

When thousands of public sector workers in Northern Ireland are worried about their pensions, with cuts to public services, and when growth figures have been so significantly downgraded, does the Secretary of State remember that, when commenting on the Budget of March 2011, he said:

“This is a Budget for growth across the whole UK in which Northern Ireland will share”?

Where did it all go wrong?

[Mr Paterson]

I am grateful to the hon. Gentleman for his question. He knows perfectly well where it went wrong. It went wrong when his colleagues landed us with the biggest deficit in Europe, and we are digging this country out.

[Vernon Coaker]

There we go—the complacent answer of someone who has no answers at all.

What little faith the Secretary of State has in the ability of the people of Northern Ireland to do their sums. I may not have taught maths, but even I know that if you take away £4 billion and return £142 million, it definitely does not add up to a fair deal for Northern Ireland. Is it not time that this Secretary of State stood up for Northern Ireland and told the Chancellor to get a proper plan for jobs and growth?

[Mr Paterson]

What we have done for Northern Ireland, as one of my colleagues said earlier, is keep interest rates low. That is the biggest service we could deliver to Northern Ireland, and thanks to the disciplined and determined manner in which we are addressing the deficit, we now have the lowest interest rates in western Europe. That benefits every family with a mortgage, and every business with an overdraft, in Northern Ireland.

[Graeme Morrice (Livingston) (Lab)]

4. What his policy is on a Bill of Rights for Northern Ireland; and if he will make a statement.

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

Our policy is that any legislation arising from the work of the Commission examining the case for a UK Bill of Rights would provide a vehicle through which to implement any rights specific to Northern Ireland if these can be agreed by the political parties there.

[Graeme Morrice]

What discussion has the Minister had with the Secretary of State for Justice on the impact that a UK Bill of Rights will have on a Northern Ireland Bill of Rights?

[Mr Swire]

We have regular discussions. We need to be absolutely clear that any discussion about a UK-wide Bill of Rights is distinct from a discussion about rights specific to Northern Ireland. We believe that the proper vehicle for rights specific to Northern Ireland would be a new UK Bill of Rights, if there is to be one.

[Mr Laurence Robertson (Tewkesbury) (Con)]

The Good Friday agreement certainly calls for a Bill of Rights for Northern Ireland, but does my right hon. Friend agree that while people in Northern Ireland understandably accept the right of freedom of religious expression, for example, those rights also belong in the United Kingdom?

[Mr Swire]

My hon. Friend is absolutely right. People in Northern Ireland enjoy the same protection as anyone in the rest of the United Kingdom. In fact, Northern Ireland has, for instance, anti-discrimination legislation that is the strongest in Europe. We need a consensus from the Executive—from the Assembly—to make sure that this matter is finally resolved to the satisfaction of all.

[Glyn Davies (Montgomeryshire) (Con)]

5. What assessment he has made of recent political developments in Northern Ireland; and if he will make a statement.

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

The political situation in Northern Ireland is now more stable than for a generation, but stability is not an end in itself. It is time for the Assembly and Executive to work towards building a prosperous Northern Ireland in which everyone has a genuinely shared future.

[Glyn Davies]

The Northern Ireland Executive have published a draft programme for government. Will my right hon. Friend comment on this development, and does he welcome what is happening in Northern Ireland?

[Mr Paterson]

I am delighted that after six months the draft programme has come forward, and I very much hope that the Executive will crack on in working with the Assembly to deliver its main elements as soon as possible.

[Naomi Long (Belfast East) (Alliance)]

One recent political development was that the Assembly agreed unanimously that the Secretary of State should convene talks to discuss how to deal with the issue of the past. Why, in the face of that consensus, does the Secretary of State refuse to do so?

[Mr Paterson]

That is a little unfair. Within a couple of days, I went to talk to the Speaker of the Assembly to discuss with him how best to address this issue, and I am now going to write to the leaders of all the main parties to discuss with their representatives how to take it forward. The sad problem regarding the past is that there is no consensus that we have detected. My right hon. Friend the Minister and I have been right round Northern Ireland talking to all sorts of groups involved with the past. Sadly, there is no consensus, but I will write to the parties and we will keep talking. This is very much an issue that has to be sorted out with local parties as well.

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

One thing on which the Secretary of State did take action in relation to the past was the Finucane issue. There was a widespread welcome in Northern Ireland for his decision to draw a line under that in the way that the Government did. Does he agree, therefore, that the decision of the Irish Prime Minister, Enda Kenny, to come to Northern Ireland last week and seek to reopen this issue and launch an international campaign is deeply unhelpful to north-south relations and invites comparisons with his attitude towards neutering the Smithwick inquiry, which is investigating the deaths of Royal Ulster Constabulary officers?

[Mr Paterson]

I am grateful to the right hon. Gentleman for his question. The review into the Finucane case is going ahead. That is the decision of this Government, and we believe that it is the right one, as we inherited an impasse from the previous Government and called for an inquiry. We know that there are strong feelings in Dublin on this issue, and I have said privately and publicly that we recognise that they will state those differences publicly. I assure the right hon. Gentleman, however, that we will not let this issue in any way damage the excellent relations we have with the Government in Dublin.

[Mr Dodds]

I am very grateful to the Secretary of State for that answer. On another issue, does he recognise that the decision by the Sinn Fein lord mayor of Belfast this week to refuse to hand out a Duke of Edinburgh award to a young man because he was an Army cadet is deeply unhelpful in terms of community relations; that it stands in stark contrast to the First Minister’s vision, set out on Saturday, of an inclusive, forward-looking Northern Ireland; and that Sinn Fein’s action has deeply disturbed people right across the community?

[Mr Paterson]

The right hon. Gentleman makes an interesting point. The armed forces are a wonderful example of people from right across the community working together. I have on the wristband of the Royal Irish Regiment, which has representatives from right across Northern Ireland and the Republic and from 11 different nations. They set an example to us all of how we can work together. [Interruption.]

[Mr Speaker]

Order. A lot of noise has been taking place in the Chamber. That is very unfair on the Secretary of State, who is trying to give his answers in terms that can be heard and appreciated.

[Alex Cunningham (Stockton North) (Lab)]

6. What representations he has received on fuel poverty in Northern Ireland.

[Nick Smith (Blaenau Gwent) (Lab)]

7. What representations he has received on fuel poverty in Northern Ireland.

[Nic Dakin (Scunthorpe) (Lab)]

8. What representations he has received on fuel poverty in Northern Ireland.

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

I attended the Opposition day debate on pensioners and winter fuel payments on 22 November. The matter was also discussed on 31 August, when I met the Minister for Welfare Reform and Northern Ireland Ministers to discuss this and other matters. Measures to tackle fuel poverty in Northern Ireland are the responsibility of Executive Ministers.

[Alex Cunningham]

I understand that the proportion of homes in Northern Ireland that are in fuel poverty is higher than in Scotland, England and Wales. The Housing Executive said that almost 50% of households cannot afford to heat their homes this winter. What are the Government going to do to help the people of Northern Ireland, and do they really think that it is enough?

[Mr Swire]

The figures are startling for Northern Ireland. These are devolved matters, and I understand that the Executive are tackling energy efficiency, maximising incomes through benefit uptake campaigns, and achieving affordable energy prices. They are also doing a lot. The Housing Executive is doing a lot about housing and the hon. Gentleman will be pleased by the announcement of £142 million over three years for Northern Ireland. Perhaps some of that could be spent on improving the housing stock.

[Nick Smith]

Like Northern Ireland, Wales has higher than average fuel poverty. Are the Government promoting dialogue between the devolved Administrations so that best practice and solutions that work can be shared?

[Mr Swire]

I remind the hon. Gentleman that, in 2004, his colleague the right hon. Member for Warley (Mr Spellar) had a target to eradicate fuel poverty in vulnerable households by 2010. The current Department for Social Development strategy states bluntly that this target will not be achieved. In fact, fuel poverty increased in Northern Ireland from 146,000 in 2004 to 302,000 in 2009.

[Nic Dakin]

How will the Minister ensure that nobody in Northern Ireland has to choose between heating and eating this winter, given that fuel prices have risen by 18.6% this autumn?

[Mr Swire]

The hon. Gentleman will know that there are several schemes in Northern Ireland, such as warm homes, warm homes plus, the pilot boiler replacement scheme, the introduction of oil stamps, and the Housing Executive itself. Contrary to what Opposition Members say, the Government have maintained the winter fuel allowance and chosen to keep the higher cold weather payment allowances, which is more than the Labour Government would have done, had they won the last general election, which, mercifully, they did not.

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

Does the Minister agree that the Chancellor’s announcement yesterday stopping the inexorable rise of fuel costs will be most welcome to people suffering from fuel poverty in Northern Ireland, and in Hastings and Rye?

[Mr Swire]

My hon. Friend is right. The Chancellor’s announcement deferring the increase from 1 January to 1 August is very welcome, as indeed is the further increase. She will also want to welcome the increases in pensions, which I believe represent the biggest increase in pensions since 1908. That will also help the most vulnerable in society.

[Mr Peter Bone (Wellingborough) (Con)]

Does the Minister share my concern about the Opposition Whips’ effort to flood the Order Paper, with a third of the questions on it being identical, so that Members––

[Mr Speaker]

Order. I am grateful to the hon. Gentleman, but that has nothing to do with fuel poverty in Northern Ireland. I call Charlie Elphicke.

[Charlie Elphicke (Dover) (Con)]

Does the Minister share my concern that some 70% of homes in Northern Ireland are heated with heating oil? Is not the priority to get them connected so that people can access a wider, more competitive market to bring prices down?

[Mr Swire]

My hon. Friend is right. That is the vulnerability of the market in Northern Ireland, which is why we welcome discussions such as those being undertaken on the undersea energy grid by the Minister, Arlene Foster, on the isles project, and on fracking, which could have a serious effect, in a beneficial way, on energy provision in Northern Ireland.

[Ian Paisley (North Antrim) (DUP)]

Eighty-two per cent. of homes across rural Ulster rely on the most expensive form of heating oil to heat their homes. The councils in Northern Ireland, the Assembly and the Northern Ireland parties represented in this House are united in their support for the higher form of winter fuel allowance in Northern Ireland. How is the Secretary of State representing that united political will to the Cabinet?

[Mr Swire]

I do not want to be cynical about the previous Government––not unless I have to be––but I draw the hon. Gentleman’s attention to the fact that they raised these allowances two years running up to the election but that their plans, had they won the election, were to reduce them. We could have stuck with those figures. We did not. We chose to increase the high level of the cold weather payment to the benefit of all who are most vulnerable.

[Stephen Pound (Ealing North) (Lab)]

In wishing the Minister of State the very happiest of birthdays today, may I remind him that politicians are often accused of giving warm words and cold comfort? Bearing in mind the uniquely disadvantaged position of the fuel poor in Northern Ireland, will he at least approach his colleagues in the Treasury for an uprating of the winter fuel allowance this year in view of the extremely inclement weather forecast?

[Mr Swire]

I am grateful to the hon. Gentleman. I just explained to the previous questioner that we have chosen to increase allowances in a way that the previous Government were simply not going to. The cold facts are there in the spending commitment. We have nothing to apologise for; indeed, we have plenty to be proud of.

The Prime Minister was asked—

[Nick Smith (Blaenau Gwent) (Lab)]

Q1. If he will list his official engagements for Wednesday 30 November.

[The Prime Minister (Mr David Cameron)]

I am sure the whole House will wish to join me in paying tribute to Rifleman Sheldon Steel from 5th Battalion The Rifles. He was a highly respected soldier who had achieved a great deal and shown much potential during his time with the Army. At this very sad time, our thoughts should be with his family, his friends and his colleagues. His courage and his dedication will never be forgotten by our nation.

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

[Nick Smith]

I join the Prime Minister in paying tribute to that brave serviceman, who gave his life for our country. Our thoughts are with his family at this very difficult time.

Blaenau Gwent, my constituency, has high unemployment but great potential, and it would benefit greatly from £200 million of private sector-led investment in motor sport. Will the Prime Minister provide support for enhanced capital allowances for enterprise zones in Wales, including Blaenau Gwent, as well as in England?

[The Prime Minister]

I thank the hon. Gentleman for that question. First, may I congratulate him and the other 37 Members who have opted to grow additional facial hair in this month of November? It is a very good way—[Interruption.] For those who are capable of doing so, it is a very good way of raising the profile of that important illness, prostate cancer.

We are committed to providing enhanced capital allowances, and discussions are ongoing with devolved Administrations about enhanced capital allowances in their enterprise zones. We will do what we can in Blaenau Gwent, as elsewhere, and I should add that we are electrifying the line to Cardiff and looking for improvements on the M4. All the announcements that my right hon. Friend the Chancellor made yesterday will have consequentials for additional spending on infrastructure in Wales.

[Richard Drax (South Dorset) (Con)]

I am confident that the Prime Minister, like me, will praise the courage and professionalism of the Portland search and rescue helicopter. I am confident also that he will share with me the alarm, anger and disbelief of my constituents and many colleagues with coastal constituencies that it is to be axed. Will he meet me and a small delegation from South Dorset to discuss that urgent matter before a disastrous mistake is made?

[The Prime Minister]

I am very happy to meet my hon. Friend. I know how important it is that we have effective search and rescue facilities off our coast, and I know about the incredibly good work that they do. What the Government are looking at is the best way to deliver those services, including how they should be paid for, and it is important that that work goes ahead.

[Edward Miliband (Doncaster North) (Lab)]

May I join the Prime Minister in paying tribute to Rifleman Sheldon Steel, from 5th Battalion The Rifles? He served with huge commitment and courage, and our deepest condolences are with his family and friends.

In June at Prime Minister’s questions, the Prime Minister praised the head teacher of Vaynor First school in Redditch for refusing to strike. Today, she has closed her school. She says:

“This has been the most difficult decision of my professional life… The difference in the summer was that I had faith in the Government… I have not seen any progress so I have decided…to strike.”

Why does the Prime Minister think that so many decent, hard-working public sector workers, many of whom have never been on strike before, feel that the Government simply are not listening?

[The Prime Minister]

The reason why people are going on strike is that they object to the reforms that we are making to public sector pensions, but I believe that those reforms are absolutely essential. The Labour former Work and Pensions Secretary, Lord Hutton, said that

“it is hard to imagine a better deal than this.”

What I would say, above all, to people who are on strike today is that they are going on strike at a time when negotiations are still under way. The right hon. Gentleman refers to what was said in June. Let me remind him what he said on 30 June:

“These strikes are wrong at a time when negotiations are…going on”.

Why has he changed his mind?

[Edward Miliband]

Mr Speaker, the reason—[Hon. Members: “Answer.”]

[Mr Speaker]

Order. I say to Members engaged in orchestrated barracking that it is very tedious and very juvenile, from whichever side it comes. The public do not want to hear it, and nor do I. The Leader of the Opposition will be heard, as will the Prime Minister, and that is all there is to it.

[Edward Miliband]

The reason public sector workers do not think the Prime Minister is listening is that the Government declared negotiations at an end four weeks ago. They said that they had made their final offer. They have not even met the unions for four weeks, since 2 November. What has he gone around saying to people? He has gone around saying that he is privately delighted that the unions have walked into his trap. That is the reality. He has been spoiling for this fight. The reason people have lost faith is that he is not being straight with them. Will he admit that 800,000 low-paid workers on £15,000 a year or less are facing an immediate tax rise of 3% on his pension plan?

[The Prime Minister]

I know that the right hon. Gentleman’s entire party is paid for by the unions, but I must say that what he has just told the House is extraordinary and completely and utterly untrue. The fact is there were meetings with the trade unions yesterday, there will be meetings with them tomorrow and there will be meetings on Friday. The negotiations are under way. Let me repeat what he said in June. He said that it is wrong to strike

“at a time when negotiations are…going on”.

Yet today he backs the strikes. Why? Because he is irresponsible, left-wing and weak.

[Edward Miliband]

The difference is that, unlike the Prime Minister, I am not going to demonise the dinner lady, the cleaner or the nurse, people who earn in a week what the Chancellor pays for his annual skiing holiday—[Interruption.]

[Mr Speaker]

Order. Members on both sides of the House need to calm down. If senior Members of the House think that it is a laughing matter, let me tell them that it is not. The public would like to see some decent behaviour and a bit of leadership on these matters, and so would I.

[Edward Miliband]

The Prime Minister is the one—he did not deny it—who went around saying that he is privately delighted because the unions have walked into his trap. That is the reality. The truth is that it is not only public sector workers who are paying for the failure of his plan, but private sector workers. Will he confirm that, as a result of the cuts to tax credits announced yesterday, a family on the minimum wage, taking home £200 a week, will lose a week and a half’s wages?

[The Prime Minister]

First, let me be absolutely clear—[Hon. Members: “Answer.”] I will answer the question—

[Mr Speaker]

Order. Let me say again that the Prime Minister’s answer, however long it takes, will be heard. That is the principle of democracy. The Leader of the Opposition and the Prime Minister must be heard.

[The Prime Minister]

Let me be clear that I do not welcome these strikes one bit. I think that we have made a very reasonable and very fair offer to public sector workers, and that is why the former Labour Pensions Secretary said that

“it is hard to imagine a better deal.”

I do not want to see any strikes. I do not want to see schools close. I do not want to see problems at our borders, but this Government have to make responsible decisions.

Let me just remind the right hon. Gentleman and the House of the facts about public sector pensions. Anyone earning less than £15,000 on a full-time equivalent salary will not see any increase in the contributions they have to make. In terms of the reforms we are making, a nurse retiring on a salary of just over £34,000 today would get a pension of £17,000, but in future she would get over £22,000. A teacher retiring on a salary of £37,000 would have got £19,000, but will now get £25,000. These are fair changes. I will tell the House why they are fair. We rejected the idea that we should level down public sector pensions. We think that public sector pensions should be generous, but as people live longer it is only right and fair that they should make greater contributions. What we see today on the Opposition Benches is a party that is in the pocket of the trade union leaders, that has to ask their permission before crossing a picket line and that take the irresponsible side of trade union leaders who have called their people out on strike when negotiations are under way.

Now let me answer his question about the low-paid—[Interruption.]

[Mr Speaker]

Order. I remind the Prime Minister gently that a large number of Members are listed on the Order Paper—Back Benchers, whom I want to hear and he wants to hear. A brief sentence will suffice.

[The Prime Minister]

I will wait for his next trade union-sponsored question, and then give my answer.

[Edward Miliband]

I am proud that millions of hard-working people in this country support the Labour party—better that than millions from Lord Ashcroft.

The problem is that the Prime Minister does not understand his own policy. He does not understand that there are part-time workers earning less than £21,000 who will be hit—800,000 low-paid, part-time workers, 90% of whom are women, will pay more. He denies that, but it is true. That is the reality.

[The Prime Minister]

indicated dissent.

[Edward Miliband]

The Prime Minister sits there shaking his head. He does not understand his own policy, and of course, he could not explain or justify what he did to everyone on low pay with the miserable deal cooked up with the Deputy Prime Minister to cut £1 billion from tax credits in the autumn statement yesterday. They have no explanation for why they are doing that—[Interruption.]

[Mr Speaker]

Order. I say to the hon. Member for Cannock Chase (Mr Burley) that I do not require any assistance from him. The Leader of the Opposition will come to a question.

[Edward Miliband]

Let me try the Prime Minister on another matter. What will unemployment be at the time of the next autumn statement on the Office for Budget Responsibility forecast?

[The Prime Minister]

If we compare the end of this Parliament with the start of this Parliament, the Office for Budget Responsibility figures—let us remember that the OBR is independent, but when the right hon. Gentleman was sitting in the Treasury, the figures were fiddled by Ministers and advisers, and that no longer happens—show that 500,000 more people will be in jobs, 90,000 fewer people will be on the claimant count, and the unemployment rate will be 7.2% instead of 8.1%. That is the OBR’s forecast; it is not fiddled. The OBR is independent; and that is what the figures show.

Let me answer the right hon. Gentleman’s question, as I was not able to do so earlier, about helping the poorest people in our country. It is his party that got rid of the 10p tax—the biggest attack on the working poor. It is this Government who have taken 1.1 million people out of tax, who froze the council tax, cut the petrol tax, introduced free nursery care for two, three and four-year-olds, and are putting up the child tax credit by £390 this year and next. That is a record to be proud of, instead of the right hon. Gentleman’s appalling record of attacking the working poor.

[Edward Miliband]

With child poverty going up as a result of the autumn statement yesterday, the truth is that the Prime Minister could not answer the question because he is too embarrassed by the truth—[Interruption.] The Education Secretary should calm down. He tells children to behave; why does he not behave himself?

The Prime Minister is too embarrassed. There are 2.8 million people out of work according to the forecast of the Office for Budget Responsibility. He is another Conservative Prime Minister for whom unemployment is a price worth paying. Because he is failing on unemployment and growth, he is failing on borrowing. He told the CBI conference last year that, no ifs or buts, by 2015

“we will have balanced the books.”

Will he now admit that on the central test he set himself, he has failed?

[The Prime Minister]

The right hon. Gentleman complains about the level of borrowing, but his answer is to borrow even more. That is the utter illiteracy. Let me tell him what we are doing. Because we have a plan to meet the mandate and to meet the test set out by the Chancellor in his emergency Budget, we have some of the lowest interest rates in Europe. That is right; for every percentage point they went up under Labour, that would be another £1,000 on a family mortgage, another £7 billion out of business and another £21 billion on our national debt. That is what we would get under Labour and that is why it is this Government who will take the country through this storm.

[Edward Miliband]

The Prime Minister is borrowing an extra £158 billion to pay for his economic failure. The truth is that his plan has failed. He refuses to change course and he is making working families pay the price. At the very least, we now know that he will never, ever be able to say again, “We’re all in this together.”

[The Prime Minister]

The leader of the Labour party has taken sides today: he is on the side of the trade union leader who wants strikes and not negotiations and he is on the side of people who want to disrupt our schools, disrupt our borders and disrupt our country. And when it comes to borrowing, he cannot even bring himself to welcome the fact that there are low interest rates.

Let me tell him this. The shadow Chancellor—[Interruption.] Mr Speaker, they are all shouting in unison—[Interruption.] Or should that have been they are all shouting on behalf of Unison? I am not quite clear. Let me remind the House of what the shadow Chancellor said about low interest rates. He said that long-term interest rates are

“the simplest measure of monetary and fiscal policy credibility”.

That is what he said, and that is what this Government are delivering.

We are being tested by these difficult economic times. We will meet that test by getting on top of our debt and getting on top of our deficit. The Leader of the Opposition is being tested too, and he is showing that he is weak, left-wing and irresponsible.

[Jo Swinson (East Dunbartonshire) (LD)]

rose—

[Mr Speaker]

Order. I assume that Government Back Benchers have some interest in listening to Jo Swinson.

[Jo Swinson]

Q2. Thank you, Mr Speaker. I would like to associate myself with the words of condolence from the Prime Minister and Leader of the Opposition.Ten years on from the military intervention, more than 3 million girls in Afghanistan are now in school. With the Bonn conference on Monday, will the Prime Minister send a clear message that the rights of those girls should not be traded away in a false choice between women’s rights and security? The evidence shows that women’s involvement in post-conflict resolution is essential for stability.

[The Prime Minister]

First of all, may I wish my hon. Friend and everyone in Scotland or who is Scottish a very happy St Andrew’s day? She is absolutely right to talk about women’s rights in Afghanistan. All too often, we talk about security without talking about some of the things that that security is making possible. It is the case that whereas in 2001 there were fewer than 1 million children in school in Afghanistan, none of them girls, today there are 6 million children regularly in school, 2 million of whom are girls. All those of us who have been to Afghanistan and met women MPs and other leaders in that country who want to stand up for women’s rights know what an incredible job those people are doing, and we are on their side.

[Lilian Greenwood (Nottingham South) (Lab)]

Q13. According to the Office for Budget Responsibility, half a million more people will be on the dole in 2013 than previously thought. That is a terrible human cost, but how much more will be lost in tax and paid out in benefits as a result of his Chancellor’s economic failure?

[The Prime Minister]

What the OBR shows is that by 2015 we are going to have half a million more people in jobs, fewer people on the claimant count and a lower unemployment rate. But there is a serious point here, because the figures do show a sharp decline in public sector employment. That is shown by the figures. There is a much bigger increase in private sector employment.

What I would say to the Opposition—in fact, to everyone in the House—is that if we want to reduce the amount of unemployment from the public sector, we have to reform welfare, which they oppose, we have to freeze public sector pay, which they oppose, and we have to reform public sector pensions, where they are on the side of the irresponsible trade union leaders.

[Mr Laurence Robertson (Tewkesbury) (Con)]

Q3. Is the Prime Minister aware that in the last financial year, taxpayers paid more than £113 million to trade unions by way of paid staff time and direct grants? In the light of today’s disruption to hospitals and schools, is it not time to review that situation?

[The Prime Minister]

I think it is time. I do not think full-time trade unionists working in the public sector on trade union business rather than serving the public is right, and we will put that to an end. That is absolutely the case, and the evidence today makes that case even stronger.

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

Q4. Why are the Government freezing working tax credit, which helps the lowest paid workers, including those whose wages are too low for them even to pay tax, to make work pay?

[The Prime Minister]

As the hon. Lady knows, what we are doing with tax credits is that there will be a £255 increase this year, which is the largest ever increase in child tax credit, and there will be a further £135 increase next year—a 5.2% increase. I think that is the right increase in child tax credit. Helping those families, genuinely helping people to get out and stay out of poverty, helping on nursery education and helping to get low paid people out of tax is even more valuable.

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

As the United Kingdom’s borders are being kept open today by patriotic volunteers, will the Prime Minister consider imitating the robust action of the late US President Ronald Reagan in relation to recalcitrant air traffic controllers?

[The Prime Minister]

I thank all those people, including a number from No. 10 Downing street, who are helping to keep our borders open and to make sure that Heathrow and Gatwick are working properly. Let me report to the House that the evidence so far suggests that about 40% of schools are open; less than a third of the civil service is striking; on our borders, the early signs are that the contingency measures are minimising the impact; we have full cover in terms of ambulance services; and only 18 out of 900 jobcentres have closed. Despite the disappointment of the Labour party, which supports irresponsible and damaging strikes, it looks like something of a damp squib.

[Mark Hendrick (Preston) (Lab/Co-op)]

Q5. May I ask the Prime Minister if he came into politics to sack three quarters of a million civil servants and public sector workers, most of whom are women and most of whom have families?

[The Prime Minister]

I came into politics to try to improve the welfare of people in our country. The fact is that, at the end of this public sector pension reform, those people working in the public sector will have far better pensions than most people in the private sector, who are contributing that money to them. [Interruption.] I know the Leader of the Opposition and the shadow Chancellor are paid to ask questions; they do not have to wave as well. [Interruption.] If they give the money back to the unions, I will calm down.

[Chris Kelly (Dudley South) (Con)]

Will my right hon. Friend join me in condemning the outrageous attack on our embassy in Tehran yesterday and in paying tribute to our diplomatic staff serving in such difficult environments with such distinction?

[The Prime Minister]

I certainly join my hon. Friend in doing that, and I am sure the whole House will join me in praising the incredible devotion of our staff in the foreign and diplomatic service, who often face great dangers, as they did yesterday in Tehran. I chaired a meeting of Cobra yesterday and another one this morning and spoke to our ambassador about the safety of his staff. That should be our No. 1 concern—their safety, their security and making sure those are maintained. After that, we will consider taking some very tough action in response to that completely appalling and disgraceful behaviour by the Iranians.

[Several hon. Members]

rose—

[Mr Speaker]

Order. The next question is a closed question.

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

Q6. What plans he has to change the machinery of Government to facilitate the implementation of early intervention policies; and if he will make a statement.

[The Prime Minister]

I lead a Committee of Cabinet Ministers that looks specifically at family issues, including the importance of early intervention, which is central to what the Government are trying to achieve. We believe that if we change the life chances of the least well off, we have a much better chance of genuinely lifting young people out of poverty and keeping them out of poverty. I take a close interest—as do my right hon. Friends the Secretary of State for Education and the Chancellor of the Exchequer—in the hon. Gentleman’s work, and in the real difference that he has made in prioritising early intervention in our country.

[Mr Allen]

I thank all three party leaders for their consistent support for early intervention and their generous welcome for my two reports. May I ask the Prime Minister to make early intervention in the lives of babies, children and young people a theme for all Departments in the next comprehensive spending review, so that not only will all children be able to make the best of their life chances, but Government and the taxpayer will be able to reduce the massive costs of failure—including educational underachievement, 120,000 dysfunctional families, summers of discontent, and many, many lifetimes wasted on benefits?

[The Prime Minister]

That is a very sensible suggestion. I think that we can look at it in the context of the next spending round, but I do not even want to wait for the next spending round. That is why the family Committee that I lead, and of which the Deputy Prime Minister is a member, is considering how we can make effective action such as intervention in the lives of the 120,000 neediest and most broken families. Government—all the different Departments—spend a huge amount of money on those families, but we are not satisfied that that money has been spent on actually intervening in the lives of those families, and trying to turn them around in order to solve their very real problems. We have a programme for doing that now, but I hope that the hon. Gentleman will continue with his very positive work.

[Andrew Rosindell (Romford) (Con)]

Q7. The Prime Minister will be aware that there remain 16 British overseas territories around the world where the Union flag still flies proudly. Will he pledge that Her Majesty’s Government will protect, defend and cherish the loyal subjects of all those territories?

[The Prime Minister]

I can happily give my hon. Friend that guarantee. Let me add that the overseas territories will remain British for as long as the people of those territories want to maintain their special relationship with us, and that the Union flag will continue to fly over the Governors’ residences. We are increasing our assistance to overseas territories—my hon. Friend will be familiar with what we are doing in St Helena with the airport—and, of course, next year is the anniversary of the liberation of the Falkland Islands, which will be a moment for genuine celebration in all overseas territories.

[Julie Hilling (Bolton West) (Lab)]

Q8. My constituent Jackie contacted me to ask how she is to manage with a 3% tax on her pension, no pay increase until 2013, and rocketing fuel and food bills. How is she to feed her family? Why is the Prime Minister making people like Jackie pay for his Government’s failure?

[The Prime Minister]

The fact is, I am afraid, that the whole country is having to pay for the failure of the last Government to get on top of debt and deficit, but what I would say to the hon. Lady’s constituent is that we are trying to help. That is why we are freezing council tax, cutting petrol tax, taking 1.1 million of the poorest people out of tax altogether, and increasing child tax credit in the way that I described earlier. We will continue to take all those steps, but I would say to the hon. Lady’s constituent—as I would say to all others—that the most dangerous thing that we could do now is lose control of our debts and see interest rates go up. When this Government came to power, our interest rates were at the same level as Italy’s. Today, Italy’s interest rates are 5% higher. If ours were at the same level, we would see higher mortgage costs and businesses going bust, and we would have a real problem in our country. That, however, is the policy of the Labour party.

[Fiona Bruce (Congleton) (Con)]

Q9. What message has the Prime Minister today for the thousands of people who run and work in small businesses in my constituency, who work tremendously hard to keep those businesses and the local economy going, and who, in some cases, can barely afford to make provision for their own pensions?

[The Prime Minister]

The hon. Lady is entirely right. This Government are squarely on the side of people who work hard, play by the rules, and want to do the right things for their families. Today I would say to all those people “Thank you for what you do to contribute to public sector pensions that are far more generous than anything that you are able to afford. For our part, we promise to ensure that public sector pensions remain strong but are affordable.” What is so notable about today is that the Labour party has taken the side of trade union leaders who want to disrupt our country.

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

Q10. With taxpayers set to pay up to £100 million to BAE Systems to make workers redundant, is the Prime Minister aware that £100 million would pay for five new Hawk planes to be built at Brough for our Red Arrows? Is that not a better use of £100 million?

[The Prime Minister]

I strongly support British Aerospace and all that it does. It is an extraordinarily strong British company. It has the full backing of the British Government and an enormous order book from us in terms of the strategic defence review. It also has massive backing from us in selling Hawk aircraft, Typhoons and Eurofighters all over the world to countries that need them. Clearly at Brough there have been issues and difficulties. That is why we have put in an enterprise zone, and we will do everything we can to help those people and help that company.

[Mr Mark Spencer (Sherwood) (Con)]

Q11. Does the Prime Minister share my belief, and until recently the belief of the Leader of the Opposition, that now is not the time to strike, before negotiations have been completed?

[The Prime Minister]

My hon. Friend makes a very good point. Just in case anyone did not get it the first time, let me say it again:

“These strikes are wrong at a time when negotiations are…going on”.

Negotiations are going on, so the Leader of the Opposition should think the strikes are wrong. He does not think that they are wrong, because he is in the pocket of the trade union leaders.

[Mr Frank Roy (Motherwell and Wishaw) (Lab)]

In every city and village in the country, home helps, carers, nurses and teachers are on strike for the very first time in their lives. These hard-working people—

[Bob Russell (Colchester) (LD)]

You are not on strike.

[Mr Roy]

Well, we hear laughter from the Government Benches, but this is no laughing matter to hard-working families. Are these hard-working people out-of-touch left-wing trade union militants, as demonised by the two parties on the Government Benches, or are they men and women who have said to the Government, “Enough is enough”?

[The Prime Minister]

I know that people feel strongly about this, but we have a responsibility to deliver an affordable public sector pension system. We have rejected the idea of levelling down public sector pensions. What we will deliver on public sector pensions is a generous and fair offer that will give public sector pensioners, unlike others in our country, a defined benefit system. That is why Lord Hutton says that this is an incredibly generous offer. What a pity it is that the Labour party has left reality and will not back that view.

[Andrew Bingham (High Peak) (Con)]

Q12. The Prime Minister will know that I recently held a small businesses event in my constituency, and many of the businesses that attended complained bitterly about the red tape and bureaucracy that they have to jump through to deal with public bodies. What message can he send to these businesses, as we look to them to help rebuild the economy, about getting rid of some of this obstructive bureaucratic nonsense?

[The Prime Minister]

My hon. Friend is absolutely right to raise this subject. It is why we have introduced the red tape challenge, so that all these rules are published on line and businesses and individuals can tell us which ones can be scrapped without harming public safety. At the same time, we have the one-in, one-out rule so that Ministers cannot introduce a new regulation until they have scrapped an existing one. This Government are determined to scrap unnecessary regulation and to help small businesses to employ more people in our country.

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

At the last spending review, the Prime Minister said that the £110 rise in child tax credits would have an impact on child poverty. Now that he has taken away that rise and is freezing working tax credit, can he say how many more children will be in poverty in the coming year?

[The Prime Minister]

What we are doing in terms of child tax credit is that it is going to be £390 higher than at the time of the last election. That is a £255 increase this year, which is the largest ever increase in child tax credit. We are adding a further £135 next year—an increase of 5.2%. That is what is happening on child tax credit. Let me make this additional point. If the pension is increased, we see child poverty figures go up, under the definition used by the Labour party. I think that it is right that we increase the pension; I do not think that we harm the life chances of children by giving pensioners what we have given, which is a record cash increase in pensions next year.

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

Q14. May I ask the Prime Minister to ensure that this House remains a free and democratic institution, accountable only to voters? Does he share my indignation that some Members had to ask permission from the GMB to be here today? [Interruption.]

[Mr Speaker]

Order. There is a matter of basic courtesy here. The question from the hon. Lady should be heard. I think that she has completed her question, but it really is a lesson for the future. When questions are being asked, they should be heard with courtesy, and when the answers are given, whatever Members think of them, they should be heard with courtesy.

[The Prime Minister]

It is genuinely baffling to people that somebody who said that they would not back strike action while negotiations were under way has come to the House today to speak on behalf of trade union leaders. I want to say that it is a flashback to Neil Kinnock, but even Kinnock was not as bad as that.

[Owen Smith (Pontypridd) (Lab)]

Does the Prime Minister think it fair that the Chancellor yesterday decided to take just £300 million extra from the banks, and £1.3 billion from working families in this country? Is that a fair distribution?

[The Prime Minister]

What the Chancellor announced yesterday was that we will take £2.5 billion off the banks, not through a one-off bonus tax one year, but every year. It is this Government who are properly putting a tax on the banks, whereas the Labour party, year after year, gave knighthoods to Fred Goodwin, did not regulate the banks or tax them properly, and gave us the biggest boom and the biggest bust, from which we are having to recover.

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

Q15. While I welcome the reduction in corporation tax, which will encourage the businesses affected to expand, 90% of the businesses in my constituency are not incorporated and will not benefit from the tax reduction. Will the Prime Minister ensure that in the spring Budget those businesses are given similar tax incentives to ensure that they grow to their full potential, in the economy and the communities they serve?

[The Prime Minister]

May I again praise the hon. Gentleman for the magnificent specimen lurking underneath his nose? We will not wait until the Budget to help those small businesses: we have already extended the rate relief freeze for small businesses, and the national loan guarantee scheme, which will help small businesses to access credit, will be up and running soon.

[Mr Speaker]

Order. We now come to the statement from the Minister for the Cabinet Office and Paymaster General. I appeal to right hon. and hon. Members leaving the Chamber to do so quickly and quietly, so that the Minister can deliver his statement and the House can listen to and hear it.

Industrial Action

Wednesday 30th November 2011 Commons Chamber

12:37

[The Minister for the Cabinet Office and Paymaster General (Mr Francis Maude)]

With permission, I would like to update the House on today's public sector strike action, which is about long overdue reforms to public sector pensions.

I start by thanking the large majority of public servants who have turned up for work today as normal. The low response to the call for strike action reflects their dedication to their public service calling. It also reflects the recognition that taking strike action while negotiations continue on an almost daily basis is nothing short of irresponsible, inappropriate and untimely. It is plain wrong.

This strike is about long-overdue reforms to public sector pensions. I repeat that we want public sector workers to continue to have access to pension schemes that are among the very best available. They will continue to be defined benefit schemes, delivering a guaranteed pension, index-linked and inflation-proofed. Such schemes have all but disappeared from the rest of the work force.

Reform, however, is urgently needed. The cost of public service pensions has increased by a third in the past 10 years to £32 billion a year, and the Office for Budget Responsibility forecasts that, without reform, spending on public sector pensions will rise by nearly £7 billion over the next five years. Life expectancy is rising, and people are living longer, so in future people will work longer, for a better balance between life spent in work and life in retirement. Most public sector staff, except the lowest-paid, will pay more for a fairer balance between what they pay towards their pensions and what other taxpayers pay.

During the discussions, we have been willing to listen to the concerns of staff, and we have responded. On 2 November, after months of negotiations, my right hon. Friend the Chief Secretary set out in Parliament a revised offer that was more generous by 8%. In addition, we have made sure that any public sector workers within 10 years of retirement will be able to retire on their current terms. We are also protecting the lower paid. Public sector staff earning less than a full-time equivalent of £15,000 will not have to pay anything extra at all, and there will be limited increases and contributions for those earning, on a full-time basis, between £15,000 and £21,000. We think that that is fair.

The offer on the table is, by any standards, a generous one. It is a deal that most people in the private sector could only dream of being offered. Most staff on low and middle incomes will retire on a pension as good as what they expect today, and for many it will be even better.

The changes to the pension schemes will particularly protect women, who form the majority of the public sector work force, many of whom are on lower pay. A move from final salary schemes to career average will secure fairer outcomes for lower-paid workers, most of whom are women. The new schemes will also protect future generations from an unsustainable burden placed on them by unaffordable public sector pensions.

It is simply not true that the Government are not negotiating. I was surprised to hear the Leader of the Opposition repeating that claim today. Only yesterday there were discussions with the civil service unions on the civil service pension scheme; tomorrow there will be discussions with the teaching unions, and on Friday with the health unions. After the new offer was made on 2 November, it was agreed, at the request of the TUC, that discussions would continue on the schemes—so it is within the sectoral schemes that the discussions are taking place, at the specific request of the TUC. In addition, there are frequent—[Interruption.] The shadow Chancellor asks from a sedentary position whether we have met the TUC. The answer is yes. [Hon. Members: “You!”] So, contrary to—[Hon. Members: “You! You!”] I will say to—

[Mr Speaker]

Order. The right hon. Gentleman will resume his seat. The Minister has, perhaps understandably, been provoked into a response, but questions, of whatever kind, relating to his statement must follow the statement. We cannot have constant sedentary interjections. I appeal to Members to stop doing that, and if it happens, I suggest that the Minister blithely ignore it.

[Mr Maude]

As always, Mr Speaker, I will do as you encourage me to.

Contrary to claims being made this morning by trade union leaders—and by the Leader of the Opposition and the shadow Chancellor—talks are very much alive. They are intensive and they are making good progress. I deeply regret the misleading claims to the contrary.

All this underlines how indefensible today’s strike is while talks at scheme level are moving forward. It is inappropriate, untimely and irresponsible. The ballots for strike action, particularly in the bigger unions, had a turnout of between a quarter and a third—a very low turnout indeed. Our latest data suggest that, as of 11 am today, 135,000 civil servants—well below a third, indeed not much more than a quarter, of civil servants—were on strike. Most civil servants are going to work today as normal.

We have put in place rigorous contingency plans to ensure that, as far as possible, essential public services are maintained during such periods of industrial action. I have an update on what my right hon. Friend the Prime Minister said a few minutes ago: only 16 of the 930 jobcentres are now closed to the public, and UK borders are open and operating with only very minor delays in some seaports. In the airports services are being maintained. I pay tribute to all the dedicated people who are keeping those borders both secure and open.

Across the other sectors the impact has been varied. According to estimates early this morning, across all state-funded schools in England, some 60% are closed but a great many are open or partially open. I am very grateful to those who have worked hard to keep their schools open across the country—head teachers, governors, support staff and teachers, all of whom may have concerns about their own pensions but have chosen to put the needs of pupils and parents above their own to minimise the impact of this strike. I deeply regret the fact that there will have been disruption to the lives of so many hard-working parents across the country, and to hard-working pupils, many of whom are facing mock exams in the near future; they need a closed school like they need a hole in the head.

Overall, the national health service is coping well with industrial action. Early indications are that the strike is having only a minor impact on patient services, and that has largely been mitigated by robust contingency planning. Several trusts have been forced to make cancellations of elective surgery, which is deeply unfortunate and I deeply regret it, but many organisations in the health service are reporting that they are operating at near normal levels. There is some disruption taking place in the local government sector, but councils have worked hard to secure essential services in areas such as dementia care and homelessness, to protect some of the most vulnerable members of the public from the most serious potential impacts of strikes.

Let me finish by saying this: I have huge respect for the dedicated women and men who keep our public services running. Their work is demanding, essential and highly valued. They deserve to be able to retire on decent pensions. Our reforms will ensure that their pension schemes will be decent, and that they can be sustained for the future. They deserve no less.

[Jon Trickett (Hemsworth) (Lab)]

I thank the Minister for his courtesy in letting me have advance sight of the statement, which I received 20 minutes ago.

Clearly, the whole House regrets that industrial action is taking place today and that millions of families now face disruption to the services on which they rely and depend. Strikes are always a sign that negotiations have broken down, and if a deal is to be reached it is essential that both sides—let us be clear that that includes the unions, but the bulk of the responsibility lies with the Government—get around the negotiating table and show willingness to give ground.

Is it not true that the Government bear the greatest burden of responsibility for what is happening today? We accept that there is a need to continue the reform of public service pensions, which we in fact began when we were in office. We found the unions to be tough but ultimately reasonable negotiators. and we achieved a settlement without any industrial action.

The Government refer to Lord Hutton. He provided rigorous analysis of the current situation, laid out the ground rules for the negotiations, and persuasively argued that there was a need for further change. For example, he was right when he suggested we should look again at career average schemes, which might be fairer in many cases.

The unions need to show they accept the need for change, and indeed they have said they accept the continued need for negotiation and further change. The Government arbitrarily announced a 3p in the pound levy on the incomes of public sector workers, but this imposition has nothing whatever to do with Hutton. Is it not the case that the money that will be garnered from that 3p is not going to the pension schemes but is instead going into the pockets of the Chancellor of the Exchequer? The Minister says negotiations are ongoing, but will he tell us whether or not the 3p imposition, which is a form of tax on public sector workers, is negotiable? It clearly is not in the Government’s mind. Will he also respond to the question about when he last met the unions as part of the negotiation, and when Treasury Ministers last met them, as the leader of Unison said today he had not met them at all since 2 November? It is remarkable that the Government can say negotiations are ongoing when the key Departments have never met the trade unions.

At the core of today’s industrial action are 750,000 low-paid workers. These people provide daily services to all of us and to all the people we serve in our constituencies. They are mainly women, they are almost exclusively low paid, and they provide the essential services on which our whole country depends: they are school dinner ladies, teachers, nurses and others. The House must not underestimate the difficult decisions each of those people must make in deciding whether to take action. Many of them never thought, when they entered the service of the public, that they would have to go on strike. It is a difficult personal decision for each of them, and I assure the House that they take it only with the greatest reluctance. They feel a burning sense of injustice that, low paid though they are, an additional burden is now being imposed on them. Equally, they face a significant deterioration in their pensions, which is why 750,000 low-paid workers—mainly women—have taken that difficult personal decision.

There is a risk that many of those people will opt out of their pensions.

[Mr Speaker]

Order. May I gently say that I know that in pretty short order the shadow Minister will want to come to his questions on the statement?

[Jon Trickett]

I thought I was asking questions as I was going along.

What estimate have the Government made of the number of people who might opt out of their pension schemes, and what damage might the schemes incur?

It has been suggested that the Prime Minister thinks he can gain political advantage from the strike. He told The Daily Telegraph that he was delighted that a strike would take place. What is the Minister’s strategy? Will he and the Treasury again meet the trade unions to begin negotiations? We have consistently argued that negotiations should be ongoing. Will he call the unions today to ask for meetings tomorrow?

Let me turn to the disruption that has been caused today. How many people are staffing the borders? Will the Minister confirm that there has been no relaxation of border checks?

This is a strike that did not need to happen—nobody wants strikes. The Government must show that they are willing to negotiate sensibly.

[Mr Maude]

It is easy to tell from the tone of that response who pays for the hon. Gentleman’s party. [Interruption.]

[Mr Speaker]

Order. I gently say to Whips, wherever they are in the House, that the House is best served when they go about their Protean tasks quietly. On the whole, the House is greatly nourished if they are seen and not heard.

[Mr Maude]

May I deal with the point about the negotiations? I thought I had made it as clear as possible that, at the TUC’s request, the negotiations are continuing in the scheme sector talks. [Hon. Members: “Are you going to meet them?] I have met them—[Hon. Members: “When?] Since 2 November. We conduct many of the negotiations in private—at the request of the TUC. [Interruption.] If Labour Members want to know when the meetings took place, I shall give them the TUC’s telephone number. Let me be absolutely clear: I shall not disclose what the contacts are—at the express request of the TUC. Okay? If they want me to be explicit about the contacts, rather than attacking me they should talk to the TUC. I think they probably know the number.

The shadow Minister asked whether I would call the unions today to suggest a meeting. He is a bit slow on the uptake: I called them yesterday to make that suggestion. I make it absolutely clear that my right hon. Friend the Chief Secretary and I are ready at any stage to meet the TUC. We have done so consistently over the whole period, but at the request of the TUC the discussions are continuing in the four sector schemes and are making good progress. That is why this strike is so indefensible, so unjustifiable, so irresponsible. Luckily, not that much damage will have been inflicted on the economy, because most public servants have chosen to work today as normal. But that has nothing to do with the attitude of the Labour party or of some trade union leaders.

I was asked about the Labour Government’s public sector pension reforms. The shadow Minister made a point about full-time equivalence—the basis on which the previous Government put in place their public sector pension reforms. We have simply followed what they did. I can tell the House that 750,00 low-paid workers will not lose at all—they will not pay a penny more in contributions, because they are below the threshold we have set—and 85% of them are women. It would be useful if the hon. Gentleman confirmed those figures.

The other thing to say about the Labour Government’s pension reforms is that, at the behest of their paymasters in the trade unions, they bottled out of putting in place the long-term reform that makes these changes sustainable. That is why Lord Hutton, Labour’s former Work and Pensions Secretary, recommends all these proposals and reforms, which will make the arrangements we arrive at in the discussions sustainable for a generation. No Government over the next 25 years should have to revisit pension schemes, which we have had to do because the previous Government bottled it.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Many Members are seeking to catch my eye. There is another statement to follow, and I remind the House that we have an Opposition day debate too. There is therefore a premium on brevity, the exemplar of which will be Mr David Ruffley.

[Mr David Ruffley (Bury St Edmunds) (Con)]

Three out of four of my constituents work in the private sector for middling incomes, and they tell me that they would have to put one third of their earnings into their pension to get the benefits that people on strike today enjoy on retirement. Does the Minister agree that the public sector pensions settlement is not only incredibly affordable but incredibly fair?

[Mr Maude]

I think it is fair to the general taxpayer, who has carried all the additional cost of public sector pensions over the past 10 years, and to public sector workers and staff, who are dedicated, hard working and perform essential work. We want pension schemes to be available, without their having to be revisited every few years, because this Government are determined to get this right for the long term.

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

Despite the sickening trade union bashing of Tory MPs, a number of whose campaigns were financed by Lord Ashcroft, so we do not need any lectures from them, is the Minister aware that many decent, dedicated, law-abiding public servants have gone on strike—in many instances for the first time in their life—because they feel cheated and insecure about their pensions and do not accept what the Minister and other Ministers have said? Is there not at least an opportunity to try to understand the deep, strong feelings of people, many of whom will retire with pensions worth a tiny fraction of those that most Tory MPs will receive?

[Mr Maude]

I do understand the concerns of public sector staff and I want to commend the 75% to 80% of public sector workers who have gone to work today as normal. No one had to go on strike. Discussions are continuing and, as I said, making progress on a daily basis. The hon. Gentleman mentions pensions for Members of Parliament. We are public sector workers. We have a very generous pension scheme. It needs to be reformed and I hope it will be.

[Mr Mark Williams (Ceredigion) (LD)]

I declare an interest as a paid-up member of the NASUWT who is not supportive of the action taken today. The critical thing is the timing. Can the Minister reiterate and continue to reiterate the fact that negotiations went on yesterday, will go on tomorrow and, tragically, would have happened today had it not been for the action that has been taken?

[Mr Maude]

My hon. Friend is completely right on that. His own union will be in discussions with the education employers tomorrow. There is disruption caused by today’s action, but despite that there were discussions yesterday with civil service unions and there will be discussions tomorrow and on Friday with health unions. This process is still going ahead, which is why it is so hard to defend the action being taken today. I am just sorry that the Labour party cannot bring itself—does not have the guts—to say it is wrong.

[Lilian Greenwood (Nottingham South) (Lab)]

Does not the Minister understand that there are thousands of part-time workers, the vast majority of whom are women, who are being asked to pay an extra 3%? I would not call it pension contribution, because it is not even going to boost their pension fund. How many of them will opt out as a result of the Government’s changes?

[Mr Maude]

For most public sector workers there is no fund. Contributions made today go to pay pensions today. The local government scheme is funded. Most of them are not funded. They are pay-as-you-go schemes. Lower paid people will not be asked to pay more. As I say, 750,000 low paid public sector workers will have to pay nothing extra at all as a result of these changes.

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

Is my right hon. Friend aware that in a substantial number of local authorities, local government pensions are paid for by the equivalent of 25% of council tax? Is it fair to those council tax payers who are paying such a large sum of their hard-earned cash?

[Mr Maude]

Over recent years the balance between what is paid by public sector staff towards their pensions and what is paid by the general taxpayer and, in the case that my hon. Friend refers to, the council tax payer, has got out of balance. What we are doing is putting it into a fairer balance. In every case the employer, which is the taxpayer, will be paying more towards the cost of those pensions than staff. I think that is fair, as well. But there will be a fairer balance, and so there should be.

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

A good St Andrew’s day to you, Mr Speaker. The Scottish National party fully supports the public sector unions and we deplore this Government’s pension fund raid. The Scottish Government tried to protect public sector workers in Scotland by not imposing the pension levy, but the Chief Secretary promised to deprive us of £100 million if we did that. Why did he do that? Surely that is a great example of why pension policy should be under the democratic control of the Scottish people in the Scottish Parliament.

[Mr Maude]

The Scottish Government have benefited from the results of the reforms, and if they choose not to implement them they will have to make savings from elsewhere. That just follows. It comes with devolution.

[Nigel Mills (Amber Valley) (Con)]

Can the Minister tell my constituents who work hard and have no chance of achieving a £20,000 index-linked guaranteed pension what level of contributions they would have to pay to their own scheme to get that level of pension?

[Mr Maude]

As has been said, to achieve the same pension as many public sector workers will continue to enjoy after these reforms are put in place, many people working in the private sector would end up having to pay no less than a third of their salary in pension contributions. These are good pension schemes. They will continue to be good pension schemes. We want them to be so.

[Chris Bryant (Rhondda) (Lab)]

I know that those on the Government Benches want to denigrate trade unions, but I am proud of being a trade unionist. I first joined a trade union when I was a vicar, though it was always a bit difficult to strike, because nobody noticed and it was difficult to identify who one’s employer was. What angers many public sector workers is that, even where there are pension funds, as the Minister admitted today, the extra 3% that is being asked for is not going into those funds. It is going straight to the Government. That is what makes it feel like a raid on public sector workers.

[Mr Maude]

I feel confident that if the hon. Gentleman was on strike today, we would definitely miss him. I commend him, as a member of a trade union, for having crossed the picket line today to come to work. The issue he raises is where the extra contribution is going. He fails to understand that these schemes, for the most part, are not funded schemes. What is not paid by staff towards the cost of their pensions is picked up by the general taxpayer. And I say again—I assume this is the basis on which the shadow Chancellor said this morning that further reform of public sector pensions is needed—that whatever is not paid by staff is picked up the taxpayer, and that all the extra cost in the past 10 years, which has risen by a third—an extra £10 billion a year—has fallen on the general taxpayer. That is why we need a fairer balance.

[Priti Patel (Witham) (Con)]

With only a third of union members voting for today’s strike action, does my right hon. Friend believe that today’s action is justified?

[Mr Maude]

I do not think that on any basis today’s action is justified. First of all, there are negotiations going on almost on a daily basis, as I said. Secondly, certainly in the biggest trade unions, a very low proportion of the members who were balloted voted. In Unison, for example, only a little over a quarter of the members balloted voted. In all the large unions, it was somewhere between a quarter and a third. That does not amount to very much of a mandate for strike action. I think it was irresponsible and I wish it had not happened.

[Mr David Hamilton (Midlothian) (Lab)]

Some on the Government Benches, when they are baying against the unions, should understand the history. It was the Thatcher Government who gave us the political levy, and that decision allows individual trade unionists to pay the levy to the Labour party. I want to try to be helpful. The reason that we are having the dispute today, apart from all the obvious arguments about the cut taking place by the Government, is that when a union holds a ballot, it has a finite amount of time before it has to take industrial action. If the Government did away with that stupid rule, which was brought in by the Thatcher Government, we would have been able to continue negotiations. Is that not correct?

[Mr Maude]

I start by saying that we are in continuing negotiations. There will be negotiations tomorrow, the day after, next week and the week after, so negotiations are continuing. I agree with the hon. Gentleman that the way the law works at present creates a perverse incentive for unions to take action. We suggested a number of ways in which the mandate could be kept open. For example, in order to keep a mandate open but not inconvenience the public, the National Union of Rail, Maritime and Transport Workers has called a two-hour strike in the middle of the night. In the Royal Mail, the Communication Workers Union has occasionally called five-minute strikes in order to keep a mandate open. It was not necessary, in order to keep this mandate open, for the unions to call a full strike. I am happy to say that most of their members have ignored the call.

[Andrea Leadsom (South Northamptonshire) (Con)]

Mr Speaker, I hope you will not think it unparliamentary language if I say that I am gobsmacked by today’s strike action. If anybody is responsible for the biggest attack on our pensions ever, it was the previous Government, who raided our private sector pensions. There were no strikes then. That has left the private sector with very little in their pensions. Does my right hon. Friend think the time is right to look again at the ten-minute rule Bill introduced by my hon. Friend the Member for Esher and Walton (Mr Raab) suggesting that a minimum level of turnout should be required for any ballots on future strikes, particularly under the circumstances, which are so unbalanced towards the private sector?

[Mr Maude]

I am aware of the motion, and I am aware of the case having been made by the CBI, among others, for such a change in the law. We think that the law can work well and we do not see any priority for making changes along those lines, but every time a strike is called on the basis of a very low turnout in a ballot, those advocates for change will feel that their hand is strengthened.

[Tony Lloyd (Manchester Central) (Lab)]

The House will understand why the Minister has wriggled so consistently on this question of part-time workers on below £15,000, who will be paying the 3%. Can he explain to the people who will be paying that why they have to pay 3% income tax while the bankers’ bonuses are left untouched?

[Mr Maude]

I remind the hon. Gentleman that under the scheme put in place by the Labour Government, there would have been an increase of £1 billion in the contribution paid by public sector staff towards their pensions in April next year in any event. The proposal we are making is only slightly ahead of that, and we are exempting large numbers of low-paid workers from the effects of it. I repeat that 750,000 low-paid public sector workers will have no increase in their contributions as a result of the specific protections that the coalition Government have put in place.

[John Glen (Salisbury) (Con)]

Given that only one in 10 low-paid private sector workers could afford anything like the pension arrangements for comparably paid people in the public sector, does my right hon. Friend agree that urgent reform is necessary if we are to have anything like fairness for all?

[Mr Maude]

In his report, Lord Hutton made it clear that he did not want public sector pension reform to be a race to the bottom, and we totally agree with that. We want as many people as possible to have access to a decent pension in retirement, but we want the public sector pensions that persist after reforms have been put in place to continue to be decent pensions that are sustainable for the long-term future. That is what we are aiming at, and that is what we will achieve.

[Mr David Anderson (Blaydon) (Lab)]

In relation to turnout, could the right hon. Gentleman reflect on the fact that only 39% of his constituents voted for him and only 27% of the constituents of the Chief Secretary to the Treasury voted for him? We do not need any lectures about turnout. Notwithstanding the confidentiality of some of the negotiations, will the Minister put in the Library a document showing exactly where we are with the negotiations and, in particular, where we are with the local government negotiations, where, as far as I am aware, no offer has been made?

[Mr Maude]

My right hon. Friend the Chief Secretary came and stood at the Dispatch Box on 2 November and made an offer. What is going on in the discussions on the four schemes is that the elements that he announced are being worked over, in conjunction with the unions, to work out what the best configuration is for the future. All these work forces are different—they have different salary profiles, different demographics, different age profiles—and the right arrangement of those moving parts within each scheme will also differ. That is where the negotiations are taking place, in order to arrive at the right agreed outcome. That is happening at the moment, so the idea that no offer has been made is completely irrelevant and immaterial.

[Justin Tomlinson (North Swindon) (Con)]

If we fail to make sustainable reform, to what extent will future generations be liable?

[Mr Maude]

My hon. Friend makes the right point. If the reform goes through, as it will, this will be a settlement for a generation and future Governments will not have to come back, as we have had to do to clear up the mess left by the last Government, who bottled it. If there is no sustainable reform, the burden on future generations will be significant. We cannot have a position where an ever smaller working population continues to pay for the pensions of an ever larger retired population. People are living longer. Life expectancy is rising every year. A 60-year-old today can expect to live for 10 years longer than could a 60-year-old in the 1970s. It is absurd to suppose that we can have the same retirement age today as we had then.

[Several hon. Members]

rose—

[Mr Speaker]

Order. It is also absurd to suppose that we can accommodate everyone unless questions and answers are significantly shorter.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

The Minister has consistently refused to address the issue of low-paid part-time workers and the extra contribution they will have to make on a pro rata basis. Does he deny that those people—many of them the lowest-paid women working in the public sector—will be more affected than others?

[Mr Maude]

I have to remind the hon. Lady that the basis on which we have made these arrangements is precisely the same as the basis on which the Government of whom she was a member was planning to reform, and indeed reforming, public sector pensions.

[Margot James (Stourbridge) (Con)]

In view of the fact that a private sector worker would have to contribute, on average, a third of their salary in order to get a similar pension to a public sector worker, and that without reform the public pensions bill would cost an additional £7 billion in borrowing, may I urge my right hon. Friend not to compromise any further on the generous offer that he has already made?

[Mr Maude]

We have made a generous offer. It means that many people in the public sector, especially those on lower and middle incomes, will be able to retire on a pension at least as good as they can expect at the moment. But we have said that that offer was conditional on there being agreement, so we want the discussions in the schemes to continue even more intensively than they have been already so that we can give effect to that offer.

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

Public sector workers will have to work longer and get less out of their pension schemes while, this year alone, bankers walked away with £7 billion in bonuses. I know that the Minister will say that he cannot do anything about that, but does he think that it is fair?

[Mr Maude]

As my right hon. Friend the Chancellor made clear yesterday, more will be got out of the banks than was the case under the Labour Government, who made such an enormous fuss about this. Public sector pensions will continue to be extremely generous, and that is what we want.

[Laura Sandys (South Thanet) (Con)]

I commend the immigration contingency plan. My husband came through Heathrow very smoothly at 6 o’clock this morning. There was a lack of enthusiasm for the mandate for this strike. Will my right hon. Friend update us on exactly how many people are taking industrial action, as enthusiasm for being on strike today seems not to reflect the unions’ enthusiasm for this event?

[Mr Maude]

I am delighted that my hon. Friend’s husband had an easy ride. There are reports that, at some airports, the service is better than it usually is. I commend all those immigration staff who have come to work as normal and all of those who have, in a public-spirited way, volunteered to help to ensure that the borders are secure and that disruption is kept to an absolute minimum.

[Emma Reynolds (Wolverhampton North East) (Lab)]

Will the right hon. Gentleman confirm that a community nurse working two days a week on an extremely low salary of £10,000 a year will have to pay the 3% surcharge? If that is the case, does he think that it is fair?

[Mr Maude]

Unlike the Labour Government, we are tiering the increases in contributions in a progressive way so that people on the lowest pay are protected and those on highest pay will pay most. We think that that is a fair way of doing it. Someone who is working part-time, on a full-time equivalent salary of between £15,000 and £21,000, will have their increase in contributions capped at 1.5%. If it is below £15,000, they pay nothing more. We think that is fair. The full-time equivalent basis about which she is complaining is what her own Government put in place.

[Charlie Elphicke (Dover) (Con)]

As a former private sector worker, I know how many people will be wondering, given the irresponsible nature of these strikes, why £113 million of Government money is paid to the unions. Would it not be better used on body armour for our troops in the field, or on looking after sick babies in our hospitals by improving intensive care?

[Mr Maude]

It is entirely correct that a large amount of taxpayers’ money is effectively used to pay for full and part-time union officials. There can be perfectly good justification for some of that, in order to sort out local disputes quickly and effectively, but that there should now be 260 full-time union officials on the civil service payroll is really hard to justify, and we are reviewing it.

[Sammy Wilson (East Antrim) (DUP)]

I regret the trade union action while negotiations are going on, and the Northern Ireland economy can ill afford the cost of this. Will the Minister confirm that the offer on the table is not a final offer and that, in ongoing negotiations, he will consider the impact on low-paid part-time workers and the appropriateness of raising the pension age for people who are engaged in physical activity, such as firemen?

[Mr Maude]

We absolutely take those points on board. I, too, regret the additional disruption that there is today in Northern Ireland, where the whole public transport system has come to a halt. As the hon. Gentleman says, the Northern Ireland economy can ill afford that kind of disruption. There is a great deal of flexibility within the negotiations. There are a lot of moving parts and they will be put together in different combinations in different schemes. We are very much aware of concerns of the sort that he raises.

[Jane Ellison (Battersea) (Con)]

The move to basing pensions on a career average is good news for very many women. Does my right hon. Friend share my frustration that Labour Members seem so determined constantly to portray women as victims rather than take pride in this important move?

[Mr Maude]

My hon. Friend is completely right. The move from final salary to career average schemes is of particular benefit to a lot of women, who, as has been said, form the majority of the public sector work force. Many women will have taken a career break and so their final salary will provide a less good basis for a good pension than the career average, which is what we seek to put in place.

[Paul Blomfield (Sheffield Central) (Lab)]

The Minister has repeated an assertion made by the Prime Minister that workers on low and middle incomes would get a larger pension at retirement than they do now. Does he accept, as has been widely reported, that that is contradicted by the Government’s own pensions calculator and that, for example, a worker on an average wage of £26,000 retiring with accrued service of 10 years at this point, whether at 60 or 67, would have a substantially worse pension despite the additional contributions?

[Mr Maude]

I do not believe that that is the case. Public sector workers on middle and lower incomes will be able to retire—albeit many of them later than they currently expect and having paid more towards it; we are perfectly open about that—on a pension that is at least as good, and many of them will be able to retire on a better pension than they currently expect.

[Jonathan Evans (Cardiff North) (Con)]

Does my right hon. Friend share my concern that very many of those who are engaged in industrial action, including many of my constituents—half my constituents work in the public sector—are completely unaware of the offer that he has made in relation to defending accrued rights of all pensioners up to the date of change, and of the significant improvement in accrual rates announced by the Chief Secretary, which gives the lie to the claim that we have just heard from the Labour Benches?

[Mr Maude]

My hon. Friend is completely right. We have done our best to get the details of the offer through to members of the public sector staff directly and to correct the misleading indications given by some trade union leaders, which I deeply regret. He is absolutely right to draw attention to the commitment we have made that all accrued rights are protected. What has been paid for up until now will be honoured in full.

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

The Minister said recently that the north-east is heavily dependent on the public sector, and the loss of a day’s pay means less spending power in the north-east economy. That will impact on the economy, for sure. What does he believe will happen after he has sacked 700,000 public sector workers? Is it not the case that, whether someone took strike action today or not, they will probably not have a job?

[Mr Maude]

I am really sorry that the north-east economy is going to take a bigger hit than other parts of the economy because the Tyne and Wear metro has been closed down, completely unnecessarily. I hope that the hon. Gentleman will join me in strongly condemning that irresponsible strike action, which will have inflicted damage on the economy of the north-east and inevitably led to there being more job losses than would otherwise be the case.

[Esther McVey (Wirral West) (Con)]

Does the Minister agree that unions are important organisations that have to get the right and fair deal? This morning I was on Radio Merseyside with Frank Hont from Unison, and we both agreed that it had to be a fair deal, but a fair deal for private sector workers, for public sector workers, for the taxpayer and for future generations, putting pensions on a fair and sustainable footing for the future.

[Mr Maude]

I totally agree with my hon. Friend. I can confirm that for most of the time we have been conducting these negotiations, the union leaders and the TUC have been behaving in the way that trade unions should in representing their members in a tough and effective way. Where they have gone wrong is in holding ballots and calling a strike at a time when negotiations are still continuing and we are making progress towards a settlement that is fair for taxpayers generally and very fair for public sector workers.

[Albert Owen (Ynys Môn) (Lab)]

I respect the right of workers in the private or public sector to take legal strike action; that used to be the position of the Conservatives and, indeed, the Liberals. As the Minister will know, some teachers are taking strike action for the first time. On Friday I met a delegation who said that the teachers’ pension scheme has not been valued, that there is a surplus in it, and that the Government are refusing to review the scheme. Will he publish the valuation of that scheme, which they say is in surplus and is not costing the taxpayer money?

[Mr Maude]

That is wrong in so many ways that it is hard to know where to start. The hon. Gentleman talks as though there is a surplus in a fund. I am sorry to break this to him, but there is no fund. Teachers’ pensions are being paid for by contributions paid predominantly by the taxpayer. There is not a surplus; there is no fund whatsoever. We have to get a better balance between what teachers themselves pay towards their pensions and what the wider taxpayer pays, and that is what we will do. However, there will still be more paid by the wider taxpayer than by teachers, and we support that too.

[Gavin Barwell (Croydon Central) (Con)]

I join my right hon. Friend in thanking public sector workers who, despite being angry about pay freezes and pension changes, are serving the public today.

Further to the point made by my hon. Friend the Member for Cardiff North (Jonathan Evans), a Labour councillor in my home town today told public sector workers that the money saved is going to be used to bail out the banks. What more can the Government do to make sure that people get told the truth about why these changes are being made and the detailed nature of the offer?

[Mr Maude]

We will do everything we can. We have communicated directly with civil servants because the Government are their employer and we can do that very directly. It is much more difficult to communicate directly with all teachers and people working in the NHS, because they are employed by a wide range of different, dispersed employers. However, the fact is that most public sector workers—more than three quarters—have ignored the call to take part in this irresponsible strike, and I warmly commend them for doing so.

[Richard Burden (Birmingham, Northfield) (Lab)]

I put it to the Minister that the willingness to negotiate has got to be a bit more than the willingness to attend meetings. A while ago, Ministers said that the offer was “final”. Is it a final offer or not; and, specifically, will the Minister negotiate around the 3%?

[Mr Maude]

We have made it clear that if, in the discussions within the sectors, there can be alternative ways of delivering the savings that are needed in the comprehensive spending review period, we will consider those suggestions. However, no such suggestions have been made. I am grateful to the hon. Gentleman for at least conceding for the first time from the Labour Benches that negotiations are continuing and making progress. There are still a lot of moving parts, and we need to discuss how they are put together to achieve a fair and sustainable result. I hope that we can continue to intensify that process and make further progress after today’s irresponsible strike action.

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

Will the Minister confirm that in return for paying a little bit more and working a little bit longer, many public sector workers will still be able to retire at 55, and that many low-income and middle-income earners will receive higher pensions under the Government’s proposals than they do currently?

[Mr Maude]

That is the case. We are absolutely clear that people who, in April next year, will be within 10 years of their expected retirement date will see no change to their retirement age. There are some who are currently looking to retire at 55, and if they are within 10 years of that retirement date, that will be honoured and their pension will be paid in exactly the same way that is envisaged at the moment.

[Derek Twigg (Halton) (Lab)]

The Minister says that he has huge respect for public sector workers, but at the same time his Government are sacking tens of thousands of them. Regarding lower-paid part-time women workers, will he put in the Library some examples of the impact that the change from RPI to CPI has had on their pensions?

[Mr Maude]

We have made available a huge range of information about the effects of the changes to public sector pensions, and there will continue to be more as the negotiations make further progress in the weeks ahead.

I just want to make this point about the job losses. I very much regret that there will continue to be job losses in the public sector. If we had not inherited the biggest budget deficit in the developed world from the Government of whom the hon. Gentleman was a member, those jobs would not be at risk today.

[Richard Graham (Gloucester) (Con)]

The Minister knows that I, as one who has worked in the civil service and as the brother and son of teachers, have huge respect for people who work in public service. However, I also believe that many teachers and nurses in my constituency have been woefully misinformed about the details of a complex pension proposal by their unions and by statements from the Labour party. Will he clarify, once and for all, for all hon. Members and for my constituents in Gloucester, that the lowest paid 15% of the work force who are on less than £15,000 a year––about 750,000 people, of whom 85% are women––will pay no extra contributions and will receive a better pension than the one they now receive, inherited from the previous Government?

[Mr Maude]

I can confirm that and add that many of the lowest paid in the public sector will pay no more towards their pension. When the basic state pension is added on top of the occupational pension, they will be able to retire on a bigger income than they were earning while they were employed.

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

What discussions has the Minister had with ministerial colleagues in the Northern Ireland Executive about building stable industrial relations, which would contribute to the local economy, rather than allowing them to undermine low-paid public sector workers who have higher costs to pay for everyday essentials?

[Mr Maude]

It is the responsibility of all the devolved Administrations to make their own arrangements and conduct their own industrial relations. We conduct our own approach to industrial relations, which involves very intensive discussions with the trade unions that are continuing on an almost daily basis.

[Chris Kelly (Dudley South) (Con)]

Further to the answer that my right hon. Friend gave the hon. Member for Birmingham, Northfield (Richard Burden), does he agree that it is disingenuous of militant trade union leaders to claim that there have been no recent negotiations when he has explicitly confirmed in his most illuminating statement that talks continued until only yesterday?

[Mr Maude]

I confirm talks yesterday, talks tomorrow, talks the day after. These will continue and they need to intensify so that we can reach a conclusion.

[Chris Williamson (Derby North) (Lab)]

Why do the Government so despise public sector workers such as nurses, doctors, teachers and street care cleaners as to impose a swingeing tax increase when the contributions to pension funds exceed their liabilities? The local government pension fund has an annual surplus of £4 billion to £5 billion. How is that fair and how can he justify it?

[Richard Graham]

On a point of order, Mr. Speaker.

[Mr Speaker]

Order. The hon. Gentleman must calm himself. There will be an opportunity for points of order, but it does not arise in the middle of a statement.

[Mr Maude]

Far from having the views about public sector workers that the hon. Member for Derby North (Chris Williamson) wrongly attributes to me, all of us in this House have dedicated ourselves to public service. We know that this is an honourable calling and we know how dedicated are the 6 million public sector workers. I commend the 75% to 80% of public sector workers who have ignored the irresponsible call for strike action and gone to work today as usual.

[Mr Philip Hollobone (Kettering) (Con)]

Will my right hon. Friend take this opportunity to praise those ordinary, hard-working trade unionists in Kettering who have crossed picket lines today to go work to serve members of the public and refused to believe the misleading advice they get from their overpaid, hot-headed trade union bosses, who are itching for a fight with the Government?

[Mr Maude]

I am afraid that there are some trade union leaders who seem to be absolutely hellbent on confrontation and industrial action. We absolutely did not want that and I join my hon. Friend in commending those of his constituents who are trade union members but who have ignored the call to strike, crossed the picket lines and gone to work to serve the public, as is their vocation.

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

As a trade union member, I place on record that I am here this afternoon specifically to represent in Parliament the concerns of my constituents who are trade union members, as they wish me to do. In the light of the news yesterday of a further restriction on pay increases in the public sector, they are particularly concerned about how they are to meet the additional 3% cost. Will the Minister say if there is an opportunity for meaningful negotiation around the timing as well as the rate of any increase in contribution?

[Mr Maude]

As I said earlier, we have made it clear that the savings that have been baked into the spending settlement for the comprehensive spending review period need to be delivered. If the discussions produce alternative ways of delivering those savings, we have said that we are open to hearing them. We have not heard any yet. Of course the hon. Lady is entitled to represent the interests of her trade union member constituents. I hope that she will also represent the interests of all those in the private sector who pay their taxes, which pay for the lion’s share of the public sector pensions that public sector workers will continue to enjoy.

[Harriett Baldwin (West Worcestershire) (Con)]

On the questions that the hon. Member for Nottingham South (Lilian Greenwood) and others asked about part-time public sector workers, does the Minister agree that the responsible conversation to have with them is to say, “Don’t protest. Do pay an extra 3%, because you are getting in return for that a pension that would cost you 38% to buy in the real world”?

[Mr Maude]

My hon. Friend is right. The public sector is as much the real world as any other, but in the private sector, staff would have to pay a very significant part of their salary––more than a third––in contributions to buy pensions as good as these. We want these to continue to be among the very best pension schemes available. That is why we are pushing forward these reforms, with a settlement for a generation, so that future Governments will not have to clear up the mess the last Government left behind.

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

Does the Minister agree that it is fair and legitimate for the wider British public to know when he personally took part in negotiations with unions? I heard what he said earlier, but in the interests of transparency, should he not publish this information?

[Mr Maude]

I say again to the hon. Lady that there are formal negotiations on a continuing basis within the schemes. There are many informal contacts that happen on a continuing basis. Those are kept confidential, not at my request but at that of the TUC, and I will continue to honour that.

[Gemma Doyle (West Dunbartonshire) (Lab/Co-op)]

The Minister seems to have given my hon. Friend the Member for Stretford and Urmston (Kate Green) an answer on the 3% different from that given by the Chief Secretary to the Treasury. Can he confirm that he is willing to negotiate on the 3%?

[Mr Maude]

What I said, and what my right hon. Friend the Chief Secretary to the Treasury said as well, was that the savings that are represented by the average increase of 3.2% must be delivered. If there are other ways of delivering it, we are willing to listen to them, but no suggestions have been made. In the absence of suggestions about how those savings can be delivered by other means within the pension schemes, we are requiring that those contribution increases will be made, but with protection for lower-paid workers.

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

I am dismayed by the Minister’s statement today that the low response to the call for strike action reflects the dedication of those who did not vote for it to their public service calling. That clearly implies that those who voted in favour do not have the same dedication. Does that apply to the 57% of the health care physios’ union, the near 50% of the Royal Society of Radiographers and other health professional organisations that voted in the same proportions? Those figures relate to the total work force, not the turnout in the vote. Does he feel that they are in any way at all not as dedicated?

[Mr Maude]

I did not make the distinction that the hon. Gentleman suggests. All I am saying is that in the public sector work force of nearly 6 million people, over three quarters have gone to work today and ignored the irresponsible call to strike action. If I am going to discriminate between those who have gone to work to follow their public service calling and those who followed the irresponsible call to strike action, then I commend those who have gone to work over those who have gone on strike while negotiations are continuing.

[Mr Frank Roy (Motherwell and Wishaw) (Lab)]

The Minister knows that he is accountable to Parliament—full stop. He is treating Parliament with contempt by not telling Parliament when he—when he—last met trade union organisations. Will he now set the record straight?

[Mr Maude]

I urge the hon. Gentleman, if his enthusiasm to know the details of confidential discussions is so intense, to call Brendan Barber and ask him.

[Jonathan Ashworth (Leicester South) (Lab)]

Does the Paymaster General not recognise that many public sector workers taking industrial action today do so reluctantly, with a heavy heart and because they feel that what is on offer is simply not fair? May I press him a little further on his answers to my hon. Friends the Members for Birmingham, Northfield (Richard Burden) and for West Dunbartonshire (Gemma Doyle)? Is he now saying that he is definitely prepared to countenance meaningful negotiations on the 3% increase?

[Mr Maude]

I have made it as clear as I possibly can, but I will say it again: the savings represented within the pension schemes and within the comprehensive spending review period by an average 3.2% increase in contributions must be delivered. We have made that clear.

We have made it clear also that we are willing to entertain suggestions on how those savings can be delivered in other ways. We have heard no such suggestions, so those contribution increases—the first of which will go through in April, and which are actually of the same order of magnitude as those that would have gone through under the previous Government’s reforms in any event—will go ahead.

British Embassy (Tehran)

Wednesday 30th November 2011 Commons Chamber

13:41

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

With permission, Mr Speaker, I should like to make a statement about events in Tehran.

Shortly after 3 o’clock Tehran time yesterday, approximately 200 demonstrators overran the city-centre compound of our embassy in Tehran. The majority of demonstrators were from a student Basij militia organisation. We should be clear from the outset that that is an organisation controlled by elements of the Iranian regime.

The demonstrators proceeded systematically to vandalise and loot the homes of staff located on the site and the ambassador’s residence. They destroyed furniture, stole property, including the personal possessions of our staff, and set fire to the main embassy office building.

Simultaneously, our second embassy compound at Gulhaq in north Tehran also came under attack, and staff homes there were also attacked and looted. Our staff immediately evacuated the buildings affected and took refuge in safe areas of the compound. It was not until yesterday evening that we received confirmation that the Iranian diplomatic police had belatedly assisted at both compounds, and that all our staff were accounted for.

I wish to pay a fulsome tribute to our ambassador and his staff, who throughout those hours of danger behaved with the utmost calm and professionalism and followed well developed contingency plans. The Prime Minister and I have spoken to him several times in the past 24 hours and passed on our thanks to the UK-based and locally engaged members of his team.

It will be obvious to the whole House and the whole world that these events are a grave violation of the Vienna convention, which states that a host state is required to protect the premises of a diplomatic mission against any intrusion, damage or disturbance. This is a breach of international responsibilities of which any nation should be ashamed.

It is true, of course, that relations between Britain and Iran are difficult, as they are to varying degrees between Iran and many other nations. We publicly differ with Iran over its nuclear programme and on human rights, and we make no secret of our views. We have been foremost among those nations arguing for peaceful legitimate pressure to be intensified on Iran in the light of the International Atomic Energy Agency’s “deep and increasing concern” about the Iranian nuclear programme, including its “possible military dimensions”.

But we should be absolutely clear that no difficulty in relations can ever excuse in any way or under any circumstances the failure to protect diplomatic staff and diplomatic premises. Iran is a country where Opposition leaders are under house arrest, where more than 500 people have been executed so far this year and where genuine protest is ruthlessly stamped on. The idea that the Iranian authorities could not have protected our embassy, or that this assault could have taken place without some degree of regime consent, is fanciful.

Yesterday, I called the Iranian Foreign Minister to protest in the strongest terms about the events and to demand immediate steps to ensure the safety of our staff and of both embassy compounds. He said that he was sorry for what had happened and that action would be taken in response. The Iranian chargé d’affaires in London was summoned to the Foreign Office to reinforce those messages, and Cobra met yesterday afternoon and again this morning with the Prime Minister in the chair.

The UN Security Council issued a statement condemning the attack on our embassy in the strongest terms and calling on the Iranian authorities to

“protect diplomatic and consular property and personnel”.

I am grateful for the strong statements of concern and support from the United States, the European Union, Germany, Poland, Russia, China and many other nations. I particularly wish to thank France for the robust support that it has given us in every way, and for the practical assistance and accommodation that it has provided to our staff in Tehran.

Throughout Europe, Iranian ambassadors have been summoned to receive strong protests. In the words of the Foreign Minister of Austria:

“With the attack on the British Embassy, Iran is now on the verge of placing itself completely outside of the framework of international law. If Iran thinks it can undermine European solidarity through such actions, it is wrong.”

I am grateful to our other friends in the region itself, and particularly to the United Arab Emirates for its practical help. I am grateful also to the Foreign Minister of Turkey for his prompt and helpful intervention in these matters last night.

The safety of our staff and of other British nationals in Iran is our highest priority. We have now closed the British embassy in Tehran. We have decided to evacuate all our staff, and as of the last few minutes, the last of our UK-based staff has now left Iran.

We will work with friendly countries to ensure that residual British interests are protected and that urgent consular assistance is available to British nationals. We advise against all but essential travel to Iran. At present, there are no indications that British nationals outside the embassy are being targeted in any way. Those requiring urgent consular assistance will receive help from other EU missions in Tehran.

But that clearly cannot be the end of the matter, and the next few paragraphs of my statement are not in the written version being circulated to the House, because the timing of this announcement had to be consistent with the safety of our staff.

The Iranian chargé in London is being informed now that we require the immediate closure of the Iranian embassy in London, and that all Iranian diplomatic staff must leave the United Kingdom within the next 48 hours. If any country makes it impossible for us to operate on their soil, they cannot expect to have a functioning embassy here. This does not amount to the severing of diplomatic relations in their entirety. It is action that reduces our relations with Iran to the lowest level consistent with the maintenance of diplomatic relations.

The House will understand that it remains desirable for British representatives to be in contact with Iranian representatives—for instance, as part of any negotiations about their nuclear programme or to discuss human rights—but it does mean that both embassies will be closed. We wish to make it absolutely clear to Iran and to any other nation that such action against our embassies and such a flagrant breach of international responsibilities is totally unacceptable to the United Kingdom.

Later today and tomorrow I will attend the meeting of the EU Foreign Affairs Council in Brussels, when we will discuss these events and further action that needs to be taken in the light of Iran’s continued pursuit of a nuclear weapons programme.

As a permanent member of the UN Security Council and a leading member of the European Union, we are proud of the role that our country plays in maintaining international peace and security and in standing up for human rights all over the world. If the Iranian Government think that we will be diverted from those responsibilities by the intimidation of our embassy staff, they will be making a serious mistake.

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

I thank the Foreign Secretary for his statement and for allowing me advance sight of it. It is indeed right that we address the issues of the assault on the British embassy in Tehran along with other important business before the House today.

I, of course, begin by expressing my clear and unequivocal condemnation of the deplorable attacks that we witnessed yesterday in Tehran, and associate all Opposition Members with the words yesterday of the Foreign Secretary and of the Prime Minister on the issue.

Let me deal with the welfare of the UK diplomatic staff. I commend the British ambassador and his whole team on their handling of the situation and the unyielding professionalism and, indeed, bravery that they have shown at this extremely difficult time. Our thoughts are also with the staff and the families who were affected by yesterday’s assaults. Are appropriate steps being taken to safeguard locally engaged staff who have supported UK-based staff during the period in which the British embassy in Tehran has been operational?

With regard to responsibility for the assault, the Iranian Government clearly failed to take adequate measures to protect our embassy, our staff and our property. Their international responsibilities, including those under the Vienna convention, are well established. The demonstrations were co-ordinated, not coincidental, and the suggestion that the regime, or at least elements within it, were unaware of some of the actions stretches credulity. I welcome the right hon. Gentleman’s confirmation that he immediately summoned the Iranian chargé d’affaires to the Foreign Office yesterday and the condemnation issued by our colleagues in the European Union and the UN Security Council.

Let me turn to the context and consequences of yesterday’s events. The backdrop was the unequivocal International Atomic Energy Agency report published earlier this month, which made it clear that there is accumulating evidence for the possible military dimensions of Iran’s nuclear programme. In response to the report, the UK, along with Canada and the United States, sought to increase peaceful diplomatic pressure on Iran, and only last week the Chancellor announced the severing of all ties with Iranian banks, including the Central Bank of Iran. As a result of these measures, the Iranian Parliament approved a Bill three days ago requiring Iran and Britain to withdraw their ambassadors and downgrade the status of the two countries’ diplomatic ties.

That was the immediate context of yesterday’s assault, but what about the consequences? As we have just heard, British diplomats are thankfully on their way home and the embassy has been closed. The Foreign Secretary has just informed the House that, in response to the events, the Iranian chargé d’affaires has been told to leave the UK and Iran’s embassy in London will be closed forthwith. The safety and security of UK diplomatic staff and other UK nationals must be a paramount consideration, but can the Foreign Secretary set out how dialogue will be maintained in the light of these developments? If the effect of yesterday’s events is to extinguish dialogue—albeit that dialogue on human rights and the nuclear dossier is proving extremely difficult at present—the elements within the regime that seek conflict and confrontation would be strengthened. In the light of the diplomatic changes, what mechanisms for dialogue will remain open?

The Opposition agree that Britain’s national interest is best served by pursuing a twin-track approach to Iran and its nuclear ambitions, so will the Foreign Secretary be a little clearer when he responds on how the first part of that approach, the engagement strategy, will continue in the light of the downgrading of diplomatic relations? Does he agree that, notwithstanding yesterday’s truly deplorable assault on the embassy, a clear-eyed sense of Britain’s national interest would resist in the weeks ahead a descent into ever more bellicose rhetoric and instead seek to find new means of taking forward the difficult but necessary dialogue? Does he also agree that in that dialogue we must be clear that such deplorable assaults on our embassy will not and must not alter our determination to take forward the diplomatic work with others in the international community to ensure that Iran upholds its responsibilities and obligations under international law?

Finally, will the Foreign Secretary consider returning to the House in the weeks or months ahead to make a more wide-ranging statement on Iran in calmer times and the approach that the Government now intend to take, given not only the immediate events and their consequences, which he has rightly come to the House to address, but the stalled progress on the E3 plus 3 process and the growing anxiety about Iran’s nuclear ambitions?

[Mr Hague]

I am grateful to the right hon. Gentleman, who has joined in the condemnation of these completely unacceptable acts and the commendation of our ambassador and his staff. He asked about the locally engaged staff. Other than security staff, locally engaged staff were not in the embassy compound yesterday because, in anticipation of the demonstrations, we had asked them not to come to work, so they were not involved in the violence and danger. We will, of course, look after them financially and have a continuing concern for their welfare, although it must be pointed out that, as former Foreign Secretaries will remember, our locally engaged staff in Tehran have unfortunately always been at some degree of risk because of previous unacceptable behaviour by the Iranian regime.

The right hon. Gentleman is right to remind us of the wider context of the IAEA report and the action the Chancellor announced last week to sever financial links between our financial institutions and those of Iran. He asked how dialogue is to be maintained. Clearly these events make that more difficult. We do not take such decisions at all lightly, but after the events we have come to the conclusion that no assurance the Iranian regime could deliver on the safety of our staff could be believed. We have an overriding duty of care for those staff.

It is still possible in other forums to pursue dialogue with Iran where appropriate and meaningful. We are part of the E3 plus 3 process—the six nations that wish to negotiate with Iran over its nuclear programme—as is the United States, which does not have an embassy in Tehran. We meet the Iranians at various multilateral forums and organisations. I met the Iranian Foreign Minister at the UN General Assembly earlier this year. As I have said, we are not advocating the severing of all diplomatic relations. It is important that dialogue about these issues can continue, but it is not possible to maintain an embassy under these circumstances and in the light of these threats and actions.

The right hon. Gentleman asked about bellicose rhetoric. Of course, that is something that comes from Iran, not the United Kingdom. We heard that on Sunday in the Iranian Parliament there were chants of, “Death to Britain”, and it is unimaginable that we would ever treat any country in that way in our deliberations here in the House of Commons. It is the bellicose rhetoric coming from Iran that should come to an end. I am of course open to making other statements to the House in future and more wide-ranging considerations of our future policy towards Iran.

[Richard Ottaway (Croydon South) (Con)]

I share the Foreign Secretary’s sense of outrage and welcome his statement and the steps he is taking. Iran is propping up the regime in Syria, undermining peace efforts in Iraq and Afghanistan and supporting terrorism in a number of arenas around the world. Does he agree that there is only one language these people understand: the language of the firmest possible action? Yet does he agree that we must somehow maintain a degree of dialogue somewhere along the line?

[Mr Hague]

My hon. Friend is right that there have been no rewards for anything other than firm dealings with Iran. Many efforts have been made to induce the Iranians into a more substantial dialogue than we have enjoyed in recent years. The right hon. Member for Blackburn (Mr Straw), when Foreign Secretary, made valiant efforts to do so, to which we should pay tribute, but his efforts and those of other European Foreign Ministers have not been successful at any stage. It is important to respond firmly to such provocations and attacks, but to continue to seek meaningful negotiations on the nuclear programme, and that remains our position.

[Mr Jack Straw (Blackburn) (Lab)]

As co-chair of the all-party group on Iran, alongside the hon. Member for Wyre and Preston North (Mr Wallace), and as a former Foreign Secretary who sought better relations with Iran, as the Foreign Secretary has kindly noted, and who went to Tehran five times in pursuit of that, I begin by entirely endorsing his praise for our brave and skilful diplomats and the outrage we all feel at the Iranian Government’s egregious breach of their obligations to protect all diplomatic embassies and posts and their palpable failure to do anything, which they could easily have done, to protect the embassy against the organised demonstration. I appreciate just how difficult it is to make such decisions when faced with them, rather than having just to comment on them, but when the Prime Minister and the Foreign Secretary were thinking about the decision to sever all relations, how far did the Foreign Secretary consider the irony of the fact that what he believes is justified is exactly what the hard-liners in the Majlis want? Given that we are not talking about a single Government, as the Americans often forget, but a system that is in turmoil, to what extent does he believe that we will now be able to strengthen those, even within the Ahmadinejad regime, who are seeking a better path than that of some of the hard-liners in the Majlis?

[Mr Hague]

I am grateful to the right hon. Gentleman for what he said about our staff and how they have conducted themselves. He is right to draw attention to the difficulties and downsides of any way of proceeding in this situation. As a former Foreign Secretary, he will know that we must be able to be confident that we can look after our staff, and that assurances of host Governments can be believed. Sometimes our staff continue to operate in very difficult and dangerous circumstances. At the moment, Yemen is an example of that, but even there, where there have been two attempts on the life of our staff in the past 18 months, we do not suspect that parts of the regime there are implicated in attacks on our embassy. That makes life dramatically more difficult, and must be weighed heavily in any balance of the question.

We must also consider that the incident in Iran has happened in currently difficult diplomatic circumstances, but we cannot be confident that those circumstances will not deteriorate further over the next 12 months or so, so we must have regard to what might happen to our embassy in those circumstances. Having considered all those matters, the Prime Minister and I believe it is right to take this action, not to sever all relations, to put the right hon. Member for Blackburn (Mr Straw) right, because it is still possible to have diplomatic contact under what I have set out, but to close both embassies.

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

I join the Foreign Secretary in paying tribute to the locally engaged staff and our diplomatic staff, whom I last met at the embassy when I visited in 2008. They have had to endure three incursions into the embassy in the past four years, and this is the most serious and obviously threatening to British interests and property.

The E3 plus 3 works best when it works as one in negotiating with Iran, and withdrawal of our embassy leaves much of the day-to-day contact with the Iranian Government in the hands of the Chinese and Russian E3 plus 3 members. What confidence does the Foreign Secretary have that those two member states will play their full part in ensuring that negotiations with Iran come to a successful conclusion?

[Mr Hague]

It is not solely the Russian and Chinese embassies that will be there, because the French and German embassies are still in Tehran, although both France and Germany are taking very strong diplomatic action in the light of these events. I will not make their announcements for them, but they are outraged by the events and will follow with their own strong diplomatic action. Those countries are still in Tehran, and are an important part of the E3 plus 3 process. Although we have differences with Russia and China, the process is by no means wholly in the hands of those countries.

[David Miliband (South Shields) (Lab)]

I join the Foreign Secretary in his utter condemnation of yesterday’s attacks on the embassy and its staff. However, he will know that the Iranian regime loves to trade shows of machismo and enjoys tit for tat, and that parts of it glory in Iran’s isolation. In that context, the presence of the British embassy in Tehran for much of the past 30 years has been wholly good, in contrast with the American position. This is a sad day for British diplomacy.

I have two questions for the Foreign Secretary. First, what will he do to ensure that this is not seen as a victory for those in the regime who would seek isolation—the so-called hard-liners? Secondly, what will he do to ensure that this series of announcements does not become part of the unwelcome drum beat of war that started in the last six weeks in respect of the Iranian nuclear programme?

[Mr Hague]

The international condemnation of Iran, the strong expressions of support for our staff, and the grave concern for what has happened have come from Russia and China, as well as from western nations, our European allies and the United States. Anyone in Tehran who thought they had won a victory in Iran in the light of the world-wide condemnation of the events would be very blinkered. We have been clear, as was the right hon. Gentleman when he was Foreign Secretary, that we are not advocating military action against Iran. We are calling for peaceful, legitimate pressure. It is as part of that peaceful, legitimate pressure that Iran has taken action that breaches international conventions, specifically the Vienna convention.

As I said to the right hon. Member for Blackburn (Mr Straw), we must weigh heavily those considerations and the disadvantages of embassies being closed, but the Government must make a decision, and our decision is that we cannot keep our staff safe in Iran, and its actions are so unacceptable that we have to take a very firm line. On the balance of such matters, we decided to take the action that we have.

[Martin Horwood (Cheltenham) (LD)]

For the Liberal Democrats, I join the condemnation of yesterday’s events and support the Foreign Secretary’s response. I also express our relief that our staff are now safe, and our admiration for their courage and professionalism.

The Foreign Secretary listed many nations that had expressed concern and support, and included Russia and China. In the international context, does he regard that as a positive development, and perhaps the beginning of the foundation of a more consistent international approach to the regime in Tehran?

[Mr Hague]

I am grateful to my hon. Friend for all his remarks. His question about whether there is a new development in the international handling of wider issues in Iran is interesting. It is too early to say yes, but I think the events will help to open the eyes of many people throughout the world to the nature and behaviour of the Iranian regime. If it has so little regard for such well established international conventions as the protection of diplomatic premises, one can imagine that it does not have much regard for other international agreements either.

[Keith Vaz (Leicester East) (Lab)]

I join others in welcoming the Foreign Secretary’s action. He will know that about 70,000 Iranians live in the United Kingdom. What will be the practical consequences of his decisions? Where will entry clearance operations in Tehran move to now that the embassy is closed? Where will British Iranians who want to visit relatives in Iran make their applications for visas?

[Mr Hague]

It will of course be more difficult for them, because we will not have a visa section operating in Tehran. Iranian citizens can still obtain visas to come to the United Kingdom, but they will have to obtain them through other hubs of our diplomatic network, specifically Abu Dhabi, or other hubs of the visa network. We will ask another country to act on our behalf in Iran and to look after our interests there, and I imagine that the Iranians will ask a third country to do the same here in London and to provide whatever assistance is required for Iranian citizens here in the UK.

[Mark Pritchard (The Wrekin) (Con)]

Is it not the case that President Ahmadinejad could do well to learn from Persian history, in particular King Cyrus, who created the first charter on human rights, which can be seen in the foyer of the United Nations building? He taught all his people the importance of respecting the rights not only of Iranian or Persian citizens but of foreigners.

[Mr Hague]

Yes. My hon. Friend makes a pertinent historical point. The King in question was rather better at sticking to his agreements than the current Government of Iran.

[Mr Speaker]

I have just been reminded that the hon. Member for The Wrekin (Mark Pritchard) is a learned and well-read fellow.

[Chris Bryant (Rhondda) (Lab)]

No he is not—Division.

[Mr Speaker]

I do not know that anyone is as learned or well read as the hon. Member for Rhondda (Chris Bryant).

[Chris Bryant]

The Foreign Secretary referred to bellicose words. What counts as bellicose words in Iran is rather different from what counts as bellicose words from a Foreign Secretary in the House of Commons. I worry about the tone that the right hon. Gentleman has adopted today. I noted that on the radio a couple of weeks ago he refused to rule out military intervention. Will he do so today?

[Mr Hague]

No. I always say that all options remain on the table, but I always make it clear, as did the previous Government, that we are not advocating military action against Iran. Our position is the same as that of the previous British Government—the hon. Gentleman was a Foreign Office Minister in that Government—and the same as that of France, Germany and the United States. It is a united international position, and we continue to adhere to the one to which he subscribed.

[Mr John Baron (Basildon and Billericay) (Con)]

The Foreign Secretary is absolutely right to condemn the sacking of our embassy, which can only serve to inflame tensions generally. Given recent remarks by Israel, and the fact that there was no smoking gun from the recent International Atomic Energy Agency report, will he do what he can to restrain Israel from conducting any form of military strike, which would be catastrophic for the region? If Iran has set its mind on nuclear weapons, it will not be scared away, and if it has not, a military strike will encourage it.

[Mr Hague]

Clearly, from what I have said, we are not advocating a military strike by anybody. I have often said in the past that although the possession of nuclear weapons by Iran would be a calamity for the world, it is quite possible that military action against Iran would be calamitous. I absolutely stand by that.

I do not think that my hon. Friend should dismiss so lightly the IAEA report, which referred to the agency’s serious concerns regarding credible evidence about the military dimensions of the Iranian nuclear programme. My hon. Friend should weigh that a little more heavily.

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

I am slightly troubled by some of the triumphant cheering that we heard behind the Foreign Secretary when he announced the closure of the embassy. Government Members would do well to show caution about the path they seem so eager to head down.

The Foreign Secretary has briefly mentioned both Turkey and the United Arab Emirates. May I press him to say a little more about the Government’s dialogue with other Governments in the region, and particularly with the Gulf Co-operation Council?

[Mr Hague]

We are in constant touch with those nations, of course. I spoke to Turkey’s Foreign Minister twice last night. He spoke, as I did, to the Iranian Foreign Minister, expressing Turkey’s outrage about these events and asking for the protection of our diplomatic staff. We are in constant diplomatic touch with the Gulf states, which also share our outrage about what has happened. As I mentioned in my statement, the United Arab Emirates has been able to give us practical help in the evacuation of our staff. A large number of the flights out of Tehran go to the UAE, so we have been in close touch with it about that.

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

May I explain to my right hon. Friend why I cheered during his statement? It was because he is absolutely right to show strength and resolution rather than surrender in the face of the provocation by the Iranian regime. May I also give him the fullest support for refusing to rule out the military option? There have been 10 years—more than a decade—of best intentions and positive diplomacy as we have tried to win the arguments with the Iranians. If this incident does not remove the rose-tinted spectacles from our eyes, nothing will.

[Mr Hague]

All options, of course, are kept on the table. However, I stress, as I have to other hon. Members, that we are not calling for military action. But I am grateful to my hon. Friend: in the House of Commons, we show approval with cheers, grunts or movements of the head, and all are acceptable on this occasion.

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

All Members would do well to remember the deplorable nature of this attack on British embassy property and staff. It demanded an appropriate response and I commend the Foreign Secretary for his swift, decisive and entirely appropriate response on this occasion. In relation to the twin-track approach that he has set out, what further practical steps—what further measures in addition to the sanctions already announced—can be taken to increase peaceful and legitimate pressure on Iran?

[Mr Hague]

I am grateful to the right hon. Gentleman for his remarks and support for the action that we have taken. At the European Foreign Affairs Council over the next 24 hours, we will be discussing further actions that can be taken—peaceful, legitimate pressure, as he says. I believe that we will agree on additional sanctions. I do not want to say now what those are going to be. I do not want to prejudge the deliberations with my European colleagues in Brussels, but the right hon. Gentleman can be confident that further measures are on their way.

[Bob Stewart (Beckenham) (Con)]

It is always sad when the Union Jack has to be pulled down in any country, because it is such a potent symbol for those of us who have been in hostile countries and for nationals in those countries. However, I rather wonder whether our interests may be served if the European Union has set up its embassy in Iran; it might have something useful to do if it has. It could look after our interests.

[Mr Hague]

The European Union has been very helpful. Baroness Ashton, the High Representative, issued a very strong and prompt statement about the issue and of course we will work with EU representatives on this matter. We have been fortunate in having such robust support from France, Germany and many other of the member states of the European Union.

[Derek Twigg (Halton) (Lab)]

This is the second outrage against this country by the Iranians; the Foreign Secretary will recall what happened with HMS Cornwall a few years ago. I support what the Government have said today. They are right in the action that they have taken and I urge them to continue to be firm in a practical and sensible way.

May I ask the Foreign Secretary a specific question? When did the ambassador or his staff last meet the Iranian authorities to discuss the security of the embassy? Were any concerns raised at that meeting and was there a report back to the Foreign Office in London expressing those concerns? If he does not know the answer, will he write to me with the information?

[Mr Hague]

I am grateful for the support of the hon. Gentleman, who remembers well the United Kingdom’s previous incidents with Iran. There have of course been regular discussions, and concerns have regularly been expressed about the security of the embassy to the Iranian authorities, but I will have to write to him with the exact chronology that he is asking for.

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

This morning, I met representatives of the Baha’i faith, who are clearly suffering greatly at the hands of the Iranians at the moment. Does the Foreign Secretary believe that Iran’s actions in relation to our embassy are symptomatic of a wider failure—a failure to observe not only international law but Iran’s national laws?

[Mr Hague]

My right hon. Friend makes an important point. In recent times, and particularly during the period this year that we now know as the Arab spring, Iran has become a more repressive system—with greater persecution of minorities, more widespread imprisonment and persecution of journalists, and the house arrest of the two leading Opposition leaders. The constant persecution of members of the Baha’i faith is a very sharp and terrible example of that. My right hon. Friend is right to point to the wider failure to observe the Iranians’ own laws and obligations.

[Mark Durkan (Foyle) (SDLP)]

I join the Foreign Secretary in expressing regard for the personnel involved and in his unequivocal indictment of regime complicity in these deplorable attacks. On the respective embassy closures, do the Government have in mind particular conditions for their reopening—conditions that would be clearly and readily achievable? Otherwise there is the danger of a spiral of deterioration, of the UK’s position becoming conflated with that of the US and of the UK becoming dependent on the vicarious good offices of others.

[Mr Hague]

That is a fair question, but the hon. Gentleman will be aware that this has just happened and it is too early to set out such conditions. Clearly, any reopening of the embassies could take place only in a much improved situation in respect of relations with Iran. I would not want to set out those conditions prematurely; we will have to consider the matter over time.

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

Yesterday’s dreadful events have attracted a proportionate and measured response from the British Government. In respect of seeking to maintain a dialogue with the Iranians, does my right hon. Friend agree that that dialogue should extend to all arms of Government and all shades of opinion within the governmental structures of Iran?

[Mr Hague]

In common with several other right hon. and hon. Members, my hon. Friend is right to draw attention to the fact that there are different shades of opinion even within the regime in Iran—of course, there are many more outside the regime. I believe, for instance, that the motives and concerns of the Iranian Foreign Ministry may have been quite different, yesterday, from the motives of other parts of the regime. We have to be conscious of that and, in our contacts with Iran, bear in mind that wide diversity of opinion.

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

Will my right hon. Friend clarify the initial part of his statement? Did I hear rightly that both north and south embassies were attacked simultaneously and that the attacks were possibly sponsored by the state?

[Mr Hague]

Yes. The militia organisation, the Basij, is well known to be regime-sponsored. It is unlikely, therefore, that such events take place spontaneously or through something just getting out of control. The fact that those attacks on our two embassy compounds were simultaneous is probably further evidence that they were intentional and premeditated.

[Neil Carmichael (Stroud) (Con)]

I welcome the Foreign Secretary’s statement and the resolute approach he has taken following such an outrageous development. May I ask him what measures he will take with the states neighbouring Iran to increase and enhance diplomacy?

[Mr Hague]

We are already engaged in that work. I mentioned the very intensive contact we have had with Turkey in the past 24 hours—nothing unusual in our case, but particularly intense yesterday—and with the Gulf states, many of which are deeply alarmed about the wider behaviour and intentions of Iran, quite apart from this incident. We shall continue and quite possibly step up our diplomatic engagement with all those countries about this most unfortunate turn of events.

[John Glen (Salisbury) (Con)]

Will my right hon. Friend say what contact he has had over the past 24 hours with his US counterpart and what actions, diplomatic or otherwise, the US is considering to support the UK Government’s position?

[Mr Hague]

We are of course in constant touch with the United States. Secretary Clinton and President Obama have issued very strong statements about this incident. The United States does not have an embassy in Tehran, but the Americans are strongly supportive of the action we are taking and will, of course, reflect that in their wider diplomacy around the globe.

[Michael Ellis (Northampton North) (Con)]

May I take the opportunity to commend my right hon. Friend the Foreign Secretary for the robust action that he has taken? It is clearly necessary in view of the hostile, belligerent, anti-Semitic regime in Tehran, which in many respects is clearly a force for evil around the world. I also take this opportunity to commend the sangfroid of the British ambassador in Tehran, who is clearly following in the finest traditions of the diplomatic service. Is there an option for compensation, which I understand the British Government could, under the Vienna protocol, insist on for damage done to its property, which was supposedly under the protection of the Iranian Government?

[Mr Hague]

I am grateful to my hon. Friend for his support. His comments, like those of many other Members, demonstrate the high regard of all parties in the House for the conduct of our diplomats, in particular our ambassador and our chargé d’affaires, both of whom did extremely well. We have already put the question of compensation and the financial liability of the Iranian Government to the Iranian chargé d’affaires, and we shall continue to pursue the matter.

[Mr Philip Hollobone (Kettering) (Con)]

In my right hon. Friend’s view, is the Government-inspired assault on the British embassy in Tehran indicative of the weakness or the strength of the internal political leadership in Iran?

[Mr Hague]

My hon. Friend asks a very pertinent and relevant question. Other hon. Members have asked about the increased general repression in Iran in recent months. To the extent that this incident is part of that, I think it is an indication of the weakness of the regime and its fear of local opinion, as well as of international opinion. It should certainly be seen as weakness rather than strength.

Points of Order

Wednesday 30th November 2011 Commons Chamber

14:23

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

On a point of order, Mr Speaker. I am sure that hon. Members on both sides of the House appreciated the almost unprecedented opportunity you gave them yesterday to interrogate a senior Cabinet Minister, the Chancellor of the Exchequer, at considerable length. May I ask whether that innovation is a practice that is likely to recur with any regularity?

[Mr Speaker]

I am grateful to the hon. Gentleman for his point of order. Each case is, of course, considered on its merits, but what I would say to him and to the House is twofold. First, I am always keen to ensure that as many Back-Bench Members as possible should have the opportunity to question Ministers of the Crown. Secondly, as the House will be conscious, I am insistent that statements of policy should first be made to the House of Commons, not outside it. There have been notable breaches of that established protocol and they are a source of concern. To the hon. Gentleman I say explicitly that yesterday I was particularly keen to ensure a full airing of the issues, not least because I wished to hear whether the Chancellor of the Exchequer had anything to say in the Chamber that he had not already said in the media. I hope that that response to his point of order satisfies the hon. Gentleman’s curiosity.

[Mr John Spellar (Warley) (Lab)]

On a point of order, Mr Speaker. Yesterday, you said:

“All hon. Members, including Ministers, are responsible for the content and accuracy of the statements they make to the House. If an error has been made it is the responsibility of the Member who made it to correct it.”—[Official Report, 29 November 2011; Vol. 536, c. 848.]

On Monday, the hon. Member for Shrewsbury and Atcham (Daniel Kawczynski) said, reported at column 709 of Hansard,

“The shadow Foreign Secretary did not mention Libya once in this whole conversation, and one wonders why”.—[Official Report, 29 November 2011; Vol. 536, c. 709.]

Yet my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander) had clearly dealt with Libya, as reported at column 695. Yesterday, I drew that to the hon. Gentleman’s attention, hoping that he would have the courtesy to apologise for inadvertently misleading the House and to set the record straight. I cannot see that he did so in yesterday’s Hansard. Has he indicated to you that he intends to do so today, Mr Speaker? If he has not, how can we ensure that the correct position is placed on the record?

[Mr Speaker]

I have had no such indication from the hon. Member for Shrewsbury and Atcham. When the right hon. Gentleman asks by what means he can secure redress, I think that he has found his own salvation, courtesy of his point of order. Although I am certainly not going to instruct anybody to come to the House—Members must take responsibility for what they do—there is nothing wrong with apologies from time to time. They are on the whole good for the soul, I think.

[Richard Graham (Gloucester) (Con)]

On a point of order, Mr Speaker. During questions on the statement from my right hon. Friend the Minister for the Cabinet Office and Paymaster General, the hon. Member for Derby North (Chris Williamson) accused this Government and my party of being anti-public service. Given the number of Members on this side of the House who have served our country, for example in schools, hospitals, embassies and all three armed forces, may I ask you whether his comment was in order or should be withdrawn?

[Mr Speaker]

I was indulgent to the hon. Member for Gloucester (Richard Graham) because I wished to listen to his mellifluous tone, but I have to tell him that nothing disorderly took place, and what he has just put to me—I say this in the most courteous possible way—constitutes not a point of order, but a point of outrage. We will leave it there for today.

[Hugh Bayley (York Central) (Lab)]

It is many years since I raised a point of order, Mr Speaker, but further to the point of order raised by the hon. Member for New Forest East (Dr Lewis), may I say that one of the primary purposes of Parliament is to hold the Executive to account? I as a Back Bencher and, I believe, many Back Benchers on both sides of the House greatly value the opportunity to question Ministers on their statements. Had you not allowed the questioning to continue until after 3 o’clock yesterday, I would not have been called. I am incredibly grateful to you for allowing so many Back Benchers to put the points they wanted to put to the Government.

[Mr Speaker]

I thank the hon. Gentleman. The fact that there is a glow of contentment on his face warms the cockles of my heart. I think we should probably quit while we are ahead and move on.

Hairdressers Registration (Amendment)

Wednesday 30th November 2011 Commons Chamber

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

14:28

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

I beg to move,

That leave be given to bring in a Bill to amend the Hairdressers (Registration) Act 1964 to provide for the mandatory registration of hairdressers with the Hairdressing Council; to empower the Hairdressing Council to issue and charge for licences to hairdressers holding certain qualifications; to provide for the removal of names from the register by the Hairdressing Council on the recommendation of its investigating and disciplinary committees; to introduce a scale of fines payable by those without a licence charging for hairdressing services; and for connected purposes.

It is a privilege to address the House on what I believe is a very important measure. This proposed amendment to the Hairdressers (Registration) Act 1964 is supported by the whole hairdressing industry and has attracted huge media interest. As hon. Members have probably seen in the newspapers—tabloid and broadsheet—the Bill has captured the imagination. Believe it or not, any one of us in the House, and indeed anyone outside it, could set up a hairdressing business tomorrow, practise as a hairdresser, and charge money for doing so.

As has been revealed in the newspapers, especially during recent weeks, hairdressers can use products that are very corrosive and dangerous and which, in some instances, can cause death. Unfortunately that has been happening for many years, and indeed it has happened during the past four weeks. Last night I met a lady to whom, thankfully, it had not happened, but she had had her hair straightened and dyed on the same day, which had caused burns to her scalp, made her hair snap off, and caused her face to puff up to twice its normal size. The poor girl, who was getting married in a week, had to get married a week later.

As I have said, the whole industry backs my Bill. There have been some quips in the media, and from certain Members of Parliament, but I want this to be an apolitical issue, and I have received much support from Members on both sides of the House. However, I ask every Member to bear in mind that the hairdressing industry in his or her constituency employs some 2,500 people who rely on that industry for their living. It puts £5 billion into the economy each year, and the amendment that I propose is supported by the Hair and Beauty Industry Authority, City and Guilds, the Freelance Hair and Beauty Federation, the Hairdressing and Beauty Suppliers Association, the Fellowship for British Hairdressing, and the National Hairdressers’ Federation, to name but a few.

Let me make clear that if there is a Division today, it will not be more of a division than a parting. [Hon. Members: “Oh!”] I had to get that one in before anyone else did.

Here are the facts. The 1964 Act came into being during the dying days of the Douglas-Home Government and has not been updated for nearly 50 years, although times have changed for the hairdressing industry. The Act set out a framework for education which governed my generation and which is now more or less standard—it is necessary to gain national vocational or, in my case, City and Guilds qualifications—but the Act has never been given teeth.

As I said, my former industry has a turnover of £5 billion. It has been established that 245,000 people—1% of the United Kingdom’s working population—work in the industry at NVQ level 3 or above. There are 34,000 salons out there, and 50% of women have their hair coloured, as well as a number of men. I am sure that some Members who are present would attest to that.

The Bill is vital because, first and foremost, it would remove from the industry unqualified individuals who harm people. When someone goes to a hairdresser, they want to know that the person working on their hair is not just qualified but experienced in using products which, as I said at the outset, can cause serious damage and often do. I was a hairdresser for 28 years before I entered the House. I was known in my time as Mr Fixit, and believe me, I encountered some horror stories. Women came into my salon with their hair dyed sky-blue pink—if, that is, it was still on their heads. One can imagine the psychological impact that that can have.

When I toured the hairdressing colleges in the north of England, one lady said to me “Everyone uses the NHS—people know where to go when something goes wrong medically—but those who have a psychological problem because their hair has turned a funny colour, has snapped off or has been burnt, and who have thus effectively been assaulted, do not know where to go.” There is no registration to enable disciplinary procedures to be carried out, and to point people in the direction of those who can ensure that their hair is sorted out. The Association of Personal Injury Lawyers supports the Bill, not only because it will help to professionalise the industry but because it will cut out frivolous litigation.

It was good to see Members in all parts of the House attending the reception that I held here yesterday. It was a wholly apolitical occasion, and it was amazing to hear of the problems experienced by Members as well as staff. Some people who talked to me had been in the hairdressing industry themselves, and were able to tell good stories as well as bad.

We already have a charter in the form of the 1964 Act, but, although it contains some good legislation, it is defunct for today’s purposes. I want the Hairdressing Council to have mandatory powers to require state registration. I want the 6,500 hairdressers who have registered voluntarily, and who are very professional, to become 250,000. That would professionalise the industry. It took me five years to learn my craft, which is comparable to the time that it takes to qualify as a solicitor. I went on to study trichology for a further two years, which is comparable to the time taken to qualify as a vet or any other member of the medical profession. I believe that the hairdressing profession should be given more accolades and should be turned from an industry or vocation into a profession, because that is what it deserves. [Hon. Members: “Hear, hear.” ] I thank hon. Members for that.

Perhaps this will be my legacy to the profession that I joined, but let me stress that this is not about David Morris trying to introduce legislation for his old industry. I think it fair to say that I am the only hairdresser in the House—indeed, the only hairdresser ever to reach the House—so I can speak with authority about my former trade, or profession, but my point is this. It is now 2011; may we please give the Hairdressing Council full powers to keep a register of hairdressers who are professional, and to strike off those who are negligent?

14:37

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

I oppose the motion because I consider the status quo to be entirely appropriate. I will not detain the House for long, because my arguments are fairly straightforward.

First, I believe that the Bill would place an unnecessary burden on hairdressers, and I do not believe that there is any demand for it. I can honestly say that I have not received a single inquiry about this since my election, and that not once during the many years for which I campaigned to win a seat in Parliament did a single person raise the issue of hairdressing regulation. I think that the last thing British business needs at present is yet more rules and regulations. We do not want to criminalise hairdressers for simply not having a licence.

No doubt the proposed office for hairdressing regulation will soon become known as Ofcut. What we have not heard is what the cost of a licence from Ofcut would be, but I do know that it would mean either reduced profits for hairdressers or, more likely, increased costs for those who wished to use a hairdresser.

I see no reason why the present situation cannot continue. Most people are quite capable of asking around and finding out who is the best hairdresser in the locality. It is, of course, currently possible for hairdressers to register voluntarily with the Hairdressing Council, and to display their City and Guilds and NVQ certificates on the wall so that potential clients can see what level of expertise they possess. Of course, there have been tragic cases in which treatments and hairdressing processes have gone wrong, but I would venture to submit that even if all this new regulation were introduced, such mistakes would still be made. We have only to look around other regulated professions to see that that is the case. I was formerly in the legal profession. Solicitors are highly regulated but, as we all know, many people have suffered either financial or other loss as a result of difficulties with solicitors.

The mere fact that some form of regulation is introduced will not rid the country of the problems that my hon. Friend the Member for Morecambe and Lunesdale (David Morris) described. If problems do occur at the hairdresser’s, anyone has redress through the criminal justice system. I believe that what we need is self-regulation and not state regulation, which is why I oppose the motion.

Question put (Standing Order No. 23).

14:41

Division 405

Ayes: 63

---

Labour: 30
Conservative: 22
Liberal Democrat: 10

Noes: 67

---

Conservative: 41
Liberal Democrat: 9
Labour: 7
Democratic Unionist Party: 5
Scottish National Party: 2
Social Democratic & Labour Party: 2
Independent: 1
Alliance: 1

Opposition Day

Wednesday 30th November 2011 Commons Chamber

[Un-allotted Day]

Living Standards

Wednesday 30th November 2011 Commons Chamber

14:52

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I beg to move,

That this House believes that the Government is out of touch and does not understand the impact of its policies, including the Autumn Statement, on children, parents, women and hard-working families; and further believes that these policies have resulted in a squeeze on households’ living standards.

I speak for many in the House when I say that I feel a debt to the hon. Member for Morecambe and Lunesdale (David Morris) for his bringing his 10-minute Bill before the House. I had no idea that it was so dangerous to go into a hairdresser’s, and I certainly will not return to one until his Bill becomes law. I do not know if I can speak for the Secretary of State for Work and Pensions too, but it is good to start debates on a note of consensus.

The verdict is now in. It is time to put all the excuses of the past few months—the snow, the cold, the royal wedding, the Japanese earthquake—to one side. We now see the true extent to which the Chancellor has drained the life out of the economy and its recovery. The Government are fundamentally failing to get our economy back on the move, and they demand of working people, parents and children that they should pay the price of the Government’s economic failure.

Yesterday, the Chancellor could no longer hide behind excuses. The Office for Budget Responsibility laid out the truth. Families, pensioners and businesses across the country have known for some time that his plan is hurting, but yesterday they found out that it is not working.

[Stuart Andrew (Pudsey) (Con)]

rose—

[Claire Perry (Devizes) (Con)]

rose—

[Mr Byrne]

I will give way in a moment.

The Government are now set to put on the national credit card £158 billion more than they planned a year ago—£6,500 for every house in this country. Why? It is because they are planning to put on the dole another 250,000 people over the next year or two. They are bringing down the number of people in jobs by 300,000, and they have put up the benefits bill—that sign of welfare waste—by an incredible £29 billion over the forecast period.

Once upon a time, the Chancellor told us that we were all in this together. Not any more—it is back to the economics of, “You are on your own.”

[Claire Perry]

rose—

[Sajid Javid (Bromsgrove) (Con)]

rose—

[Mr Byrne]

I will give way in a moment. There are not too many speakers on the Treasury Bench today, so there will be plenty of time for interventions.

Let us consider what the Chancellor’s proposals mean for jobs. The OBR now predicts that unemployment will rise next year, and unemployment forecasts for the years ahead are up year after year until 2015. The Government say that there is no alternative, because they still believe that unemployment is a price worth paying. Unemployment is bad this year, but it will be worse in the years ahead: the OBR said yesterday that it will rise up to 8.7%, while youth unemployment already stands at over 1 million. The brutal price that our young people are paying for the Government’s failure to get people back to work is now clear to hon. Members across the House. Those young people will be at the sharp end of rising unemployment in the years ahead. I will give way to the hon. Member for Devizes (Claire Perry), who will perhaps tell me how the Government can do more to get down youth unemployment in her constituency.

[Claire Perry]

Does the right hon. Gentleman think that the words, “There is no money,” were sufficient excuse, or is that actually a fact?

[Mr Byrne]

The Chancellor said yesterday that he is putting £158 billion more on the national credit card—£8 billion more borrowing than I and my right hon. Friend the Member for Edinburgh South West (Mr Darling) set out. The Government are set to borrow £37 billion more than we set out in the Budget before the election. The tragedy is that 7,700 people in the hon. Lady’s constituency will see their tax credits cut next year to pay for the failure of those on her Front Bench to get this country back to work.

[Several hon. Members]

rose—

[Mr Byrne]

I will give way in a moment.

There have been announcements in the past few days, not, sadly, from the Secretary of State for Work and Pensions, but from the Deputy Prime Minister, who announced the youth contract, which is set to be so successful that the OBR said yesterday that it cannot count on its getting any extra people into jobs. All that we have had this week from the Minister for unemployment is a decision to blame the figures—it is all down to the statistics, not his failure to get people back to work.

Long-term unemployment among young people is going through the roof—it is up 83% this year alone—but another jobs crisis is emerging up and down the country among our most experienced workers. Among the over-50s, long-term unemployment is more than 110,000—up 20% since the start of the year. People with experience to offer, who have worked hard and paid in all their lives, deserve better than to be thrown on the scrap heap.

[Charlie Elphicke (Dover) (Con)]

The right hon. Gentleman’s premise is that the Opposition would not have borrowed more money, but that is fundamentally false, as the reality is that they would have borrowed billions more to deal with the eurozone crisis. In addition, interest rates would have been higher, costing home owners more money on their mortgages.

[Mr Byrne]

I know that the hon. Gentleman takes these matters seriously, and that he will feel bad about the fact that 10,000 families in his constituency are seeing cuts to their tax credits to pay for the failure of his Front Bench to get people back to work. He is such an assiduous attender of these debates that he will know as well as I do that the OBR’s analysis of our last Budget showed that we were set to borrow £37 billion less than the Chancellor set out to the House yesterday. He should explain that to the 10,000 families in his constituency who are seeing a cut in tax credits.

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

The right hon. Gentleman is being generous, as ever, in giving way. I remind him, however, that there is obviously a split between him and the shadow Chief Secretary to the Treasury, because on yesterday’s BBC programme “The Daily Politics”, she was asked this specifically:

“If you had been writing the autumn statement, borrowing would have been higher? Yes or no.”

Her answer was yes.

[Mr Byrne]

We do happen to believe that further action is needed to get people back to work, because we are now seeing the costs of the right hon. Gentleman’s Government over the past year and a half. We have now seen the Chancellor set out £158 billion of extra borrowing because he has drained the recovery of growth and put the benefits bill up over the course of this Parliament by £24 billion. That is the only part of his budget that is growing.

[Mr Dave Watts (St Helens North) (Lab)]

Does my right hon. Friend not find it strange that Government Members talk only about deficit? They do not talk about unemployment, poverty or growth. Do we not need a more balanced approach to the problem?

[Mr Byrne]

My hon. Friend is absolutely right—and that is why unemployment is set to spiral over the course of this Parliament, with £24 billion on the benefit bill, which means a £1,000 extra bill for every household in this country.

[Angie Bray (Ealing Central and Acton) (Con)]

As I have found before, the right hon. Gentleman does not like history. The fact is that a note was left saying, “There’s no money left,” and that had consequences. This country is living and breathing the consequences of how Labour managed the budget. We are in deficit, which is why we talk about it so often, and it is about time the Labour party recognised the consequences of the way in which it managed this country’s finances.

[Mr Byrne]

Perhaps the hon. Lady’s memory of history is suddenly faltering, because she should surely remember that in the Chancellor’s emergency Budget, borrowing turned out to be £20 billion less than my right hon. Friend the Member for Edinburgh South West projected when he was Chancellor. Unlike his, the Conservatives’ borrowing forecasts have come in £158 billion higher than originally projected. That means thousands of pounds more for every household in this country—and of course, the price of the consequences is being paid by the hon. Lady’s constituents. More than 7,000 families in her constituency are now seeing their tax credits cut to pay the higher bills of higher unemployment.

[Ms Karen Buck (Westminster North) (Lab)]

Can we turn from history to current affairs? One of the key messages from the Government was that they were going to make work pay. Following from my right hon. Friend’s argument about how additional spending is being generated because of the failure of their policies, would he comment on the fact that in-work benefits for working households, such as housing benefit for those in work, have risen by 42% since the general election, as 115,000 more households have been forced on to in-work benefits?

[Mr Byrne]

That underlines an extremely important point, and I hope that in the Secretary of State’s response he will say a little more about how he reconciles the “Budget” that we heard yesterday with his own honourable intention to ensure that work pays. Right now, in my constituency, I have working parents, especially women, coming to me and saying that they are now giving up work—because the Government are cutting benefits, meaning that it is no longer economic to work. Surely that cannot be right.

[Sammy Wilson (East Antrim) (DUP)]

Does the shadow Minister not find it strange that the Government argue that if we were to borrow to stimulate the economy the money markets would go mad and put up interest rates, yet the markets seem to have no problem in lending us money to pay for unemployment?

[Mr Byrne]

And this is a Government, of course, who have brought forward plans to borrow another £158 billion —a bill that, ultimately, will be paid by the rest of us. It is a bill for economic failure.

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

May I take the shadow Secretary of State back to the subject of youth unemployment? Doubtless the previous Government did some very good things in that area—they did some very bad things as well—but does he admit that the present situation was not created overnight? When Labour left office there was an upward trend in unemployment—[Interruption.] For youth unemployment, there was an upward trend from 2004. Does he accept that under Labour the number of children brought up in workless families hit record levels and the gap between the best performing and the worst performing schools widened? What he is saying is political knockabout, but this is a long-term issue, which deserves to be treated seriously.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Interventions are getting longer, and a lot of Members wish to speak. Please let us not use up the time on interventions.

[Mr Byrne]

I am afraid that the hon. Gentleman is simply wrong. Youth unemployment was coming down before the election; it has now gone through the roof, since his party took office. It is now up through the 1 million mark for the first time. Long-term youth unemployment in this country is up 83% since the start of the year. He would surely admit that that is a badge of shame for this Government, and demands much more urgent action from them.

[George Freeman (Mid Norfolk) (Con)]

rose—

[Mr Byrne]

I will give way to the hon. Gentleman, and then I will make a bit more progress.

[George Freeman]

Does the Opposition spokesman agree that his authority to talk about this subject would be heightened if it were not for the fact that during the previous 10 years, before his party lost office, youth unemployment rose to a quarter of a million—and that was during a boom? His authority to talk about this is hugely reduced by that track record.

[Mr Byrne]

Youth unemployment came down to record lows under the Labour Government. It was coming down before the election, because we chose to act. Now the key back-to-work scheme for young people has been taken off the shelf for the past year and a half. What is the result? Youth unemployment in the hon. Gentleman’s constituency is going up. He should explain that to young people in his constituency, and he should apologise to them. The back-to-work scheme set out by the Deputy Prime Minister last week is not even planned to come into place until next April. That shows how much his party cares about getting young people back to work.

[Sajid Javid]

rose—

[Mr John Redwood (Wokingham) (Con)]

rose—

[Mr Byrne]

I shall give way in a moment.

The weakness in the jobs market is not abstract; it shows up in people’s pay packets. That is exactly what the Office for Budget Responsibility confirmed yesterday. Earnings, it says, are now set to fall throughout the rest of this Parliament. By 2016 wages will be no higher than they were in 2001—£1,400 below their pre-crash peak—yet prices are not falling; they are rising. Prices are going up over the course of this Parliament. Wages are falling and prices are rising. That double whammy is now hurting families all over this country.

Not long ago, the Governor of the Bank of England said that we in this country now confront the worst squeeze on living standards since the 1920s. Yesterday, the Institute for Fiscal Studies said that the squeeze was “unprecedented”. This is the biggest fall in household income since records began. With our nation’s family budgets under such pressure, we would have thought that the Government would step in to help. Not a bit of it. Instead, working families are being asked to pick up the pieces.

[Mr Redwood]

The right hon. Gentleman is making a very important point—that a big squeeze on living standards started under his party’s Government. It is continuing under the coalition. As the forecasts make clear, a big element in that is energy and fuel prices. Does he have any proposals that the Government could adopt to tackle that problem?

[Mr Byrne]

We do think that Government should be doing more in the energy market to help to bring down prices. The right hon. Gentleman will, I know, feel strongly about that, because of the 6,500 families in his constituency who are now seeing cuts in tax credits.

When wages are falling and prices are rising, people would expect the Government to do more to help, but what we now have is a budget set out yesterday that tightens the squeeze on working families. Last Friday the Deputy Prime Minister blustered his way through an interview on the radio and said, once again:

“We will not balance the books…on the backs of the poorest”.

That is an old line, and today it rings pretty hollow, because that is exactly what the Government are doing.

Yesterday, the Government rejected any new tax on bankers’ bonuses. Instead, it is children, women and working parents who are picking up the tab for the Government’s failure to get people back to work.

[Bill Esterson (Sefton Central) (Lab)]

My right hon. Friend is making the case extremely well about the unfairness of what the Government announced in the autumn statement about targeting those on lower and middle incomes instead of targeting the bankers and the bonuses—a move that was successful under Labour and should be repeated by the present Government. He was asked about prices, and I am sure that he will soon say something about cutting VAT as an effective way of helping hard-pressed families through reduced prices.

[Mr Byrne]

I will indeed come on to that topic in a moment, but I first want to talk about the impact on children of yesterday’s Budget. We knew before yesterday’s Budget that all the gains made in reducing child poverty over the last decade were set to be wiped out by the decisions of just the last year. Once upon a time the Prime Minister told us he would not increase child poverty. That was the rhetoric, but today the Institute for Fiscal Studies has given us the reality. It has already said that almost one in four children will be in poverty by the end of the decade, thanks to this Government. That was before the attack on working families in yesterday’s Budget. A generation of children will not thank this Government because hundreds of thousands more of them are now destined to grow up poor.

Then we had yesterday’s Budget, reversing any improvement in child tax credit for the poorest, and robbing 5.5 million families of £110 per child. There will now be 13 cuts to children’s benefits beginning in March, which next year will take out £2.5 billion in benefits for children. That is almost eight times the level of benefit cuts this year. Almost £12 billion is coming out of children’s benefits over the course of this Parliament; that is £1.5 billion more than is coming off our nation’s bankers. I therefore have to ask this question: what kind of Government take more off children than they take off bankers?

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

rose—

[Mr Byrne]

Perhaps the hon. Gentleman would like to answer that question?

[Nick de Bois]

Does the right hon. Gentleman not recall that in his Government’s 13 years in office between 1997 and 2010 they increased personal tax allowances by only £2,400, whereas in only 18 months we have increased people’s earnings by raising those allowances by £1,800, and we will go further by the end of this Parliament by raising the figure to £10,000? Is that not a major contribution to addressing lower pay?

[Mr Byrne]

No, because what comes with that is the biggest raid ever on the benefits of children and families. Let us consider the bill that will be paid by families under yesterday’s announcements. An average family on the minimum wage with two kids will lose £320 a year as a result of the changes made yesterday. They would only ever gain £120 a year through the increases in tax thresholds to which the hon. Gentleman referred. Overwhelmingly, poorer families and children in this country are now getting poorer as a result of his Government’s Budget.

No wonder Save the Children said yesterday:

“For many families the scrapped £110 increase in Child Tax Credit could mean the difference between putting food on the table for their children or having them go hungry.”

The Child Poverty Action Group said:

“Britain’s poorest families have been abandoned today and left to face the worst…the government has actively decided to let child poverty rise.”

Those on the Treasury Bench should be ashamed of themselves; they should be ashamed of what they have done to children in this country. Labour will be the party that stands up for a fair deal for working parents.

The scale of the cuts to children’s benefits is not the only story. There is more. Let us consider the cuts to working tax credits for working families. Working families are already in line for seven big cuts to their tax credits next year. That was going to lose them more than £1.7 billion, but that was not enough for the Chancellor, so yesterday they got an eighth cut to their working tax credits. They will now lose almost £2 billion next year. That is almost double the cuts they received last year.

Some 2 million families in our country now face a double hit, with the cuts to child tax credits and the freezing of the working tax credit. There is therefore a great deal of extra squeeze that will hit working families, but I want to flag up one cut in particular. It is the subject of a Westminster Hall debate secured by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), and I want the Secretary of State to reflect on it further, as I think it will have consequences that he would not intend. One of the changes he will make next year is to increase the number of hours a working couple must work in order to get tax credits. At present, they can qualify for tax credits if they work 16 hours a week. From next April, they will need to work 24 hours a week. At present, however, companies are not handing out extra shifts. Many families that will be affected work in the retail sector. If anything, big retailers are cutting back on their employees’ hours, not increasing them. A family that is on the minimum wage for 16 hours a week might bring in just over £5,000. Working tax credits and child tax credit might increase their take-home pay to about £11,000. If they cannot get an extra shift, all of that working tax credit will be gone. Those families may well find themselves better off on jobseeker’s allowance.

We must not create a situation in which cuts to tax credits mean families are better off on benefits than in work. I am sure that is not the Secretary of State’s intention, and I urge him to look at this matter in more detail before those cuts bite in April next year.

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

I am trying to follow the right hon. Gentleman’s reasoning. I think he has argued so far that people out of work should not face cuts and that people in work should not face cuts, so who should?

[Mr Byrne]

The Pensions Minister—[Interruption.] Government Front-Bench Members might think cuts to working families are funny, but I can tell them that families in their constituencies do not.

[Claire Perry]

rose—

[Mr Byrne]

The Pensions Minister should reflect on the following point. When we add together the cuts to children’s benefits and the cuts to families’ working tax credits, the total is £20 billion over the course of this Parliament. That is twice the amount of money his party is taking off the country’s bankers. Surely he would reflect on the wisdom of taking more off children and working parents than off bankers? I think he should reflect on that further.

[Claire Perry]

Will the right hon. Gentleman give way?

[Sajid Javid]

Will the right hon. Gentleman give way?

[Mr Byrne]

I shall give way to the hon. Gentleman, as I have given way to the hon. Lady before.

[Sajid Javid]

I thank the right hon. Gentleman for giving way. When he left office, why did he leave a note saying there was no money left?

[Mr Byrne]

It takes some audacity for a Member on the Government Benches to stand up after a Budget that has added £158 billion to the nation’s credit card and throw cheap jibes across the Chamber.

[Claire Perry]

rose—

[Mr Byrne]

The hon. Gentleman should explain to his constituents how £6,500 for every household in his constituency has been added to the nation’s credit card. [Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Member for Devizes (Claire Perry) is pushing her luck today. She has already intervened, and I do not mind her rising to seek to do so again, but continually to stand up and barrack is not the way forward. She has a great future in this House, and I am sure she wants to protect it.

[Mr Byrne]

Finally, I want to talk about the impact on women of these Budget changes. The shadow Home Secretary, my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), will say more on this in her winding-up speech. She has already set out with clarity and force how the Budget changes made by this Government have, overwhelmingly, hit women harder than men. I would just highlight to Members, and especially those on the Treasury Bench, the comment made yesterday by the hon. Member for Calder Valley (Craig Whittaker). He put it very simply when he said that of course women are paying the price most. At least someone on the Government Benches has the honesty to tell it straight. He was right: women are being hit hardest by these Budget changes, not least through the changes to child care. Some 30,000 women in this country have had to give up work in the last year because they can no longer afford the child care. That is £50 million in lost tax to the Exchequer. What a shambles.

The tragedy in this debate is that there is a different way. We have set out a different way of jump-starting growth and getting people back into work. Yes, it does start with a tax—a fair and sensible tax—on bankers’ bonuses to help get 100,000 young people back to work. What have this Government proposed instead? They have proposed a fund of about one third of the size, paid for not by those with blessings to share, but by children and families who are already feeling the squeeze. That decision alone tells us everything we need to know about who this Government stand for. That decision alone tells us how out of touch this Government have now become, and it is for that decision if no other that I say this House should support our motion.

15:19

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

I am tempted to ask, “Is that it?”, but perhaps I will not.

Yesterday, the Office for Budget Responsibility published its forecasts for the UK economy over the coming years, which painted a very difficult picture: Britain is expected to grow this year by 0.9% and next year by 0.7%; growth is forecast at 2.1% in 2013, 2.7% in 2014, 3% in 2015 and 3% again in 2016. The OBR showed that in 2009-10 borrowing was £156 billion a year. Last year, that fell to £137 billion. This year, the OBR expects it to fall again to £127 billion.

The OBR did not just publish forecasts. It did us a favour, because it looked back and reopened the books on the era of the previous Government, and an important factor emerged. It told us that an even bigger component of the growth that preceded the financial crisis was part of an unsustainable boom, and that the bust was deeper and had an even greater impact on our economy than previously thought, meaning that the effects will last even longer. It said:

“The peak-to-trough fall in output over the recession is now estimated to have been greater than previously thought at 7.1% rather than 6.4%”

That is a huge change to the figures. It found that from near the end of 2010 we were taking a serious hit from rising global food and energy prices.

I want to add a further quotation from the OBR as these matters form the baselines of our debate today:

“Most of the weakness can be explained by an external inflation shock”.

Its third point is that the eurozone crisis is

“likely to have contributed to weaker UK growth and business and consumer confidence.”

[Mr Watts]

What credibility will the public attach to the forecasts of the right hon. Gentleman and his advisers when despite every forecast they have made, the deficit and unemployment have gone up and growth has gone down?

[Mr Duncan Smith]

I hope they will attach no credibility if they were our forecasts. We set up the OBR—an independent body that Opposition Members accepted—and its forecasts are about as good as we shall get, so we should give it credibility for at least trying to get the forecasts right. That is a damn sight better than the past 12 years of gerrymandered Treasury figures, not one of which had any credibility.

[Sheila Gilmore (Edinburgh East) (Lab)]

The Secretary of State quotes from the OBR, so he might like to add that it stated that we came out of recession quicker and that growth had increased by the first part of 2010. The OBR made its predictions before the autumn statement. Last year, it made its predictions before the statement. Its predictions were wrong, because the Government’s policies were wrong. Its dire predictions this year were made before this new set of policies.

[Mr Duncan Smith]

I am grateful for the intervention, as it allows me to remind the hon. Lady that in looking back at the period in the run-up to and start of the recession the OBR said the depth of boom and bust was greater than was anticipated—by more than 1%. The baseline from which we started, therefore, was much lower, which means, as is seen by the Treasury, that the amount we would have had to borrow would have been more than £100 billion if we had not taken our decisions early on. Labour Members’ posturing about their own position is fundamentally incorrect, and they must recognise that.

The OBR said that the eurozone crisis is

“likely to have contributed to weaker UK growth and business and consumer confidence.”

I know that Labour Members do not like to hear that that is an issue, but it is seen by everybody, not least of which the OBR.

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

We all welcomed the establishment of the OBR because of the independence it gives. The full quotation from the OBR states that

“an external inflation shock constraining real household consumption”

is the reason for the revision in growth forecasts. How does the Secretary of State think that bearing down further on family incomes will help our economy to grow again?

[Mr Duncan Smith]

The reality, as the OBR and the Institute for Fiscal Studies make very clear, is that you cannot borrow your way out of a debt crisis. I know that Opposition Members are indulging in voodoo economics—a fake religion—but almost every economist abroad and at home says that you cannot borrow your way out of a debt crisis.

[Charlie Elphicke]

I was just looking at Labour’s five points for growth, which would cost a lot, would require us to borrow from the markets, and would drive up mortgage rates for hard-pressed home owners. Would that not be irresponsible and reckless?

[Mr Duncan Smith]

The answer, very simply, is that, yes, it would be.

Yesterday, there was much jeering about the issue of Europe. The Opposition say one thing one day, move on and then say another. I remind the shadow Chancellor, who is not here today, of something he said in July:

“We need to face up to today’s problems. When you see Italian and Spanish bond spreads you can see the situation is incredibly dangerous”—

and that came from a man who yesterday said that we cannot blame anything on the European crisis. That is absurd, and the Opposition must get their act together over the reasons we are where we are.

[Bill Esterson]

rose—

[Mr Duncan Smith]

I want to make a little progress, but then I will give way.

Whatever we say, in government or in opposition, I fancy that were the previous Chancellor in office he would be saying many of the things that my right hon. Friend the Chancellor said yesterday, because once in government people become strangely rational, and that leads to difficult choices. We can play party games, but I want to run through some of the choices we have had to make. We had to choose whether to invest more in supporting young people, and we chose to invest in the youth contract—about £1 billion over the next three years. That was an absolute priority for us, so we had to tighten two or three other areas to enable us to provide that support. These are tough choices. If we had a pot of money to raid, yes, we might have raided it, but there is none, as the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) reminded us on leaving office.

Unemployment is therefore a huge challenge for us—it is why we set up the Work programme. None the less, the OBR estimates that private sector employment will rise by 1.7 million by 2016, largely offsetting the forecast reduction in public sector employment.

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

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

I will give way in a moment. I promised I would give way to the hon. Member for Sefton Central (Bill Esterson), too.

The growth plan proposes £6.3 billion of additional infrastructure, £1 billion for new regulated industries and moves, with the Association of British Insurers, to target a further £20 billion of extra investment.

[Bill Esterson]

I wonder whether the right hon. Gentleman believes in fairness. I expect he will say he does. If so, why do the Government’s policies target low income families much more than those at the top?

[Mr Duncan Smith]

I do not agree with the hon. Gentleman. I am talking about choices. I remember a great deal of debate, even in the Select Committee, about whether the working-age unemployed would see their benefits reduced. Everybody said it would happen; newspapers predicted it. In fact, my right hon. Friend the Chancellor has stuck to increasing them by CPI at 5.2%—just one good example of making a choice about who would be affected most direly by any change or any reduction. That was a bold choice and one on which we should congratulate him.

[Mr Byrne]

I am grateful to the Secretary of State and I am following his argument closely. Further to the intervention from my hon. Friend, the right hon. Gentleman will no doubt have seen the analysis from the Institute for Fiscal Studies this morning. If it is true that the Government are not hitting the poorest families harder, why has the IFS said that for 2012-13 the poorest three deciles in this country are being hit three times harder than the overall average?

[Mr Duncan Smith]

According to the findings of the IFS and of the Treasury, the top decile pays a huge amount more in relative terms than anybody else. [Interruption]. Hon. Members should listen. Taking account of uprating, about 80% of households with children will see their tax credit awards rise at least in line with earnings next year. Members can pluck little bits out, but when they average it across, they will see that there have been some choices.

I am quite prepared to recognise that the pressure on the bottom deciles will always be tougher and harder because of where they spend their money. That is not the issue. The issue is, within the bounds of what we could afford, what were we trying to protect? The decisions we took and the changes we made, which I will come to in a moment, mean that we have protected the most vulnerable as well as we could and better than the Opposition would have done, had they been in power.

[Mr Byrne]

I am grateful to the Secretary of State. He is being most generous. The IFS was pretty clear this morning. It said that the richest decile would see an impact of just over 0.5%. The poorest decile would see an impact of minus 1.6%. So it is clear that the poorer families in this country are being hit much, much harder than the richer ones.

[Mr Duncan Smith]

I am sorry, those are not the figures that I have. The figures on the chart that I am looking at show that the richest decile has a greater proportion of its income taken, even in relative terms. Yes, I accept that, relatively, those in the bottom three deciles do quite badly in many senses, but the right hon. Gentleman should look at the Treasury figures, which show that the wealthiest decile do worse than anybody else, in absolute and in relative terms.

[Several hon. Members]

rose—

[Mr Duncan Smith]

I am going to move on.

The commitments made by the Chancellor in the previous Budget have to be taken into consideration, along with the ones that I have mentioned. The new offer on child care comes on top of our expansion of free nursery education for all three and four-year-olds. We are already set on a path of far-reaching reform in our welfare system, getting work incentives back in order and delivering a system that people finally understand. We will do this through the universal credit, which will in two years rebalance any of the out-of-work incentives that got out of balance, so that work pays.

The Opposition had 13 years to make the kind of changes that we are making. We have already got them under way. They will take about 350,000 children and more than 500,000 adults out of poverty. Some £7.2 billion has been invested in the fairness premium, including the pupil premium, to support the poorest in the early years and at every stage in their education. We have invested in 4,200 new health visitors.

Almost none of those changes is taken into consideration in the rather narrow way of measuring who is in poverty and who is not in poverty, particularly child poverty. This is an important point. I spoke earlier about the money and the effort that we are putting in for the poorest. The wide range of steps that we have taken is, on balance, positive. None of those has been taken into account because it is not possible at this stage to calculate the effect, but I want to do that and we ought to do so.

[Several hon. Members]

rose—

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

The right hon. Gentleman’s heart is in the right place, but his head is in the clouds. We can argue over definitions and data, but let me read to him the response of the chief executive of Citizens Advice, who says:

“The Chancellor has broken the promise he made in last year’s Budget to protect families on the lowest incomes from the impact of last year’s harsh cuts by increasing child tax credits above inflation, leaving them now with no protection at all… Make no mistake, this—

yesterday’s announcements—

“means children in the poorest homes are at risk of going cold and hungry to pay for the new schemes the Chancellor has announced today”.

Why do the poorest in society have to pay for the schemes that were announced yesterday? The right hon. Gentleman’s heart is in the right place, but he has not thought this through.

[Mr Duncan Smith]

It is not just the poorest who are paying. Everyone will have to bear a proportion, because everybody is going to pay for this. Yesterday the Opposition claimed that the shocks that caused inflation are not relevant, yet today they stand there and tell us that it is all down to inflation. They need to make up their minds which case they want to mount first.

[Mr Redwood]

Will my right hon. Friend confirm that it is his strong intention always to make sure that it is worth while working, and will he bring us up to date on the progress and timetable on that?

[Mr Duncan Smith]

I will indeed. The point I was making was that, as the universal credit comes forward in the next two years, it will do huge amounts to ensure that the incentives to return to work are improved. Secondly—and this relates to complaints from Opposition Members about the tax credit—it will reset the baseline so that those incentives will be increased and improved. Had we remained in the same position as the previous Government with their tax credits, there would be no way back for us now.

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

I am well aware that the Secretary of State has great hopes for the universal credit to incentivise people into paid employment, but does he accept that the cumulative effect of last year’s Budget and spending review, this year’s Budget and yesterday’s statement is that the incentives to work for low-paid employees have been worsened as a result of the reduction in support for child care costs through the tax credit, the cut in child benefit, the freezing of the lone parent and couples element of tax credits and the fact that it is all set against a rise in living costs that families cannot afford to meet?

[Mr Duncan Smith]

Seen over the whole period of this Parliament, and taking into account things such as lifting the tax allowances, the commitment of the coalition to lift them further before the end of the Parliament, and a whole variety of the points that I have already laid out, I do not agree with the hon. Lady. When Opposition Members look back, they will realise that the introduction of the universal credit will result in positive work incentives and we will get people back to work, as we are already doing.

I have already mentioned some of the things that have been introduced in the past year and a half, and yesterday the Chancellor also announced reforms to support working families which no Opposition Member has taken into consideration. We have deferred the fuel duty increase planned for January and cancelled the inflation increase planned for August 2012. The tax on petrol will be a full 10p lower than it would have been without our action in the Budget this autumn, and that means that families will save £144 on filling up the average family car by the end of next year. Fuel and the cost of driving are a very big driver of poverty and we are doing something about it. We are also regulating the rise in fares on national rail, the London tube and London buses, and we have already offered councils the resources for another year’s freeze in council tax, which I hope they all take up. Our plans to raise personal tax allowances will pull over 1 million people out of tax altogether, which is a big incentive for people to go back to work. When the Opposition complain about changes to working tax credits, they should remember their punitive decision to abolish the 10p starting rate of tax. They did not care what happened to the poorest in society.

[Neil Carmichael (Stroud) (Con)]

My right hon. Friend has mentioned the 900,000 people who are being lifted out of income tax altogether. Is that not a significant step in the right direction?

[Mr Duncan Smith]

I agree with my hon. Friend. The reality is that we are raising people out of tax, while what the Labour Government did by getting rid of the 10p starting rate was to drop more people into higher rates of tax. It was really dismissive, very regressive and attacked the poorest.

[John Howell (Henley) (Con)]

Is my right hon. Friend as surprised as I am that there has been little or no mention from the Opposition of the benefit to living standards that comes from keeping interest rates low?

[Mr Duncan Smith]

I was going to come on to that. Had interest rates gone up and had we been paying more for our borrowing, we would all—including those paying mortgages—be poorer.

This debate about living standards is important. Of course, those standards are very tight, and I make no bones about the challenge that we face, but let us not forget where we came from. Let me take the House back to 2007, when personal debt had rocketed to about £1.3 trillion and we had the highest structural deficit in the whole of the G7. That was before the recession began. That is a completely unsustainable picture, and it required very painful readjustment. As my colleagues know, the problem was that we entered the recession ill prepared for the consequences. When Labour Members ratcheted up spending by a massive degree, they simply postponed the inevitable. After all, the IFS forecast for the period 2008-2011 was that living standards would fall by 1.6%. This was a case of a fall in living standards postponed, with pain pushed on to future generations. People do not have to take my word for it—the IFS said:

“Much of the impact of the…recession on UK living standards was not felt until after the economy had stopped contracting, but that…pain was most definitely delayed rather than avoided”.

[Claire Perry]

Does my right hon. Friend agree that adopting the Opposition’s proposals would just delay that pain further for future generations, and that this debate would be irresponsible in the extreme if we did not think about the living standards of our children and grandchildren?

[Mr Duncan Smith]

My hon. Friend, not for the first time, hits the nail firmly on the head. The reality is—

[Several hon. Members]

rose—

[Mr Duncan Smith]

I will give way in a minute. [Interruption.] Relax—I will give way. The point is that there is a choice: we can either let this thing slide, with higher interest rates and all that goes with that, and let our children pick up the debt and the deficit, or we can deal with this ourselves and give our kids at least a fair chance.

Of course living standards are under a squeeze—we know that—but that is something we utterly regret. Nobody wants to stand here and say that that is the purpose of what we do—it is not—but it is part of what we are having to do, and we need to get living standards up again as fast as we can. The forecasts from the Office for Budget Responsibility show that that will be the case. If Labour Members were being realistic, they would accept that no matter who was in power, standing here, they would have to deal with exactly the same problem.

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

The Secretary of State and the hon. Member for Devizes (Claire Perry) talk about the children of the future, but I would like to bring their attention back to the children of today. Is the Secretary of State aware of recent Government figures that show that the number of children in need this past year has risen by 3,600, with squeezed living standards putting vulnerable families further at risk and pushing more cost on to the state?

[Mr Duncan Smith]

The children of today are also, more than likely, the children of the future, so we do not want to split hairs about this. Children are children, and as they become adults we do not want them to have to pick up the debt and the deficit that we leave behind. It is all about taking difficult decisions, being honest about what those decisions are, and recognising that if we do not take them now, we will have them forced on us by other people.

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

May I remind my right hon. Friend of the record of the previous Government, which included imposing a 100% rise in council tax on my constituents, upping the pension rate by a pathetic 75p for our old-age pensioners, and ratcheting up fuel prices? How did that help children and families across our country?

[Mr Duncan Smith]

I wish that we saw a little more realism from Labour Members in accepting that they were, in many senses, partly the architects of the difficulty that we are in.

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

I find it absolutely incomprehensible that the Secretary of State is able to discard the real pain that is now being suffered by children because of his Government’s bizarre choices based on the argument that they are going to become adults and will then have to pay further down the line. Is he really equating the possibility of a child losing its home, its school, its friends, its family, its support system, and watching its parents having to give up work because they cannot afford child care, with what is going to happen further down the road? That is bizarre.

[Mr Duncan Smith]

Of course, the hon. Lady would be right if that were what I was saying. What I am saying is quite simple: it is that our responsibility right now is to get the economy back in balance so that children do not have to pick up the debts. Let us remember that the deficit that we are dealing with is the pump that fuels the debt, and that debt is the legacy that we will leave them.

[Several hon. Members]

rose—

[Mr Duncan Smith]

Wait a minute—I am trying to answer the hon. Lady. She may not like the answer, but I want to finish it. The reality therefore is, yes, of course, but I think that we have done as much as we can to protect those who are in difficulty.

In answer to the hon. Lady, I should like to list a few things that we have done. Bearing in mind the changes we have made to taxation, more than half of those who will be lifted out of income tax will be women. We are investing an additional £300 million in child care support on top of the £2 billion already being spent. There will be 5,000 mentors to support women entrepreneurs and we are creating the women’s business council to advise Government. There will be up to £2 million to support women to set up and expand businesses in rural areas. We are improving child tax credits this April with a £180 real-terms permanent increase in the child element. Next April, there is an increase of 5.2% and a further £135. We are doubling the number of two-year-old kids who receive 15 hours of free education a week. There is also the £2.5 billion pupil premium. I could go on and on. We are doing huge amounts to try to protect the poorest in society.

[Mr Watts]

Part of the help package that has been set out is the money that will go to London families to keep rail and bus fares down. Does the right hon. Gentleman have a similar package for my constituents?

[Mr Duncan Smith]

It is all rail fares, but I do not want to split hairs with the hon. Gentleman about whether he thinks it will help his constituency. I think it will.

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

The Secretary of State talks about protecting women but he will know that House of Commons Library figures show that women are paying two thirds of the contribution in tax and benefit changes. He also said that the personal allowance increase benefits women more than men. Does he admit that the truth is that the Library figures show that while 13,500 women benefited from the personal allowance increase even though it was compensated for by other cuts, 16,800 men benefited, so in fact women are a minority, even from the personal allowance increase that he parades as a change to help women?

[Mr Duncan Smith]

I can look at the Library’s figures and decide whether they or our figures are correct. We will have a look at them. My view is that the figures that we have show that more women than men benefit from that change. We can debate that if the right hon. Lady likes, but at least she is admitting that, one way or the other, a significant number of women benefit dramatically. That is a good starting point.

I want to move to an important subject. Given that this is an Opposition day debate, I had rather hoped––

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

Before we move from the topic of hard-working women such as those in my constituency, especially those on the lowest incomes, who depend on informal care from grandparents, perhaps my right hon. Friend could share with the House the many things we have done to support grandparents on low incomes.

[Mr Duncan Smith]

I am grateful to my hon. Friend who, as ever, talks sense, and I agree with her.

This is an Opposition day debate and I had hoped to hear something about what they would do to fix things. My right hon. Friend the Member for Wokingham (Mr Redwood) asked a very specific question but never received an answer from the right hon. Member for Birmingham, Hodge Hill. We have today had to endure the usual waffle and confusion. On the one hand, the Opposition criticised us yesterday for borrowing too much, but on the other they seem to think that more borrowing is the only way to fix the deficit. The director of the IFS was pretty clear yesterday on the Opposition’s position on borrowing more to spend. He said:

“You would have to believe some pretty surprising things about the way the economy works to think that if you reduce tax by a pound then borrowing would go down rather than up.”

Does the right hon. Gentleman agree with the director?

[Mr Byrne]

Does the Secretary of State acknowledge that the benefits bill rising on his watch by £29 billion is a sign of failure? It is too high and it would come down if the Government helped more people back into jobs.

[Mr Duncan Smith]

With respect, that is not a policy; that is just a lot of waffle. In reality, what the right hon. Gentleman has to tell us—[Interruption]—and I will give way to him again or to the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper)—is whether he agrees with the shadow Chief Secretary to the Treasury, who yesterday said that if the Opposition had made the autumn statement, they would be borrowing more.

[Mr Byrne]

We think that we could get more people into jobs if we had a temporary cut in VAT to get shoppers back on to the high street; if we cut national insurance for small firms to hire extra workers; if we brought forward infrastructure projects, none of which we saw yesterday; if we cut VAT on home improvements; and if we had a tax on bankers’ bonuses to get 100,000 young people into jobs.

[Mr Duncan Smith]

Borrowing, borrowing, borrowing. More borrowing—isn’t it wonderful? Interestingly, the Opposition were supposed to say that they would stick to the original Darling plan, but the measures just laid out involve borrowing way above that, because, as my right hon. Friend the Member for Wokingham has said, if we look at what the Opposition have opposed, out of all that that we have had to do, we find that the bill now stands at some £91 billion extra a year, or £326 billion for the next five years in which they might have been in government.

These are all the spending cuts that the Opposition have opposed; the VAT position—opposed; welfare savings—opposed; in-year spending cuts—opposed; local government reform—opposed; capital spending on education—opposed; two-year public sector pay freeze— opposed; cuts to capital investment allowances—opposed; increasing public sector employee contributions—opposed; Ministry of Justice reform—opposed; police reform— opposed; DEFRA reform—opposed; cuts to the HMRC budget—opposed. That is not a policy; that is a joke.

[Mr Byrne]

The truth is that the plan laid out by my right hon. Friend the Member for Edinburgh South West (Mr Darling) would have halved the deficit over four years and, according to the OBR, resulted by the end of this Parliament in borrowing £8 billion less than that which the Chancellor set out yesterday. It would have involved borrowing £37 billion less than the Chancellor over the forecast period. The truth is that he has put borrowing through the roof, because he has put welfare through the roof, because he has put unemployment through the roof.

[Mr Duncan Smith]

The reality is that the OBR yesterday told us categorically that the position in which the Labour Government left us was significantly worse than anybody expected. It also said that unless we had taken the decisions that we took last year, we would be borrowing more than £100 billion in each year of this Parliament. On top of that, the Labour party’s measures would have resulted in even worse, but at least we had a little honesty from the shadow Chief Secretary to the Treasury, who said that borrowing would rise because she would borrow more. Given the economic situation, the Treasury estimates that such measures would cost far more—on the back of the OBR figures.

We now know what the Government at the time were doing, and what the Opposition today are about. They are determined to put hard-won interest rates, which we have held down, at risk. Last April, under Labour, our interest rates were higher than Italy’s; 18 months later, we are the only major western country to have seen its credit rating improve. Italy’s interest rates are now about three times ours, despite it having a lower deficit—actually, almost half the deficit that the previous Government left us. So, while the rest of Europe is under intense pressure, the UK remains a safe haven and the Labour Opposition are completely confused.

Yesterday the shadow Chancellor insisted that low interest rates were the sign of an economy in trouble. That is the same man who, back in 2004, described long-term interest rates as

“the simplest measure of monetary and fiscal policy credibility”.

[Hugh Bayley (York Central) (Lab)]

Will the Secretary of State give way?

[Mr Duncan Smith]

Let me lay out the facts to make things simple for the Opposition before I give way. A 1% rise in our market interest rates would add £10 billion to mortgage bills; the average family with a mortgage would have to pay £1,000 more every year; the cost of business loans would increase by £7 billion; taxpayers would be forced to find an extra £21 billion in debt interest payments—and the ex-Chief Secretary to the Treasury has the front, the absolute front, to talk about squeezing living standards. If the Opposition had their way, living standards would collapse.

[Hugh Bayley]

Does the Secretary of State not recall that at the time of the general election Britain’s national debt was significantly lower than that of Italy, France, Japan and the United States? The reason Italy faces its economic problems is that its national debt is much higher than that which this Government inherited from the Labour Government.

[Mr Duncan Smith]

It is well worth reflecting on the fact that the previous Government’s debt cannot be detached from their deficit. In case the hon. Gentleman does not understand it, I will explain that what they did was ratchet up spending before the recession began. We had the largest structural deficit of any G7 country before the recession began.

[Mr Byrne]

rose—

[Mr Duncan Smith]

No, I will not give way. The previous Government then went on a spending spree, ratcheting up the deficit, which now pumps the debt. It is no good playing silly games—

[Hugh Bayley]

rose—

[Mr Duncan Smith]

No, the hon. Gentleman can sit down. It is no good. He is not going to play games over the difference between the deficit and the debt. The reality is that Labour cannot weasel out of it. It left us with a tragedy that we are having to put right, which is why we will oppose the motion.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I remind the House that there is a six-minute limit on speeches.

15:54

[Ian Mearns (Gateshead) (Lab)]

I am grateful to be called to speak in the debate. The Government’s failure in economic policy is having a profound effect on our nation, but it is also having a disproportionate impact on regions such as the north-east and the poorest in our society. I have every sympathy for the squeezed middle, and many of my constituents are part of it, but I have much greater sympathy for the people who are the battered base in our economy, the very poorest in our society, who the Government’s policies are attacking the worst.

In March the Government launched their much-heralded “The Plan for Growth”. In the foreword, the Business Secretary and his new friend the Chancellor stated:

“This Plan for Growth is an urgent call for action. Britain has lost ground in the world’s economy, and needs to catch up. If we do not act now, jobs will be lost, our country will become poorer and we will find it difficult to afford the public services we all want. If we do not wake up to the world around us, our standard of living will fall, not rise.”

[Fiona O’Donnell (East Lothian) (Lab)]

Does my hon. Friend agree that one area where we are missing an opportunity for growth is green growth, and that yesterday the Government finally shed any claim to be the greenest Government ever by threatening investment in green technologies and green jobs?

[Ian Mearns]

I am grateful to my hon. Friend for her comments, which are absolutely true. Certainly, companies in the north-east that have invested heavily in plant to develop photovoltaic cells for household generation and microgeneration have had the base of their work cut away by the Government’s slashing of input tariffs, which will have a disastrous effect on them.

The warning from the Business Secretary and his new friend the Chancellor was a call to action—fine words, but we all know that actions speak much louder. In my constituency and in the wider north-east the impact of the Government’s failure has been, and will be, enormous. Even before their economic sabotage, the Local Knowledge public sector employment survey predicted more than 287,000 public sector job losses in the north-east alone. As a consequence of the Chancellor’s statement yesterday, that figure will probably be higher. The Government claim that we are all in this together, but they know, as they knew before embarking on their failed economic experiment, that it will be the poorest and most vulnerable regions and people who will pay the greatest relative cost.

[Jessica Morden (Newport East) (Lab)]

Does my hon. Friend agree that the spectre of regional pay, which the Government raised yesterday, will be a huge concern for workers in Wales and the north-east, who will end up doing the same jobs for less pay?

[Ian Mearns]

I could not agree more. If we want an economic race to the bottom, that is exactly the sort of policy to follow.

In September 2010 the BBC published a report that demonstrated clearly which regions would suffer most. Spending cuts were “to hit north harder”, it reported. BBC-commissioned research showed that industrial areas in the north-east and the midlands are least resilient to economic shocks. It showed that Middlesbrough is ranked as the most vulnerable, followed by Mansfield in Nottinghamshire, and Stoke-on-Trent. The Experian research suggests how England’s regions may cope or not cope with further public sector cuts. The study looked at the ability of each local authority area to withstand sudden changes in the economy, and a clear north-south divide is evident in the research. Elmbridge and Waverley in Surrey and St Albans in Hertfordshire are the most resilient places, and places such as those I mentioned are the least resilient.

[Jim Shannon (Strangford) (DUP)]

Clearly, the changes in working tax credit and child tax credit will also affect people, and those who are not on the poverty line but are close to it will be pushed towards it. Does the hon. Gentleman believe that the Government’s changes in working tax credit and child tax credit will have a harsh impact on those people who can least afford it?

[Ian Mearns]

That is exactly the case, and the impact will be felt more greatly in the regions outside the south- east.

The BBC’s research revealed a clear north-south divide, and a number of factors within the categories were analysed, including the number of vulnerable and resilient industries within an area, the life expectancy of residents, the earnings of workers, and the unemployment and crime rates. The Deputy Prime Minister even admitted at the time that Experian’s research showed that a north-south divide was already present in England. He said that large spending cuts to be announced in the following months should be seen as a broader effort to put the economy on to a more sustainable footing. He spoke about the need to “balance the books”, and to redress the balance. From the north-east’s perspective, can I thank the Deputy Prime Minister? I think not.

In the face of clear evidence of the north-east’s vulnerability, what was the Government’s action? In the last financial year, while the 12 least deprived authorities in England have suffered cuts of around £5 per head of population, Gateshead has lost £88 per head, and the 12 authorities in the north-east have lost an average of £84 per head in expenditure, so no one on the Government Bench should dare to come out with the usual mantra of “We’re all in this together.” It is clear that if we are all in this together, some are dipping their toes and some are in up to our necks.

In November 2010, the Office for Budget Responsibility predicted that 410,000 jobs would be lost in the public sector as a result of the coalition’s cuts. However, in October 2011, the Chartered Institute of Personnel and Development said that overall job losses are now expected to be between 600,000 and 750,000 between now and 2015-16. In the north-east already, local authorities have shed well over 10,000 jobs, and 30,000 jobs in the public sector have gone. Some 142,000 people are on the dole in a population of only 2.5 million, and between 12 and 15 people chase each job vacancy in the jobcentres of the north-east. We are not all in it together. There is clearly a divide in the nation.

Where are the jobs in the private sector? Where is the growth that was supposed to replace public sector job losses in the north-east? They simply have not happened, and they will not happen, because the Government’s policies are sucking spending power from the north-east’s economy. Our high streets are suffering, our shops are closing, and our local economy is shedding jobs. If anything, the private sector in the north-east is becoming poorer. Although there is much innovation, cuts in input tariffs are having an impact on green industries. Other industries, such as Allied Bakeries in my constituency have shed jobs, as has Waverley Vintners. The Alcan smelter in the constituency of my hon. Friend the Member for Wansbeck (Ian Lavery) has lost jobs. Things are getting bad up there, and we need a real rebalancing of the economy. Instead of borrowing money to spend on dole and benefit payments, why do we not use that borrowing to invest in our economy, to provide infrastructure growth and create jobs in construction? We are not all in this together, and clearly the Government must wake up to that fact.

16:04

[Brandon Lewis (Great Yarmouth) (Con)]

Given that I represent one of the most deprived wards in the country, I find it ironic that I should be speaking in this Opposition debate. In fact, Nelson ward is in the bottom 1% in England, particularly when we look at the lower layer super output areas.

Great Yarmouth is a constituency that, like many coastal towns, suffered from many years of being forgotten and left at the end of the track by Labour. One of the phrases that people often use is that we were at the end of the line and that the last Government forgot about us for 13 years. One of the problems was that too many things were done in isolation—working in silos with pet projects or with specific, centrally led Government projects that did not have enough focus locally, so were never able to have enough impact on the general living standards of people in my constituency or other coastal towns.

Let me give a clear example. Some years ago, Great Yarmouth was given about £17 million, which had to be spent on improving the seafront. I have to say that our seafront now looks superb; the council have set it up brilliantly. It looks fabulous and I advise all hon. Members to visit and see the great improvement. I also advise them not to step too far back from the seafront into Nelson, Southtown or Cobholm; they would see the areas left behind as industry faltered through lack of support and the last Government drew jobs away from rural areas. That included Government public sector jobs; they closed HMRC and set up the programme that eventually led to the closure of our coastguard call centre.

We need a Government like this one, who see things far more holistically and do not focus on only one specific area. That is why I am so supportive of what the Government, across all Departments, have been doing. It can benefit constituents across our country—including, from my selfish point of view, Great Yarmouth.

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

Did my hon. Friend experience what I did, in the similar coastal community of Hastings? During those Labour years, there was a dramatic fall in average income in comparison with the rest of the country. In Hastings, it fell by £100 a week per person during that period.

[Brandon Lewis]

My hon. Friend makes a very good point, and I shall give another example. The UK average of gross weekly earnings is about £500 per week or £26,100 a year. In Great Yarmouth, the figures are £420 and £21,900 respectively; in fact, 10% of our full-time workers have earnings of £250 a week or £13,000 a year. That is partly because we have seasonal employment, and nobody did enough to move the situation forward until this Government. What the Government have done in improving things for business is to open up better opportunities for people to earn, look after their families and raise their living standards.

In Great Yarmouth, in conjunction with Waveney constituency and Lowestoft, we now have an enterprise zone. The importance of an enterprise zone cannot be overestimated; it has been set out and led by business people in our area who know what they need to grow businesses and attract them into the area to create jobs. The jobs that we need are not seasonal, but those based on an industry in energy and engineering that has a long-term future. The renewable energy industry believes that there are contracts worth about £80 billion across our coastline, with oil and gas decommissioning and renewable energy. That business will bring jobs to our area.

The enterprise zone, focused on areas designed and requested by local business and business leaders, is already attracting companies. The first company to go into an enterprise zone is likely to be in Great Yarmouth. ScottishPower and Vattenfall have already announced a memorandum of understanding that alone could create hundreds of jobs in one spot in my constituency. That is the kind of thing that will increase living standards. We need a more joined-up, holistic approach.

Education also needs to be part of the issue, to ensure that the skills are right. One of the complaints that I get from businesses, not just in my constituency but across industry, is that there is a shortage of people with the skills required by engineering companies and the energy industry. We need to make sure that we match that skill set to the job requirements of businesses.

Only a few weeks ago I met prime providers for the Work programme. One of them said to me that they were surprised that in certain parts of the country where they expected to have an issue in finding jobs, the problem is not finding jobs, but finding people who will apply for those jobs. In Great Yarmouth, we have third-generation, and in some cases fourth-generation, unemployment. Over the next few years, we need to change that culture—to change the programme so that people want to aspire to that first job. They should understand that that first step on the ladder is not the end of the story. They should not just stay on benefits.

A school pupil actually said to me that their ambition was to go on benefits, because their parents were doing nicely, thank you very much. That does not represent the majority of people, but we need to change that culture so that people look at that first opportunity and want to take the step on the ladder. That first job may not be the perfect one with the perfect salary, but it is the first step on the way to getting where people want to be and can be for themselves and their families. That is good for the entire community.

[Justin Tomlinson (North Swindon) (Con)]

Does my hon. Friend agree that the welcome expansion of apprenticeship schemes is giving young people the opportunity not only to take that first step, but to learn applied, real-life skills that businesses in constituencies across the country are crying out for?

[Brandon Lewis]

My hon. Friend is right, and directs me perfectly to the point I was about to make, which is that apprenticeships are a hugely important part of raising living standards. In my constituency alone, the number of people taking up apprenticeships has increased by about 60%. Apprenticeships give opportunities for people to get real-time work experience and for companies to train people so that they have the skill set that readies them to take on work. One of the things the Government have done well and that we can do more of is highlight the value of apprenticeships, so that young people do not regard university as their only or primary option, but see apprenticeships and going straight into the workplace as a genuine, viable and valuable way to contribute to their own family as much as to society.

[Angie Bray]

Does my hon. Friend agree also that the Government’s creation of the national citizen service scheme, which is giving 16-year-olds the chance to train together, work together and develop projects together, provides a sure-fire way for them to gain the self-esteem and the confidence they need to take them forward into the workplace?

[Brandon Lewis]

Absolutely, and I would add that we also need to look at how to get businesses growing faster and quicker to employ more people. Having more people working in the private sector is without doubt the best way to raise living standards both for them and for our country, because having more jobs reduces welfare costs. That is hugely important and it is why I was so pleased to hear the Chancellor’s announcement yesterday about fuel duty being frozen and not increased in January. That, combined with the work already done to get rid of the fuel duty escalator, will get prices, although high, lower than they would otherwise have been. That is important—

[Sheila Gilmore]

Will the hon. Gentleman give way?

[Brandon Lewis]

No, I will not give way again.

The fuel duty measures are important not only to commuters and consumers—parents trying to get their children to school and young people trying to go to work or get to job interviews—all of whom will be better off, but to firms in transport and logistics, which need to be able to invest more in their businesses, to grow them and to create more jobs.

The Government are also working to protect the elderly, who have given so much already. Making sure that they get their winter fuel allowance and the right protection for their pension, as was announced yesterday, means that we are doing all we can, in the circumstances we inherited from the previous Government, to provide for the people who need help the most.

To me, the key is to bring all that together—education and welfare reforms, and the work being done through the Treasury and BIS on taxation and apprenticeships—in an holistic approach. In that way, our country will be able to move forward and we will see the real improvement in living standards that we all want.

16:12

[David Miliband (South Shields) (Lab)]

This is a time of some gravity for our economy and our society. I shall address two aspects of today’s debate: first, the past 18 months and whether, if the Chancellor had made different decisions, we would be in a different position now; and secondly, the future—the prospects for growth and jobs for our constituents and, above all, whether we can avoid successive further downgrades, after the four that have already occurred, to the economic forecasts published since the general election.

The Prime Minister has introduced a bazooka test for the eurozone countries. My shorthand reading is that in Britain the bazooka marked “austerity” has been far too big and the bazooka marked “growth for the future” far too small. I shall explain that view in my speech today.

The Chancellor’s claim is very specific: that his plan of fiscal austerity is the best route to economic expansion. He uses four arguments to support his case. First, he says that the evidence of Canada in the 1990s shows that the seemingly impossible, a “contractionary expansion”, is proved possible by the Canadian experience. In fact, the Canadian squeeze took place at the same time as the Clinton boom in the United States—Canada’s primary export market. Yet the export of which the Prime Minister and the Chancellor are the most proud is the export of their austerity message to the rest of Europe—our primary trading partners. That was seen at the Busan summit, within a few weeks of this Government coming to office. In the process, they are killing the markets on which we depend.

Secondly, the Chancellor has said that private sector growth was previously crowded out by the public sector, but in his speech yesterday he accepted that Government needed to support private enterprise, including through fiscal policy, although admittedly using the off-balance-sheet tactics that he denounced so forcefully during the last Parliament. Retrenchment in the public sector is no guarantee of renaissance in the private sector.

Thirdly—this, I think, is particularly important—the Chancellor says that international markets have voted with their feet in buying UK gilts and driving down yields over the last 18 months. However, the biggest buyer of gilts in recent years has been not the international markets but the Bank of England. I will not dwell on the fact that the Chancellor denounced quantitative easing when he was shadow Chancellor, but he surely knows that for this financial year the Bank of England will have bought no less than 42% of gilt issuance. The Bank now owns more than 30% of the total gilt stock, compared with zero in 2008, while the proportion of international market ownership has barely changed. Interest rates are low in this country because of Bank purchasing policy, not because of Government fiscal policy.

[Mrs Jenny Chapman (Darlington) (Lab)]

I am no expert, but is my right hon. Friend saying that the Chancellor’s economic plan is a catastrophic failure?

[David Miliband]

My hon. Friend has demonstrated that it is harder to make a short speech than a long one, but she has summed up very well in a few words what I am trying to say in rather more.

Fourthly, the Chancellor says that without austerity we would be in the same position as Greece, but the maturity of British bonds is closer to 14 years than to the 14 weeks or 14 days that seem to afflict the Greeks; much more of our borrowing is covered by domestic savings; and above all—unlike countries including Italy, which the Secretary of State mentioned—we have our monetary sovereignty. Far from the Government’s having instilled confidence and stirred entrepreneurial spirits for the future, confidence has dropped further and faster in Britain than anywhere else in the last 18 months, and had done so well before the euro crisis. Moreover, the level of confidence is lower than it was when the Government came to office.

[Claire Perry]

It is so refreshing to hear a grown-up make a speech from the Opposition Benches. Does the right hon. Gentleman agree, however, that quantitative easing took place originally in 2009—so the money was effectively already in the Bank of England’s coffers at the time of the election—that since then interest rates in Britain have dropped by more than one percentage point, and that we are now borrowing money more cheaply than Germany?

[David Miliband]

The hon. Lady is right, in that the zero stock held by the Bank of England in 2007-08 meant that quantitative easing had not yet started. When it did start, the stock went up. However, as she will know, since the general election there have been three further rounds of quantitative easing, including the most recent injection of £75 billion. That does much to explain why, although yields have fallen, international market ownership of the stock has not changed. I hope that she will engage with the issue that I am raising in all seriousness, because it is a serious problem for the Government’s argument.

In respect of the future, I want to concentrate on an aspect of the debate that relates directly to the Secretary of State’s responsibilities: youth unemployment. Let me repeat something that I said on television last week, half of which the Prime Minister and the Chancellor have enjoyed quoting. The current Government did not invent the problem of youth unemployment, but my goodness, they have made it worse. That is the charge against them. As the Secretary of State will know, it is a fact that structural unemployment among 16 to 25-year-olds stubbornly refused to fall below 10% even in the good years, when the economy was cantering along, and it is true that unemployment rose in 2005-06.

[Stephen Williams (Bristol West) (LD)]

Will the right hon. Gentleman give way?

[David Miliband]

No, let me make this point.

It is also true, however, that between the start of the Labour Government and the financial crisis, long-term unemployment fell by 78%. It fell again, by 38%, between January and December 2010, before the Government’s first Budget decisions were implemented. In January, 150 people aged 16 to 25 in my constituency were claiming jobseeker’s allowance for more than six months. Today the figure is 420, and the figure in the north-east has doubled to nearly 9,000. Youth unemployment across Britain is now at record levels. Severe long-term youth unemployment—the number of people who have been out of work for at least 12 months—stands at 260,000, up by over 100,000 in 18 months, and the number of NEETs, those not in employment, education or training, has risen to 1.2 million. The Secretary of State agrees with me that those figures are a disgrace for any Government or any country. The question is what we do about it. I hope that the Government will take the following points into consideration as they think about the roll-out of their work contract.

First, the Work programme is fine in good times, in a growing economy, but it is not enough to give people job interview preparation when not enough jobs are being created in the economy as a whole. Secondly, the wage subsidy that is being introduced is designed to help 53,000 of the 260,000 long-term youth unemployed. When in 1995 the then Chancellor of the Exchequer introduced a similar scheme, however, it helped 2,300 people. The Secretary of State needs to look at those figures and understand why. Thirdly, the growth in apprenticeships is welcome, but it has got to be for the under-25s. Finally, young people who need help with transport costs, disabled young people and young people with carers need extra help. He knows it as well as I do. It is bad enough to be young and stuck on the dole. It is double the agony to be promised a job and then find that you will not get it.

Let me finish with this thought. The Chancellor’s

“latest economic commentary shows just how out of his depth he is when it comes to important economic issues. Slashing spending now could push the economy back into recession and inflict further structural damage on the UK”.

Those are not my words, but those of the current Business Secretary in February 2010. How right he was. It is time for a change of course, and it is time for a change of course now.

16:21

[Stephen Williams (Bristol West) (LD)]

Yesterday, I think we all agreed when listening to the Chancellor’s statement that much of what he had to say was grim news indeed. It was worse than many of us had anticipated. The situation was certainly worse than the last Government declared when they were in office, or even predicted when they could choose their own predictions. It was also worse than the independent Office for Budget Responsibility forecast when this Government came to office.

We now know that finances will be difficult throughout this Parliament. There will be a squeeze on many people’s real incomes. Perhaps more importantly, in terms of confidence, there will be a suppression of hopes and expectations. I understand absolutely why many people are anxious, and I even understand why many people are right to be angry about the situation in which we find ourselves. They are also right to think that some people are indeed “out of touch”, as the motion puts it.

We have seen in many major cities around the world the Occupy people, who are protesting against capitalism. I do not agree with much of what they say; I am a free-market liberal, and I want capitalism to work. Those of us who believe in the functioning of the market economy, however—I think that this now unites the three main parties in this country—must address the concerns that many of our constituents feel about the failure of the market economy to deliver fairness in our society. Last week, the High Pay Commission referred to the “gross inequality” that has arisen in our society, most of which arose, of course, during the period of the last Labour Government. The average pay of someone in work is now £25,900, whereas the pay of a chief executive of a top 100 company has risen to £4.2 million —145 times average pay.

[Mr Byrne]

The hon. Gentleman is kind in giving way, and I am following his argument closely. I am not certain which measure of inequality he is looking at, but I am sure he would accept that the Gini coefficient, which is one of the most popular measures of inequality, was practically the same at the end of Labour’s term of office as at the beginning. I am sure he would also accept that, looking around the world, the UK was one of the only countries in the OECD—I think that Turkey and Ireland were the others—where inequality was held in check. It went through the roof everywhere else.

[Stephen Williams]

We can trade statistics, but the right hon. Gentleman cannot deny what everyone is seeing and what all our constituents are saying to us. They are fed up that the people at the top of companies— Labour Members have referred to bankers, but it is not just the bankers; this also applies to others—seem to have got away with it, while people at the middle or bottom are being squeezed. I hope that the Government act on the High Pay Commission recommendations.

The Government are acting to safeguard the living standards of those at the bottom of the income scale.

[Hugh Bayley]

What would be the hon. Gentleman’s policy to reduce the incomes of those on high income, to reduce inequality?

[Stephen Williams]

I recommend that the hon. Gentleman looks at the High Pay Commission report, which is an excellent document containing many recommendations for controlling executive pay. I urge the Government seriously to consider many of those recommendations, including on the revolving door of non-executives on boards of companies effectively determining each other’s pay, where some of the most serious breaches occur.

On hard-working families, to which the motion refers, the Liberal Democrats’ No. 1 policy commitment at the last general election was that, in order to make work pay, we would raise out of income tax those on low earnings and those working part time by increasing the income tax threshold to £10,000 over the lifetime of the Parliament. Progress towards giving effect to that aspiration is being made throughout this Parliament. Let us contrast that with the last Budget of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in 2007, when, just before becoming Prime Minister, he financed an income tax cut through a tax rise for the poorest in society. I remember watching Labour Members waving their Order Papers and cheering that income tax cut—

[Steve Webb]

They did not understand.

[Stephen Williams]

As my hon. Friend the Pensions Minister says, they did not understand that their own Chancellor was financing election populism on the backs of the poorest workers in society. Let us have fewer lectures from Labour Members on how to treat people on low pay in work.

[Several hon. Members]

rose—

[Stephen Williams]

I have taken two interventions. I will not take any more.

The Secretary of State for Work and Pensions referred to another reform that the coalition Government will introduce—universal credit—to sweep away the labyrinth of benefits and tax credits that are a legacy of the last Labour Government. In the autumn statement, the Chancellor confirmed that working-age benefits and benefits for disabled people would be increased by the full CPI rate of 5.2%, which puts into the pockets of the poorest in society extra cash that they will spend almost immediately in their local communities.

[Sheila Gilmore]

Will the hon. Gentleman give way?

[Stephen Williams]

I have taken two interventions.

There was pressure from certain quarters not to make that increase, but the coalition has done the right thing and stuck by its promises to the poorest people in society.

On children, which the motion also covers, tax credits for children are being increased—given all the rhetoric, one would swear they were being cut—by the rate of inflation, 5.2%. In the long term, we want to transform the life chances of the poorest children in society, through the pupil premium and extra child care for two-year-olds announced in the autumn statement.

For young people, the Government are putting millions of pounds behind increasing apprenticeship places. The right hon. Member for South Shields (David Miliband) did not want to take my intervention on youth unemployment—

[David Miliband]

indicated dissent.

[Stephen Williams]

He can shake his head and then he can deny that youth unemployment was 650,000 in 1997, and after one of the longest booms in Britain’s peacetime history the Labour Government left behind 930,000 young unemployed for this Government to deal with.

For pensioners, the autumn statement confirmed that the basic state pension will be increased by £5.30, the biggest cash increase in the history of the state pension. That increase comes about because of the triple lock that the coalition Government have put in place. Let us remember another policy choice that could have been made. In 2000, when the previous Government were in office and when earnings rose by 4.4%, the CPI was 1.2% and inflation was 1.1%, which measure did the previous Labour Government choose? They chose the lowest, producing a 75p pension rise. That was at a time when the budget was in surplus and we were in the middle of a boom. In these difficult times, the Government have done the right thing by pensioners as well. No wonder that pensioners were left out of the motion that has been tabled today.

The motion mentions a squeeze, but the biggest squeeze that could be inflicted on citizens in our country—the 29 million people in work—would be on their mortgage payments, their debt interest payments, and the loans of the businesses that employ them, if the international markets were to lose confidence in this country.

The motion says that the government are “out of touch”. There is some cheek, some chutzpah, at the heart of a motion worded in that way by a party formerly led by Tony Blair, alongside whom the architect of new Labour, Peter Mandelson, said that he was “intensely relaxed” about people becoming filthy rich. If the shadow Secretary of State wants to see who is out of touch, I suggest that he and his colleagues look in the mirror, because it is they who are out of touch with reality.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. In order to fit in more Back-Bench contributions the time limit is being reduced to five minutes, and it is likely to be reduced further because of the number of interventions being made.

16:25

[Teresa Pearce (Erith and Thamesmead) (Lab)]

I spent this morning talking about living standards with mothers in my constituency, who are losing a day’s pay today to stand with other public sector workers fighting for a decent pension. They told me that they had not taken strike action lightly or easily, and had never been on strike before. Many of them are low paid; they are all women. They told me that under the Government’s proposals for public sector pensions, when they retired they would receive only just enough to keep them above the threshold for means-tested benefits.

The Government like to encourage the myth that pensions in the public sector are gold-plated; they are anything but. The average pension in local government is £3,800 a year, and for women it is even lower—£2,800 a year. More than half of all women pensioners who have worked in the national health service receive a pension of less than £3,500 a year. Nobody in society benefits when pensioners are in poverty, and if people are reliant on state benefits in retirement, that costs the taxpayer more in the long run.

Although in my lifetime we have seen progress in terms of a fairer deal for women, it is undeniable that the women now reaching pension age are still at a disadvantage because of the decades for which women’s pay was lower. The Government talk the talk about a fairer deal for women, but I do not believe that they walk the walk. Many of us who campaigned alongside thousands of women born in 1954 will remember that the coalition had to be dragged kicking and screaming to make concessions to those women.

Under this Government the pay gap between rich and poor has been widening, and last week the Office for National Statistics figures showed that for the worst-paid jobs, the jobs traditionally held by women—the hairdressers, the dinner ladies and the waiters—pay has fallen sharply in real terms.

[Lilian Greenwood (Nottingham South) (Lab)]

Will not those very women that my hon. Friend is talking about—the dinner ladies and the classroom assistants—be further hit by two years of a pay freeze, followed by years to come in which they will get wage increases of just 1%, if their jobs stay in the public sector and are not privatised?

[Teresa Pearce]

I totally agree with my hon. Friend. There is wage stagnation at the bottom of the income ladder. People are seeing their pay frozen at the same time as they face higher food, fuel and energy costs. There is a quiet crisis going on behind the front doors of the homes in my constituency, where families are struggling week in, week out to make ends meet. Their financial affairs can be thrown into total crisis by even the smallest unexpected bill.

Today, therefore, I want to talk about how the Government have decided what side they are on. They have driven on with that course, no matter what. It has to be said that we in this House are the privileged few, and surely the moral duty of those with privilege is to defend those who have little or no power. But that is not what I have witnessed since I came here in May 2010. What I have seen is a systematic, focused political attack by the Government on the poor, the weak and the voiceless.

In the May 2010 emergency Budget child benefit was frozen, housing benefit was capped, the health in pregnancy grant was abolished, and Sure Start grant was restricted to the first child. The Library said that 72% of those cuts fell on women. In October 2010 the same thing happened: more cuts—cuts to local government, cuts to Departments whose work affects women, and nearly half a million jobs cut from the public sector. When it comes to cuts, it seems to me that it is “women and children first”.

That leads me on to yesterday’s announcement. In June 2010 the Chancellor announced plans to increase child tax credits above inflation as a measure to prevent rises in child poverty. The spending review in October reaffirmed that pledge. Yesterday the autumn statement said that that decision would be reversed. The Daily Telegraph said today that the Treasury admitted that the cuts in tax credit would “theoretically” push 100,000 children into poverty. Let me tell the House that the child poverty in my constituency is not theoretical. It is heartbreakingly, grindingly real. So why do the coalition Government think that it is fair, or morally right, to hit hardest those who have the least?

It is not just me who thinks this way. The Children’s Society has said that it is “deeply concerned” that the Chancellor

“has decided to compound the hardship felt by low-income families.”

It added:

“Children in low-income families need to be protected from rising living costs. Instead, the Chancellor has condemned thousands of low-income families to a winter of discontent, with many more to come.”

The Working Families charity has said that

“today’s measure will lead to higher levels of in-work poverty, or to more parents being priced out of work.”

[Anna Soubry (Broxtowe) (Con)]

Is the hon. Lady really saying that child poverty has only existed in her constituency for the past 18 months, and that it did not exist in the 13 years when her party was in power?

[Teresa Pearce]

What I am saying is that child poverty in my constituency will increase as a result of this Government’s plans.

Inequality is often most obvious in the context of housing. Every week my postbag is full of letters from families who are living in overcrowded, shoddy, private-rented flats, and whose dream of a decent home seems to drift further away every month. I would welcome any initiative that helps to remedy that, but, sadly, I do not think that the measures announced by the Government, such as underwriting mortgages for families to buy new-build homes, will help families in Erith and Thamesmead.

The indemnity scheme involves taking a lot of risk on to the public-sector balance sheet. That is bad for taxpayers and could be worse for those who take up the scheme. The scheme applies only to new build, and it is widely acknowledged that new build is often marketed at a premium above market value of about 2% or 3%, so a 95% mortgage will, in effect, be close to a 100% mortgage, and if house prices fall buyers will face negative equity and the taxpayer will have to cover any losses. A better way to help families and first-time buyers is through extending stamp duty relief.

Time and again, therefore, the Government show whose side they are on: they cut corporation tax while increasing VAT; they cut housing benefit rather than tackle the unscrupulous landlords who are profiteering from housing benefit while their tenants live in substandard properties. As for the Chancellor, it is clear that not one of his post-election assertions has turned out to be correct: inflation is up; growth has stalled; the eurozone has crashed; the structural deficit is bigger than previously thought; and unemployment continues to rise month on month as the private sector fails to take up the public sector slack, although the Chancellor was certain that it would do so. It appears, too, that everybody else is to blame. The Chancellor has blamed the royal wedding, the weather, civil servants, Brussels, employment tribunals, trade unions, banks, bank holidays, people living longer, energy prices and, of course, the Opposition. We have a Chancellor who wants the power but not the responsibility, and I fully expect him to say at the next Budget, “It’s not my fault—”

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Time is up. I call Guto Bebb.

16:37

[Guto Bebb (Aberconwy) (Con)]

I am pleased to follow the hon. Member for Erith and Thamesmead (Teresa Pearce) because it is important that we challenge some of the myths we have just heard. Before I was elected as Member for Aberconwy, I remember going out in the constituency with the police, and we came across people who were living rough. That was before this coalition Government came to power. From listening to Labour Members, however, one would think that poverty did not exist until May 2010. Their rewriting of history is completely unacceptable.

[Mr Byrne]

Is the hon. Gentleman as concerned as I am about the Institute for Fiscal Studies estimate that a further 600,000 children will be plunged into absolute poverty over the course of this Parliament, and is he worried about the Treasury’s own analysis published yesterday showing that 100,000 children may fall into child poverty over the next year or two?

[Guto Bebb]

There is not a single Member of this House who will not be concerned about the fact that there are people who are facing real difficulties, but this Government are trying to make sure we tackle the real poverty we have in this country. In Wales, for example, in many instances what we have is a poverty of ambition, which was fostered by 13 years of Labour Government. For 13 years the economic performance of Wales was worse than that of the rest of the United Kingdom. For 13 years, Labour Members happily threw money at an issue in order to salve their consciences—they threw money at the issue and felt they could then forget the communities that I am proud to represent.

I am part of a coalition Government who are aiming to ensure that if people are willing to work and take part in this economy, they will be better off by doing so. The Government are tackling a long-term problem with long-term solutions. It is unacceptable that the Labour party is attacking a Government who are willing to have a long-term strategy by trying to make short-term points about the past 18 months. This Government are brave enough to look not to the next electoral cycle but to the future.

I was astounded when I read the motion, which refers to the need to look after hard-pressed families. It does not read very well if one is a Welsh MP, because the Labour Assembly Government have completely forgotten about hard-pressed families. What has happened with the council tax in Wales, compared with that in England? The Westminster Government have made money available to allow council tax to be frozen, but the Labour Administration in Wales have decided that supporting hard-working families is not a priority. Some Labour Members have said to me, “The council tax saving is £12 a month. What’s £12 a month?” For people in my constituency, where the average wage is £23,000 a year, £12 a month is a lot.

[Mr Byrne]

The hon. Gentleman is making his argument with passion and force, as he always does. He will be worried, I am sure, that the cuts made over the past 18 months mean that in his constituency 700 families are losing help with child care, and the tax credits of nearly 6,000 people are being cut. He must surely accept that that is contributing to the squeeze his constituents are feeling.

[Guto Bebb]

Indeed. The problem is that the Labour party believes that the Government should be responsible for ensuring that families have money in their back pockets. I believe that my constituents want to take that responsibility for themselves. Hon. Members should be proud of the fact that this Government are trying to ensure that those who work are better off. My constituents will be able to keep more of their earnings because we are moving to higher personal allowance rates, and I welcome that.

[Sheila Gilmore]

rose—

[Guto Bebb]

I have already taken two interventions.

It is disingenuous of Labour Members to say that they are concerned about the incomes of hard-working families when the Labour party in Wales is unwilling to pass on council tax savings that would be appreciated by people in my constituency and across Wales. They have the cheek to say that the VAT increase implemented by the Government—made necessary by the financial situation that the previous Government left—should be reversed without explaining where the money will come from. Even more bizarre, Labour spokespeople explain in the media that the VAT reduction they propose would save the average family £450. I have no idea where that figure comes from. Such a saving would mean that an average family had £18,000 of disposable income to spend on “VAT-able” goods. I will not come across a family in my constituency with £18,000 of disposable income, let alone one with £18,000 of disposable income to spend on “VAT-able” goods and services.

The inflation figures show that families are being squeezed by increasing food prices. What should the Government do about such increases? Food is subject to VAT at 0%. As a result of high street competition, the prices of goods and services subject to VAT are going down.

We must be honest in this debate. In very difficult circumstances, the Government have attempted to look after the weakest in society. I was proud of the fact that yesterday, despite the changes to the Government’s finances, the triple-lock guarantee on pensions was kept. Average ages in my constituency are the highest among constituencies in Wales, and the Government’s decision will go down very well, compared with the previous Government’s 75p insult to pensioners. We should also be proud of the fact that we are increasing child credits by £390.

More crucial is the fact that, unlike the previous Government, this Government recognise the real threat to family incomes—the increase in fuel prices. I welcome the fact that the Chancellor listened and that, in extremely difficult circumstances, the previous Administration’s proposed 3p increase in fuel duty, scheduled for January, is to be postponed. Fuel prices are high—again, owing to circumstances beyond the control of the Government—but time and again the Government have listened. We had the 1p reduction, and the 5p increase was cancelled.

[Albert Owen (Ynys Môn) (Lab)]

And the VAT rise?

[Guto Bebb]

The VAT rise is a fair point. That is possibly 2p, but we have seen duty frozen—11p, in effect, off the price, and frozen for 19 months. When the previous Administration were in power, we saw fuel duty increase by 20p and I did not see any Labour Members express any concern for those living in a rural area such as mine, where people have to travel 20 miles to get to the supermarket. This Government listen. They listen to the concerns of the elderly and of people in rural communities.

[Nia Griffith (Llanelli) (Lab)]

Will the hon. Gentleman give way?

[Guto Bebb]

I have already taken two interventions.

More importantly, this Government know that the way out of the situation that we inherited is to champion self-reliance and enterprise, and to say to people in Wales, “Back in the 1980s we were creating more businesses than any other part of the United Kingdom. We had more new VAT-registered businesses than any other part of the United Kingdom.” I have confidence in the people of Wales. Unfortunately, the past 13 years have been wasted, but with this coalition Government, we will see change and we will see growth.

16:45

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

I support the motion before the House and I want to bring to the debate the perspective of a rural constituency in Northern Ireland.

There is irrefutable evidence that families, young people, the elderly, low to middle income earners and those in receipt of benefits have all found themselves squeezed, have less money to provide for essentials for daily living, and justifiably feel that they have been unfairly treated by the coalition Government. They also feel that the Government have removed the sense of fairness and equity from their vocabulary.

Proposed punitive regulations and legislation surrounding welfare reform will make the situation worse, making it more difficult for people to access benefits. At the same time they will be unable to obtain jobs. Although the concept is laudable, the jobs are not there because of the economic recession. The spectre of emigration therefore looms again, this time to Australia and New Zealand, and many small rural communities have found that young people who should be making a contribution to the economy through self-help, through the private sector or through the public sector, have simply gone away.

Added to this, the increases in fuel prices are leading to deepening fuel poverty, and the rising cost of motor insurance, particularly in Northern Ireland where it is more acute, prevent many young people from making themselves available to work where a requirement to drive is a pre-requisite on the job application. Levels of youth unemployment have risen, so child poverty has deepened. Levels of deprivation and disadvantage have deepened. We must not let the Government condemn us. We believe in self-help and in collaboration, and we have done that. We have developed our assets to their full potential but still that has not been enough because of the Government policies, which have been an onslaught on our rural economy, particularly in areas such as Northern Ireland where deprivation is at its most acute.

Against that background, we had the Government’s autumn statement yesterday. Although parts of it may be welcome, there are areas that require clarification. They centre on the cap on public sector pay, the rise in state pension age that goes with it, and the need for spending commitments to be fully subject to the Barnett consequentials. There is no doubt that in the face of the mounting economic recession, the 1% cap on public sector pay, following on from the current freeze, is derisory and unacceptable. It will prove highly controversial in a place like Northern Ireland, particularly in the light of today’s strikes.

[Nia Griffith]

Does the hon. Lady agree that not only will the cutting back on public sector jobs affect young people’s opportunities, but the 3% tax—the £2.8 billion that the Government hope to raise from the increase in pension contributions—will suck money out of the economy across the UK and drive families into poverty?

[Ms Ritchie]

I do agree. In fact, we were the only party in the Northern Ireland Executive that voted against the hike in pensions, which we found totally unacceptable because it will impact on the most vulnerable in our society.

We would also like to know what the Barnett consequentials for the devolved Administrations will be in relation to the announcements in the autumn statement of the £16 billion youth contract and the £400 million for house construction projects.

I and my party colleagues support this motion because it clearly highlights the deepening problem of poverty right across Northern Ireland and because we support our colleagues in the Labour party in Britain.

16:49

[Mr Robert Syms (Poole) (Con)]

At the end of the Labour period in office, when the first financial storms hit us in 2007, it was clear that the country was, at that point, living beyond its means. It had a deficit of about 3% of GDP, while at the same time the Germans had a surplus. Then we hit all the problems of the banking collapse. The hon. Member for York Central (Hugh Bayley) was right: thank God Britain had a low debt level of gross domestic product because that allowed the Government—

[Hugh Bayley]

Reduced by Labour.

[Mr Syms]

Yes, partly because of that. Traditionally in Britain it has been about 40%, so that gave the Government some room for manoeuvre. Any Government in office would have had a large increase in its deficit given what hit them in 2007 and 2008. There is no great argument about that and, as someone sitting on the other side of the Chamber, I think that many of the things that the right hon. Member for Edinburgh South West (Mr Darling) did were beneficial in trying to maintain a fragile economic situation.

Having said that, we cannot continue to increase debt year on year at the rate we were in 2009, 2010 and 2011 or we will overwhelm the British economy. The worst thing for our constituents is not paying tax; it is paying tax to pay interest on money being borrowed from someone else. The Government had to make a judgment, and their judgment was to set out an economic policy gradually to reduce our debt over five to seven years to a level that, once it tops off in 2016-17, can then start to be brought back to the level of more normal years, which is about 40% of GDP. In an environment in which the world was growing rapidly, that would be easier. In an environment in which the eurozone is blowing up, and there are high fuel and food prices, it becomes much more difficult. That is part of the problem for the Government in the short term. It is events—it is what is happening around the world.

There is nothing surprising about where the Government are. Sticking with the policy is perfectly sensible, but things do not go in a straight line in economics, and there will be OBR forecasts and Budgets where the figures for debt increase, and some where they decrease. It will depend to some extent on world events.

[Richard Fuller (Bedford) (Con)]

My hon. Friend is talking about debt levels. Was not one of the issues under the Labour Government the integrity of the public finances? Their estimates of public sector debt did not include the private finance initiative, which was a grossly exaggerated amount of public benefit, and they did not include the burgeoning increase in public sector pension claims on the economy. Does my hon. Friend agree that another aspect of debt in which the Labour Government’s policies were embedded was increasing the costs that people had to pay for their housing through the ever-increasing impression that housing wealth was real wealth? That has had a real impact on people’s well-being and living standards today.

[Mr Syms]

Clearly, and another problem in the British economy is that there is a lot of private sector borrowing. We have a high level of indebtedness, both of government and of the private sector. In Italy, they save rather more than we do, and as a country we should try to encourage more of our citizens to save and not live on the never-never in the long term.

I support what the Chancellor did in the autumn statement. We are clearly in choppy weather, but that is no reason to change course. We cannot adjust the budget down or raise taxation painlessly. The living standards of most of the population will be squeezed. As the IFS and other organisations have said, living standards have fallen by about 7% over the past two to three years. The good news is that next year the projection is for things to be fairly flat, with some modest recovery after that. It may well be that when we get to 2015—the general election year—we have lower living standards than in 2010 as a consequence of the fact that we have inherited a major deficit, very difficult problems and a pretty rotten international environment. That is no reason for going off course, but it is a reason for sticking to a very sensible policy. Labour Members may think that we cannot do things without breaking eggs, but that is not so. We have to raise the tax burden and reduce spending, and I am afraid that that has consequences.

[Toby Perkins (Chesterfield) (Lab)]

The hon. Gentleman said at the beginning that this would have happened under any Government. I congratulate him on his frankness, but the Chancellor is in complete denial about that—he wants to disown the fact that in 2007 and 2008 his policy was to follow Labour’s spending plans. The hon. Gentleman is right and his Chancellor is wrong, and I hope that he will try to get him to be a little more frank in future. No one disagrees about the need to reduce the deficit, but we are cutting more and more and yet the debt is going up way beyond what was predicted because the policy is not working.

[Mr Syms]

We have been in office for only 18 months. It will take six, seven or eight years to stabilise the debt and probably several more to start reducing debt as a proportion of GDP.

I have said some complimentary things about the right hon. Member for Edinburgh South West. I rather suspect that had Labour won the general election in 2010 and Labour Members were sitting on the Treasury Bench, they would have a policy not dissimilar from that of the current Government. The seriousness of the problem is demonstrated by the fact that we are acting as a coalition Government. For all my political life, we fought the Liberal Democrats like ferrets in a sack, yet we have managed to find some degree of agreement because of the scale of the economic problems that we face.

The Government’s policy is sensible and measured in trying to do things gradually. That means that it will take a long time to implement, but we will ultimately get to a point where we have managed to reduce debt and get the economy into a much better state. In the short term, as I say, it is going to hurt, but I am afraid that that is a consequence of where we are. I see no other way around that. Tough decisions are necessary. I am glad that the Government—Conservative Ministers and even Liberal Democrat Ministers, to my surprise—have taken some pretty tough decisions. They are doing so for the national interest and for the interests of our children and our grandchildren.

16:57

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

The hon. Member for Poole (Mr Syms) almost had me agreeing with some of his speech, certainly in its early moments, but I am afraid that he blew it at the end when he talked about the Chancellor being sensible and then praised the Liberal Democrats—neither of the main parties in this House should stoop to such a level.

We have heard the phrase, “We’re all in this together”, many times over the past 18 months. I wonder how the 11,600 families in my constituency who will see their tax credits cut by an average of £680 per annum—on top of the three-year child benefit freeze and all the other cuts that they have seen—will feel about our all being in this together. I think they will be sitting there thinking that we are certainly not all in it together. Around the country, 100,000 more children will be in poverty as a result of this Government’s plans, proposals and policies. Will they think that we are all in it together? I somehow do not think they will. The number of young people in my constituency who are aged between 18 and 24 and have been claiming jobseeker’s allowance for six months or more has increased by 154%. That is a huge increase in the number of young people who find themselves in the position of not having any work. They will not think that we are all in this together, and rightly so, because we are not.

The Minister sneered a few times when the issue of bankers came up. The Government are keen, with their coalition pals, to talk about how hard they have been on the bankers with their levy. They always seem to forget that they offset the hit of the levy with the corporation tax cut and other giveaways to the bankers. The bankers are not sitting there saying “We’ve been really hard hit by this; we’re all in this together”—of course they are not. They are quite happy because on the face of it, they have had this big levy, but the reality is that that is diminished by the corporation tax changes and other benefits.

The pay of FTSE 100 directors has risen by 49% but my constituents can only dream of a 4.9% increase in income. Are we all in this together? I do not think that we are. A pattern is developing. The wealthiest, the bankers and the FTSE 100 all seem to do nicely as against the children and the poorest. The three poorest deciles are being hit three times as hard as the top decile.

[Steve Webb]

indicated dissent.

[Robert Flello]

The Minister shakes his head, but I am afraid that the figures do not support his position.

The Opposition are wrong to say that the Government’s policies are hurting, not working, because they are not hurting but murdering our communities. They are so punitive that they are destroying our communities. We are not all in this together by any stretch of the imagination. We heard earlier about a list of areas that were among the most vulnerable to the impact of the cuts. Stoke-on-Trent was high up on that list but the Government’s policies actively take money away from places like Stoke-on-Trent to help all-in-it-together places like Kensington and Chelsea or Westminster, which obviously need the money far more than do the people of Stoke-on-Trent.

Then there is this nonsense, this con––let us get it out on the table––of the freeze on council tax. I am sorry but this 2.5% increase in council tax, which is what this nonsense would amount to––

[Sheila Gilmore]

Does my hon. Friend know that in Scotland we have had five years of the council tax freeze? For some of the poorest people in the community, it has in effect put up things like charges for home care because the freeze pushes the costs out elsewhere.

[Robert Flello]

My hon. Friend makes a sound point, to which I was just coming. Because of the large number of band A properties in Stoke-on-Trent, the tax take is relatively low. Just taking the 2.5% increase instead of the much larger imposition that would be needed to go some way to not having to make the £24 million or so of cuts this year on top of the £36 million or so last year, means that the council will probably be unable to afford not to raise the price of things like respite care or day care centres. The council could not take the 2.5% pay-off to do that but would have to raise council tax by more to get some way to avoiding that.

Day care centres are under threat. There is talk of closing such things in Fenton and in Burslem in the constituency of my hon. Friend the Member for Stoke-on-Trent, North (Joan Walley). These cuts across the board are again hitting the poorest and most vulnerable people in our society who live in Stoke-on-Trent.

I have a long list of things, but in the time I have left, I want to mention something that the Chancellor announced yesterday in respect of what on the face of it appears to be help for energy-intensive users. Stoke-on-Trent has many energy-intensive users in the ceramic industry. As Dr Laura Cohen of the British Ceramic Confederation has said, the thresholds have been set so high and the proposals have been done in such a way that they will not help ceramic producers in Stoke-on-Trent, many of whom have contacted the confederation to say that it is an empty gesture that will not assist them. That is the sort of thing that Government policies are doing. They are hammering communities such as Stoke-on-Trent and, frankly, that is outrageous.

17:03

[Charlie Elphicke (Dover) (Con)]

I want to talk particularly about the importance of getting the country going in order to raise living standards. I pressed the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) on what Labour’s growth plan was and how much it would cost. I will happily accept any intervention from Opposition Members on this, but it seems to me that it would cost billions. How would it be funded? It is clear that it would be funded by debt––more borrowing.

We have narrowly avoided suffering from the debt storm throughout Europe, but were we to give way on the fiscal rectitude that we have shown and to go to the markets and borrow to fund Labour’s extravagant growth plan, we would be at risk of higher interest rates. Let us bear in mind that every one percentage point increase in interest rates means another £1,000 on the average mortgage.

Painful though the programme to cut overspending has been for so many people throughout the country, the most important achievement—the most important tax cut, if we like—has been the reduction in the cost of borrowing. It has helped so many hard-pressed families, including those in my constituency, to muddle through the recession as best they can, in a situation in which global inflation from imported goods, such as petrol and so on, has been higher and has put pressure on living standards, as every constituency MP understands all too well.

These are very difficult times not just for my constituents in Dover and Deal, but for everyone in the country who finds themselves without a large pay rise at work and facing rising global food prices. It has been a very difficult year, as the OBR makes clear. This year, average inflation has been 4.5%, yet average earnings have not kept pace. It has been difficult, and it has been a squeeze, but world prices, including in commodities and food, are something over which no Government have any great control. I, like my hon. Friend the Member for Poole (Mr Syms), have not heard from the Opposition any clear plan for what they would do differently to deal with the situation, but it does get better next year as those things work their way through the system.

[Lorely Burt (Solihull) (LD)]

My hon. Friend paints a picture of the difficulties that families throughout the country face, and I fully understand the points that he makes. Will he speculate on how much worse the situation would be if, having entered government with a warning on our triple A credit rating, we had not taken those necessary steps? We would be in the same situation as Italy or even Greece. How many more families would be out of work, and how much smaller would be the amount of money to go round?

[Charlie Elphicke]

I thank my hon. Friend for that powerful intervention, and she is absolutely right. The point has been made that, when we entered office, we had similar interest rates to Italy, but its rate is now up at about 8% and we are basically parallel with German borrowing. If we were turned by the Opposition into—dare I say it?—an Italian job, we would find that interest rates shot up for the average home owner and small business borrower, and that we faced serious difficulties and serious economic decline. In fact, we are not in recession and we are still growing.

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

On my hon. Friend’s point about the real difficulties that we would face if our interest rates were the same as those in Italy or Greece, does he agree that the 25,000 home owners in my constituency would face real hardship, real misery, and possibly repossession?

[Charlie Elphicke]

I could not agree more. If we had pursued such a plan, we would now be in recession, and the fact that we are not in that situation and do not plan to be is a testament to how well the Chancellor has managed the economy since the election, and to how well the coalition Government have done in taking the tough and necessary decisions to steer the right and careful course.

The situation is, of course, difficult for our young people. All Government Members feel painfully how difficult it has been with youth unemployment, and it would be a lie to say otherwise, but we have taken action: we have had an apprenticeship revolution, which has done so much; we have seen the new youth contract, which is going to make such a big difference; and, although we know that the trend had been rising for some time, we now need to reduce it and to turn the oil tanker around. I am confident that this Government are absolutely determined to do that.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

When the Labour party left government, it left huge debts, and the cost of paying just the interest is running at about £44 billion a year. That works out at about £1,800 per household in taxation—just to pay the interest on Labour’s debts. Does my hon. Friend agree that that is having a huge impact on the spending power of families and is one reason why they feel under real pressure?

[Charlie Elphicke]

I absolutely agree. The saviour has been the low interest rates, which have meant that they are less squeezed than they would have been had Labour been in power.

[Hugh Bayley]

Will the hon. Gentleman give way?

[Charlie Elphicke]

No, because I have taken three interventions, which is more than generous.

Finally, it is not the job of Government to create jobs. Jobs, wealth and prosperity are created by business. A Government who want higher living standards and economic growth are a Government who will back business to the hilt and ensure that it has a stable environment in which jobs can be created. I welcome the enterprise zones that have been created, the incentives for business to grow and create job opportunities and the measures to help business announced by the Chancellor in the autumn statement. I welcome all the reductions in corporation tax, the cut in the small companies rate, the extension of loan guarantees, the simplification of health and safety laws, the investment in science and apprenticeships and the promotion of exports through major trade missions. That is what we should be doing. We need an activist Government who are concerned with active growth and making this country this great again after 13 years in which Labour took us back to the edge of bankruptcy, just as it did in the 1970s. We want to take this country forward to better growth and living standards and better prosperity and business success across the world.

17:10

[Mr Nick Raynsford (Greenwich and Woolwich) (Lab)]

I draw attention to my registered interests. I was interested to hear the comments of the hon. Member for Dover (Charlie Elphicke). All I can say is that it would be nice to see some of the growth he talks about, but he must be aware that it is proving stubbornly resistant to the policies the Government have adopted.

I intend to focus my remarks on the housing market and associated benefits, which the Minister will be familiar with as his Department is responsible for them. I will do so for three reasons. First, the availability and affordability of housing is critical to people’s living standards. Secondly, housing and construction have a huge contribution to make to employment and the country’s economic performance, and currently they are underperforming. Thirdly, the Government’s policies in this sector provide in microcosm a rather telling illustration of incoherence, which is why their policies, not just in housing, but across the whole economy, are doomed to failure.

Like the wider economy, the housing market is in a fragile and parlous state. The recovery that was under way in the early months of 2010 has been halted in its tracks, output has plummeted and net additions to the housing stock in the latest 12 months are just 121,000, the lowest ever recorded and only half the level required to meet estimated need. New housing starts are even worse. In the latest 12 months new starts fell below 100,000 to just 96,000.

The Government have responded with some measures. The mortgage indemnity scheme announced in the autumn statement addresses one of the factors that are currently inhibiting the market: the availability of mortgage finance to people who cannot raise substantial deposits. I welcome that, with some reservations, but it does not address the other factors discouraging market recovery, particularly the wider economy; the fear of unemployment, which clearly inhibits people from taking the risk of purchasing a new house; and the considerable problems of uncertainty in the planning system, which are the product of the Government’s ill-considered meddling in planning rules. The scheme does not provide the rapid response that is urgently needed, because we do not yet know the full details, how lenders will respond or, critically, what interest rates are likely to apply on mortgages given with the indemnity. If they are high, that will largely undermine the potential benefit, thereby reducing potential take-up. We do not yet know when the scheme will come into operation. We think that it will be in the spring, but that is almost six months away and in the meantime the market is seriously underperforming.

The position in the rented sector is even bleaker. The Government have made huge cuts to the Homes and Communities Agency budget for investment in housing, essentially stopping social housing investment. There has been an overall cut of 60% in investment and in the latest six months only 454 new social and affordable homes were started in England. That is a measure of just what a desperate state the affordable housing market is in.

The Government’s new policy is based on the Orwellian concept of affordable rents. The previous Government’s policy of target rents was based on a formula that took account of earnings, so it generally delivered rents that were affordable to people on low incomes. The new affordable rents, however, are related to market rents, and the concept is 80% of market rent. In areas of high values, such as London and the south-east, that is a recipe for huge rent increases, and in some cases a doubling of rent levels.

The interesting question, to which I hope the Minister will give some thought, is how people on low incomes will meet those vast rent increases. Either they will go elsewhere, and probably the only option is the private rented sector, where rents will be even higher because, by definition, they will be market rents, or they will be dependent on housing benefit. Back in the 1980s and 1990s, the then Conservative Government talked about housing benefit being the solution to coping with higher rents. The problem now is that we have a Department for Work and Pensions that is hellbent on cutting housing benefit at the same time as the Department for Communities and Local Government is making people more dependent on it. That is inherently contradictory, and simply cannot work. It will result either in increased poverty, homelessness and deprivation, or in a huge increase in the housing benefit bill, which will no doubt spark further calls for it to be reduced. The policy is incoherent, and cannot deliver the new homes that are needed. It threatens serious social consequences, and I hope that the Government will reconsider.

17:16

[Anna Soubry (Broxtowe) (Con)]

I would like to open my remarks by trying to find some consensus in this place. What do we, as parents, all want and hope for our children? I think that each and every one of us agrees that we hope to pass on to our children stuff that is better than we have had as we have lived our lives. For example, we want our children to have a better education than we had, a higher quality and standard of living, and perhaps a happier and more fulfilled life. Essentially, we want them to have more and better things than we have enjoyed. We do not want our children to have to bear the burden of debt from a previous generation—a debt and a deficit in which they played no part. I certainly do not want that for my children, who are 20 and 21. It is not right, and it is not fair that they and the rest of their generation, and arguably the generation that will come from them, should bear the burden of the debt and deficit that my generation—the generation in this House—has ratcheted up, particularly as a consequence of the policies adopted by the last Government.

It is breathtaking to sit in this debate listening to the Opposition. It is as though the last 13 years of their Government did not exist. It is as though they were not here, and as though some of them have landed from planet Zog. They talk about things that bear no resemblance to the reality of the policies that they pursued, and the consequences that we are now living with.

It would be ridiculous to try to argue that it is all the fault of the last Government. We know—others have spoken more eloquently and with greater knowledge than me—about the external factors and forces, but at the heart of this nation’s problem is our deficit. One does not have to be a woman or to run a family budget to know that the matter is simple. One works out how much money is coming in, and how much is going out, and tries to ensure that one spends only as much as is coming in. Someone who gets it wrong and spends more than is coming in runs up debt.

[Lilian Greenwood]

Will the hon. Lady give way?

[Anna Soubry]

I am more than happy to give way in a moment to the hon. Lady whose constituency is next to mine in Nottingham.

What people do not do—they recognise this if they are responsible—is to borrow more. If they have reached the maximum on their credit card or their overdraft, they must pull in their horns, live within their means, and cut their expenditure to match their income. Opposition Members struggle with that concept, because they never practised it when in government. That is why we have an appalling level of debt and, worst of all, an appalling level of deficit.

[Toby Perkins]

The first thing the hon. Lady seems to be suggesting is that the national debt is a brand new concept. The country has always had a national debt. The reality is that until 2008, her party supported our spending plans. The national debt fell between 1997 and 2007 under the Labour Government. She is talking as though the issue is brand new, but the reality is that a global economic crisis caused the scale of the deficit, and she must take that into account.

[Anna Soubry]

There we have it: the finest example that we could have expected of an Opposition Member who simply does not get it. Deficit deniers—after 18 months of argument, they still do not understand. It is the structural deficit that is our problem. We are not earning as much as we are paying out. We have this debt, and that is what is causing the economic crisis.

[Lilian Greenwood]

I do not know what planet the hon. Lady was on yesterday, but here we heard that as a result of the Chancellor’s failed economic plans, more people are out of work and as a result he is having to borrow an extra £158 billion, which is making the deficit worse.

[Anna Soubry]

Again we have another brilliant example of somebody who just does not get it. They do not understand the problems. Some of the problems are external, as I have explained, but at the heart are the failings of 13 years of Labour Government. Some of us are old enough to remember what happened at the end of the Labour Administration before that. My generation, the ones who did our homework by candlelight, had to pick up the pieces. Who was it who had to sort out the mess that Labour created? A Tory Government—and here we are again, all these years later.

I would like to make another point. We all come from different backgrounds, but we all come here for the same reason: to make change. We all want to make things better for everybody in our society, and I find it deeply offensive when the Labour party claims a monopoly on compassion. No one person, party or side has any such monopoly. Nobody on the Government Benches came to this place to make the life of the poor even worse. In fact, many of us came here because we want to eradicate poverty. How rich it is to hear the comments from the Opposition, who failed to hit all their targets for child poverty—after 13 years of their Labour Government, the difference between rich and poor actually grew. That is their legacy and the indictment of the last Government’s failures.

I believe in fairness as much as I believe in compassion. I would much prefer there not to be any need for regulation, but there must be fairness when it comes to restraint and responsibility among executives over their pay. Other hon. Members have touched on the issue. It is just not on to see the levels of pay and bonuses that we have seen in the financial sector. I urge all those people to exercise restraint and responsibility in difficult times, which affect every other one of us.

I reject the Opposition motion and support the autumn statement so eloquently explained to us yesterday. I do not wish to tread on the toes of the hon. Member for Nottingham South (Lilian Greenwood), but I am sure that, like me, she will welcome one of the proposals in that statement—the widening and improvement of the A453. It does not lie in my constituency, although if the Boundary Commission gets its way, a large part of it will, but that work will have a profound benefit for the people of Greater Nottingham and the whole county.

I commend the Conservative-led county council for their efforts in bringing everybody together to persuade the powers that be that the improvement and widening of the A453 would bring great economic benefit to Greater Nottingham, including my constituency of Broxtowe. Many things are happening, such as the extension of the tram, that give people hope for the future—the prospect of more jobs and apprenticeships. I am happy to reject the motion and support the Chancellor in all he does to make a better future for all of us, especially our children.

17:24

[Lilian Greenwood (Nottingham South) (Lab)]

I agree with the hon. Member for Broxtowe (Anna Soubry); I do welcome the work on the A453. However, if her Government had not cancelled it 18 months ago, work would already have been under way.

Families in Nottingham are finding life hard this autumn. They tell me that they are worried about turning up the heating because gas bills have shot up. It costs more and more to do the weekly shop, they pay more for the bus and it costs a fortune to fill up the car. Thousands have found themselves out of work, but even if they have a job, their wages are likely to be frozen or rising by less than inflation. There certainly is not much left over for Christmas presents or occasional treats, let alone holidays or major purchases.

[Andrea Leadsom (South Northamptonshire) (Con)]

What has happened to their mortgage rates?

[Lilian Greenwood]

Obviously those who are home owners are paying low interest rates, but many who rent their home are having to pay a lot more.

People in my city are angry that the irresponsible behaviour of a small number of people in banks brought our economy to the verge of collapse. They do not feel that those who caused the damage are doing enough to pay for the costs. They are also angry that the Government are making the situation much more difficult by putting up VAT, freezing child benefit, cutting the support families get for child care, taking away their children’s education maintenance allowance, or closing down services they rely on. A year ago, the Chancellor claimed that his £40 billion of extra cuts were necessary to get borrowing down, but now we know that borrowing will be £158 billion higher than he planned—a lot of pain for no gain. It was his decision to cut too far and too fast that choked off growth and led to rising unemployment: more people are claiming benefits and fewer people are paying taxes; people have less money to spend, so businesses struggle and more people lose their jobs. It is a vicious circle that this Government helped to create.

Thousands of people in my constituency face an even bigger hit. Public sector workers are being told that they have to find an extra 3.2% from their pay packets to help the Government pay down the deficit. Teaching assistants, nurses and youth workers are all being asked to pay more. The Government say they need to pour more money into their pensions, but the money is not going to boost their pension scheme; it is going straight to the Treasury. That is why people who have never taken part in a strike in their lives are doing so today. They feel they have no choice. This is the last resort when their employers simply will not listen or negotiate properly.

Let me tell the House about one hard-working family in my constituency that this Government are squeezing. Mark Thomas works for the city council as a neighbourhood enforcement officer. His job is to inspect houses in multiple occupation, of which there are thousands in Nottingham, particularly around our universities. Mark does vital work protecting public health and ensuring that young people are not exploited by unscrupulous landlords. In July this year, Mark and his partner Alison bought their first home together, and Mark’s 14-year-old son lives with them every other week. Like most people, they worked out how much they could afford, taking account of all the other bills they would have to pay each month and how much they had coming in through their wages. In addition to the usual utility bills, Mark pays child support to his son’s mother. Alison went to university to improve her career prospects and has student loan payments deducted from her salary. As Mark says,

“We are not a wealthy family. I would class us as average, getting by”.

Mark earns £2,500 less than the national average wage and currently pays £120 a month towards his pension. If the proposals to increase pension contributions go ahead, Mark will be paying half as much again—an extra £60 a month. Perhaps a member of the Cabinet would not notice £60 a month, but ordinary people who are not completely out of touch know that that is a lot extra, especially when their pay has been frozen for two years already. Mark and Alison face a double whammy because Alison also works for the city council, as an environmental health officer. She earns a bit more than Mark and pays £155 a month toward her pension, so her 50% increase will be £77 a month. One Nottingham family, an average family, getting by, is being asked to find an extra £137.50 each month, not to benefit their pension fund, but to help the Treasury pay down the deficit—a deficit caused by bankers; a deficit that this Government are making worse.

Mark and Alison are worried sick about finding that extra money. Mark says,

“£137.50 would pay our council tax, or buy gas and electric credit for the month, or pay for a large amount of grocery shopping. We already have to save over a number of months to buy necessities such as glasses and dental treatment.”

Mark is anxious that he will not be able to give his son the life he wanted to. He is worried that his son might choose to spend more time at his mum’s house because she is able to provide for him better financially. I am pretty sure that Ministers do not lie awake at night worrying about their family like that, and Mark and Alison should not have to either.

Of course pensions have to be sustainable and affordable, but changes have to be fair. They have to be fair to taxpayers—of course, public servants are taxpayers themselves—but also fair to the people who care for us when we are sick, educate our children and keep our streets clean and safe. The Government need to stop attacking the people our communities rely on day in, day out. They need to listen to why people are so angry and they need to try to resolve the dispute by engaging in real negotiations.

17:30

[Jessica Lee (Erewash) (Con)]

I am delighted to be able to speak about this important subject. I believe that if the country is ever to improve living standards for the long term, three elements will be necessary. We need a Government who have a vision of how such an improvement is to be achieved, who will consider in detail how they can empower families and businesses, and who will deal with the cycles of poverty that trap people in the benefits system and work to make those people’s lives better.

I want to suggest some ways in which we can improve the living standards of families and children, especially vulnerable children, and also help businesses. The most vulnerable children, surely, are those who do not have parents. Their lives are troubled from the beginning. They are children of the state, looked-after children. Thousands of people work with those children throughout the country, doing a really good job in children’s services, the voluntary sector and many other areas, but they need support. For many years there has been a disturbing trend towards disproportionately low outcomes for looked-after children. Their educational outcomes are poor, and the number who turn to crime is disproportionately large.

We simply must do better for those vulnerable children. Such changes can never happen overnight, but I believe that the Government have got off to a promising start. We have benefited from the expertise of the right hon. Member for Birkenhead (Mr Field), whose report on child poverty is a fascinating document containing real insights on how we can make progress, and the hon. Member for Nottingham North (Mr Allen), who also happens to sit on the Opposition Benches and who spoke about early intervention during Prime Minister’s questions today. That is a key theme. If we can target and help vulnerable children with early intervention policies, it will be entirely possible to improve their outcomes. That is the most important aspect, but they will also become less of a financial burden—if I may put it that way—on the state and on taxpayers.

[Amber Rudd]

Does my hon. Friend agree that the Government’s commitment to provide 4,200 new health visitors will help to reinforce that early intervention message?

[Jessica Lee]

I do agree. Other policies will also be helpful, although sadly I have not enough time to list them all. We have the pupil premium and the reports that have been commissioned, including those dealing with social workers produced by Eileen Munro and other experts.

[Andrea Leadsom]

Does my hon. Friend also agree that the Government will be able to save money at local council level by promoting infant early intervention programmes? By helping struggling families at the outset, they will save society much more money further down the track, because those families have been supported from the beginning.

[Jessica Lee]

I entirely agree. I know that my hon. Friend has spent some years examining the issue while running a charity. I think that all Members agree that early intervention will benefit young people, and that we must do all that we can to implement it.

[Glenda Jackson]

Will the hon. Lady give way?

[Jessica Lee]

I will give way once more.

[Glenda Jackson]

No one would disagree with the hon. Lady’s argument, but unfortunately the Government have made the provision of early intervention virtually impossible by removing the ring fence from Sure Start funds, and removing the other support systems that are necessary to produce the results that she and every other Member desires.

[Jessica Lee]

I disagree completely with the hon. Lady’s comments. That sort of scaremongering about local children’s services is not helpful. [Interruption.] This Government have gone out of their way—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I do not think we need any shouting across the Chamber, either from the Government or the Opposition Benches. We should listen to the debate—although this might be the umpteenth time that that has been said this afternoon.

[Jessica Lee]

This is a Government who have shown from the outset, within the first few weeks of their formation, a genuine commitment and a refreshing approach to how we deal with the most vulnerable children. I support what they are doing on that.

There are many other aspects that I do not have time to go through in detail. I mentioned empowering people and giving them opportunities. The Secretary of State has spent years in his work for the Centre for Social Justice examining what is wrong and where the difficulties are in society, and pinpointing the problems. He has been coming forward with radical proposals such as universal credit. We in this House may not agree on the outcomes of those policies, but it is that type of bold, progressive move that we must adopt. Such moves help families who have been trapped in cycles and years of poverty to move on, and give them opportunities that they might otherwise never have.

In the brief time that remains, I want to deal with business. Another aspect of this debate is women and how the Government are working to support them. There are many women in businesses in Erewash who are doing a fantastic job. I welcome recent policies such as establishing 5,000 mentors to help existing women entrepreneurs to develop their businesses. We all know that many women will have to struggle with child care and family commitments, but many start-ups begin at home, on laptops or round the coffee table. We need to support women much more, so I welcome those and other policies such as the Women’s Business Council.

Last week, I spoke in the House during the manufacturing debate. I happen to be the only female MP to have made a substantive speech in that debate, but manufacturing is very important to my constituency, so I want to say in conclusion that it is by supporting business, manufacturing and the policies to help families which I have mentioned that we will improve living standards.

17:37

[Hugh Bayley (York Central) (Lab)]

I am somewhat surprised by how few Members on the Government Benches seem to have realised that the Government’s policy has changed. They have spent 18 months reading out the brief from their Whips Office—or wherever it comes from—and complaining about the legacy of high debt which they inherited when they came to power. However, I say to the hon. Member for Broxtowe (Anna Soubry) that the national debt at the time of the general election was £760 billion. In the first year of the coalition Government, it rose to £905 billion. In the middle of a financial crisis, the coalition Government are doing what the Labour Government did in the middle of a financial crisis. When in opposition, they argued against the private finance initiative.

[Anna Soubry]

Will the hon. Gentleman give way?

[Hugh Bayley]

No; I will make my case, if I may.

In opposition, the Government argued against the PFI, but their investment stimulus, which was announced yesterday—I was one of those who applauded it—is going to be paid for by the same sort of off-balance-sheet private finance as financed the PFI.

Yesterday, I ran the risk of incurring anger from my colleagues by welcoming the Chancellor’s plan B. It is a small plan B, but it is £5 billion of Government money backed up by further off-balance-sheet money from the private sector to stimulate the economy. The Chancellor does not call it a plan B. That would be embarrassing, as he has spent 18 months telling us that there is no alternative to plan A: savage cuts in public investment and infrastructure. But now it is plain for all to see that there has been a U-turn.

I congratulate the Chancellor on having the courage to start to do what is right and necessary for the economy. We heard about the U-turn in relation to a road in Nottinghamshire that was cancelled by the coalition Government and has now been reinstated. The Access York scheme—a £22 million improvement to the city’s park-and-ride system—is another good illustration. It was approved by the previous Labour Government, stopped by the coalition one month after the general election, and has now been reinstated, and I thank the coalition Government for that. In the short term, that green transport system will create construction jobs in my constituency, and in the longer term it will attract more visitors to York who will spend money in the shops and the visitor economy.

Nobody so far has mentioned the situation of the NHS. The Government promised that they would not cut NHS spending in real terms. I asked the Library to look at the figures for my PCT area, where many services are being cut. Gastric band surgery for the obese is not available on the same terms in North Yorkshire and York as in neighbouring areas. Facet joint injections for back pain are available elsewhere but not in York. Assisted fertility is available in neighbouring health authority areas, but not in York.

In the last year of the Labour Government, the increase to the PCT budget was 5.8%, which, with inflation running at 3.7%, was a net increase of 2.1%. In the first year of the coalition Government, the local PCT budget was increased by 2.2% but, with RPI running at 4%, that was a 1.8% cut in real terms. Nationally, the figures tell a similar story. In 2011-12, the real-terms cut in NHS funding is 0.56% on the previous year, and in 2012-13 it is predicted to be 0.33%. The Government gave a pledge not to cut NHS funding, and with inflation running at higher levels than they were anticipating, it is necessary for the Treasury to increase NHS funding to meet that pledge. I ask the Minister to respond to that point particularly.

[Toby Perkins]

What my hon. Friend says about the NHS is absolutely right, but there was also a pledge not to have any major reorganisations of the NHS. In Chesterfield, alongside the financial pressures that the NHS would have been under anyway, additional resources are being spent on reorganisation rather than on patient care. That is the other major problem that the NHS is facing.

[Hugh Bayley]

My hon. Friend is absolutely right. The reason why, under a Labour Government, there was a 2% real-terms increase in the NHS budget is that the cost of an ageing population and the new medical technologies introduced to the NHS is roughly 2% a year. A 2% real-terms increase, therefore, is a standstill in the ability to treat patients, but adding in a costly health service reorganisation and a real-terms cut in the budget means a savage cut in the availability of care for NHS patients.

[Damian Hinds (East Hampshire) (Con)]

At what point was the £20 billion shortfall in NHS financing spotted?

[Hugh Bayley]

The hon. Gentleman should simply look at the record of the 13 years when Labour was in power. The real budget of the NHS almost doubled, but now we are seeing its real spending power being reduced, which his party promised that it would not cut.

I want to speak briefly about help for small and medium-sized enterprises. Autohorn, a successful York business, runs the Europcar franchise and other car leasing and care hire businesses in my constituency, employing 60 staff. A couple of months ago, one of the high street banks withdrew a credit line worth £750,000, which financed roughly a sixth of the company’s fleet. I wrote to the Minister with responsibility for small businesses and asked what he could do to help. He was sympathetic, but offered no practical help. I went to the bank, and I am pleased to say that it has renegotiated with the company and reinstated the credit line. The jobs in that business are now safe, and I hope that it will expand and take on more people. None the less, I say to the Government, “The rhetoric is right, but please, you must do more to back up your rhetoric.” They should make the banks do what they say they are doing and extend credit to successful businesses.

There is no time for me to say what I intended to say about the debt, but let me just say this: there is no argument between our parties about the need to reduce the deficit, but there is a sharp difference about how to do it. The Government’s plan A has made a difficult situation worse over the past 18 months. By cutting growth they have cut tax revenues, and by driving up unemployment they have increased spending. It is time for them to change their policy.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am going to reduce the time limit again. There are still 21 Members who wish to contribute to the debate, and the wind-ups are due to start in 55 minutes. Starting with the next speaker, the time limit will be four minutes.

17:45

[Andrew Jones (Harrogate and Knaresborough) (Con)]

Conscious of the time, I will scamper through what I had written down. I am grateful for the opportunity to speak today, because I want to disagree with the motion. At the heart of it is the idea that household living standards are being squeezed only by the effects of Government policies. Such an idea fails to recognise the economic challenges that this country and other countries are facing. Those problems are debt and what we do with it, combined with the impact of rising prices.

The average household is now paying £1,800 per year in tax just to cover the interest on the debts that the last Government left. That is a huge sum, and because it is combined with big rises in prices and with incomes that are often static, I have no doubt that everyone is indeed feeling squeezed. That is certainly the message that I am hearing from my constituency—but I think that my constituents know where the squeeze is coming from. They see it in the salaries that they earn, which are not increasing; indeed, their salaries may be falling, as hours may be cut or overtime reduced. They see it in the supermarket, with food prices going up, and they see it when they fill their car with petrol or buy domestic fuel.

My constituents also see huge uncertainty every time they tune in to the news and see, across the economies of Europe and the United States—countries that have traditionally been seen as stable and affluent—enormous challenges. People know that this country and others have been living way beyond our means, and that correcting that will be a necessary but unpleasant task—a task made more difficult by the international turmoil.

The key reason why the motion is wrong is that the Government have taken clear and decisive action on the issues that my constituents have raised with me. The Government cannot be accused of being out of touch when they have made so many efforts. We should remember what would happen if we stopped making those efforts to reduce our deficit and protect living standards, and if we ignored the financial reality, as Labour Members seem to.

The impact would be higher interest rates. As has already been said, a 1% increase in interest rates would add £10 billion to mortgage bills. That equates to £1,000 per household. It would also add £7 billion to the cost of interest paid by business, taking away more money that should be directed into business investment.

That is the big picture. Keep interest rates down to protect jobs and living standards.

[Amber Rudd]

Does my hon. Friend agree that that situation was particularly highlighted by the fact that this country could have been in danger of having its debt downgraded? Before the general election, Moody’s and Fitch were watching the previous Government, and had threatened to downgrade.

[Andrew Jones]

My hon. Friend makes a wise point, as ever. Protecting mortgage rates and the rates that businesses pay, and the rates at which our Government can borrow, is critical to our longer-term financial success.

It is fair to say that while we are going through this corrective process, the Government are taking action to protect the living standards of people in this country. I would highlight the 1 million people who are being taken out of tax altogether, and the protection of the state pension by the triple lock. I know that the increase of £5.30 in the basic state pension announced yesterday will be particularly welcome in my constituency, which has quite a high average age profile. People often assume that the community in my constituency is uniformly affluent. That is not the case; there are pockets of real poverty, particularly among pensioners living on fixed incomes.

My constituency is in North Yorkshire, one of the most rural counties in the country. People have to travel long distances to reach work or to access services. I therefore welcome the initiatives on fuel duty, especially the cancellation of January’s increase. Opposition Members are wrong not to recognise the impact the fuel duty escalator had on prices, and I hope they will support the actions being taken by this Government, as a result of which fuel duty will be 10p lower than it would otherwise have been. That amounts to an average saving of £144 a year, and I suspect the figure will be higher for those in rural areas.

These are concrete examples of the action this Government are taking to protect living standards. They are taking action on the issues my constituents raise with me. It is therefore wrong to claim that the Government are out of touch or are not taking action. The motion fails to recognise how much is being done and, astonishingly, maintains the pretence that there is no financial problem to tackle.

17:50

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

This Government are having a big impact on poorer people. We see that particularly clearly in my constituency, where 21% of households have an income of less than £15,000 per annum. Indeed, we have the dubious honour of being beaten in that regard by only one other London borough. As of March this year the majority of young people in my constituency—just over 58% of those aged up to 19 years—lived in households in receipt of means-tested benefits. In Hackney, 39% of adults live in households receiving benefit, and that proportion rises to a staggeringly high 71% when we combine those in social housing and lone parents with two or more children.

I would therefore be very concerned about the impacts on real people of the policies of any Government. In this House, we often hear esoteric debate about the impacts of quantitative easing and the big economic arguments. However, although it is important that we deal with the deficit, we are not accountants. Rather, we are politicians, and we need to challenge Government about such impacts on people and we need to bring people with us.

I want to tell Members a little about some of the people in my constituency, therefore. Many Members have spoken about the many financial pressures facing people, and I might add that businesses in Hackney central, my area’s main shopping centre, tell me that footfall is down by about 40%. Things are hard for them too, therefore, as greater pressure on household incomes means people have less money to spend.

Some families facing financial pressures in my constituency will also face a shortfall in housing benefit from next year, and they will have to cover that by finding some money from their other income. Where will they find that money, however, given all the other price increases, such as for food and energy?

This week, I met a young mother who works at McDonald’s. She does the 5 am to 9 am shift so that her husband can look after the children, and she works 16 hours so that she can get help in the form of tax credits, but the Chancellor’s announcements of this week will have an impact on that.

My constituency may have higher than average deprivation figures, but there is no lack of aspiration. In the last week alone, I have met two middle-aged women who used to work in schools before losing their jobs, but who are keen to get new jobs—to do any job in order to work—and I met a young African woman, immaculately turned out and at a good school, who is keen to go on to university, but her home is minimally furnished, with clothes stored in suitcases and the household investing only in necessities, as their income does not stretch to purchasing items that Members of this House would expect to be able to have.

We need to focus on the impacts on real people, and I therefore welcome the Government’s support for disadvantaged two-year-olds. All Members regardless of party allegiance agree that early intervention is crucial, but the key question is how we do that. Other Government measures are having a disproportionately great impact on poorer households, of which I represent many.

[Andrea Leadsom]

Is the hon. Lady aware that an all-party group inquiry into Sure Start found that fewer than 10 children’s centres had closed? Local councils have shown huge commitment to the ongoing success of this important matter.

[Meg Hillier]

It is easy for the Government to talk in figures, but many centres have been run down to the bare minimum and are helping just a few families, whereas before it was a universal service, which was one of the benefits.

The children in my constituency who turn up at school without breakfast because of their alcoholic or drug-addicted parents—the same children who turn up malnourished at the end of the school holidays—are the young people whom we should be helping to have a better future. All the Government’s actions—all the talk as though the Government are accountants—do not help those families. Whatever our party, we should not be hoodwinked by academic and esoteric debate but should govern for the people we represent and remember that not all of them enjoy the same advantages as we in this place do.

17:55

[Claire Perry (Devizes) (Con)]

May I start by saying that I completely agree with the hon. Member for Hackney South and Shoreditch (Meg Hillier)? When we politicians talk about billions, deciles and quantitative easing it does not resonate in my constituency. It is 25 days to Christmas and 61% of people say that they are cutting their Christmas spending this year, but we often fail to recognise that.

In my short speech I shall therefore try to concentrate on what happens to the pound in someone’s pocket when it enters a household in my constituency, where the average income is £23,000—well below the national average—and where public sector employment is about 35%.

The top slice is taxation. The Government have done a huge amount, especially at the lower end of the tax scales, to lift the poorest people out of taxation. I am incredibly proud of the fact that from next April more than 1 million people will be lifted out of taxation altogether, 60% of whom will be women. That is a far more efficient way of delivering benefits through the tax system than dealing with tax credits, which though a laudable idea are expensive and difficult to manage and result in huge fraud and complexity amounting to billions of pounds a year.

There has been a council tax freeze across the country. We have given councils money to renew that, which is worth £72 a year to my working families in Devizes.

According to the family spending survey, families’ second highest expense is housing, about which we have heard much today. There are families who are struggling to get any housing. In Wiltshire, more than 12,000 families are waiting for affordable housing. My constituents, Nicky and Lee of Pewsey, who are expecting a child, are living in hugely overcrowded, damp conditions, which I have seen and in which I would not house an animal, let alone a young family. The Government’s radical housing reform is designed to help exactly such people. We must get Britain building again, and we must build sufficient affordable housing, which we have failed to do for the past 13 years.

We have heard much about mortgages. Significantly, mortgage payers across all income deciles, to use that hideous term, are saving £10 billion a year as a result of low interest rates—an important benefit to families across the country.

Given the preponderance of service families in my constituency, the Government’s work to put service families at the top of housing allocations, where possible, is hugely valuable.

Families’ next highest expense is fuel and transport. Like many Members, I live in a rural constituency where we have to use our cars. I welcome the fact that by next April fuel will be 10p cheaper and that, by the end of the year, we will save ordinary working families £144 a year in filling up their cars.

We have focused massively on energy consumption. Through the green deal, we are working on greening the most vulnerable households, which is very important.

I welcome this debate and the chance to talk about those whose voices are often the quietest—pensioners and children in care, for example—and it is our job to speak up for them.

Let us be clear: the tough decisions facing this Government would have faced any Government. We must be fair to the next generation—the children of today who will be the workers and taxpayers of tomorrow and who will pay for our pensions and meet our NHS expenditure. Let us have less ideology and more common sense.

17:59

[Jonathan Ashworth (Leicester South) (Lab)]

We have heard many Members on the Government Benches, including the Secretary of State, complain about the level of the structural deficit. However, I recall that up until the financial crash the Prime Minister and the Chancellor supported every penny piece of our expenditure. It was only when the crash hit that they changed their position. To be fair, the Secretary of State, in the period when he was Leader of the Opposition, did not support our spending, but the current Prime Minister certainly did.

I shall make a few comments about the rising cost of living. I think it was the Governor of the Bank of England who said earlier this year that households in 2011 would experience the toughest squeeze in living standards since the 1920s. That has been endorsed by the OBR, which stated yesterday that

“household disposable income is forecast to have fallen by 2.3 per cent this year, a post-war record.”

The OBR went on to predict that it will not be until 2014 that earnings will rise faster than prices. That means, in effect, that over the course of 2010 to 2015 the average growth in real household disposable income will be just 0.5% per annum. It is no wonder that household spending has been so weak and that in the run-up to Christmas we had an extraordinary report from the CBI this week showing that shops are laying off workers at the fastest rate for two years.

Although there were some measures in the autumn statement to help people, such as the fuel duty change, the Chancellor is paying for the changes that he introduced by means of a public sector pay freeze and hitting low- paid workers who rely on tax credits. As I understand it, the changes to tax credits amount to a cut of £1.3 billion to families, affecting 5.5 million families.

I read today in The Times that Tory sources are baffled that Liberal Democrats agreed to this. My constituents will not be baffled when they find out about it. They will be livid when they see what the tax credit cut will be for them. I am particularly concerned because that will lead to an increase in child poverty. The Treasury’s own figures show an increase of 100,000. In Leicester child poverty is a particular issue, and the cut will only make matters worse.

We are plainly not in this together. The Chancellor is not in this together with the young mother on the Saffron Lane estate in Leicester who is seeing her tax credit cut. The Chancellor is not in this together with the young people in Highfields who are still unemployed. Members on the Opposition Benches have been calling for a youth unemployment scheme. I hope that the youth contract announced by the Deputy Prime Minister is a success, but as my right hon. Friend the Member for South Shields (David Miliband) so eloquently explained, a similar scheme introduced by the Lord Chancellor when he was Chancellor in the mid-1990s was an utter failure. I hope the scheme succeeds, but we on the Opposition Benches will scrutinise it carefully. Many constituents ask me whether it would have been better to keep the future jobs fund. They also ask why on earth young people in Leicester have to wait until next April for the scheme to be introduced.

I want to say a few words about the industrial dispute going on today. Many of my constituents are on strike. They take industrial action reluctantly and with a heavy heart. Earlier today the Paymaster General said that he is prepared to consider suggestions on the 3%. I want him to go further, and perhaps the Minister might respond to this. Will he think about going further and look at entering meaningful negotiations on that 3%?

When we left office, the economy was growing, unemployment was falling and inflation was under control. We now have next to no growth, record unemployment and one of the highest inflation levels in Europe.

18:03

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

There has been much talk this afternoon about real people. Thinking about the incredibly important subject of living standards, I thought about a real person I met in 2007. In my constituency, in an extremely poor ward, I met a woman who had just come back from work. She said to me, speaking about the then Government, “Why do they bother giving me a pay packet at all? All I get is the leftovers. Why don’t they just give me the pocket money?” She had just been affected by the 10p tax cut, which famously affected 60% of women and was so damaging to the lowest paid.

Living standards is the overriding important issue that politicians try to work on to improve quality of life for everybody. It is the practical application of the famous phrase, “It’s the economy, stupid”, because it is the private economy, the budget, of individuals and families. There are so many levers that politicians try to move to work on living standards, and in the time allowed to me I will focus on two: taxation and jobs.

I mentioned the lady from Hastings, who lives in Bevan court in Hollington. As a low earner, she will now be approaching being taken out of tax. This has been referred to many times this afternoon, and I repeat that taking people out of tax is one of the most important things the Government can do to combat poverty and raise living standards. I urge the Government, however choppy the economic waters get, to ensure that they stick to the commitment to increase the level to £10,000. Aligned to increasing the level is tax simplification, which really would be welcomed.

Undoubtedly the best way to raise living standards is to help people who do not have a job to get one. I welcome the Government’s initiatives in relation to the youth contract and apprentices, because poverty really becomes entrenched where families follow each other into unemployment. I hope that the universal credit will mitigate some of that, with its associated reforms to help make work pay, such as introducing free child care for when mothers go out to work for one hour rather than their having to work a minimum of 16 hours. The best way to improve living standards is to create jobs and the best way to do that is to stimulate the private sector. I thought that the new president of the CBI, Sir Roger Carr, put it very well when he said:

“Government can set the climate, but it is business that must deliver the goods.”

Yes, we can set the climate, but we cannot produce the jobs. We must encourage the private sector to do that. This Government are doing their best to set that climate fair, despite what is going on in the eurozone and despite the inheritance we had. That is the best way to raise living standards.

[Heather Wheeler (South Derbyshire) (Con)]

Would my hon. Friend like to congratulate the great people of South Derbyshire on bringing forward 1,500 jobs in the Toyota factory and 300 jobs at the Nestlé factory?

[Amber Rudd]

It is great to hear about that marvellous triumph of the private sector. There is another example in Hastings: a year ago Saga moved into the town with up to 800 new jobs. Only 350 have been filled so far, but I hope that they will continue to build on that number. We have high public sector employment in Hastings, so with these changes and cuts, we are delighted to have a major private sector employer able to provide jobs.

[Claire Perry]

Does my hon. Friend agree that, while we must not forget about the public sector, which is so very valuable to so many families, the best way to protect jobs in the public sector is for pay restraint and pension reform?

[Amber Rudd]

I thank my hon. Friend for that intervention, and I would like to take the opportunity to say how much I respect the people who work in the public sector. I value the important work that they do. I and my family have used our local hospital in Hastings and they do an excellent job. It is important that we recognise the enormous value that the public sector provides, but we need more job creation in the private sector.

[Damian Hinds]

With employers talking more than ever about work-readiness and employability skills among the young work force, and with the danger of so many young people not being able to get into work quickly, does my hon. Friend agree that work experience placements are a great way of increasing those young people’s value to employers compared with not having had any experience of formal work?

[Amber Rudd]

I agree with my hon. Friend. The Government’s initiative to bring in work experience is valuable and I understand that the scheme is going well, with people picking up jobs after their work experience.

[Sheila Gilmore]

Last year we were told that squeezing down the public sector would cause more private sector jobs to appear. That has not happened. Why should we expect it to get any better?

[Amber Rudd]

Has not the hon. Lady heard the comments from my colleagues and me about growth in the private sector? Five hundred thousand new private sector jobs have been created in the past year. I dispute her statement that these jobs are not being created in the private sector—they are. But I am in no way complacent. I know that we are in difficult times and that people’s living standards are being squeezed.

The Government are doing an incredibly important job. They are doing their best in difficult times to keep up living standards. Above all, they need to get out of the way of job creation, which is the best way of helping people out of poverty.

18:09

[Lisa Nandy (Wigan) (Lab)]

I want to talk about the living standards of women in my constituency who work in the public sector, who are deeply concerned about their prospects for a decent and dignified retirement, and who are today trying to make the Government listen. A third of my constituents are employed in the public sector. All of us in Wigan have friends or family who are affected by the changes to public sector pensions. To them—and to me, having met so many of these workers over the past six months—the Government’s attempt to characterise this as a strike whipped up by a group of self-interested officials not only does not ring true but is, frankly, offensive.

I want to explain to Ministers why so many hard-working, decent people are out on strike today. I have never met a teacher or a nurse who wants to go out on strike; for them, it is a vocation and not just a job. However, like me, they believe strongly in the right of people who have, for very many years, served this country so well, often on very low pay, to retire with dignity. Like me, they do not believe that the interests of the public will be served by running down the professions of which they are so proud to such an extent that nobody in their right mind would go into them. They are as baffled as I am that their Government are describing their pensions—which are, on average, less than £5,000 a year—as gold-plated. Government Members are keen on quoting Lord Hutton; well, I agree with him that we cannot say, in any sense, that public sector pensions are gold-plated.

People pay high premiums for their pensions, and for many women the return is low. My hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) outlined that convincingly. How many of us in this House face that prospect? I am genuinely grateful that Ministers listened and revised their offer for people who are to retire imminently. That will have a particular impact on women, and I thank them for it. However, I am deeply concerned about the situation for part-time workers whose full-time pay may be over £15,000 but whose real pay is far less. What will their Government do for them?

I want to set out what my constituents would like to happen. First, I will address the problem of affordability. Public sector workers are being hit from all directions. Thanks to the Secretary of State, teachers in academies face a pay freeze, and possibly a pay cut. Women are also having to face cuts to child care, tax credits and family support. I put it to Ministers that a scheme that is not affordable is also not sustainable. Young people are saying to me that they will not be opting into these schemes. They are willing to pay into them, but they want to know where the money is going—to know that it is going into the pension scheme. They are not willing to make sacrifices through their pay—

[Damian Hinds]

rose—

[Lisa Nandy]

We have heard enough from Government Members—it is time they listened.

People are willing to make sacrifices but not to pay for the deficit while bankers continue to receive huge bonuses and executive pay in the City continues to rise. I urge Ministers to understand that in some professions, such as teaching and policing, it is unrealistic to ask people to work until they are in their late 60s. Will they please look at the situation of people who do hard, front-line work day in, day out, and recognise that it is unrealistic to ask them to work for that long?

My constituents and I want the Government to set an example. It is not good enough to say that because low-paid private sector workers receive appallingly low pensions their public sector counterparts should receive the same. The Government should be setting an example to employers by taking a lead on tackling the grossly unfair pay and pensions gap between high-paid and low-paid private sector workers, not pushing their own employees into the most appalling poverty after a lifetime of service.

18:13

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

Given the constraints on time and the number of people who wish to speak, which shows how seriously Members on both sides of the House take this issue, I will try to limit my remarks.

The obvious route to improving living standards is to help as many people back into work as possible. Instead of focusing on the points that have been made about some of the very good schemes that have been introduced, I should like to start with structural issues to do with employment. There is no question but that the Government are introducing measures that will help to increase employment. For example, they are looking at rebalancing out-of-work incentives. We are trying to make work pay through the very welcome introduction of higher personal allowances, which will help people at the lower end of the scale. We are also, as the Secretary of State outlined, looking at the bigger picture of welfare reform.

However, we have to consider matters beyond that. As a former employer who started a business with one or two people and ended up with 100 people, I saw, and shared, the intense pleasure of recruiting someone into a new job or their first job. I also understood, and felt, the enormous pain, and sometimes shame, of people who underwent redundancy through no fault of their own. In the last two years of my working time before I came into Parliament, I was very worried by the level of the CVs that were being produced and the failure of candidates to articulate themselves with even basic English or a basic education. That was a clear sign that some people were being failed by their education. I am sure we all agree on the common goal to improve education and raise standards, but there is no question but that the structural changes that we are introducing will improve people’s chances and lead to a fundamental generational change for the future. If those changes fail, we may be back here in 10 years, still talking about the problem.

[Mr Stewart Jackson (Peterborough) (Con)]

Has my hon. Friend, like me, noted the lack of contrition from the Labour party in its failure to apologise for driving many people into welfare dependency through its policy of unrestricted immigration over the last 13 years?

[Nick de Bois]

I welcome my hon. Friend’s comments on the complex issues that he raised. We have to consider the consequences of both those issues, but I shall continue to examine the structural changes I was discussing.

The welcome sign for the future is that we have rightly shifted the emphasis from a purely academic route and are now pushing vocational routes, whether through apprenticeships or through further skills and training, giving people a choice from the age of 14 or 16 that will meet the skill needs of employers. Otherwise, we could be back here in 10 years discussing many of the same issues.

With the changes that are being introduced, we need to look at the tactical areas where we can help people get into Work that will meet the immediate challenges of improving both their life chances and their living standards. I have met Work programme providers and witnessed how they are determined to provide long-term jobs for those who are unemployed and going through the new system. These programmes are to be welcomed because they seek to provide a long-term, rather than a short-term, solution.

I am particularly impressed by the early results of the work experience programmes, working with the jobcentres, where people who had little chance of breaking the dependency culture and moving to independence are put into a work environment and employers are encouraged to take them on. As a result, over half of those who have been in such employment for three months are getting full-time work. I do not subscribe to the theory that so many people just wish to sit on benefits. The road to work is through breaking the cycle of dependency and putting people into an environment where they relish the challenge and want to work. That is the very life chance that they will be able to see, given the chance to improve their opportunities, shaped around the proposals of my right hon. Friend the Secretary of State.

Much has been said about the debt interest. It is shocking that this country pays about £46 billion a year to service debt in return for nothing. The worst thing is that that money is going to our competitors. The people who are lending us money are the people who will make it harder to help people in this country improve their life chances.

18:18

[Glenda Jackson (Hampstead and Kilburn) (Lab)]

Yesterday, the Chancellor of the Exchequer, as for the last 18 months and assiduously supported by his Back-Bench colleagues, blamed our flatlining economy, constantly rising unemployment and failure of small businesses to obtain loans from banks on the enormous debts that this country was left by the previous Labour Government. His other argument was that the Labour Government had failed to mend the roof when the sun was shining. Those of us who had lived through 18 years of Conservative Government knew that it was not only the roof that needed mending, but also the foundations: our schools, our hospitals, our infrastructure, our social services.

The interesting point that the Chancellor of the Exchequer made yesterday was that our flatlining economy, constantly rising unemployment and consistent failure of small businesses to obtain loans was because, actually, the debt was even greater. What puzzles me is why the Chancellor of the Exchequer, after 18 months and with all the services that the Treasury provides to him, has clearly failed to make the numbers add up. Are we really left with the realisation that we have a Chancellor of the Exchequer who cannot count? I rather worry that we probably are.

The Chancellor then went on with the other canard that his Government have floated ever since they entered office—that this particular crisis is one in which we are all in it together, and that his economic polices will protect our state from the storm. His idea of protecting our state from the storm reminds me of the old Grecian city of Sparta, where the state was protected by exposing the most vulnerable on the harshest, coldest, stormiest mountain that could be found. That seems to be the example that his Government are following, because we simply are not all in this together.

The Secretary of State for Work and Pensions seemed today to state, with great sang froid, that the lowest three deciles in our society carry three times the burden of the top decile, and Government Members throughout the afternoon have stated that all our children must be protected from the terrible debt burden that they will have to face if we do not continue with an economy in which there is almost no growth—because we are all in this together.

It is highly unlikely that any child whose parent and/or parents sit on the Government Benches is in the situation facing many children in families in my constituency, where there is a strong possibility that, owing to the changes that the Government have introduced, most markedly to housing benefit, they will lose their homes. Indeed, they will lose not only their homes, but their schools—that is, those who are fortunate enough to have a place at a school in their area, because in my constituency, although apparently we are all in this together, there is a terrible dearth of school places. The dearth used to be in secondary schools; now it is in junior schools.

We hear from the Government all these wonderful stories about the free schools that will come in down the road, and about the academies that will be built, but they have not been built yet. It is simply not true, as we have heard. The Government’s changes—in relation to the abolition of the ring-fence around children’s centres and the supposed protection of Sure Start—are taking place throughout the country. I have mothers in my constituency who simply cannot find adequate child care—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

18:22

[Bob Stewart (Beckenham) (Con)]

I am very sad that people have seen fit to go on strike today, and I regret it a great deal. I am very pleased that only about 135,000 people seem to have gone on strike, and that they amount to only about one third of those who could have gone on strike.

Some people seem to be happy with the strikes—and in my family they are two teenage girls, whose schools have been closed today. I am very unhappy about that, so my standard of living has, indeed, been touched. I presume the reason why people have gone on strike is to try, ostensibly at least, to retain a high standard of living when they are pensioners—so they think.

I am very pleased to hear for the first time today that we are living 10 years longer than we did in the 1970s, but somehow we have to find the means to look after those people properly until the end of their life, and no one in the House wants to do anything but that.

When I left the services, I tried to ensure that I had a decent pension, and I saved hugely, but in almost two months I lost 20% of what I had saved, and I had saved about one third of what I had made since I had left the Army. So I understand what happens when one loses a lot of money in a pension fund, and I was horrified.

I understand that private sector workers would have to put about 30% more into a pension pot if they wanted a similar pension. We would all like to raise pensions, but we just do not have the money. Let us remember that about 20% of the people who work in the United Kingdom are paid directly or indirectly by the Government. The Office for National Statistics suggested in June that, accounting for gender, age, occupation, region and qualifications, a public sector worker earns on average 7.8% more an hour than a private sector worker.

It is interesting that we all want pensioners to have the best quality and standard of life right until the end. I do not disagree with Members on either side of the House when they say that we should do everything in our power to get pensioners everything they want. I am pleased that those who earn a salary of up to £15,000 on full-time equivalent will not have to pay any more and saddened that others will have to pay more until they retire to provide the means for decent pensions. The Prime Minister said earlier that a nurse earning £34,000 will get a pension of £22,000 when she retires. I am sure that all of us in the House—[Interruption.] Hon. Members can barrack all they want, but all of us agree on one thing: we want to give our pensioners the best possible standard of life until they drop down. We all agree on that, but it is how we do it that matters.

18:26

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

I think that it will be generally accepted that people’s long-term living standards depend on decent pensions and that as a society generally we need to save more. Until now, having a pension has been seen as the safest way of saving—

[Andrew Griffiths (Burton) (Con)]

Will the right hon. Gentleman give way?

[Frank Dobson]

I certainly shall not.

Over the past few years people in the private sector have seen their bosses slash the pensions available and swindle them out of what they thought they signed up to when they joined their pension scheme. Now the Government are turning that idea on the public sector, with higher contributions, longer years of work and then lower pensions. One of the dangers is the lesson people will draw from what has happened in the private sector and is now proposed for the public sector. The Government talk about nudge, but the nudge will now encourage people not to bother to save because some swindler, either public or private, will take it off them and they will not get what they thought they signed up for.

On 11 August the Prime Minister repeated his praise for the emergency services, the police, firefighters, ambulance staff and A and E staff. Then he went back to Downing street and proceeded to press on further with trying to undermine the pension provision for all those people, making them work longer, pay more and then get less in their pension. He clearly considers them only when doing a bit of PR at the Dispatch Box. The same is true of the Government’s approach to teachers.

It is impossible to exaggerate the importance of teachers to this country’s future, especially head teachers, whose leadership is crucial in schools, because they do more for wealth creation than anyone in the City of London has ever done. They educate, train and produce adaptable young people who are the greatest asset to wealth creation in this country so that we can compete with the best on quality and not be dragged down to having to compete with the cheapest on price, because that is something we will never do.

The Government ought to wonder why head teachers are going on strike. Not only are they going on strike for the first time, but they have had a strike ballot for the first time. They are determined to improve their schools and believe that the pension proposals, if they go through, will damage their schools in the long term. Everyone accepts that changes are necessary. The teachers have accepted that changes are necessary, and they accepted agreements a year or two ago to make a bigger contribution.

The interesting question that the Government do not answer is why they have not produced the actuarial review of whether the teachers pension fund is in credit or deficit. They know that it is in credit, but they will not produce the answer because they know that it will expose the fact that they are trying to shift money from the teachers to the Treasury to pay for the incompetence of the Chancellor of the Exchequer, who has made as big a mess as was predicted when he took over as Chancellor. I have nothing more to say, Madam Deputy Speaker.

18:30

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

I am pleased to be called to speak in this important debate to which there have been so many good contributions, but I shall introduce a bit of a downer. If the ghost of Christmas present visited the streets of Ogmore and Bridgend as we run towards Christmas, he would not find a great sight, because we are seeing rising household prices, and a squeeze on incomes because incomes are falling. People who work in retail parks and shops are being asked to reduce their hours, and there is greater job uncertainty. It is not only low earners in working families who are being squeezed; middle earners are being squeezed too. There is a squeeze on the high street, and shops in my constituency are being closed for the first time in 20 years.

There are rises in some areas; there are rising queues at the jobcentres. I am glad the Secretary of State is back in his place. He visited Wales not long ago, and we were pleased to see him. He visited Merthyr where he said there were plenty of jobs out there. On the day he was there, there were 39 jobs, but there were 1,670 people chasing those jobs. He suggested looking in Cardiff, where things would be better. They were better: there were 1,700 jobs there, and 15,000 people were chasing them. I suspect that the situation is no better today. That is the backdrop to this debate.

There are rising queues at my surgeries, at citizens advice bureaux, at housing advice surgeries and, most chronically, at food handout centres. Queues at food handout centres in this century are a repercussion of the current dilemma. Great people are setting up food distribution centres to hand out food, not just to low-earning families but to people who would previously have been thought to be relatively prosperous and doing okay, but are now finding that the squeeze is so acute that they must rely on food handouts.

That is a toxic mix. We are not seeing a rebalancing of the economy between public and private sectors jobs, or seeing private sector growth. We are seeing a rebalancing of the economy from growth to chronic contraction. Why is that coming about, and who is being hurt most? I suggest that the cumulative effect of some of the Government’s new and current policies—those they have put in place over the last year, as well as yesterday—is hurting working families, women and those who are struggling to make ends meet. The Department for Work and Pensions is cutting child care costs from 80% to 70%. That is £13 a week for working families in Ogmore, and around 400 families will be worse off. An Ogmore family with two children will lose an additional £3.70 a week by 2013-14 thanks to the Government’s freeze on child benefit.

In-work families in Ogmore will be £100 per claimant worse off thanks to the freezing of the basic and 30-hour elements of the working tax credit. An average Ogmore family will lose £160 a year because of the increase in the tax credit withdrawal rate. The baby element of child tax credit has been scrapped. No one can put a price on a baby—I have three children in my family—but some money can be paid towards that. The credit was £545, but it has now been scrapped. The average loss from the cut in the second income threshold will be £285 per family. In total, around 9,100 families in Ogmore will be affected by the tax credit cuts. That is a crying shame.

The Government often say that they do not want to learn lessons from the Opposition, so let them learn from Chris Johnes, Oxfam’s director of UK poverty. He said:

“Freezing working tax credits will penalise those who are trying to make a living by working their way out of poverty—this should be among the last places the Government looks to make savings. At a time when the lowest-income households are already struggling to make ends meet, it could push even more working people into poverty.”

That is the Government’s legacy.

18:34

[Julie Hilling (Bolton West) (Lab)]

I am grateful to have been called to speak in this debate. I declare an interest as a proud trade unionist and a proud deferred member of the local government pension scheme.

The pension dispute is just the tip of the iceberg of the devastating effect of the Government’s policies on the living standards of ordinary people. My surgery is full and my postbag is full of letters from people who are struggling because of Government policies, which make the poor pay for the devastation that irresponsible bankers wrought on the world.

People are losing their homes and jobs. They are terrified that they will lose their disability living allowance. They are struggling to pay their household bills and are very frightened. Things will only get worse for those ordinary people. Let me tell hon. Members what my constituents are telling me. Paul works in customer accounts for a local council. He tells me that he strongly objects to the pension proposals affecting him. He says that he has already lost £3,000 owing to the new pay and grading structure and will now have to pay 3% more for his pension and work longer. Like many thousands of others, he believes that he may well have to leave the pension scheme altogether.

Jeanette is another constituent who is deeply annoyed by the cuts to the local government pensions. She says:

“I really need to express my disgust at the treatment of Local Government employees, as the majority of us do work very hard and make a great contribution to local services and meeting national targets and budgets. I feel we are pawns in the political game and are easy targets, with propaganda being used to fuel the media misconception that we are lazy, workshy overpaid employees who have a cushy working life in comparison to the private sector.”

She went on to say that she felt that she was having her pension stolen from her.

It is no wonder that those constituents are so angry. Their pension scheme is a funded scheme: both employee and employer pay actual money into an actual fund. It takes in £4 billion a year more than it pays out and was changed just a few years ago to make it sustainable. Now the Secretary of State for Communities and Local Government wants to rob the fund of £900 million—not to make it sustainable or to improve it, but to satisfy his need to make cuts, rather like the worst employers of the past who raided pension funds.

This illustrates the complexity of public sector pensions. There are six schemes, not one—all with different rules, accrual rates, retirement ages and benefits. Contribution rates range from 0% for the armed forces to 11% for the police. To speak of them as though they were one unaffordable public sector pension is misleading. The Government say that their proposals are an improvement, but they are not telling the whole truth. The average public sector worker will still end up with a pension of less than £6,000, will have to work a number of years longer, will have to pay 3% more and have their pension uprated by the consumer prices index rather than the retail prices index.

It is no wonder that public sector workers are angry, but they are also scared. Paula, a teacher of deaf children for 30 years, told me of her fears that her pension will lose its value because of its being uprated by the CPI. She said:

“I have little or no family, I live alone and if I were to fall into debt the fear of that keeps me awake at night. My lifestyle is already very frugal, I have no choice about that because of the price of gas, electricity and fuel. My pension puts limits on my lifestyle now. I dread to think of what will become of me in a few years’ time when my financial position has not kept pace with prices and that wakes me up at night constantly.”

Of course, there is much worse to come for the low paid: cuts to housing benefit and in-work benefit for a great many low paid workers—

[Mr Speaker]

Order. The Front-Bench winding-up speeches will begin at 6.40 pm. I call Pat Glass.

18:38

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

Is it worth it? I will have to rely on bullet points.

I want to speak about the impact of the Government’s policies on children and young people—their educational chances, their life chances and their employment. In the past 19 months, we have seen a Government who have a massive gap between their stated political objectives and the main drivers put in place to meet them. We heard from the hon. Member for Broxtowe (Anna Soubry), who said that she came into Parliament to eradicate child poverty, yet the Government are going to put 600,000 more children into child poverty. The hon. Member for Erewash (Jessica Lee) gave a notable speech, much of which I agreed with, about early intervention, yet the Government have massively cut funding to local government, which is going to deliver on that.

The Government tell us that they want to narrow the gap in outcomes between the poorest and the most advantaged in our schools, that they want more children from disadvantaged backgrounds to go to university and that they want to build skills for the future—but what do they do? They slash the education maintenance allowance. The number of young people going into further education this year has fallen—in one year—to levels last seen in 1990. That will not deliver a knowledge-based economy for us in the future. They triple tuition fees and tell us that £9,000 will not be the norm. Wake up—it is the norm, and as a result, this year applications for higher education fell by 12% nationally and by 15% from British students. The biggest drop has been in applications from young people in the most disadvantaged and poorest families.

That is what the Government are doing. What they say is one thing, but what they deliver is something completely different. It is not just that they are failing on the economy now; it is that they will not deliver on the skills we need to get us out of this mess in the future.

18:40

[Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)]

Today’s debate has been an extremely good one, with many Members contributing. It has been a very serious debate about the real consequences to families across the country of yesterday’s facts and figures and yesterday’s decisions. We are holding the debate on the day on which the Institute for Fiscal Studies said that Britain is facing the steepest drop in living standards for generations, and the day after the Chancellor told us that there will be a quarter of a million more people on the dole each and every year, that growth has collapsed and that borrowing is set to be an astonishing £158 billion higher. We know that it is hurting, but it is not working.

I will not mention every Member who spoke in the debate, because to do so would take me to the end of my time, but there are some things on which we agree. The hon. Member for Dover (Charlie Elphicke) said that the best way to increase living standards is to increase growth. I agree, but the Government’s policies are choking off growth, not supporting it. The hon. Member for Poole (Mr Syms) made a thoughtful speech, and the hon. Member for Erewash (Jessica Lee) talked about the impact on children in care. The hon. Member for Broxtowe (Anna Soubry) took us to Planet Zog, I think, and even worse, the hon. Member for Aberconwy (Guto Bebb) wanted to take us back to Wales in the 1980s when, by my recollection, unemployment was considerably higher than it is today.

We heard serious speeches from my hon. Friend the Member for Erith and Thamesmead (Teresa Pearce), who described discussions with women in her constituency who are really worried about the impact of Government policies, as well as the hon. Member for South Down (Ms Ritchie) and my hon. Friends the Members for Stoke-on-Trent South (Robert Flello), for Gateshead (Ian Mearns), for Leicester South (Jonathan Ashworth) and for or Ogmore (Huw Irranca-Davies), who all talked about the devastating impact on communities, families and child poverty. My hon. Friend the Member for York Central (Hugh Bayley) and my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) talked about the impact on housing and jobs, and my right hon. Friend the Member for South Shields (David Miliband) made a powerful speech rebutting the claims, to which Government Members are clinging, that low interest rates are a sign of confidence on the international markets, instead of a reflection of decisions made by the Bank of England. As Japan’s experience for many years shows, they are a sign of weakness in the economy.

The Treasury analysis published yesterday of who is taking the strain of the Government’s plans is pretty gloomy. It shows that the impact of their plans next year alone is regressive across 80% of the population. It also shows an increase of 100,000 in the number of children in poverty, just as a result of the autumn statement. The IFS analysis published today, which takes account of far more measures, is far more damning, showing that the poorest 30% in society will lose more than three times as much as a share of their income as the richest 30%. In addition, an earlier analysis shows that 600,000 more families will fall into absolute poverty.

We remember what the Government said. The Secretary of State for Work and Pensions said today that he was protecting the poorest families. No, he is not, and the IFS figures make that clear. The Chancellor said, “We’re all in this together,” and the Deputy Prime Minister said his cuts would be progressive. Time and again, the facts show the opposite. Even today, the Prime Minister claimed that he was increasing child tax credit, providing more support for families. He said that he had increased child tax credit this year, but the truth is that this Government have cut tax credits for families, cut child benefit, cut Sure Start and cut the child care element, so some families are losing more than £1,000 in child care support alone.

As for the Government’s claim today that they will increase child tax credit by £135 next year, that is just inflation. They are not increasing the value of tax credits; in fact they are cutting them, and cutting child benefit too. A family on the minimum wage with two children will lose £320 a year as a result of yesterday’s decisions alone, and over £100 more as a result of the freezing of child benefit. That is the equivalent of about two weeks’ take-home pay. If the Prime Minister thinks that he can stand in the House of Commons and claim that he is increasing support for children, and imagines that parents will not notice what is actually happening to their pay packets and what they receive at the end of the month, he is simply out of touch with what is happening in communities across the country.

We understand that the Chancellor wanted to raise money for youth unemployment. It would have been better not to abolish the youth guarantee and the future jobs fund in the first place, it would have been better not to let long-term youth unemployment rise by more than 80% since the beginning of the year, and it would have been better to prevent youth unemployment from hitting the 1 million mark and start reducing it, as we did before the election. However, we do support extra action for youth jobs, and indeed we said that we would raise a bankers’ bonus tax in order to pay for it.

What was the Chancellor’s response to that? It was not “Oh yes, what a good idea, let us introduce a bankers’ bonus tax.” It was “No thanks, I think I will leave the bankers alone. In fact, I was planning to cut their 50p rate as soon as I could afford it. I have another wheeze: I want to take the money from families who are on the minimum wage.” That is what the Chancellor did yesterday. He has already taken £6 billion a year from support for children, and now he has gone back for over £1 billion more: £7.5 billion a year from children, and £2.8 billion from the banks. He is taking between two and three times as much from children as from the banks. That is the supposedly progressive decision that this out-of-touch Government have made.

What do the Government’s proposals mean for women? We know that the Government are already worried about their popularity among women, for the No. 10 memo tells us:

“We know from a range of polls that women are significantly more negative about the Government than men. We don't at present have a finer-grained analysis than this”.

It also says:

“the group of Cabinet Office and No 10 women we assembled felt strongly that the general tone and messages of government communications, particularly around deficit reduction were an issue - with women, especially in the public sector feeling targeted… we found the insights useful.”

We can imagine the Tory special advisers scouring the Cabinet Office and No. 10 for women who would tell them the obvious. It is not rocket science, and it should not take so much for them to find out what is the experience of women across the country.

The memo also says:

“we are clear that there are a range of policies… which are seen as having hit women, or their interests, disproportionately, including… Public sector pay and pensions…Tuition fees… Abolition of Child Trust Funds… Changes to child tax credit and the childcare element… Changes to child benefit… Rising cost of living… Lone patent obligations… Income support”.

Exactly. So what have the Prime Minister, the Chancellor and the Deputy Prime Minister done in response to that? They have simply gone back for more.

In the autumn statement, the Government are hitting women hardest again. We already knew of the £16 billion that they were raising in tax and benefit changes— £11 billion of it coming from women, even though women still earn less and own less than men. It is hurting but it is not working, so the Government think that they should just go back and make it hurt more. The Prime Minister can try as much as he likes with his new women’s spin doctor, the marginally greater chance that a woman will occupy the throne as a result of the succession changes, and some family-friendly photo opportunities, but that is all that he is offering, and it will not work. The Government are out of touch, and women throughout the country are aware of the damage that they are doing to their families and their lives.

The biggest problem, of course, is the impact on growth and jobs that is affecting women, families and everyone else in the country. An extra £29 billion on the benefits bill is not lifting people out of poverty, and is not helping people into work. It is the cost of failure: the choking off of recovery, more people on the dole, and the pushing up of inflation. We should be investing in growth and jobs, not borrowing to pay the bills of failure. This is hurting, not working, and it is time to change course.

18:50

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

I agree with the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) on one thing: this has been a worthwhile and important debate. We have had 31 contributions from across the House on the important issue of living standards. However, there is an omission in the motion. It refers to the impact of policies on living standards and to hard-working families, women and parents, but it does not mention pensioners at all. I wonder why. It is probably because the Labour party assumed that we were not going to keep our promise, but we did. We uprated the basic state pension by 5.2%—the biggest increase ever, at £5.30—and passed that money through to the poorest pensioners. We have done the right thing by pensioners; it is not surprising that Labour Members do not want to talk about it.

What are the key things that matter to our constituents about living standards? The first and most important is their mortgages. One in three households has a mortgage. We have the lowest mortgage rates on record and we have kept them that way.

The right hon. Member for South Shields (David Miliband) made a thoughtful contribution in which he reminded us why most of his colleagues wanted him as party leader and not his brother. He explained that he did not think the Government’s stance on the fiscal position had anything to do with interest rates, but does he accept that Britain’s credit rating has improved, almost uniquely, because we are taken seriously on tackling the debt? That is the crucial difference between this side and the Opposition.

The hon. Member for York Central (Hugh Bayley), if I can distract him from his BlackBerry, referred to the national debt and to Labour’s golden economic legacy. He forgot to point out, however, that the national debt—£750 billion in total the year before the election—was slated under his plans to double to £1.5 trillion. I may be old-fashioned, but with a trillion here and a trillion there, we are soon talking about serious money. That was the burden.

We have talked about our children, with some almost dismissing the idea that we as a society have lived beyond our means. For every £3 we raised in tax, we were spending £4. That simply could not go on.

[Several hon. Members]

rose—

[Steve Webb]

I am not giving way.

That could not go on, and it meant that our children will have to pick up the tab. Similarly, several hon. Members, including the hon. Member for Erith and Thamesmead (Teresa Pearce), have referred to public sector pensions. This is a classic case of asking our children to pick up the tab. For example, the right hon. Member for Holborn and St Pancras (Frank Dobson) asked why we did not value the teachers’ pension scheme, as we might find that it was in credit. I have news for him: there is no scheme; there is no money. Today’s teachers pay for today’s retired teachers. There could not be a credit, because there is no fund. That is one of the problems with this whole debate. [Interruption.] There is no fund and no money; there is nothing invested. [Interruption.] If the right hon. Member for Holborn and St Pancras wants to intervene, I am happy for him to put on record what he is saying from a sedentary position. As a former Secretary of State for a major spending Department, if he does not understand that there is no cash in the teachers’ pension fund, I will be very pleased to take an intervention from him.

[Frank Dobson]

The Minister and the Secretary of State refer to creating jobs in the private sector to compensate for the ones that have been lost in the public sector. Can he confirm that neither his Department nor any other is checking on how many of the so-called new jobs in the private sector are simply ones transferred from the public sector?

[Steve Webb]

I can understand why the right hon. Gentleman did not want to deal with the issue that I raised. I can point out to him, however, that the total number of people in employment will rise from 29 million last year to 30 million in 2016 under the projections. There will be more people in employment, and a rebalancing towards a vibrant private sector, which we want to see.

As well as mortgages, Members on the Government side have talked about the council tax. Labour Members did not seem to want to talk about the council tax, as though it did not matter. The council tax is one of the most regressive taxes that we have. This Government froze it and will freeze it again. That is real help for hard-working families.

A number of hon. Members talked about fuel prices and petrol. It is this Government who cancelled the 3p rise in January. It is Labour that had the escalator, year after year, with above-inflation increases in petrol prices. Under our plans for duty, petrol prices will be 10p a litre less than under Labour’s plans.

[Mr Byrne]

I am following the Pensions Minister’s argument closely. The Budget also set out about £30 billion of cuts in the next Parliament. Will he confirm whether it is the Liberal position to support those cuts?

[Steve Webb]

I am grateful to the right hon. Gentleman for intervening, because I asked him the question when he was speaking, and he said that he opposed cuts for people who are out of work and that he opposed cuts for people who are in work. When I asked him whom that left, he said nothing—he never answers the question—and his Back Benchers said, “The bankers”. He was in the Treasury when, before the general election, the Labour Government introduced a “temporary” bankers’ bonus tax. If Labour thought they were going to win the election, why did they not make the bankers’ bonus tax permanent? It was a one-off, pre-election gimmick, whereas this Government have introduced a banking levy that, every year, will raise more than his temporary banking tax raised in any year.

[Sheila Gilmore]

Will the Minister give way?

[Nic Dakin (Scunthorpe) (Lab)]

Will the Minister give way?

[Steve Webb]

I have four minutes to respond to more than 30 speeches. Out of deference to Labour Members, I will do so.

The shadow Home Secretary talked about the position of women, and it is important that we deal with that point. The difference between this Government and the Labour Government is that we are taking 1 million people out of tax, the majority of whom are women, whereas her Government abolished the 10p tax rate, from which the majority of the losers were women.

There has been much discussion of the gainers and losers from the Government’s policies. I refer the House to the chart on page 4 of the Treasury document, “Distributional analysis to accompany the Autumn Statement 2011”, which ranks households by expenditure and shows the smallest cash losses at the bottom and the biggest cash losses at the top—progressive changes in difficult times.

[Several hon. Members]

rose—

[Steve Webb]

My hon. Friend the Member for Bristol West (Stephen Williams) made a characteristically thoughtful contribution pointing out the contrast between the two parties’ records—the 75p pension rise and the abolition of the 10p tax rate under the previous Government, and the personal tax allowance increases that this party is bringing in.

[Hon. Members]

Give way!

[Mr Speaker]

Order. The House must come to order. It seems clear on observation that the Minister is not giving way.

[Steve Webb]

I am grateful, Mr Speaker.

The hon. Member for Dover (Charlie Elphicke) spoke about how low interest rates benefit growth, which is crucial to the economy. The hon. Member for Broxtowe (Anna Soubry) raised the crucial issue of us having to pay our own way.

In opposition, one must do two things: yes, one must oppose the things that one is against, but one must also propose the things that one is in favour of. The Labour party failed to tell us where the £46 billion of spending cuts identified by the shadow Secretary of State for Work and Pensions would come from. We heard speech after speech from Labour Members who were opposed to every single cut, but I heard no Labour Member say what they would cut. We heard that there should not be cuts for people out of work, or for people in work, that there should not be cuts to the public sector, or to the private sector. Where does all the money come from? Answer came there none.

[Ms Rosie Winterton (Doncaster Central) (Lab)]

claimed to move the closure (Standing Order No. 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question put accordingly.

18:59

Division 406

Ayes: 226

---

Labour: 215
Democratic Unionist Party: 4
Scottish National Party: 4
Social Democratic & Labour Party: 3
Alliance: 1
Independent: 1

Noes: 293

---

Conservative: 250
Liberal Democrat: 41

Business without Debate

Wednesday 30th November 2011 Commons Chamber

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11),

generalised tariff preferences

That the House takes note of European Union Document No. 10052/11 and Addenda 1 to 3, relating to a Draft Regulation applying a scheme of generalised tariff preferences; and supports the Government’s aim that the reform of the Generalised System of Preferences (GSP) should be an opportunity to focus the scheme on the poorest countries by increasing preferences to those on the scheme and widening the eligibility criteria of the special incentive arrangement for certain countries, GSP+, but that this should not be used as an instrument to increase protectionism by the blanket removal of all Upper Middle Income Countries.—(James Duddridge.)

Question agreed to.

Planning National Policy Statements

Ordered,

That Standing Order No. 152H (Planning: national policy statements) be amended as follows:—

(a) line 28, leave out sub-paragraph (c) and insert—

‘(c) may report from time to time and shall cease to exist when the relevant national policy statement is designated’; and

(b) leave out paragraphs (4) and (5).—(James Duddridge.)

Dalgety Bay (Radiation)

Wednesday 30th November 2011 Commons Chamber

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

19:15

[Mr Gordon Brown (Kirkcaldy and Cowdenbeath) (Lab)]

I have called this debate for one purpose and one purpose only: to persuade the Ministry of Defence of the need for urgent action in an area in my constituency where radioactive materials have been discovered.

The affected land on the shores of the Firth of Forth occupied by and near Dalgety Bay sailing club is a few yards from people’s homes, near where children play, and is an area where many go for walks. But in the past six weeks, materials that were dumped there by the Ministry of Defence in the 1950s—aircraft dials, aircraft paint and other materials—have been discovered, with radioactive levels that are 10 times anything witnessed before. They are an undeniable hazard, they are materials which children should not touch, and they are particles which should be removed quickly and in full.

Urgent action is necessary not just because of risks to safety, but because the Scottish Environment Protection Agency has now stated publicly that unless the Ministry of Defence brings forward a remedial plan for the area, the agency will designate Dalgety Bay a radioactive contaminated piece of land. This will be the first and only land to be designated as radioactive contaminated in the United Kingdom, and the agency says that it will nominate the Ministry of Defence as the culpable party.

[Lindsay Roy (Glenrothes) (Lab)]

Does my right hon. Friend agree that the Ministry of Defence abdicated its responsibility for the contaminated land when it unilaterally informed the local forum that it

“had no plans to continue monitoring and removing contamination from the site”?

Surely such irresponsible inaction deserves the strongest condemnation.

[Mr Brown]

That was in 2010. I shall come to that.

I have had to call this debate because, despite a succession of approaches to the Ministry of Defence—letters, phone calls, a chance conversation with the Secretary of State for Defence, whom I acquainted with the issue—the Ministry of Defence has yet to instruct the necessary actions and agree that a plan for remedial work is prepared, funded and implemented.

Since 1983 I have been the Member of Parliament representing the community of Dalgety Bay. It is near where I grew up and went to school, and near where I live and where my children go to school, so I have been aware for many years of the history of the site and of the past dumping of materials there by the Ministry of Defence. Those came from Donibristle airfield, which was created in 1917, was opened, closed and then opened again, and when reopened became, like the nearby Royal Navy base, vital to the second world war effort. Even as late as 1959, when it was announced that it would be closed down as an aircraft repair yard, it employed 1,400 industrial and non-industrial staff.

In that time, disused aircraft, including aircraft dials, materials used for painting dials and other instruments, were broken up and dumped at Dalgety Bay. On that land houses were built and the sailing club was established. Since 1990 materials with some radioactivity have been detected at Dalgety Bay. In June that year, after environmental monitoring by Babcock, the owners of Rosyth dockyard, elevated radiation levels including the presence of radium 226, were found. At that time particles were removed. As was reported later, they were removed “as far as possible”, but since 1990 and at regular intervals, I and the local community council, headed by Colin McPhail, have pressed for regular monitoring of any potential threat to the safety of local residents and to reassure locals that we have consistently asked for surveys to be done, tests to be carried out and investigations to be made.

Until 17 October this year, no investigation that I have seen has yielded evidence of substantial pollution or danger. In fact, at the request of local people, the National Radiological Protection Board—now the Health Protection Agency—carried out surveys during May and June 1991, as it monitored the beach, and then in 1992, 1993 and 1994. It reported that it found only low-level contaminated material buried below a layer of soil.

That was followed in 1995 by a detailed risk assessment, commissioned from a multidisciplinary research team at the university of Aberdeen. Its purpose was to assess the implications of radiation contamination, to consider the level of risk to the public and to review the options for reducing the contamination, if that were necessary. The study found that the variations in the ambient radiation dose rate values were within normal levels and calculated that the highest ambient dose rate found at Dalgety Bay was only two thirds of that found naturally in the granite in Aberdeen.

When the inquiry team published their survey in 1998, they reported that radium contamination was present not as a layer in the sediment, but randomly distributed as particles. However, they found that the number of radiation particles found in the area surveyed was very small and, thus, the risk of coming into contact with such a particle was “very low”. They found that the risk of inhalation was also low and reported that skin contact with a particle for an extended period could produce a very small burn similar in nature and severity to a fire-ash burn, but concluded that the maximum fatal risk per year from inhaling or swallowing a radioactive particle to any user of the area surveyed was negligible; it was calculated as clearly

“less than one in a million”.

However, we rightly agreed that we would continue monitoring, and in 2006 SEPA compiled a report that concluded that further work needed to be done. It also highlighted the possibility of coastal erosion that might bring particles nearer to the surface, but said:

“The most probable effect of an encounter which lasts for a number of minutes is a skin burn. The chances of ingestion…is highly unlikely, around one in half a million per year”.

The common view locally was that during the break-up of some aircraft some of the redundant luminescent materials had been burnt, and it was likely that the resultant ash and clinker produced from burning were either buried or spread on the ground surface. It was reported:

“It is therefore possible that the action of burning of luminised dials can produce a diverse range of chemical forms”.

Since then, at our request and at the request of others, six monitoring surveys and three intrusive investigations were carried out by Entec over the course of 12 months, and they have found that the radioactive materials probably derived from a bed of ash material. But, as was reported,

“recontamination of the beach continued, indicating that either the ash horizon was not the only potential host material, or that”—

other—

“sources continued to be present…and continued to re-contaminate the beach.”

Of the 128 particles, 48 were recovered from investigations of the ash bed, 28 from clearance surveys of the beach and coastal path, and 51 from regular visits to monitor the area. These surveys made it clear that

“the data do not indicate a reducing rate of hazard recurrence…at the site.”

I should add that, also after our request, work was also commissioned over these years by the health board, whose study of data from 1975 to 2002 did not reveal any correlation between the location of the radioactive materials and the incidence of cancer. So until a few weeks ago none of these surveys revealed any substantial risk or out-of-the-ordinary levels of radiation. Many of them were carried out at the expense of the MOD, because it rightly recognised that this monitoring was its responsibility. But in mid-October, work done by SEPA dramatically revealed particles at a level of radiation 10 times that of any previous discovery and led to the decision by SEPA, after repeated contact with the MOD, that it had to take action in the weekend of 17 to 19 November to remove potentially dangerous items. This was work that, as the correspondence makes clear to me, the MOD was willing to instruct. However, unfortunately, it would not guarantee that it would immediately remove any items discovered or submit them for full investigation.

So on Saturday 19 November, without the help of the MOD, SEPA took action and removed what it reported to be

“a second potentially high activity source”.

It was

“five times greater activity than anything previously recovered”.

SEPA also reported that a

“second source was also recovered”

and that

“a third source was found at the surface”

and that required urgent action.

So the real issue here is that there needs to be agreement on a plan for remedial action, given what we know now about the radioactive materials on the site. In October, SEPA wrote to the defence industrial office asking for assistance in monitoring and for a plan of action to repair the site. On 10 November—I quote from its letter—the MOD said, astonishingly, that

“any suggestions that the Ministry should provide a plan of action is immature at this stage”.

On 24 November, SEPA again wrote to the MOD asking for a commitment to undertake appropriate remediation and

“the delivery of a plan”

with

“sufficient resources and funds to enable work to be undertaken”.

However, at the most recent meeting with the Dalgety Bay officials, the MOD was

“unable to commit to undertaking any remediation following site investigation”.

That has caused SEPA to say that unless there is a plan—not just agreed in principle but produced by the MOD—it will, in March next year, designate the site as contaminated and name the MOD as the responsible party

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

My right hon. Friend is to be congratulated not only on securing this debate but on the dogged way that he has pursued this issue over a number of years. He will know that the beach is incredibly popular with his constituents and with mine. Does he agree that it is absolutely vital that the Ministry of Defence deals with this quickly so that our constituents can continue to enjoy this beauty spot?

[Mr Brown]

Yes.

We now have clear evidence that there is a radioactivity level higher than anything that has been seen before. We have a desire—indeed, a demand—locally for remedial action. The community council chairman, Colin McPhail, has said very eloquently that fears in the area need to be allayed. We have correspondence, which I have seen, between the two Government agencies, but it has failed to resolve the issues despite the urgency of the need for action. It is therefore necessary that I bring this matter to the House so that we can secure agreement on preparing and financing a remediation plan for the site.

Over the years, the MOD has funded work, including the removal of radioactive contamination from homes in the area, but the result of its work on those homes has never been disclosed. It has funded the permanent erection of signs to provide warning information to the public, but those signs now require updating. In 2009, the MOD undertook an investigation of the slipway area which recovered 100 sources of radium. The MOD analysed whether the inter-tidal area was itself the source of the contamination, but found that not to be the case. The MOD has agreed to fund three annual surveys and removal programmes at Dalgety Bay. However, SEPA believes that it has detected caches of contamination that MOD contractors may have missed. Through the re-monitoring that SEPA has done, significantly more sources of radioactivity have been found, and while the MOD contractor removed 33 sources, SEPA has removed 442 separate particles. Together with this large number of sources, the SEPA investigation has recovered four high-activity sources from the inter-tidal area of Dalgety Bay, and those are, at the highest levels, 76 times greater than anything previously reported. In the light of recent findings, SEPA now considers that any survey and removal at Dalgety Bay that was previously agreed is not enough. It believes that joint work is now required with the Health Protection Agency and that an urgent plan is required to repair the site.

The community that lives in Dalgety Bay and in the vicinity of Rosyth dockyard is a loyal and patriotic community whose patience and good will has been sorely tested. At one time, Rosyth dockyard and naval base employed 15,000 people and was the base for thousands of servicemen and women. Churchill rightly described Rosyth as the greatest defended war harbour in the world. Today, it is home to 1,500 workers who are building the new aircraft carriers, but the naval base that has been so important to the local economy has gone. The current proposal for Rosyth is that nuclear decommissioning work be done on nuclear submarines that are currently stored there. Ironically, at the very moment when the MOD is trying to persuade local people that their fears about any radiation from that nuclear source should be non-existent, it seems to be utterly slow to act on the removal of the other source of radioactivity, which is its responsibility. This is no way to treat loyal supporters of our armed forces and people who, having refitted the Polaris submarines at Rosyth, have lived with nuclear dangers for years.

It seems very strange that this country has been home to nuclear-powered and nuclear weapons submarines, nuclear power stations and experimental nuclear work at Dounreay, and yet we face the prospect, because of the inactivity of the MOD, that a small piece of land occupied mainly by a sailing club will carry the title of the only officially registered area of radiation contaminated land in the United Kingdom.

The damage to the area, the loss to the community, the disruption to local people, the reduction in property values, the loss of a public space where children can play and young people can sail are totally avoidable. That can be avoided by decisions of the MOD that should be announced today. I ask in this debate for a recognition of the Ministry’s responsibility to agree to develop and to fund a remedial action plan to clear up the Dalgety Bay site. The community council, among others, is right to demand nothing less, and, on behalf of the community I make their demands directly to the Minister this evening. I expect not only a full and comprehensive response but a decision to be announced this evening that the action that is necessary to draw up a remedial plan to clear the site at Dalgety Bay will be instructed by the Ministry of Defence immediately.

19:30

[The Parliamentary Under-Secretary of State for Defence (Mr Andrew Robathan)]

It is a pleasure to see the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in his place and I congratulate him on securing this important debate. All those involved understand that there is a serious issue at Dalgety Bay. The Ministry of Defence, the Scottish Environment Protection Agency and other stakeholders who comprise the Dalgety Bay Forum all recognise that there is an issue.

I do not entirely recognise the portrayal of the situation given by the right hon. Gentleman. Since the early 1990s, we have been aware that radioactive material was being washed up on the foreshore and found on land, as he said. This material takes the form of fragments from navigational instruments and dials coated with luminescent paint with radium 226. The flakes of such paint are radioactive. We have worked with SEPA and the Dalgety Bay Forum for many years, certainly between 2007 and 2010, to understand the risk and the requirement for remedial measures. Such measures should be proportionate, sustainable and cost-effective.

We also agree that removal of radioactive sources by MOD and SEPA has reduced any hazard posed to the local population. Notwithstanding the fact that the issues have been around for some time, the general consensus has been that risks were low, as the right hon. Gentleman admitted. We took this approach because it was consistent with the advice of the Health Protection Agency, which he mentioned. Until recently, SEPA publicly acknowledged the MOD’s contribution to finding a credible solution. However, following preliminary testing earlier this month, SEPA disclosed that it has discovered higher levels of radiation than in previous tests. Naturally, this has caused a certain amount of concern among his constituents and he is right to raise that.

Given the recent finds, we agreed only last week to work with SEPA over the next four weeks to identify a programme of work that will inform the scope of any long-term credible remediation and management measures. This work will also look at interim management measures and we will continue with our existing monitoring programme. Indeed, the first meeting between the MOD and SEPA to establish a credible investigation plan occurred yesterday, which is further evidence of how seriously we take this issue.

Previously, we have acted voluntarily and discreetly to investigate and remediate radium 226 contamination affecting residential properties that have been built on the site of the former Royal Naval Air Station Donibristle. This measured approach was welcomed by the residents as our action avoided unnecessary blight, anxiety and stress. The MOD also took forward the recommendations of the Committee on Medical Aspects of Radiation in the Environment. We remain concerned that any designation of the area because of the contamination would be not only premature but disproportionate and certainly not in the interests of residents.

I must also make it clear that the location from which the artefacts and radioactive material are currently emanating has yet to be conclusively established. We are concerned that recent attempts to attract national media attention to this issue will have the opposite effect to the one intended on the local community.

To put the situation in context, the beach and the foreshore at Dalgety Bay lie adjacent to the former Royal Naval Air Station Donibristle. Our records show that Donibristle was first used by the Royal Flying Corps in early 1917. The RNAS took over in August that year, and from 1 April 1918, when the RNAS and the RFC were amalgamated, the site came under Royal Air Force control. It was put on a care and maintenance basis in 1921, and the airfield was reopened as an air station in 1925, when it was used as a shore base to disembark carrier aircraft and as a training base. Donibristle was a torpedo training school from 1934.

With the onset of world war two, the grass strip airfield came into royal naval use once more, and RNAS Donibristle was commissioned as HMS Merlin, eventually becoming an aircraft repair yard. By 1941 the yard was processing some 320 aircraft a year. A second runway was completed in early 1944, when the station had the capacity to accommodate 220 aircraft and was, therefore, pretty busy. Some 1,000 military personnel and 2,000 civilians were employed on site, and by the end of the war the total number of aircraft repaired and inspected reached more than 7,000. After the war, the site flew the flag of Flag Officer Carrier Training. In 1953, HMS Merlin was paid off, but repair and reconditioning work continued for the Fleet Air Arm.

The yard and airfield are recorded as having closed in August 1959, but there were royal naval barracks at Donibristle between 1962 and 1963. The land was subsequently sold, and some time later—in other words, well after the MOD had gone—it was developed for housing and industrial use, including the Donibristle industrial park.

We all recognise that “radioactivity” and the fact of contamination will give cause for concern, so it makes sense to ask how serious and real the risks are at Dalgety Bay. I am aware that there has been criticism of the manner in which the risk has been presented in the media. SEPA has recently found higher activity sourced at some depth—about 75cm, or 2 feet for those who deal in old-fashioned measurements—beneath the foreshore. MOD experts advise that that does not necessarily imply a step change in the risk to human health, or the need for additional mitigation measures over and above what SEPA has already put in place.

Indeed, as I have said, the Health Protection Agency has and continues to hold the view, despite the recent finds, that the risk is likely to be low—a view that SEPA has hitherto shared. Nevertheless, given the recent finds of relatively high activity, the HPA quite understandably feels it important that the risk be adequately quantified and understood, taking into account the likelihood of exposure. I therefore welcome, as I hope the House will, SEPA’s establishment of an expert group, which is charged with doing exactly that. My officials are observers to the group and stand ready to assist as required. That leads me to the calls for the MOD to develop a “credible remediation plan”.

We need to understand how the contamination at different locations is being caused. Is it, for instance, from erosion of the former refuse tip within the headland, or is it from other sources? Interestingly, the refuse tip is not documented in the 1959 contract of sale, and it is recorded only subsequently in the 1960s, on maps and so on. It is equally important to understand how radioactive sources found at depth in the foreshore have come to be there, the plausibility of their exposure by a storm event, and the impact on public health if that occurs.

The removal of what is known has ensured public safety in the short term, but an effective solution depends on assessing what might still be present and the risks from it. Moreover, what precisely would comprise an effective solution, given the current uncertainties? The answers to such questions are necessary in order to inform appropriate remediation measures. For those reasons, the MOD has offered to assist SEPA further. We are engaged with SEPA, working in consultation with it to develop and deliver the investigation necessary to help answer those important and relevant questions.

Of course, responsibility for such investigation would normally fall within SEPA’s statutory mandate for which it is funded, but I recognise that any delay would not be in the interests of residents. Moreover, my Department has disposed of material for them, so we are continuing with our voluntary assistance, which includes arranging for the disposal of material found by SEPA.

[Mr Gordon Brown]

The issue comes down to this: even after the letters from the Ministry of Defence and the meeting yesterday, the Scottish Environment Protection Agency still says that, unless the Ministry of Defence can give assurances, it will designate the land as radioactive and contaminated, which is not something people want. It seems strange that the Ministry of Defence was prepared to accept responsibility for monitoring when there was no problem, but now is not prepared to accept full responsibility for remedial action. I simply ask the Minister to give a straightforward assurance that the necessary remedial action will be taken and funded by the Ministry of Defence. I think we should ask for nothing less and that he is in a position to give that assurance.

[Mr Robathan]

I think that the right hon. Gentleman would agree that the important thing is to know what the dangers are before getting into a great state about it, because I am afraid that there is some conflict and disagreement on this. We are engaged with SEPA on the matter, and I think that it is important that we remain engaged.

[Mr Brown]

The Ministry of Defence has been told by the Scottish Environment Protection Agency that a remedial action plan is needed. It has the power to designate the land and require the Ministry of Defence to do this. It will not change its mind about whether a remedial action plan is needed, and nor should it because of what we have found in the past few weeks. All we need is an assurance from the Ministry of Defence that it will not only produce the remedial action plan with the Scottish Environment Protection Agency, but properly fund it. The Minister is in a position to give that assurance, based on everything else the Ministry of Defence has said and done in the past, and should do so now to allay the fears of local residents.

[Mr Robathan]

The right hon. Gentleman tells me that I am in a position to do this, but for a long time he was in a position to take further action should he have so wished. I am afraid that that is the case. Contrary to some media reports, I do not believe that it can reasonably be said that the MOD is being complacent or unhelpful. On the contrary, we have assisted and will continue to assist SEPA by undertaking surveys and disposing of recovered sources. We have remedied land-based contamination in residential areas within the former RNAS Donibristle site. We have also funded the warning signs and play an active part with the Dalgety Bay Forum. All in all, we have already spent £750,000 on land remediation signage and surveys and on assisting SEPA in other ways. Without further investigation, it is difficult to justify using taxpayers’ money to remediate while the current source, level of risk and remediation necessary remain unclear. That is why, in addition to the three-year monitoring and collection work we are already doing in conjunction with SEPA, we have agreed to undertake further investigative work. As I said earlier, we understand that the work we have done was seen, until recently, as entirely satisfactory by SEPA.

[Mr Brown]

The work is not seen as satisfactory by the Scottish Environment Protection Agency. I talked with head of the agency this afternoon, who assured me that he has had no assurances from the Ministry of Defence that it will do what the Scottish Environment Protection Agency needs. To return to the central point, the Ministry of Defence was prepared to accept responsibility for the site when there was no real problem, but now that we have a problem it should, in order to allay local people’s fears, say that it will fund the necessary remedial action plan. It is not in a position to say whether that action is needed. In law, that is a matter for SEPA, which the Minister seems to misunderstand. The question is will the MOD, having designated the site as an area of difficulty, honour the responsibility to fund the remedial action plan? It is a simple question and we need a simple answer.

[Mr Robathan]

I can see the characteristic passion and vigour with which the right hon. Gentleman has put his case. There is more to this than media reports in Kirkcaldy, or wherever it may be, suggest. The Health Protection Agency has a role to play. He shakes his head, but the Health Protection Agency has a role to play in this. He is of course right and entitled to represent the concerns of residents, but I do not think that we should get this out of proportion. We continue to believe that the risk to health remains low and that precipitate action is in no one’s interest. I can assure him and his constituents that the MOD will continue to work in a credible and responsible way with all concerned at Dalgety Bay.

Finally, may I say what a pleasure it has been to discover how many Members of the House are as interested as I am in the concerns of the people of Dalgety Bay?

Question put and agreed to.

19:44

House adjourned.