House of Commons

Thursday 8th December 2011 Commons Chamber

Thursday 8 December 2011

The House met at half-past Ten o’clock

Prayers

Thursday 8th December 2011 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 8th December 2011 Commons Chamber

The Secretary of State was asked—

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

1. What recent steps his Department has taken to support the manufacturing sector.

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

The Government are taking action to support and grow modern manufacturing in the UK by encouraging higher levels of innovation exports, business investment and technical skills.

[Tristram Hunt]

In the last few weeks, five ceramic and brick companies have gone bust in the UK, including the Jesse Shirley bone china works in my constituency. The energy-intensive industry measures announced in the autumn statement did little for our pottery industry. Can we now have some movement from the Government on capital allowances for the ceramic sector, which is a vital part of our manufacturing industry?

[Vince Cable]

I will look at the specific issue of the ceramics industry. I know that the hon. Gentleman was involved in promoting an anti-dumping action. We considered the matter carefully, and there were not sufficient grounds to support the rather disproportionate action advocated by the European Commission. Indeed, the Chinese market share has remained pretty unchanged over the past decade. However, we will certainly consider what else can be done to help the industry.

[Mr Laurence Robertson (Tewkesbury) (Con)]

Is the Secretary of State aware of the excellent cutting-edge technology in my constituency in the aerospace industry? Is he also aware that one of the biggest problems that the industry has is attracting young people into manufacturing? What can he do to encourage that?

[Vince Cable]

I was in the west country just over a week ago looking at the aerospace industry, which is a considerable success story. My hon. Friend is quite right that one of the constraints is the need for skilled manpower, which is why in our rapidly growing apprenticeship programme we are setting aside funding specifically for advanced apprenticeships in engineering skills of the kind that firms in his constituency need.

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

There is an increasing body of evidence to show that small manufacturing companies are not only having difficulty in accessing finance to expand but are discouraged from applying for it because of a lack of confidence in the ability to sell any increased production. What is the Secretary of State doing to persuade the Chancellor that the time is right for a stimulus in the demand side of the economy as well as provisions for the supply side?

[Vince Cable]

A stimulus to demand is coming from two sources. One is rapidly growing export markets in emerging markets, where our export growth is very substantial. Manufacturers, including small and medium-sized enterprises, are taking a substantial part of that. In addition our monetary policy, which is supported by the Bank of England, with low short and long interest rates, quantitative easing and credit easing, is supporting demand.

[Matthew Hancock (West Suffolk) (Con)]

In his efforts to support manufacturing, will the Secretary of State agree that high executive pay that rewards not success but failure can inhibit growth, and that dealing with it is an important part of supporting manufacturing, financial services and other parts of the economy?

[Vince Cable]

My hon. Friend is absolutely right, and the point is very well made. There is now a remarkable consensus. We have had evidence to the inquiry that I initiated into executive pay from, among others, the CBI, showing a high level of social responsibility and an acknowledgment that much executive pay has been disproportionate and unrelated to performance in the past. We intend to reform that.

[Mr Iain Wright (Hartlepool) (Lab)]

Mr Speaker,

“Germany has had an industrial strategy as well as an economic strategy. Applied with huge consistency of purpose. This has greatly helped German industry plan for the future. Let us compare this with the position in the UK…In terms of industrial policy there are serious deficiencies.”

Those are not my words, but those of Lord Heseltine in a speech only a couple of weeks ago. Given yesterday’s dire figures from the Office for National Statistics, which showed the biggest output drop in manufacturing since April, and three times the fall forecast by analysts, is it not time the Secretary of State listened to Lord Heseltine and provided a comprehensive well-planned industrial strategy for the long term that supports British manufacturing and helps it become more competitive?

[Vince Cable]

I often wonder which Opposition Front Bencher will be courageous enough to talk about manufacturing, reminding the House that we lost 1.7 million jobs in manufacturing in 13 years of a Labour Government, and manufacturing’s share of the economy shrank from 18% to 10%. We are addressing that, and I certainly listen to Lord Heseltine, who has an office in my Department. We frequently interact, and he has some very good suggestions.

We are pursuing support for innovation through the advanced technology innovation centre, pursuing support for advanced apprenticeships, on which we are doing a great deal, and co-financing private investment through the regional growth fund and the Green investment bank, which is due to start. As I announced yesterday, we are also considerably increasing support for supply chains using a new £125 million fund.

[Brandon Lewis (Great Yarmouth) (Con)]

2. What recent progress his Department has made on its employment law review being undertaken as part of the red tape challenge.

[Mr Marcus Jones (Nuneaton) (Con)]

13. What recent progress his Department has made on its employment law review being undertaken as part of the red tape challenge.

[Julian Smith (Skipton and Ripon) (Con)]

17. What recent progress his Department has made on its employment law review being undertaken as part of the red tape challenge.

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

We have made excellent progress with our employment law review. Our radical package includes streamlining the employment tribunals system, doubling the qualifying period for unfair dismissal, promoting early conciliation and mediation, and simplifying compromise agreements. We have also called for evidence on TUPE and collective redundancies as part of our wide reforms.

[Brandon Lewis]

For many years, small and medium-sized enterprises in particular have felt that they are caught in the stranglehold of gold-plated red tape when it comes to growing and employing more people. Will the Minister give grounds for optimism to companies that want the freedom to employ more people and grow, particularly with reference to TUPE, which he mentioned?

[Mr Davey]

The Government’s strategy is to ensure that we are not gold-plating. I am sure that my hon. Friend will have been pleased that on 23 November we published a call for evidence on the TUPE regulations, which he mentioned. It is available on the Department’s website and I encourage all right hon. and hon. Members to respond.

[Mr Marcus Jones]

I recently met local business people at a constituency event sponsored by the Federation of Small Businesses, and they told me that they were apprehensive about taking on additional employees because of the culture of employment tribunals, to which employees can take even the most spurious claims without any personal risk whatever. What can the Minister do to address that issue, which, if tackled, would encourage more employers to take on extra staff?

[Mr Davey]

We have listened to both employer and employee concerns about the cost and complexity of going to employment tribunals, and believe that our reforms will make a positive difference to both parties. We have set out our conclusions and our response to the “Resolving Workplace Disputes” consultation. Critical aspects of our new approach include a major new emphasis on mediation and a new pre-claim conciliation service by ACAS, and, finally, a fundamental review of the rules and procedures is now being undertaken by Lord Justice Underhill.

[Julian Smith]

Compensated no-fault dismissal could be a great fillip to very small businesses and the employment market. Will the Minister outline the timetable for the Government’s call for evidence and reassure the House that he is completely open-minded on the policy?

[Mr Davey]

As my hon. Friend knows—the Chancellor announced this in the autumn statement—we will be publishing a call for evidence on the case for and against a new compensated no-fault dismissal for micros. The Government have an open mind on that, but we are especially keen to ensure that there are no unintended consequences. My hon. Friend will be mindful that the unfair dismissal law was introduced by a previous Conservative Government to improve industrial relations.

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

As part of the sham review of employment legislation, has the Minister had any consultations with the trade unions or others who believe in effective employment legislation? If he has, what was the outcome? If he has not, why not?

[Mr Davey]

My right hon. Friend the Secretary of State and I regularly meet Brendan Barber from the TUC. People from the trade union movement widely responded to the “Resolving Workplace Disputes” consultation, and we have looked at those responses.

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

The Minister will be aware that those who work with children and vulnerable adults can play a vital role in their protection. What is he doing to ensure that new employees, who often see problems with established bad practice, are protected if they decide to become whistleblowers?

[Mr Davey]

There is already whistleblowing legislation; I believe that it was passed by the previous Government. We would therefore advise employees in the situation that the hon. Lady describes to look at that.

[Ian Murray (Edinburgh South) (Lab)]

The Secretary of State and the Minister are obviously at loggerheads with Downing street over their proposals on changes to employment law, and have been forced to consult on no-fault dismissal. Lord Heseltine believes that such a measure would

“make life rougher and tougher for large numbers of people”;

Citizens Advice described it as a rogue’s charter; only 6% of SMEs consider employment law as a factor when employing people; and the Secretary of State himself has said that there was already a “reasonably good balance” between rights and flexibility in Britain. So why is his Department—the Department for no growth—trying to make it easier to fire rather than hire people?

[Mr Davey]

The truth is that the Government are making it easier to hire people. We understand the importance of fair, efficient and flexible labour markets. We will protect those because that is in our country’s interest. I should tell the hon. Gentleman that we are working very closely with colleagues across the coalition on all aspects of our employment law review. This coalition is more together than the Labour party was when it was in government.

[Dr Julian Huppert (Cambridge) (LD)]

3. When he plans to publish his innovation and research strategy.

[Graham Evans (Weaver Vale) (Con)]

14. When he plans to publish his innovation and research strategy.

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

With permission, Mr Speaker, I propose to answer this question with question 13—

[Mr Speaker]

I am reluctant to argue with Two Brains, but I think the link is with question 14.

[Mr Willetts]

Thank you, Mr Speaker.

I am pleased to announce that the Government have today published our innovation and research strategy for growth.

[Dr Huppert]

I thank the Minister for publishing that statement. In 2004 I was awarded a DTI Smart award for innovation. That excellent scheme supported small companies in developing risky innovative products, but over the years the financial support available was watered down and success rates fell. Will his strategy reverse that and support SMEs that have not been supported by the Technology Strategy Board?

[Mr Willetts]

Indeed, and I believe that my hon. Friend’s proposal was for a biotech company that collected virgin female fruit flies, which I am sure was an excellent example of curiosity-driven research. I can confirm that we are bringing back the Smart awards scheme on a nationwide basis, properly financed.

[Graham Evans]

Fostering research and innovation is absolutely essential to growth and to rebalancing our economy, and I am proud that the Government are doing so much to support Daresbury science innovation campus in my constituency, including the announcement of a new enterprise zone. Can the Minister outline what support will be provided for small and medium-sized businesses in this area?

[Mr Willetts]

I recognise the strong support that my hon. Friend gives Daresbury, which I visited with him only a couple of months ago. Indeed, we will put more funding into Daresbury because of its excellent role in national computing infrastructure, and we will support small businesses in particular through the infrastructure and innovation plan that we have launched today.

[Mr David Lammy (Tottenham) (Lab)]

Does the Minister accept that we can have no research and innovation without UK postgraduates? His strategy says nothing about the decline in taught postgraduate courses or the implications of fees at postgraduate level in the UK.

[Mr Willetts]

We are committed to postgraduate education in the UK, and of course we will continue to review the implications for it as our higher education reforms come through, but at the moment we are seeing an increase in the number of postgraduate students in the UK—a record of which we can be proud.

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

Eighteen months into a Government supposedly focused on growth, we finally have a paper focused on innovation—the engine of growth. We welcome it and will consider it carefully. However, we have seen that this Government’s fine words are not matched by action. The director of the CBI recently described their action on solar panels as the

“third smack about the head”

for investors in renewables. In China, the US, India, Germany and Finland Governments are taking action to create large-scale technological and market opportunities in renewables, ICT, pharma and nanotechnology. What real action will the Government take as a result of the report?

[Mr Willetts]

The report that we are publishing today is a list of the actions that we have already taken and the further actions that we are proposing to take. That includes technology innovation centres, including specific provision for renewables. It also includes the reintroduction of the Smart awards, which were run into the sand under the previous Government, and a research and development tax credit that will be worth more than £1 billion to companies large and small.

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

4. What steps his Department is taking to help small and medium-sized businesses to access export markets.

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

UK Trade & Investment has set out a new export strategy of some £45 million, which will double the number of small companies helped each year. The strategy includes five financial products, bespoke services for middle-sized firms and a collaborative approach to accessing new export markets.

[Gordon Henderson]

I welcome that assurance from the Minister, but an exporter in my constituency has for years been obtaining certificates of origin from our local chamber of commerce, using a formal declaration from his supplier. Recently he applied for a new certificate, but was told that one could not be issued without a declaration from the manufacturer of the goods. That is causing my constituent a big problem, because his supplier is loth to provide details about his manufacturer for fear that my constituent might obtain his goods direct. What can my hon. Friend do to make it easier for exporters to export—and when changes are made to the rules, can exporters at least be given adequate notice?

[Mr Prisk]

I am concerned about the instance that my hon. Friend mentions. The rules on certification of origin have not changed, but they are subject to local management and interpretation. It sounds as if that might be the problem. I am keen to help all exporters, so perhaps my hon. Friend will submit further details to me and I will look personally into the matter.

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

The Government have cut by 25% the funding for small and medium-sized enterprises to attend vital overseas trade shows to help them win new business. How will that help exports?

[Mr Prisk]

As I said at the beginning, the new export strategy enables us to double the number of companies that we reach and support. In addition, five new finance products have been put on to the market. We have commitments of £242 million for those products, so there is a positive layer of action, and we can make real progress in the years to come.

[Mr Chuka Umunna (Streatham) (Lab)]

At a previous Question Time, the Business Secretary was right to say that, historically, SMEs have not been as involved in exporting as larger companies. With that in mind, earlier this year he launched the export enterprise finance guarantee scheme, a programme run out of his Department, and we were told that that would help lots of SMEs to access export finance. Will the Secretary of State tell us how many companies have been helped by the scheme since it was announced with a great fanfare 10 months ago?

[Mr Prisk]

Sadly, the hon. Gentleman will have to make do with the Minister of State rather than the Secretary of State. We have been able to deliver some £242 million across the five products, and we have also been able to ensure that with the pilot, the export enterprise finance guarantee scheme, in which there have been a number of changes, we have been able to deliver some £2 million. It is important to bear in mind the fact that the export enterprise finance guarantee scheme is a pilot; the other four are actually full products.

[Mr Umunna]

The answer to my question is that just four companies have benefited from that export scheme. That is another example of the failure of the Minister’s Department to improve access to finance for small businesses. Of course access to finance in general helps SMEs to grow and expand into different export markets, and we were told that Project Merlin would ease credit conditions for small businesses—but net lending to businesses by banks has contracted in nine of the past 12 months under this Government. Merlin failed, so they are now giving credit easing a try, but the effectiveness of credit easing is dependent on whether the banks choose to participate. What guarantees can the Minister give us that they will participate in the scheme and increase net lending to businesses as a result?

[Mr Prisk]

In the first three quarters, the numbers on net lending stand at £66 million. [Interruption.] What I am trying to say to the hon. Gentleman is that we are committed, through Merlin, to ensuring that lending this year is greater than last year. He needs to be careful in this area, because, as he knows, such schemes are subject to demand. [Interruption.] He asked about credit easing, and I will come to that point. I say to the hon. Gentleman that the £20 billion that the Chancellor has put forward is substantially important and will bring about an important increase. What the Opposition need to remember is that we are actually delivering an increase in lending this year over last year. They did not deliver that. We are, and that is the difference.

[Margot James (Stourbridge) (Con)]

5. What steps his Department is taking to support the commercialisation of new discoveries in life sciences.

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

The UK life sciences sector employs 170,000 people with a turnover of £50 billion, but it is facing enormous challenges, which is why the Prime Minister launched an ambitious new life sciences strategy on Monday. That includes a £180 million catalyst fund to aid commercialisation of new discoveries. We have also improved the regime for clinical trials in the interests of patients and opened up the NHS to innovation.

[Margot James]

I very much welcome the life sciences strategy published by the Government earlier this week. What plans does my right hon. Friend now have to support the development of geographic clusters that will foster collaboration between industry, the NHS and academia?

[Mr Willetts]

My hon. Friend has absolutely described what a cluster is; I congratulate her. We support them. They are important for innovation and growth. Indeed, in the proposals published today, we are talking about making it easier for groups of institutions to come together to bid for funding from research councils, and also our enlightened Treasury has agreed that in future there will not be VAT on cost-sharing arrangements in which groups of institutions come together to share services in the interests of efficiency.

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

The Minister will know that in life sciences and many other areas of innovation there are lots of small companies, often in partnership with universities. Will he comment on the fact that many of those partnerships tell me that with the demise of the regional development agencies they have no access to a large amount of money held in Europe, essentially for innovation? There are billions of pounds that they cannot access.

[Mr Willetts]

The catalyst fund that I referred to in my previous answer is aimed specifically at getting financial support to new start-ups, and will help finance them through the so-called “valley of death” before they can get commercial funding. At the Competitiveness Council in Brussels on Tuesday, I argued that European research funding should be more easily accessible for small and medium-sized enterprises. The best way to achieve that is by cutting bureaucracy and the complexity in the current arrangements for accessing European funding. That is what I urged on the Commission.

[Keith Vaz (Leicester East) (Lab)]

6. What recent steps he has taken to ensure that the liquidation of Bank of Credit and Commerce International is complete.

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

My right hon. Friend the Secretary of State wrote to the BCCI liquidators about the progress of the BCCI liquidation earlier this year, following his meeting with the right hon. Gentleman. I understand that a closure plan has been published on the liquidators’ website at www.bcci.info. This website is updated as and when there are any developments in the liquidation.

[Keith Vaz]

It is now 20 years since the bank went into liquidation, in which time the liquidators, Deloitte Touche, its solicitors, Lovells, and other professionals have received £1.2 billion in fees. Will the Minister thank the Secretary of State for writing that letter and ask him whether he would be prepared to secure his place in history, or at least to act as Santa Claus to the victims of BCCI, so that finally this bank can be closed and the liquidators will cease to bleed it of the last remnants of its money?

[Mr Davey]

I think that my right hon. Friend already has his place in history. The right hon. Member for Leicester East (Keith Vaz) knows that the BCCI creditors have been repaid more than 85% of what they were owed at the outset of liquidation, and a final dividend—estimated to be about 3%—is expected to be paid in April or May 2012. He will also know that control of the BCCI liquidation is a matter for the liquidation committee, and ultimately the courts, not for the Secretary of State, and that the liquidators are trying to bring this long period to an end.

[Harriett Baldwin (West Worcestershire) (Con)]

7. What steps he is taking to assist unemployed people to start new businesses.

[The Minister of State, Department for Business, Innovation and Skills (Greg Clark)]

The new enterprise allowance is now available nationwide and is providing access to business mentors and financial support to help unemployed people start their own businesses. On 14 November we launched My New Business, a service on the Business Link website, providing help for everyone looking to start a new business.

[Harriett Baldwin]

As QinetiQ in my constituency has restructured, many of the brilliant brains employed there have started new businesses in a range of different areas. May I invite the Minister to Malvern to help back my campaign for phase 4 of the Malvern Hills science park as a further incubator?

[Greg Clark]

It would be a delight to visit Malvern. I know that my hon. Friend is trying—successfully, given the number of high-tech businesses there—to market Malvern as a cyber-valley. We know that silicon valley has prospered because of the links between existing high-tech firms and new ones, and I know that that is what she wants to achieve.

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

What guarantees can the Minister provide that the banks will actually lend to newly formed businesses run by previously unemployed people? They are not lending to existing businesses, so why should they lend to new ones?

[Greg Clark]

As the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), said earlier, the intention is—and the banks are delivering on this—that they increase lending to small businesses year on year. That is part of the loan guarantee scheme announced in the autumn statement, and we are determined to deliver on it.

[Esther McVey (Wirral West) (Con)]

8. What assessment he has made of the effect of the regional growth fund on private sector investment.

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

In April we announced that the regional growth fund would conditionally support 50 projects, amounting to £450 million of Government investment and leveraging an estimated £2.7 billion of private sector investment. In October we announced that 126 projects would receive conditional funding of £950 million, leveraging an estimated £6 billion of private sector investment.

[Esther McVey]

I welcome the regional growth fund, in rounds 1 and 2 of which, companies on Merseyside, including Stobart, Pilkington, Liverpool Vision and Trinity Mirror, have done very well. Wirral Investment Network, a business network for smaller companies, wants to know by what routes it can apply to the regional growth fund.

[Vince Cable]

Our estimate is that roughly a third of all regional growth fund money is going to SMEs, and there are several routes through which it goes. First, there are packets of SME loans, one of which was in Liverpool, while another is in Plymouth. Indeed, I saw that one a couple of weeks ago, and it is going extraordinarily well. There are specifically tailored schemes—for example, the RBS-HSBC scheme linked to asset finance—and programme bids, as in Manchester, all of which are targeted at SMEs.

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

The Secretary of State will be aware that in the last round an SME in Coventry was turned down for a major investment from the regional growth fund. Despite the fact that the council and, more importantly, the local enterprise partnership were in full support, the company was turned down—I am not particularly grumbling about the decision, disappointed though we were, of course—on the grounds that the ownership was wrong. Will the Minister put in place better criteria for sifting schemes locally and regionally? The company wasted an awful lot of time and money in preparing its bid.

[Vince Cable]

I would certainly be happy to look into the background of that particular case. As the hon. Gentleman knows, we have an impartial process. Applications come to Ministers and then go through Sir Ian Wrigglesworth and Lord Heseltine, who sift and assess them properly. There is a new round for the regional growth fund, and if the project that the hon. Gentleman mentions can be reworked, we would certainly be very happy to look at it.

[George Freeman (Mid Norfolk) (Con)]

9. How he proposes that his Department’s investment in graphene will be spent. [R]

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

Graphene is the thinnest, lightest, strongest and most conductive material known to man. Its discovery in Manchester in 2001 is testament to our strong science base and opens up a wide range of possibilities. That is why we have committed £50 million to create a new UK graphene hub to focus on its commercialisation. The Engineering and Physical Sciences Research Council and the Technology Strategy Board are now developing a detailed business case, which will be submitted to the Government shortly. We expect funding to start next year.

[George Freeman]

I welcome that announcement. Does the Minister agree that the investment of £50 million in a world-class hub is testament to the Government’s serious commitment to a rebalanced economy and a regional growth strategy? Will he agree to place a sample of graphene—like this—in the Library for the edification of us all?

[Mr Speaker]

The use of such props is on the whole discouraged, but we will let the hon. Gentleman off on this occasion.

[Mr Willetts]

I do not think that that is quite life science—nor is it supposed to be life-size, because it is one atom. I have some graphene in my office, and I would be very happy to show it to people who want to know what has been discovered. I absolutely agree with my hon. Friend. As a result of the Chancellor’s announcement, we are now able to invest in labs that will ensure that researchers can develop and research the applications of this important material.

[Mr Speaker]

May I appeal to Members not to pass that rather unglamorous specimen around the Chamber? The hon. Member for Mid Norfolk (George Freeman), to whom I have been generous, should secrete his graphene away, and behave with the tact and discretion for which he was previously renowned.

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

I beg to disagree, Mr Speaker. Graphene is very glamorous, and it is a fantastic discovery, made in Manchester. The Minister will be aware from his appearances before the Science and Technology Committee that there is a huge imbalance between the public investment in science in the golden triangle between Oxford, Cambridge and London, and investment in the rest of the country. Is this not a great opportunity to invest the vast bulk of that £50 million in Manchester, where the two Nobel laureates discovered graphene?

[Mr Willetts]

The hon. Gentleman makes a clear case. Of course, the issue is now being investigated by the EPSRC and the TSB, but we recognise the crucial role that Manchester played in the discovery, and I am sure that its role will continue.

[Mr Speaker]

Of course I readily concede that something unglamorous can also be very important. I call Penny Mordaunt. [Laughter.] Order. I am delighted that the House is in such a good mood.

[Penny Mordaunt (Portsmouth North) (Con)]

10. What assessment he has made of the benefit to UK business of the investment in low-cost radar satellites announced in the autumn statement.

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

Yes, we have made an assessment of the benefits to business of investing in low-cost radar satellites. This is an important investment of £21 million, which we hope will enable business investment to follow on, including possibly in my hon. Friend’s constituency.

[Mr Speaker]

I was referring to the item, not to a human being. I call Penny Mordaunt.

[Penny Mordaunt]

Thank you, Mr Speaker.

Earth observation satellites are critical in helping developing countries manage humanitarian and environmental crises. Does my right hon. Friend see merit in giving such countries British technology or satellite time—provided it is the best for the job, and it usually is—rather than having ring-fenced funding to purchase such services from a third country?

[Mr Willetts]

That is a very interesting idea. It is absolutely right that British satellite technology plays a greater role than is recognised in ensuring that we have information about the sites of disasters. Earlier this year we chaired the disaster monitoring committee, which ensured that satellite images were immediately available after the tsunami in Japan and after disasters elsewhere in the world. There are certainly imaginative ideas through which this role could be enhanced.

[Sajid Javid (Bromsgrove) (Con)]

11. What steps he is taking to promote adult and community learning.

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

The Government are enthusiastically committed to adult and community learning. That is why we have protected the £210 million a year adult safeguarded budget. On 1 December we announced our intention to devolve its planning and accountability, so that local people are at the heart of deciding the learning offer. We will pilot different community learning trust models in 2012-13.

[Sajid Javid]

The Minister has been an excellent advocate of adult community learning. May I ask him how his pilot on community learning trusts is working at the moment? In particular, how has he engaged local communities to improve adult community learning?

[Mr Hayes]

We know, as W B Yeats knew, that education lights a fire that burns brightly. It certainly burns brightly in the hearts of Ministers. We have much to do in respect of adult community learning, which was derided by the last Government as mainly holiday Spanish. That was how the former Secretary of State described it. We will work with local communities. The first meeting to discuss models and timings will take place one week from today, and we intend to publish a prospectus in spring 2012. We are delivering.

[Kevin Brennan (Cardiff West) (Lab)]

The Minister and I have jousted about Yeats before, and I should tell him that he did not share the Minister’s politics, which might disappoint him. There is a danger of his policy becoming a fig leaf around adult and community learning. Will he undertake to work from the centre with other ministerial colleagues, particularly for older people in care homes because of the incredible impact that adult and community learning can have on health outcomes for those older people?

[Mr Hayes]

One reason why I, along with the Secretary of State, have defended adult and community learning is due to its effect on things such as physical well-being, community health, mental health and so forth. It is certainly true that we will need to take those things into full account in respect of the offer. I give that answer mindful that the hon. Gentleman, who was my predecessor, was himself a champion of adult and community learning.

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

12. What recent progress he has made on the Green investment bank.

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

The development of the Green investment bank is making good progress. Prior to its establishment, the Government are planning to invest in projects from April 2012, including in renewable energy and the non-domestic energy efficiency and waste sectors. We will announce the process for deciding the location of the bank shortly.

[Glenda Jackson]

There are reports that the Government have dramatically lowered their funding for this potentially innovative venture, so when, if ever, will what threatens to become a mere piggy bank be open for business?

[Vince Cable]

Those reports are simply incorrect. The Government’s commitment was for £3 billion, and that remains the case. We expect the bank will have leveraged in another £15 billion by the end of this Parliament. That is our commitment, which we will stick to. I am relieved that Hampstead and Kilburn are not adding their names to the list of cities hoping to attract the Green investment bank.

[Mike Crockart (Edinburgh West) (LD)]

I welcome the Secretary of State’s statement of a few moments ago. May I press him to tell me and the poised Edinburgh Green investment bank bid team when he will publish the criteria for deciding the location for the bank and what those criteria are likely to contain?

[Vince Cable]

We shall set out the process in the next few days. There are a great many bids from different cities and, indeed, some quite small towns around the country, all of which must be assessed properly and fairly.

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

Will the Secretary of State confirm that investment in wind turbine technology is a potential recipient of Green investment bank funding? Gamesa has been considering locations in various parts of the United Kingdom for a major scheme with which it is proceeding, and has identified Leith, which is in my constituency, as a possible location. Will the Secretary of State work with the Scottish Government to try to bring this important facility to Scotland and to the UK?

[Vince Cable]

That is exactly the kind of project that the bank will be considering, and a team of people are already preparing projects for submission.

[Robert Halfon (Harlow) (Con)]

15. What steps he is taking to ensure that apprenticeships offer a route to higher-level skills.

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

We are committed to expanding the proportion of apprenticeships that are at advanced and higher levels. Provisional 2010-11 data show that the number of advanced-level apprenticeships has risen by about two thirds. We have allocated some £19 million to support the development of new higher apprenticeships, which will dramatically extend the range of opportunities for apprenticeships up to degree level, and will create at least an additional 19,000 apprenticeships at the higher level.

[Robert Halfon]

Will the Minister support the parliamentary apprentice school which I founded with the charity New Deal of the Mind, and will he consider the similar idea of establishing a Government apprentice school using public contracts? Figures from the House of Commons Library show that if just one apprentice were hired for every £1 million public procurement, 280,000 apprenticeships would be created instantly and youth unemployment would be cut by a quarter.

[Mr Hayes]

I take the view that Government have a role and that procurement has a role as well. For that reason I have established a ministerial champions group for apprenticeships involving 14 Departments, we have explored the development of kitemarking for good employers who use apprenticeships and supply the public sector, and we have provided streamlined informational skills for companies that want to supply Government.

My hon. Friend has been a great champion of apprenticeships, and has even taken on an apprentice himself. Let me again urge all Members to take on their own apprentices.

[Mark Lancaster (Milton Keynes North) (Con)]

16. What plans he has to encourage small and medium-sized businesses to offer apprenticeships.

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

As you can see, Mr Speaker, I am irrepressible.

We have recently announced a new financial incentive of £1,500, which will help up to 40,000 small employers who have not previously engaged in the programme to take on a young apprentice. We are taking radical steps to speed up and simplify the process for employers, and to remove unnecessary paperwork and bureaucracy.

[Mark Lancaster]

While the Minister’s talents are obvious, some of us have hidden talents. I, for instance, am a pyrotechnician, and ran the family firework company for many years. We were always keen to take on apprentices, but it was hard to keep them in a long-term skilled job, and the paperwork involved in taking them on in the first place was very extensive. What can be done to help the situation?

[Mr Hayes]

As my hon. Friend will know, the number of apprenticeships has risen by 70% in his constituency. That does credit to him, and, as I think he will acknowledge, still greater credit to me.

My hon. Friend asked what more we would do. We will strip out all unnecessary health and safety requirements, we will introduce those incentive payments to compensate small businesses, and I am determined to streamline every stage of the process. Tackling youth unemployment is a top priority for the Government: that is why we are focusing the apprenticeship budget on young people, which is where it can make the most difference.

[George Eustice (Camborne and Redruth) (Con)]

18. What progress his Department has made in assessing applications by further education colleges for phase 2 of the enhanced renewal grant.

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

In August, I was delighted to confirm that the Government would make an extra £100 million available for a two-year college capital investment programme. The programme was launched by the Skills Funding Agency in September, applications were invited by November, and the agency is aiming to announce decisions on the enhanced renewal grant before Christmas. Speedy action, Mr Speaker: alacrity, combined with perspicacity.

[George Eustice]

Cornwall college in my constituency has recently used a new technique to refurbish and reclad one of the old buildings on its estate at a fraction of the cost of a rebuild, and would like to repeat the process on some of the rest of its estate. Does the Minister agree that procedures of that kind should be given priority?

[Mr Hayes]

My hon. Friend, who is a great champion of his local college and a great local Member of Parliament, has written to me about that very matter. I have his letter here. I am pleased to say that I have arranged to speak to him on Monday about the details of his question, and I can also tell him that as soon as I became the Minister we announced new capital funding. I do not say this with any joy—I say it more in sorrow and anger—but what a contrast with the last Government, who presided over a capital funding debacle.

[Mr Edward Leigh (Gainsborough) (Con)]

19. What assessment he has made of the effect on the growth of small and medium-sized enterprises of planned reductions in the level of taxation; and if he will make a statement.

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

Many SMEs will benefit from lower corporation tax, reforms to research and development tax credits, relief of business rates, increases in employer national insurance contribution thresholds and tax advantages in the 22 new enterprise zones.

[Mr Leigh]

We already have the longest tax code in the world. Does the Secretary of State accept that what business wants are not more allowances from the Government but across-the-board tax cuts so that they can get on with running their own business in their own way?

[Vince Cable]

Many businesses, as I have just said, receive substantial tax cuts, which is absolutely right. As the economy progresses, there will be more, and there is also an exercise in tax simplification, the results of which will be announced at the beginning of next year.

[Sajid Javid (Bromsgrove) (Con)]

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

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

The Department has a key role in supporting the rebalancing of the economy and business, to deliver growth while increasing skills and learning.

[Sajid Javid]

May I thank the Minister for Further Education, Skills and Lifelong Learning for visiting my constituency of Bromsgrove and opening a £3.5 million extension to North East Worcestershire college? Will he update the House on what other investment plans he has for colleges up and down the country, and how that will promote young people’s life chances?

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

I said a few moments ago that we have made £100 million available. It will be spent quickly, and that will affect colleges across the country. I should like to thank my hon. Friend for being such a generous host when I visited NEW college in his constituency. My hon. Friend the Member for Redditch (Karen Lumley) was in attendance as well, because the college serves both constituencies. On that occasion, I had an opportunity to ride a Harley Davidson motorbike, and like that bike, the career of my hon. Friend the Member for Bromsgrove (Sajid Javid) is powerful, speedy and impressive.

[Mr Speaker]

We are all intrigued by the Minister’s exploits, I am sure.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

It is exactly one year on from the Government’s trebling of tuition fees to £9,000, and we can clearly see the disastrous impact of that decision. UCAS applications are down by 15%, and the Government have had to introduce the chaotic core and margin model to make up for the fact that they got their sums wrong. Is the Minister for Universities and Science aware that he has created a perfect storm for our world-class higher education sector, and why is he prepared to put our world-leading reputation at risk?

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

Our reforms will ensure that universities are well financed, and that there is more funding available for access than ever before. Perhaps the hon. Lady would explain to the House why she proposes to double fees and, at the same time, reduce the funding available for scholarships and access money.

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

T2. It is clear to me that the more young people and adults hear the actual facts about the funding for universities, the more likely they are to apply. Given that there are five weeks left before the conventional cut-off date for applications, will the Minister tell the House what the Government propose to do to make sure that young people and adults, whether full or part-time students, understand the benefits of applying to university.

[Mr Willetts]

I thank my right hon. Friend for the excellent work that he has done on this important subject. I can report to the House that 90% of schools and colleges have been visited by graduates explaining the facts of the system. In addition, they are reaching out to parents evenings. Every hon. Member has received a copy of the DVD that has gone to every school with the information that shows that no student has to pay up front to go to university.

[Mr Dennis Skinner (Bolsover) (Lab)]

T4. When the Secretary of State was talking about the running down of British industry, he failed to mention that, in the 1980s, the Thatcher Government employed MacGregor to come over here and close large parts of the steel industry, and he almost destroyed the whole mining industry. Does the Secretary of State not realise that, surrounded by all those Tories, he is a mini-MacGregor of his day, carrying out the dirty work of the Tories and overseeing the demise of the rest of British industry? He does it not for the money that MacGregor got but for a ministerial car and a red box.

[Vince Cable]

After the hon. Gentleman’s previous contribution, I set up a visit to his constituency, which will take place, I think, in the first quarter of next year. I can discuss these matters in depth with him then, which I think is rather more than my Labour predecessor did. The hon. Gentleman has been a Member for a long time, but he has overlooked the fact that in the 13 years of Labour Government there was a decline in manufacturing output averaging 0.5% a year.

[David Rutley (Macclesfield) (Con)]

T3. Returning to 2011, what steps is my right hon. Friend taking to create the conditions for the pharmaceutical and life sciences sectors in the United Kingdom, including AstraZeneca in Macclesfield, to be able to compete more strongly in the global marketplace?

[Mr Willetts]

The life sciences strategy we produced earlier this week aims to rise to the challenge my hon. Friend identifies. In particular, there is an imaginative proposal under which 20 compounds that have been identified by AstraZeneca but are not currently being commercialised will be open to research by others, with a view to using them to create the medicines of the future.

[Julie Hilling (Bolton West) (Lab)]

T5. Bolton university is excellent at recruiting and retaining large numbers of students from disadvantaged backgrounds. It is worried, however, about the future of the widening participation premium, which makes up 6.7% of its teaching grant. Can the Minister reassure them that that premium will be fully funded in 2012, 2013 and beyond?

[Mr Willetts]

We have to look at the Higher Education Funding Council for England teaching grant year by year, so no assurances can be given about the total teaching grant at this stage. That has never been possible under any Government. What I can tell the House is that the total amount of money going into access funding has increased significantly because of the increase in fees. It is now running at a higher level—£200 million higher—than ever before.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

T6. I am sure that my hon. Friend the Minister for Further Education, Skills and Lifelong Learning will agree with me not only about his own irrepressibility but also about the importance for economic growth of our meeting the training needs of businesses. What measures is he taking to reduce red tape and excessive micro-management in respect of further education colleges —a trend that so characterised the last Government—in order that they can respond to our economic needs?

[Mr Hayes]

The Foster report described the last Government’s policy as a galaxy of bureaucracy, oversight and inspection. By contrast, we are cutting red tape, streamlining funding systems, and giving colleges greater discretion to respond to the demands of employers and the needs of learners. I have recently published a document setting this out in detail. Copies are available in the Library of the House—and signed copies by application.

[Naomi Long (Belfast East) (Alliance)]

T7. Northern Ireland is the only region where employment law is devolved, an anomaly that in the past has led to the Northern Ireland position being largely ignored in the formulation of UK policy both in the transposition of European Union employment directives and in national agreements. Will the Minister assure us that he will work with the Minister for Employment and Learning in Northern Ireland to provide a framework in which Northern Ireland interests can be addressed in any future developments in this area?

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

The hon. Lady is absolutely right: our Department looks at the majority of employment law for the rest of Great Britain but not for Northern Ireland. However, I can assure her that officials from my Department are in regular contact with their counterparts in the Department for Employment and Learning in Northern Ireland. Examples of that include frequent conversations during the consultation on resolving workplace disputes, and close working between the employment agency standards inspectorate and the equivalent team in Northern Ireland. Indeed, we are currently working with it to understand the impact of the agency workers directive, and we will continue to do so.

[Mark Menzies (Fylde) (Con)]

T9. Will the Minister update me on what efforts are being taken to attract inward investment into enterprise zones such as that in Warton in my constituency?

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

We have made good progress on enterprise zones. I know that locally there is a team working together with UK Trade & Investment on specific live commercial projects, and I am hopeful of real progress in the next few months.

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

T8. Last week we heard how Project Merlin had failed and was going to be bailed out by credit easing. How many banks have signed up to credit easing, how many small businesses will be helped by that, and will it be more successful than the business growth fund was?

[Vince Cable]

The Merlin project certainly did not succeed in its central objective, which was to achieve growth in gross lending by banks. There has been a contraction in net lending for a variety of reasons, not least the fact that many companies are holding more cash. Credit easing will be commenced soon. The Treasury will maintain a metric of performance by individual banks, and this will lower the cost of capital for many of their customers. The cost of borrowing and covenanting, as much as access, has now become the central concern.

[John Pugh (Southport) (LD)]

Will the Minister explain how revising TUPE will actually create more jobs, as opposed to facilitating outsourcing?

[Mr Davey]

My hon. Friend will know that there are mixed views in the business community about whether or not the current TUPE regulations are gold-plated, which is why we have called for evidence. We have not published a consultation with specific proposals as we want to have evidence from all stakeholders, so that when we make our proposals in a future consultation they will be well evidenced.

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

May I draw the Secretary of State’s attention to the £150 million worth of entirely private investment that Associated British Ports wants to spend now to equip Southampton for the next generation of container ships? Instead of creating and supporting 2,000 or more jobs, this project is mired in red tape in the Department for Environment, Food and Rural Affairs and its agencies. Will he speak to his colleagues to try to get this vital project under way?

[Vince Cable]

Yes, I will certainly do that—that seems a very helpful intervention. As the right hon. Gentleman knows, logistics, including ports, were a major part of our work in the growth review. A lot is now happening to open up British ports and invest in them, and I will certainly pursue his inquiry.

[Neil Carmichael (Stroud) (Con)]

I am very much looking forward to welcoming the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), who is responsible for business and enterprise, to the festival for manufacturing in my constituency to celebrate what we have achieved in the constituency, and to promote more investment and employment. But one area that we need to focus on is the supply chain, so what are the Government planning to do to help with that?

[Mr Prisk]

I am pleased to say that not only will I be able to attend the Stroud manufacturing festival, which is an excellent example of the initiatives taken by those on this side of the House, but the Government have put in place a £125 million supply chain initiative. It builds on the work we have done in the automotive sector, it is a great opportunity and I hope it will be one of those areas where the Labour party will set aside the posturing and work with us positively.

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

I have been raising the issue of small businesses’ failure to be paid by large contractors. The Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk) was good enough to write to me, but he said that more than 50% of the problem occurred because there continued to be a problem with effective customer management on the part of the supplier. In other words, the large companies were to be managed by the small company. Is it not time that we actually did what the Electrical Contractors Association has called for and make it compulsory for 30 days’ payment to be in every single contract for a small supplier?

[Mr Prisk]

In fact, the Labour party tried to do that at the very beginning—in 1998, I believe—and failed. What we are doing is using our procurement powers to make sure that government sets the standard. I think that that is the best way, but I am always happy to look at unreasonable behaviour by large corporations and I would be happy to look at any further details that the hon. Gentleman can provide.

[Tessa Munt (Wells) (LD)]

The county of Avon was abolished in April 1996. The Somerset village of Shipham was never part of Avon and has always been in Somerset, so it is a constant irritation to my constituents that post, including that from all Government agencies and any organisation using the Royal Mail’s database, is addressed to Shipham in Avon. When complaints are made to the Royal Mail’s headquarters, they elicit the reply, “We like to give users an historical perspective.” That is complete tosh. The Royal Mail does not update its database and will not correct inaccuracies in the address details. Will the Minister wade into this ancient, decades-old dispute on behalf of the long-suffering villagers and get this bizarre—

[Mr Speaker]

Order. I think we have got the thrust of it.

[Mr Davey]

I am very grateful for my hon. Friend’s question. She will be aware that her constituents in this village share their concerns about postcode issues with many other residents in many other constituencies across the UK. I have raised this matter in the past with Royal Mail, and it believes that the costs of changing its systems would be disproportionate. Of course I will raise her point, but I do not want to raise her expectations.

[Jim Shannon (Strangford) (DUP)]

The responsibility to promote adult and community learning in Northern Ireland is a devolved matter. Has the Minister considered linking with Northern Ireland’s Department for Employment and Learning to provide a strategy for the mutual benefit of both the UK mainland and Northern Ireland?

[Mr Hayes]

I do have regular discussions with my counterparts in the devolved Administrations. The point that the hon. Gentleman makes is an excellent one and I shall take action on it following questions today.

[Karen Bradley (Staffordshire Moorlands) (Con)]

I am afraid that I am going to take the Minister back to the issue of postcodes, as many of my constituents contact me with their frustrations about the very wide range of postcodes in Staffordshire Moorlands, which leads to problems with insurance, cold weather payments and the emergency services failing to find people. So would he be able to meet me and local representatives to discuss the possibility of creating and setting up a Staffordshire Moorlands postcode to deal with these problems?

[Mr Davey]

I am always happy to meet hon. Members and I am sure we can arrange that. Ahead of that meeting, however, I want to ensure that the hon. Lady and her constituents who will be accompanying her do not have raised expectations. Royal Mail is struggling with its financial position. We are turning around Royal Mail—it was a disastrous financial case when we had it from Labour—and, as Minister, I would not want to impose extraordinary and disproportionate costs on it. I shall certainly meet the hon. Lady, however.

[Chris Bryant (Rhondda) (Lab)]

The Labour Government introduced the artists resale right, which has made an enormous difference to many artists in this country. The law requires that it is introduced for the estates of deceased artists from 1 January next year. When I last asked the Secretary of State about it, he said that he could not confirm that it was going ahead and he still looks as bemused as he did then even though it is his responsibility, but the Arts Minister has told me that it will go ahead as long as I do not mention it to anybody else. Will the Secretary of State please now inform us exactly what is happening on the artists resale right?

[Mr Davey]

rose—

[Chris Bryant]

The Secretary of State.

[Vince Cable]

I believe it will go ahead; I have made further inquiries since the hon. Gentleman’s original question.

[Martin Vickers (Cleethorpes) (Con)]

The Secretary of State visited my constituency in July, closely followed by the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Tunbridge Wells (Greg Clark), clearly recognising the need to boost the local economy. Since that time, we have had two enterprise zones, regional growth fund successes, a new road scheme and the halving of the Humber bridge tolls. My constituents are asking: what next?

[Vince Cable]

I think there is an expression that goes, “post hoc ergo propter hoc”. It is not just a coincidence.

[Mr Speaker]

I once used that on “Any Questions”. I say to the Secretary of State that it does not work.

Water White Paper

Thursday 8th December 2011 Commons Chamber

11:31

[Mary Creagh (Wakefield) (Lab)]

(Urgent Question): To ask the Secretary of State for Environment, Food and Rural Affairs if she will make a statement on the water White Paper.

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

Making sure that we have enough water for everyone will be one of the major challenges this country will have to deal with in the years ahead. Today’s publication of “Water for Life” recognises that water is essential for economic growth and that we must protect the environment for future generations.

The White Paper is a blueprint for action. It outlines plans to modernise the rules that govern how we take water from our rivers; it explains how we will improve the condition of our rivers by encouraging local organisations to improve water quality and ensure we are extracting water from our environment in the least harmful way; it announces plans to reform the water industry and deregulate water markets to drive economic growth; it enables business and public sector customers to negotiate better services from suppliers and to cut their costs; it removes barriers that have discouraged new entrants from competing in the water market; it asks water companies to consider where water trading and interconnecting pipelines could help to ensure secure water supplies at a price customers can afford; it enables water companies to introduce new social tariffs for people struggling to pay their bills and seeks to tackle bad debt that ordinary householders have to bear the cost of to the tune of £15 a year; and it tackles the historic unfairness of water infrastructure in the south-west.

The White Paper is the Government taking leadership on an issue of critical importance to our economy and our environment. It is a bold vision for the management and harnessing of an increasingly scarce but vital resource and I welcome this opportunity to discuss it with hon. Members today.

[Mary Creagh]

I start by thanking the Secretary of State for her note explaining why the market-sensitive parts of the White Paper were briefed to the stock exchange this morning and expressing my disappointment that she is not giving us her views on this.

We have just had the driest 12 months since records began 100 years ago. That has affected water quality, restricted boating activity and seen wildfires destroy valuable habitats. Last month, the Department for Environment, Food and Rural Affairs granted Anglian Water a drought permit, a highly unusual move for the autumn, when reservoirs are normally filling up. Last Thursday, the Environment Agency’s drought prospect report revealed that south-east England is at high risk of drought next year with some restrictions possible on customer supply. Ensuring a safe, affordable and continuous supply of water while protecting the environment and managing unpredictable rainfall is a major challenge. The White Paper is of intense interest to the public, who are worried about rising bills as real incomes fall and household budgets are squeezed. It builds on Labour’s Cave and Walker reviews, which we commissioned, and takes an evolutionary approach.

We welcome the proposals to introduce greater competition for business and public sector customers and to establish a cross-border market between England and Scotland for water and sewerage services. We also welcome the fact that water efficiency measures will be part of the green deal, as proposed by my hon. Friends the Members for Ogmore (Huw Irranca-Davies) and for Liverpool, Wavertree (Luciana Berger) during the passage of the Energy Act 2011. However, the White Paper is silent on how the water sector will reduce its carbon footprint and encourage energy from waste, and the proposals on the removal of historical abstraction licences, which cause such damage to our environment, are given an end date of 2025, which is far too late.

Last week’s autumn statement announced £40 million a year to help 700,000 households in the south-west pay their water bills. Will the Minister tell the House when the £2 billion capital investment in the south-west that South West Water invested be paid off and how long the £40 million subsidy will continue for those customers? How will he ensure that those proposals for South West Water meet EU state aid rules? We know that bills in the south-west are, on average, £157 higher than those across the rest of the country, reflecting the botched Tory privatisation of 1989, which left 3% of the population paying for 30% of the country’s coastline and the £2 billion investment in new sewerage services. Does that money set a precedent for other areas of the country to receive help to offset capital investment costs? The cost of the Thames tideway tunnel is now estimated to be over £4 billion, so can Thames Water customers look forward to receiving similar help with their bills?

More than 2,250,000 pensioners, single adults and families spend more than 5% of their disposable income on water bills. The Government’s proposals to help people with rising bills elsewhere in England and Wales are weak and unclear. How does the Minister propose to force water companies to ensure that those eligible people receive help with their bills when that will come straight off the companie’s bottom line? What sanctions will there be for water companies that consistently fail to help people with their bills? Has he decided whether to fund Water Sure through public expenditure, as mentioned in the consultation in June, and, if so, what will the cost be per annum? Has he rejected the idea of match funding for company social tariffs in the south-west and modifying sewerage charges for non-household sectors?

Today’s water White Paper is more than six months late, and it is a curate’s egg—good in parts. We will work with the Government to ensure a fair deal for water customers, whatever part of the country they live in.

[Richard Benyon]

I am grateful to the hon. Lady for the welcome she has given to large elements of the White Paper. She is right that it builds on work that has been done over many years. I am grateful to Professor Cave, Anna Walker and to David Gray for his report on Ofwat, which informed the White Paper, as have the contributions of many stakeholders, other organisations and Members of the House.

The hon. Lady made a slightly predictable and lame remark about why I am dealing with the issue today, rather than the Secretary of State. We have a style of management in this Government that encourages people to take control of the issues. It is a highly motivational style that I recommend to her, because it encourages greater understanding of the issues. The Secretary of State and I have spent many hours preparing the White Paper and have immersed ourselves in the detail.

The hon. Lady is wrong to suggest that there is not enough in the White Paper on reform of the abstraction system. The abstraction rules go back to the early 1960s and do not take into account changes to our climate and weather patterns, and it is important that we have new and clear rules that take us into the future. We will consult in 2013 on our long-term approach to a transitional system of changing abstraction that will work and be sustainable in every sense.

There are urgent measures that we need to take forward, because in constituencies similar to mine, much-loved and much-valued rivers, which are vital to our eco-systems and to the general health of our environment and to the way in which we value it, are running dry. The White Paper sets out clearly how the Environment Agency will work to bring forward speedily measures that change how we abstract water, so that we return water as quickly as possible to river systems, and our catchment approach, which we announced in March, will soon start to benefit water quality and pollution. I urge the hon. Lady to support that measure, which involves many local people, is effective and tackles the urgent situation that we face, brought about by the current low rainfall and the impending drought, unless we have a proper, wet winter.

The hon. Lady mentioned South West Water. We believe that the announcement in the Budget, on which the Chancellor gave more detail in the autumn statement, sets out a way of righting a long-term wrong. It is to the credit of this Government that they have tackled it, because Members from all parts of the House have raised the issue for a great many years, and we are dealing with it. I am not going to pretend to her or to the House that the announcement will create the equivalence that people in the south-west might feel they deserve, but it is a considerable contribution and is separate from what we are doing to assist those on low incomes throughout the country to pay their bills.

We are consulting on the guidelines that we will produce for companies’ social tariffs, and I recommend to the hon. Lady the details in the White Paper on the excellent work that several water companies are doing to make it easier for people to pay their bills, and on the work that the companies are doing with organisations such as Citizens Advice and others.

The hon. Lady asks how long the payment announced by the Chancellor will continue. In an almost unique announcement, I can tell the House that it will continue beyond the end of the spending review and, in fact, until at least the end of the next spending review. Of course, it will be for Ministers then to decide what happens after that.

The hon. Lady talks about other high-cost items and their impact on people’s bills, and refers to the Thames tideway tunnel, which, as she rightly recognises, imposes a high cost on Thames Water customers. The cost of the project is of great concern to Ministers and to the Government, and we are looking at it very closely. We remain supportive of the scheme, however, and page 55 of the White Paper shows the Government’s clear support for it. The Thames is one of the most important rivers running through an iconic city, and we need to ensure that it is clean. We believe that this scheme offers the best solution.

The hon. Lady asks me about the guidance on tariffs. Water is a monopoly industry, and the monopoly industries are highly regulated by three regulators, so Ofwat will continue to set prices and to be an independent regulator. We will give clear guidance on where we think it should be going, but the relationship will remain the same and its responsibility will be to keep bills affordable.

[Several hon. Members]

rose—

[Mr Speaker]

Order. What are required now are short questions and short answers, because we must move on. That is the way it has to be done.

[Tony Baldry (Banbury) (Con)]

Birmingham has a greater length of canals than Venice, and the country as a whole has an extensive canal network, so what assessment has my hon. Friend made of its potential to link those parts of the country with above-average rainfall with those parts that need more water?

[Richard Benyon]

I have looked very carefully at that issue, and as my hon. Friend will know we are in the process of a very exciting change in how we manage our waterways, in transferring British Waterways to the charitable sector. There remains the opportunity to use our canals to move water around, but the sad truth is that water is an extremely heavy substance, and it is very carbon-intensive to move it very far. The economic assessments that I have seen state that to move water much more than 30 miles is uneconomic, but through a range of different measures we start to see that, with interconnectors, we can incentivise water companies to use a variety of means to move water from neighbouring areas to theirs. Then, we can start moving a trickle of water from areas of high rainfall to areas of low rainfall.

[Mr Ben Bradshaw (Exeter) (Lab)]

I welcome the fact that the Government are implementing the part of Anna Walker’s review that will bring relief at last to consumers in the south-west, although I note, of course, that our bills will still be more than £100 more than in any other part of the United Kingdom. Will the Minister say a little more about infrastructure? The thing that puzzles many members of the public is that we live in a wet, temperate climate with lots of rainfall, and yet we constantly talk about having droughts. What more can the Government do to increase the capacity of reservoirs and other infrastructure to avoid that happening?

[Richard Benyon]

I thank the right hon. Gentleman for his words. Of course, he is right. We want to encourage water companies to continue to invest. A key element of the White Paper is to send a very clear message to the investor community that we value the nearly £100 billion of investment in our infrastructure over the past 22 years and want to see more of it in future. There have been two intentions in that direction: first, not to spook investors by giving the wrong indications about how we want to proceed on competition; and secondly, to say to the investor community, “This is a place of safety and security where you can invest for the long term.” We will still require greater infrastructure and elements of construction that will make our economy and our environment more resilient to the kinds of weather changes that are happening.

[Andrew George (St Ives) (LD)]

Like the right hon. Member for Exeter (Mr Bradshaw), I welcome the Government’s approach to South West Water customers and to the social tariff proposal. However, does my hon. Friend acknowledge that the ability across companies to respond to the advantage that is given to them as regards social tariffs will vary from company area to company area, and will he keep that under review? After all, this is a White Paper, not a Bill.

[Richard Benyon]

The hon. Gentleman is absolutely right. We hope to legislate in the near future on a number of these matters, not least that of South West Water, which does require primary legislation. The guidance that we are consulting on will be made available when the results of the consultation are known in January—in the new year, to be precise. We will very much take his concerns into account. We want company social tariff schemes that really work and get to those who are in water poverty.

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

I welcome the publication of the White Paper, although I am disappointed that in some respects it is not more ambitious, particularly as some of the measures that we need could be very simply achieved. To give one specific example, are there plans to include a mandatory requirement to have rainwater harvesting in all new homes, and if not, why not, given that it is a very simple measure that could nevertheless have a significant impact?

[Richard Benyon]

There are great incentives to be given in the construction of new homes. In terms of the wider debate on development, sustainable development will put the onus on developers to show that the construction of these dwellings will have as minimal an impact as possible on the environment. This will be a real driver towards using water-conserving measures such as greywater schemes, sustainable drainage systems and a whole host of others that we will be bringing forward as this process goes further.

[Mr James Gray (North Wiltshire) (Con)]

One reason for over-abstraction from rivers such as the source of the Thames and the Malmesbury, the Avon and the Kennet in my constituency is that the law prevents planners from considering water and sewerage availability when agreeing unwanted out-of-town developments and large-scale developments such as those around Swindon. Will the Minister have discussions with his colleagues at the Department for Communities and Local Government to consider whether planning law could be changed to avoid over-abstraction from rivers such as mine?

[Richard Benyon]

That is a matter of great concern to me. The River Kennet flows through my constituency, and when I stood in it in Marlborough the other day, it was as dry as the carpet on which I am standing. It is a very real problem, and the projections for population growth across this country in the years to come indicate that we have to address it now. We are setting out in the White Paper a vision that will precisely encompass the concerns so accurately voiced by my hon. Friend. We need to ensure that there is an adequate water supply so that our rivers and taps can continue to flow, and we are trying to link up those two very important requirements.

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

The Minister will be aware that it took David Walliams’s sponsored swim down the Thames to remind our constituents how filthy some of our rivers are. Tens of thousands of tonnes of sewage are still pumped into the Thames. Protection for the quality of our rivers comes from the Environment Agency, but everyone is saying that the Environment Agency is being run down and that it does not have the capacity to be vigilant and ensure that our environment is safe.

[Richard Benyon]

I have the highest respect for the Environment Agency. The people who work there are true professionals and are absolutely committed. I have had no indication from them that they are unable to deal with water quality issues, as described by the hon. Gentleman. I agree with him that the main river flowing through our capital city is in a disgraceful state. Not only should it be our ambition to see it cleaner, but we have to comply with international treaties. It behoves us to take the tough decision to restore its quality. However, that will not happen with the exclusion of other rivers that are also suffering quality problems.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

Lincolnshire, where my constituency sits, is one of the driest counties in the country, somewhat counter-intuitively. Water is therefore of great importance to my constituents and in particular to those who farm. Will the Minister assure the House that there are no proposals in the White Paper that will adversely affect the farming industry?

[Richard Benyon]

One of the core principles that motivates us in DEFRA is food security. We are deeply indebted to the farming community for the innovation that it has shown and for its ability to cope with changing weather patterns, while continuing to produce quality food. During the drought last year, we engaged with abstractors, many of them from the farming community. We found that the Government have many tools at hand to deal with the problems now. There was some very innovative work by the Environment Agency, the National Farmers Union and other organisations on that. The White Paper addresses the urgent and available methods, but also considers a new, changeable abstraction scheme for the long term that encourages farmers to continue to produce food.

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

I think that there will be concern at the failure to separate the retail arm of competition for non-domestic customers. May I press the Minister to set out the timetable for the introduction of a zero-threshold market for all non-domestic customers?

[Richard Benyon]

That is a clear priority. We hope to have a water Bill to take those methods forward. We looked closely at the recommendations of the Cave report and those from a number of other quarters about retail separation. We are making substantial changes on competition, but we were not persuaded of the need for wholesale reorganisation and separation. We want to ensure that the water sector remains open to increased investment. We hope to make changes with a water Bill in the next Session of Parliament.

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

I welcome the commitment in the White Paper to tackle water quality on a water catchment area basis. I notice that the Teme, Wye and Severn catchment areas straddle the England-Wales border. I ask the Minister to work closely with Ministers in the Welsh Assembly and other agencies to ensure that water quality is improved as quickly as possible.

[Richard Benyon]

I have visited that catchment area and know that there are serious issues to be tackled. We work closely not only with ministerial colleagues in Wales, but with the Environment Agency and the new Countryside Council for Wales. I assure my hon. Friend that cross-border issues will be dealt with to reflect the needs of catchments. We will work with all concerned to ensure that that is successful.

[Paul Flynn (Newport West) (Lab)]

If the Government are abiding by their promised timetable, 8 December is part of early summer. Is it not true that this White Paper is not only late, but lame and limited? It appears to disregard altogether the immense potential of water resources to generate clean, sustainable energy.

[Richard Benyon]

I am saddened that the hon. Gentleman is not as welcoming of the White Paper as others have been. We originally planned to introduce it in July and I recognise that it is a few months late. However, I am sure that he would have preferred for us to take a bit longer and get it right rather than rush it. We produced a natural environment White Paper in June, which informed the issues that we are taking forward in this White Paper. We have consulted closely with people across the water sector and in the wider DEFRA family. I think that it was better to take a few months longer and get it right.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

I welcome the White Paper. Will the Minister confirm that the reason it was released to the City first was that it contains market-sensitive information? There is genuine anxiety in Stratford-on-Avon and throughout the country about over-abstraction. What can he say to my constituents to allay their fears?

[Richard Benyon]

My hon. Friend is right: we released only the parts of the White Paper that were market sensitive to the stock exchange, after informing Mr Speaker. I gather that there is precedent for such a move and I am grateful for the general support for it. My hon. Friend’s constituents, like mine, are right to be concerned about the impact that over-abstraction is having on their environment. That is why we are making a reasoned change to the abstraction system in the long term and tackling urgently the problems of over-abstraction in certain areas where rivers are dangerously low or even running dry.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

The Minister has confirmed his commitment to the Thames tideway tunnel investment of £4 billion. Will he also confirm the other major investment in the Thames Water area at Deephams in my constituency? How will the Government continue to protect the consumer from the increased bills that will be occasioned by that major investment?

[Richard Benyon]

Deephams is vital to the infrastructure that we need. The hon. Gentleman is right to suggest that it will have an impact on people’s bills. It is the job of the Government, working with Thames Water and Ofwat, to ensure that that cost is as low as possible. There is a large contingency in the Thames tideway project, which every experience of large-scale environmental projects shows is necessary. I hope that we can work with Thames Water to ensure that these infrastructure projects are produced at as reasonable a cost as possible and with as little impact on charge payers as we can achieve.

[George Eustice (Camborne and Redruth) (Con)]

I, too, welcome the measures outlined in the White Paper to deal with the affordability of water bills in the south-west. As the Minister said, this issue has been discussed for more than a decade and nothing has been done. It is good finally to see action. In respect of the concerns about whether this sets a precedent for the Thames tideway project, does he agree that a major difference is that the population of the Thames Water area is far greater than that of the South West Water area, so the overall impact of the infrastructure improvements on bills will be far lower?

[Richard Benyon]

It is no comfort to my constituents or the constituents of other hon. Members in the Thames Water area to say that their bills are likely to go up. However, when they do go up, our projection is that they will be at about the national average. My hon. Friend’s constituents will continue to pay bills of about £100 over the national average. We have made a considerable investment to try to right the wrong that they have lived with for a long time. It is never easy, but I assure him that I will continue to work with Ofwat and others. I am grateful for his contribution and that of other hon. Members from the south-west in this difficult process. I hope that it is appreciated that we are getting somewhere.

[Chris Bryant (Rhondda) (Lab)]

With all this talk of dryness, I feel as though the Rhondda is living in a different world—perhaps not for the first time—because the issue that affects us most is still flooding, in particular where there is dry ground and water comes straight down off the mountains. One thing that has helped enormously is that Dwr Cymru, Welsh Water, has, with its unique structure, been able to work more co-operatively with the Welsh Assembly and others. Will the Minister ensure that nothing compromises that unique structure?

[Richard Benyon]

I commend that company. I was with its chairman just the other day discussing this issue. We have to learn how water companies cope with large quantities of water in high rainfall areas, but also how we can work with them to achieve greater connectivity with other water companies. If we see water flowing from area to area, it will benefit the hon. Gentleman’s constituents through the bills that they pay and encourage water to go to the stressed areas of the south-east.

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

The microclimate in Suffolk Coastal is quite similar to that of north Africa, and farmers are used to using irrigation in producing crops. There are also big abstractors of both river and ground water. I welcome large parts of the White Paper, but I am a little worried by recommendations 3.39 and 3.43, which I am concerned will put farmers in my constituency out of food production.

[Richard Benyon]

I am very happy to discuss the details of that with my hon. Friend and with farmers from her constituency, because that outcome is not our intention. We want farmers’ businesses to be secure for the future. If the Government had not taken responsibility for this issue by taking forward a clear vision of an abstraction regime that is fit for the future—it has been a problem for a long time that there has not been such a coalescing of ideas—farmers in her constituency would have been in a much worse condition.

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

The Minister has just mentioned Welsh Water. Will he remember that it also serves customers on the English side of the border, for instance in Chester? In areas where there are disputes between DEFRA and the Welsh Assembly Government—for example, on the Consumer Council for Water—will he ensure that customers on the English side of the border are not forgotten?

[Richard Benyon]

I will of course ensure that they are not forgotten. I am looking forward to going up to the north-west to see the new interconnector, which will provide water from places such as north Wales to an area that was water-stressed last year. We have to recognise that drought is not exclusive to the south and east but is now a feature in other parts of the country, including my hon. Friend’s constituency.

Core Cities

Thursday 8th December 2011 Commons Chamber

12:01

[Hilary Benn (Leeds Central) (Lab)]

(Urgent Question): To ask the Secretary of State for Communities and Local Government if he will make a statement on the powers and finance he intends to devolve to local authorities.

[The Minister of State, Department for Communities and Local Government (Greg Clark)]

I am grateful for the opportunity to answer.

I have laid in the Library today a copy of a document that the Government are publishing entitled “Unlocking growth in cities”, and I have laid a written ministerial statement. The document outlines a new framework for the relationship between our larger cities and central Government.

England’s largest cities—many of the issues in question are devolved matters—are the economic powerhouses of our country. We are offering them a menu of new powers that we want to explore as part of a series of bespoke “city deals”. The ability to do that comes from an amendment that was introduced into the Localism Bill, which was promoted by the core cities group and attracted all-party support. It allowed powers to be devolved to cities in future, and I believe it is important to act on it.

Our cities have great potential to contribute more to growth, and to enable them to do that we want to free them from Whitehall control in a number of areas, with the aim of stimulating growth. The first wave of deals that we propose will be with the eight largest cities and their surrounding local enterprise partnerships. As with any deal, cities will have to offer something in return for their new powers and funding. They must guarantee that they can provide strong and accountable leadership, improve efficiency and outcomes, and be innovative in their approach.

The bespoke approach of recognising the differences between cities and allowing licensed exceptions is a new idea to put cities back in charge of their own economic destiny and enable them to seize the opportunities for growth. It represents a big shift in how Whitehall works, with the presumption being that powers should be handed down wherever cities make a convincing case.

It is important to say that today’s document sets out a series of indicative options for the transfers of control that could be considered as part of each deal-making process. The list is not intended to be a statement of policy or represent an automatic entitlement for cities. It is neither prescriptive nor exhaustive, but it might help the House if I give some examples of the content of the document.

We want to bring an end to the current system of requiring cities to bid to different Whitehall departments for different pots of cash, whether for roads or housing. Instead, we want to explore whether they can get one consolidated capital pot, to direct as they see fit. We want them to have the ability to set lower business rates for certain types of company. We already have very successful business improvement districts, and sometimes firms in a particular sector across a wider area may benefit from the same degree of flexibility.

There will be a £1 billion boost to the regional growth fund to create jobs, and we will encourage cities to bid for that money to help clusters of businesses in their area, so one bid could help several small companies. We know that many small businesses find the system of taking on apprentices daunting, so cities will be able to set up city apprenticeship hubs, which will help local employers and local people to make the most of the opportunities offered by apprenticeships.

We want to improve the way in which services work together in cities, to make it easier for people to get back into work instead of being passed from one service to another—from Jobcentre Plus to the town hall to a careers adviser. That can be done under one roof, and we want to make that possible. We also want to offer powers over infrastructure to unlock investments in improving transport, housing and broadband. Currently, transport projects can be delayed because cities have to go through the Whitehall machinery, but they may have the capacity to make some of the decisions themselves. Cities should also be able to have more of a say on their priorities for housing and regeneration, instead of having to go through the Homes and Communities Agency.

Cities will be able to bid for a share in a £100 million capital investment pot to spend on ambitious broadband infrastructure projects. We expect bids to include a range of projects, including superfast broadband for strategic business areas and city-wide high-speed mobile connectivity.

As I said, we want to start with the eight core cities that proposed the amendment to the Localism Bill, but I wish to be clear that our vision extends to the whole of urban Britain. I will be open to suggestions from other cities about how they can make use of the powers that the Bill, now the Localism Act 2011, gives them.

The powers that we are proposing will help to allow our cities to be the economic, social and cultural magnets that they have the potential to be, and places where people aspire to live. Our cities have too often been straining at Whitehall’s leash, and they now have an opportunity to seize the powers that are available to them. I hope that the conversation and negotiations that we will have in the months ahead will be fruitful, and I commend this statement to the House.

[Mr Speaker]

Yes, I notice that the Minister refers to his “statement” to the House, and his observations did somewhat exceed the time limit allocated to Ministers for dealing with urgent questions—so much so that one wonders whether he might have considered making an oral statement in the first instance.

[Hilary Benn]

I am grateful to the Minister for his reply, but it should not have taken an urgent question to bring him to the Dispatch Box this morning. Once again, a major policy announcement affecting local government, this time made in the Deputy Prime Minister’s speech in my constituency this morning, is all over the national and regional media, who were clearly pre-briefed yesterday, whereas the House should have been told first today.

The efforts of councils and communities up and down the country make the biggest contribution to our cities, and it is the Government’s job to help them do so. At least the Deputy Prime Minister acknowledged today that areas once synonymous with urban decay were “dramatically revived” thanks to Labour’s investment. However, when we examine the “unprecedented transfer of power” that he has talked of, in fact we find unprecedented cuts, as confirmed in this morning’s local government settlement, on top of the cuts already resulting from the scrapping of regional development agencies. Those cuts are substantial, front-loaded and unfair.

Will the Minister explain why the 10% most deprived local authorities, which include the core cities of Manchester and Liverpool, are facing reductions in their spending power nearly four times greater than the 10% least deprived authorities? There is only one way to describe that, and it is as balancing the books on the backs of the poor or, when it comes to job losses, on the backs of women, who have lost twice as many jobs in local government as men since the coalition was formed. How many more public sector jobs will be lost in the core cities in view of the revised Office for Budget Responsibility forecast published last week?

When does the Minister expect the new powers for the core cities to be confirmed? He has assured the House today that they will be available regardless of the outcome of the mayoral referendums, so when does he propose to extend them to other councils?

On the devolution of local funding, we developed single pot funding, a good idea that is now being taken forward. We welcome that, but will the Minister tell the House by how much the Government have slashed local capital spending in the core cities? Is that not why we now face an “infrastructure deficit”? Those are not my words but those of the Prime Minister.

How will reducing the affordable housing budget by nearly £4 billion unleash the power of local councils, including the core cities, when it means that they will find it much more difficult to provide the homes that their people need?

Councils will welcome a role on apprenticeships, although many already play a role, but why are local authorities, including the core cities, excluded from playing a part in the Work programme? Surely they should have a role in helping people to find jobs, which is an urgent task up and down the country.

On the changes to local government finance announced by the Deputy Prime Minister today, which will affect all councils, will the Minister give the House an assurance that no local authority will lose out financially? Will there be effective redistribution from the most well off to the least well off? How much of the increase in business rate revenue do the Government plan to keep for themselves? How exactly is that localisation?

On the business rate discounts, to which the Minister referred, who will decide where and to which industry they can be offered, and will he assure us that that will not just result in better-off areas being the ones that can attract new businesses?

The Opposition support strong and innovative local government, which should have the powers it needs to do that job, but no amount of warm words will hide two very uncomfortable facts: the Government are cutting unfairly and their failed economic policy is undermining the growth of our core cities and all local communities, when what they really need is a change of course.

[Greg Clark]

I accept your words, Mr Speaker, that, such is the replete quantity of announcements that we are making, I might have made a statement on them. However, I am pleased to be able to respond to the right hon. Member for Leeds Central (Hilary Benn).

The intention of the proposals is to begin a series of negotiations with cities—we have not made a definitive announcement of powers that will be vested in one city rather than another. I thought it reasonable to publish a document to encourage cities across the country and see what others have suggested.

The right hon. Gentleman mentioned RDAs, but he will know that local enterprise partnerships in each of the cities are making major contributions to our reform. It is significant that when people were invited to make a proposal on how they should organise themselves economically, local businesses and local authorities proposed core cities as a preferable alternative. I am not aware of any consensus on the retention of RDAs.

On the local government finance settlement, to which the right hon. Gentleman referred, he will know that this is the second year of a settlement announced last year. I can confirm that the figures are exactly the same. The average reduction in spending power is 3.3%, which is less than last year’s reduction, and there is the protection of a maximum reduction of 8.8%.

In terms of fairness, we have again advantaged the deprivation and needs component of the formula to ensure that it has a greater weight compared with the system that we inherited.

On jobs, the right hon. Gentleman will know that to rebalance the economy it is important that we have private sector job creation. That is the agenda that the local enterprise partnerships are putting forward, and each of the core cities is clear that that is what is needed. They have a great capacity to create private sector jobs. Our future jobs are likely to come from knowledge-intensive industries, of which cities are ideally placed to be the hosts. In cities, people are in close proximity with one another and can share knowledge and insights. Cities will be the cradles of growth in future, and it is right that private sector job creation should be the key to that. He will also know that the Office for Budget Responsibility independent report on the autumn statement projected an increase in private sector jobs of 1.7 million in the years ahead.

We will negotiate case by case on what each city would like to be part of the single pot. It is important that we recognise that the needs of Liverpool are perhaps different from those of Bristol or of Leeds.

The right hon. Gentleman asked who should approve the discounts available in business rates. That is clearly a matter for the local authorities representing the whole of the city area. When there are industry-specific arrangements, we would expect a ballot of those industries, as with business improvement districts, which can have a higher levy.

The proposals we are making today are consonant with the discussions that we have had with each of the core cities during months past. I hope that the right hon. Gentleman and his colleagues, having been instrumental in providing this power, will join the leaders of all parties in the cities to ensure that we can give them the tools they need to unlock growth in their areas.

[Mr Stewart Jackson (Peterborough) (Con)]

The Minister’s reply to this urgent question shows that this Government are serious about civic renaissance. Will my right hon. Friend make efforts to speak to his colleagues in the Treasury about supporting tax increment financing and residential estate investment trusts, and about the development of more detailed special-purpose vehicles to access private sector capital to drive regeneration, not just in large cities, but in smaller ones such as Peterborough?

[Greg Clark]

My hon. Friend is absolutely right. One power that we are keen to see devolved to cities is a greater ability to invest in infrastructure, which can unlock growth and lead to financial prosperity. We have consulted on suggestions for tax increment financing and will propose our response shortly, but it is clear that cities want to be in the vanguard of using such powers.

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

The Minister talked about the devolution of business rates, but he did not respond to the question that my right hon. Friend the Member for Leeds Central (Hilary Benn) asked him on Government plans to retain part of the revenue from them. If the Minister is serious about localism, will he tell the House whether the Government will consider options for devolving all business rate revenue to local government and not allowing a clawback by the Treasury?

[Greg Clark]

The right hon. Gentleman will know that the Government have consulted on precisely that. It is important that there is a strong connection between an authority’s business rate receipts—all authorities; not just cities—and its policy behaviour in respect of businesses. The direction in which we are headed is very clear, but the precise technical details will be made clear in days to come.

[Lorely Burt (Solihull) (LD)]

I welcome today’s announcement, particularly the repatriation of business rates. Real localism means people having their own money to spend how they decide locally. How many savings will be made by reversing Labour’s Whitehall centralisation, under which so much taxpayers’ money was lost in administration costs before it ever got to front-line users?

[Greg Clark]

There is recognition that whatever the intentions behind the regional agencies, whether RDAs or regional arrangements more generally, they had become instruments—or, as it were, embassies—of Whitehall in the country. Our preferred approach is to devolve powers to cities so that they can revive their reputation of being able to determine their own future and stand proudly in the world as beacons of investment.

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

As Chair of the Select Committee on Political and Constitutional Reform, I strongly welcome the principle and philosophy behind today’s announcement and the co-operation with the core cities in moving the proposals forward. All parties should ensure that they are on the right side of the ambition of local government for greater independence. Is the Minister aware that local government in this country is one of the few in any of the western democracies to remain a creature of statute? Will he consider pushing localism much further towards genuine independence, as is enjoyed in other western democracies? The Local Government Association is currently looking at that and might well campaign on it in the new year.

[Greg Clark]

I commend the work of the hon. Gentleman and his Committee. He is right that we want to improve the standing of local government and its ability to be recognised as having—in effect—a constitutional significance that cannot simply be brushed aside. As he will know, our reforms in the Localism Act 2011 move considerably in that direction to establish a general power of competence for local government, so that it no longer exists to do those things that it is told to do by Parliament and central Government. Instead, the default should be the other way around: councils should be able to do things unless they are explicitly prevented from doing them by Parliament. The Act is a huge step in that direction, but I look forward to the report from the hon. Gentleman’s Committee—it will be taken very seriously in the Government.

[Julian Smith (Skipton and Ripon) (Con)]

This is a great opportunity for northern cities such as Leeds to seize back control from London. Does the Minister agree that Leeds is doing the right thing by attracting inward investment, sovereign wealth funds and other sources of capital, and not relying on money from Whitehall?

[Greg Clark]

My hon. Friend is absolutely right. One of the things that was suppressed under the old regional arrangements was the identity of cities internationally, and one of the proposals that we make in the document is that UK Trade & Investment should work even more closely with cities to promote the identity of cities such as Liverpool, which is world renowned and should be given particular prominence in UKTI’s work around the world.

[Mr Ben Bradshaw (Exeter) (Lab)]

I was pleased by the Minister’s clear statement that these new powers would not be restricted to the biggest regional cities, but applied—as he said—to all urban areas. But how on earth is that compatible with one of the first decisions that this Government made, which was to take away Exeter’s unitary status?

[Greg Clark]

I know that there has been an extensive debate, and great opposition in the area, about that issue, but it was settled. Rather than change administrative boundaries, which could bog down this process and waste time, our choice has been to respect existing administrative boundaries and, within that, transfer powers.

[Guy Opperman (Hexham) (Con)]

Will the Minister outline how his core cities plans will impact on business rates and investments to boost the economy of Newcastle and the north-east?

[Greg Clark]

The connection between business rates and investment should of course be a virtuous circle. It should be possible to invest in major infrastructure projects knowing that they will attract business, so establishing a clear connection between the activities and behaviour of the council and the rewards for that. The proposals that my right hon. Friend the Secretary of State for Communities and Local Government will make on the reform of business rates, combined with the access to single capital pots, will provide—for the first time—the ability as of right for cities to invest in their infrastructure, attract businesses and reap the rewards of doing so, and so enter that virtuous circle.

[Jonathan Ashworth (Leicester South) (Lab)]

The Minister has announced some very interesting measures, but I am not entirely sure that they will compensate for the huge cuts our cities face. It is very disappointing that Leicester is still not considered a core city. We are the pre-eminent city in the east midlands, we have a very successful mayor in Sir Peter Soulsby—a former Member of Parliament—and I am sure that the city could benefit from some of the proposals announced today. Will the Minister add Leicester to the list of core cities?

[Greg Clark]

The hon. Member for Nottingham North (Mr Allen) looked somewhat askance at that, but I think that rivalry between cities is healthy. Cities should have an identity, and verve and competitiveness should be encouraged. As I said to the right hon. Member for Leeds Central (Hilary Benn), I will not rule out the inclusion of any cities that can make a good case for taking on some of these powers. I would certainly expect Leicester to be pre-eminent among those cities.

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

I grew up in the city of Liverpool and I am sure that fellow Scousers will welcome these proposals, but I now represent a seat in Suffolk, which does not have a city but is bigger than most of the cities that my hon. Friend has mentioned. What is stopping the transfer of these powers to shire counties, and why are they being restricted to cities at present?

[Greg Clark]

My hon. Friend knows that our agenda for decentralisation extends across the country to authorities of all types—indeed, the Localism Act enacts those powers—but it is right to recognise that our cities have particular challenges and opportunities. Just as cities around the world have prospered from having a policy focus, it is right that we should consider the challenges of urban Britain and, by transferring powers to cities and encouraging them to realise their potential, we should help our cities to do what cities in other countries do, which is to match or exceed the national average of prosperity. Too often, our cities are below the national average in income, and we want them to improve their position.

[Tony Lloyd (Manchester Central) (Lab)]

The Manchester region will welcome the direction of travel that the Minister spells out, but does he recognise that the fundamental partnership between the previous Government and my city—and other northern cities—which saw such dramatic changes, was premised on the fact the Government ensured that resources were adequate? Will he guarantee that we will see a proper resource base for our core cities?

[Greg Clark]

The reforms give more control and more direct ability for authorities to have the resources that they need to invest. One of the features of the system that we inherited from several Governments is that too often our great cities, which have an international standing and reputation, have had to look up to Whitehall to plead for assistance when they have the capacity and resilience to invest and reap the rewards themselves. That is the change that we want to secure and these proposals are a step towards that.

[Stephen Williams (Bristol West) (LD)]

The Minister has visited Bristol and he will know that the city of Bristol is not the same as Bristol city council. A pot of money will be welcome to help to solve the city’s transport problems, but power over the entire urban area would be more welcome. Will the Minister endorse the case for an integrated transport authority for the county that used to be Avon?

[Greg Clark]

This is one of the proposals that I expect to come from Bristol. The Government recognise, in this document, that cities include their surrounding area, and indeed that is how local enterprise partnerships defined themselves. One of the criteria for the deals is to ensure that all the connections in the area in and around the city are reflected in what is proposed, so I expect that to be part of the discussion that we will have with the authorities in my hon. Friend’s area.

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

What the Minister’s paper shows, in what it says about LEPs and skills, is that Ministers are having to reinvent the wheel on what RDAs did. Belatedly, they are giving powers to LEPs, wasting 12 months in the process. Does he accept that, as Members on both sides of the House have said, these powers and opportunities should also be available to second-level towns, coastal towns, rural areas and suburban areas on the edge of cities? Will he also look at the need to combine a skills strategy with localism in those areas—something that his colleagues in the Department for Business, Innovation and Skills and across the Government have so far failed to do?

[Greg Clark]

That is explicitly referred to in the document. We want to give the opportunity for cities to engage in skills strategies and help to equip the next generation of workers to enable businesses to prosper. I have been clear in what I have said: while we are starting with the core cities, this should by no means be seen as an exclusive process and I want to extend these principles beyond that.

On the point about the ability to do this through LEPs, I think that the identity and strength of cities were submerged under the regional structure that we inherited. Having swept away the regional approach, we are giving life to the potential of these cities, as is being increasingly recognised.

[Martin Vickers (Cleethorpes) (Con)]

I welcome the Minister’s announcement and the continuing devolution of powers to our local authorities. Like the hon. Member for Blackpool South (Mr Marsden), I represent a coastal constituency, and my constituents will be concerned that investment will be sucked into our cities to their disadvantage. Will the Minister assure me that other measures will be introduced that will help constituencies such as mine?

[Greg Clark]

My hon. Friend knows that coastal cities have been a particular focal point for the Government. As a considerable presence in his area, he will want to encourage his authority to make use of some of the powers that are generally available. It is right to recognise the importance of cities and what they can do, but one of the contributions that they can make is to revive the prosperity of areas even outside the city boundaries, and I am sure that that will be the case in and around the Humber.

[Nick Smith (Blaenau Gwent) (Lab)]

May I press the Minister on the point that local authorities should surely be included in the Work programme? They could play a great part in helping people to get jobs.

[Greg Clark]

The document makes an explicit proposal that local authorities should be able to participate in the Work programme. It is relevant for them to be able to bring local insights to bear, the better to get people from welfare into work.

[Robert Halfon (Harlow) (Con)]

I welcome these moves from Fabian centralisation to local democracy, but will my hon. Friend consider extending these devolved powers to core new towns such as Harlow, especially given that we are now an enterprise zone?

[Greg Clark]

I am delighted by Members’ requests to extend these powers beyond the cities. It is music to my ears. I would be delighted to have such compelling propositions and requests from cities and new towns and indeed from other parts of Britain. We are starting with the core cities, but we want to go further.

Business of the House

Thursday 8th December 2011 Commons Chamber

12:30

[Ms Angela Eagle (Wallasey) (Lab)]

Will the Leader of the House give us the business for next week?

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

The business for the week commencing 12 December will be:

Monday 12 December—General debate on immigration. In addition, my right hon. Friend the Prime Minister plans to make a statement on the EU Council.

Tuesday 13 December—Motion to approve the chairman of the Statistics Board, followed by proceedings on the Charities Bill [Lords], followed by motion to approve a statutory instrument relating to financial restrictions (Iran), followed by Opposition day [un-allotted day] [half-day]. There will be a debate relating to Europe. This debate will arise on a Democratic Unionist party motion.



Wednesday 14 December—Motions on Standing Orders relating to ways and means and supply, followed by motions relating to scrutiny of draft orders under the Public Bodies Bill [Lords], followed by Opposition day [un-allotted day] [half-day]. There will be a debate on an Opposition motion. Subject to be announced.

Thursday 15 December—Motion relating to the recommendations of the Members’ Expenses Committee report on the operation of the Parliamentary Standards Act 2009, followed by, motion relating to financial education. The subjects for these debates were nominated by the Backbench Business Committee.

The provisional business for the week commencing 19 December will include:

Monday 19 December—General debate on apprenticeships.

Tuesday 20 December—Pre-recess Adjournment debate. The format will be specified by the Backbench Business Committee.

Colleagues will also wish to be reminded that the House will meet at 11.30 am on 20 December.

I should also like to inform the House that the business in Westminster Hall for 15 December 2011 will be:

Thursday 15 December—Debate on Remploy.

[Ms Eagle]

We have all been captivated this week by the images of the arrival of two giant pandas at Edinburgh zoo. Is the Leader of the House alarmed to realise that there are now more giant pandas in Scotland than there are Conservative MPs? Before the Deputy Leader of the House gets too comfortable, let me say that, given his party’s poll ratings in Scotland, it looks like its MPs are going to be joining the endangered species list north of the border as well.

In 20 years in this place, I have never known business statements to contain so little legislative substance, especially so early in a Parliament. There has been little even resembling Government legislation in this place for weeks now. Will the Leader of the House explain why the Commons is twiddling its thumbs while the Lords teeters under the weight of badly drafted, highly controversial and ill-thought-out legislation? Was this part of the plan? Before he blames the Opposition, the snow or the royal wedding, analysis shows that thousands of Government amendments and endless Liberal Democrat speeches are causing the logjam in the Lords. Why is the Government’s legislative programme so out of balance and why can they not manage it better?

Talking about incompetence, on Tuesday the Government lost their first vote in the House of Commons amid chaotic scenes as panic-stricken Government Whips first dragged their MPs out of the Aye Lobby and then shoved them back in again. By the time the doors were locked, Hansard shows fewer than a quarter of Government MPs were actually in the Lobby with just three Cabinet Ministers for company. I have to say that neither the Leader of the House nor his Deputy were among them. Thankfully for the Leader of the House, neither was the Chief Whip.

I understand that when this defeat was announced, the cheers from the Carlton Club were even louder than those from Opposition Benches. What an ominous sign for the Prime Minister on his way to Brussels. Whether the Leader of the House likes it or not, this place has expressed a clear view by a majority of 134 that we require more time to debate this Government’s failing economic policy. Will the right hon. Gentleman now honour the clearly expressed wishes of this House, by scheduling further Government time for debate on the economy in the very near future?

This week, the Deputy Prime Minister vowed to go into the next election with a plan to means-test free bus passes and TV licences for millions of pensioners. Is that what his newly appointed “brand advisers” meant when they told him to act more like Oxfam? Some 9 million pensioners now want us to have a debate on whether this is Government policy. Will the Leader of the House oblige?

On Tuesday, a former Conservative Member of this House was caught on camera boasting of his access and influence at the heart of Downing street. This follows the still unanswered questions on the Werritty affair. In Opposition, the Prime Minister said that lobbying was the

“next big scandal waiting to happen.”

The Minister responsible gave a firm promise to the House that there would be a consultation document on the regulation of the lobbying industry by the end of November. Given that it is now December and next week is the last full parliamentary week before the recess, will the Leader of the House confirm that the promised consultation paper will be published next week?

Tory divisions on Europe have exploded into the open. The Prime Minister got a Euro-mauling from his own Back Benchers yesterday and the Eurosceptics are out on manoeuvres. Meanwhile, Cabinet Members are openly at war: the Work and Pensions Secretary is reportedly issuing threats over the phone; the Northern Ireland Secretary has taken to the airwaves demanding a referendum and the leader in waiting at City Hall is madly stirring the pot.

We have a Tory grass-roots rebellion, a Cabinet divided and a Prime Minister isolated. Will the Leader of the House inform us what is different from the last Tory Government that he served in?

[Sir George Young]

My party plans to overtake the population of pandas before the next election—[Interruption.] At the next election. In view of the fertility of pandas, that may not be a very high hurdle, but we do plan to do better than them.

As for the House twiddling its thumbs, I think that the hon. Lady demeans the debates that I have announced in the forthcoming week. There is a debate on Europe. What can be more topical than that? There is the Opposition-day debate. Are they going to choose something that is of no consequence? I am amazed that she has repeated the accusation that we heard last week. The fact is we have managed the business in the House of Commons much better than the outgoing Government. We have managed to scrutinise the Government’s legislative programme with adequate time. That programme is now in another place and we will deal with the Lords amendments in due course.

I am amazed that the hon. Lady raised the issue of the debate and vote on Tuesday. We provided a debate in Government time after the autumn statement. That is something that the previous Labour Government did not always do. We had the pre-Budget report, and we did not always get a debate in Government time. Having provided a debate in Government time, the Labour party then brought it to a premature conclusion by moving that it should stop before we reached 10 o’clock. It then complained that we did not have enough time to debate the motion. A number of Labour MPs who took part in the debate then solemnly went through the Division Lobbies to assert that they had done no such thing; that they had not considered the economy. At a time when we are trying to reconnect the House of Commons with the public, I wonder whether the sort of antics that the Labour party got up to on Tuesday really advanced our cause.

On benefits for pensioners, if the hon. Lady looks at the coalition agreement, she will see clear commitments on benefits to pensioners on bus passes and other issues and that remains the policy of the coalition Government.

I am amazed that the hon. Lady chose to raise the subject of lobbying. For 13 years, the Labour Government did nothing about lobbying. They ignored the recommendations of the Public Administration Select Committee, which reported in 2009. By contrast, we are actually doing something about lobbying. We will produce our consultation paper within the next few weeks, proposing a statutory register of lobbyists, which is something that the Labour Government consistently failed to do. On the question of boasting, I have to say that in the previous Parliament, there were ex-Labour Ministers who were boasting, while they were still Members of Parliament, of the influence that they had on Government.

Finally, on Europe, I gently remind the hon. Lady that when we had the vote on the referendum, her party was split as were all three parties. On the Government Benches, we are delighted that the person representing this country in Europe today and tomorrow is the Prime Minister and not the Leader of the Opposition.

[Anna Soubry (Broxtowe) (Con)]

I do not wish to fall out with Labour Members who represent Leicester constituencies but it is a long-standing fact that the queen of the east midlands is Nottingham.

There was good news today for the city of Nottingham, and that is good news for my constituency, which forms part of Greater Nottingham. Will the Leader of the House be so good as to find time for us to discuss cities and today’s good news for all the core cities?

[Sir George Young]

I am grateful to my hon. Friend. Having listened to the exchange just now, I know that the announcement and the enfranchisement of local government were welcomed on both sides of the House. I cannot promise an early debate on the cities and I do not want to get drawn into the question of which is the principal city in the east midlands. There will be an opportunity to discuss this matter, however, on Tuesday week, during the pre-recess Adjournment debate, or she might like to apply for a debate in Westminster Hall. Furthermore, there will be the normal debate on the revenue support grant early in the new year.

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

I apologise in advance for not being able to stay for the whole of business questions today.

I would like to offer the Leader of the House the help of the Backbench Business Committee between now and such time as the Government’s legislation comes back from the House of Lords: we would be only too delighted to take responsibility for scheduling all debates on the Floor of the House between now and then. I hope that he will take us up on that generous offer. I also hope that he does not mind if I take this opportunity to make another public service announcement: hon. Members have until 6 pm on Monday to put in for the pre-recess Adjournment debate ballot.

[Sir George Young]

We are grateful for the public service announcement. On the hon. Lady’s generous offer to replace me as Leader of the House, I gently point out to her that I have announced six days’ business in the next two weeks, three of which are Opposition days or Backbench Business days. I do not think that she will find a more generous offer in the history of Parliament.

[Mr Matthew Offord (Hendon) (Con)]

Will the Leader of the House consider having a debate on payday loans? It is an area of the financial sector that has not had that much coverage, but yesterday’s report showed that one in six people cannot afford to pay off the principal that they borrow. It seems that this area of the financial sector is acting in a fashion that is little more than loan sharking, particularly given that it preys on the financially vulnerable in our constituencies.

[Sir George Young]

I am grateful to my hon. Friend for reminding the House of the report published yesterday. The Government are concerned about the impact of these high interest rates on the day-to-day life of those on low incomes. He might know that this issue was raised during a debate on 1 December in Westminster Hall. The Government have just commissioned research from Bristol university to find out what the consequences would be of introducing a cap on the interest rates. I hope that that will be available and published in the summer and that it will inform the debate. In the meantime, I urge people to think twice before taking on high-interest loans and to contact the free money advice service, possibly through their citizens advice bureau, or to visit their local credit union, which might be able to help on better terms.

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

Has the right hon. Gentleman seen early-day motion 2506, which stands in my name and those of other hon. Members, and deals with the antisocial property speculation in my constituency of Mr R. Street of Woodhouses, Manchester and Associated British Foods, which for eight years have kept derelict a site among which large numbers of my constituents live.

[That this House expresses its disgust with Mr R. Street of Woodhouses, Manchester, landowner and Associated British Foods PLC, head lessee, whose avarice and lack of concern mean that land at the junction of Wellington Street and Cross Lane, Gorton, Manchester, remains a derelict eyesore, as it has been now for eight years, when community development is urgently required on this site; notes with anger and concern that large numbers of local residents in this heavily populated area have had to put up with this unacceptable situation for so long; calls on these greedy property-speculators to give up the land without delay so that it can be developed for community use; and further calls on the Secretary of State for Communities and Local Government and Manchester City Council to take all possible action to get these anti-social people to behave decently.]

It is a total disgrace that because of the greed and cupidity of these property speculators my constituents should have to put up with this. Will the Leader of the House refer the matter to the Secretary of State for Communities and Local Government so that these people can be told that they cannot go on like this anymore?

[Sir George Young]

I am grateful to the right hon. Gentleman. I have now seen early-day motion 2506, and I understand why he and his constituents feel strongly about the site. I note that at the end of the motion he calls on Manchester city council, as well as my right hon. Friend, to take all possible action, and presumably compulsory purchase order powers are available if desired. However, I shall do as he has suggested and bring the matter to the attention of my right hon. Friend.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

May we have a debate on the Freedom of Information Act? In my area, public bodies have been asked a range of questions, including on witches, werewolves, wizards, ghosts, vampires, zombies and demons. Even the star signs of local car thieves and the chief constable’s lottery choices have been asked for. It is a waste of time and money, and may we review it?

[Sir George Young]

I understand my hon. Friend’s concern. The Government announced in January that they would review the FOI legislation. We are about to submit our evidence to the Justice Committee as part of the post-legislative scrutiny, and that scrutiny will touch on the issues that he has just mentioned—the costs imposed on those who have to respond to these requests. I hope very much that the Committee, once it has received our review of the FOI Act, can take the matter forward. Of course, we will be interested in any recommendations that it might make on changes to the legislation.

[Gloria De Piero (Ashfield) (Lab)]

May we have a debate in Government time on the national lottery provider, Camelot, with a view to securing a constituency breakdown of where tickets are purchased, not just where lottery money is spent?

[Sir George Young]

I understand that there will be an opportunity to ask that question of Ministers in the Department for Culture, Media and Sport on 15 December. I also understand that the hon. Lady represents her party on the Front Bench so she is well placed to ask that question. I shall convey the question to my right hon. Friend the Secretary of State and see whether we can get the information—I am pretty sure that it has been asked for before—on the relationship between the areas that buy the tickets and those that get the lottery investment. I shall do what I can to secure that information.

[Philip Davies (Shipley) (Con)]

May we have a debate on penalties for swearing at police officers? The excellent new Metropolitan Police Commissioner, Bernard Hogan-Howe, has said that people should be properly punished for swearing at police officers, whereas the rather ridiculous Mr Justice Bean has recently quashed the conviction against somebody who swore at a police officer, saying that it was the kind of thing that they should expect. Given the widespread concern about the lack of respect in society, surely people should not be able to swear at police officers without punishment. A debate in the House could decide the will of the House.

[Sir George Young]

I understand my hon. Friend’s concern. Having been on the police parliamentary scheme, which I am sure that many other hon. Members have been on, I understand the frustration that policemen experience when they are subject to abuse. My recollection is that it is not an offence, as such, to swear at a policeman, but that if, after someone has been warned, they carry on, they are liable to be arrested. However, I am not a lawyer and I shall get an authoritative response from the Lord Chancellor, which will be conveyed to my hon. Friend.

[Mrs Anne McGuire (Stirling) (Lab)]

A couple of days ago, the renewables obligation banding review impact assessment was published by the Department of Energy and Climate Change. Unfortunately, in spite of meetings with officials and at ministerial level, the impact assessment has failed to address some of the issues relating to the wood and forestry industry in the United Kingdom, not least the impact on 150,000 jobs across some of the most rural parts of the UK. Given that the Leader of the House has so much time to be generous with, will he allow a debate in Government time on this important industry?

[Sir George Young]

I understand the right hon. Lady’s concern, and I understand that the issue was raised—although perhaps not in precisely the form in which she expressed it—at DECC questions recently. I will share her concern with my right hon. Friend the Energy Secretary and see whether we can get a response on the impact assessment.

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

Many Government Members are passionate about the NHS, so may we please have a general debate on it, particularly given the recent problems at the Care Quality Commission and the variability in certain orthopaedic services?

[Sir George Young]

I am grateful to my hon. Friend. The Government would welcome a debate on the NHS, during which we could explain the reforms that we are introducing to improve it and the extra resources that we are investing. I cannot promise a debate, but at some point the Health and Social Care Bill, which is in another place, will return to this place, and then there might be an opportunity for the sort of exchange to which he refers.

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

Given that the Government are in disarray over their legislative programme, do we not have an opportunity to have some pre-legislative scrutiny so that we do not end up in the position we found ourselves in with the Health and Social Care Bill, when it had to be paused?

[Sir George Young]

I do not know whether the hon. Lady remembers the previous Parliament, but in contrast to it the legislative programme in this Parliament is a model of order. She made a serious point about more legislation being introduced in draft. We will do that. I think that we plan to introduce nine draft Bills this Session, which is double the number at the beginning of the previous Session. It is the objective of the coalition Government to have more pre-legislative scrutiny and more Bills introduced in draft. We think that that leads to a better scrutiny process in the House of Commons.

[Robert Halfon (Harlow) (Con)]

May we have a debate on the rights of children to proper and equal access to their grandparents? In a few moments, I and a number of other MPs will join the Grandparents Association—a charity based in Harlow—to take a petition to No. 10 Downing street calling for children to be given that right in law?

[Sir George Young]

I applaud the work of the Grandparents Association to achieve positive outcomes for grandchildren, and I hope that my hon. Friend will get a positive response to the petition that he is about to present. In the context of what the coalition Government are doing to strengthen the family, we of course want to see what more we can do to strengthen the rights of grandparents, particularly where there is family breakdown.

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

I wonder whether the Leader of the House is aware of the growing concerns about the potential implications of changes to tax credits for couples who work only 16 hours in the week. Last week’s Westminster Hall debate on the issue was well attended, and it was clear that many more Members wished to speak than could do so in the time available. Will the Leader of the House therefore consider allocating some time during Government business to consider the issue and allow the Economic Secretary to the Treasury to give fuller responses than she was able to give in that debate?

[Sir George Young]

I understand the hon. Lady’s concern. She will know that the Welfare Reform Bill is in another place. It may be appropriate to raise such issues when the Bill returns to this House. However, I would point out that by next April the child tax credit will have risen by £390, so against a difficult background we have tried to help the sorts of families to whom she has referred.

[Tessa Munt (Wells) (LD)]

The Leader of the House will have noticed that the number of questions submitted by MPs to the Secretary of State for Environment, Food and Rural Affairs and the Secretary of State for Transport has risen to about the equivalent of those submitted to the main Departments, which give an hour’s worth of responses from Ministers, rather than three quarters of an hour. I wonder whether the Leader of the House will consider raising the time to an hour, to ensure that the farmers and everyone with transport problems in my constituency, including young people, will have a chance to hear some answers.

[Sir George Young]

I understand the point that my hon. Friend makes. I wonder whether she has been able to identify which Department might have less time, in order to accommodate the extra time for the Departments that she mentions.

[Nick Smith (Blaenau Gwent) (Lab)]

Excel, a new car park operator in my constituency, has gridlocked my office with complaints. Shoppers, local traders and taxi drivers think that they have been unfairly hit by hefty penalty charges. We should consider a licensing system and an independent appeals service to improve car parking management. May we have a debate on driving up standards for car parking operators?

[Sir George Young]

I understand the hon. Gentleman’s concern. I think that legislation banning the clamping of cars on private property has gone through the House and will come into effect next year. I hope that that is a step in the direction that he wants, but I will raise his broader concerns with my right hon. Friend the Secretary of State for Transport.

[Chris Heaton-Harris (Daventry) (Con)]

A total of 17 babies die every day in Great Britain, with 11 stillborn and the others dying within four weeks of birth. SANDS, the campaigning charity in this area, is currently holding an exhibition at the Oxo gallery to highlight the care available for parents who suffer this tragedy. I had a Westminster Hall debate on stillbirth about six months ago, and I have been trying hard to get a debate, in Westminster Hall or otherwise, on the certification of a stillbirth, which is a Home Office matter. May we have some Government time to discuss the issue?

[Sir George Young]

The Government are anxious to improve the perinatal mortality rates to which my hon. Friend has referred. I hope that the investment in midwives will help to bring that figure down. I will pursue his specific question about statistics with the Home Office, if that is the right Department, and see what can be done on that front. As he will have heard, there will also be an opportunity to debate the matter further in the pre-recess Christmas Adjournment debate.

[Valerie Vaz (Walsall South) (Lab)]

May we have an urgent statement about why the Minister of State, Department of Health, the right hon. Member for Chelmsford (Mr Burns) is privately telling the Care Quality Commission to press ahead with the takeover of the Human Fertilisation and Embryology Authority, while publicly saying that he is still consulting and considering options? Surely that is unreasonable, in a judicial review sense, and bad government.

[Sir George Young]

It might be unreasonable if it were true. I would like to make some inquiries, but I assume that what my right hon. Friend says in public is what is the case.

[Guto Bebb (Aberconwy) (Con)]

Many local authorities in Wales have accepted demands from trade unions not to dock the pay of striking workers until January or February. May we have a statement to ascertain the Government’s position on using taxpayers’ funds to provide unions with a “strike now, pay later” option?

[Sir George Young]

I understand my hon. Friend’s concern. So far as the Government are concerned, we have had no approach from the civil service trade unions to do what he describes, and we are not aware of a general approach from the public sector trade unions. However, I very much agree with what he has said, and if we were approached, we would say that it is not appropriate to pay people for work that they have not done at this or any other time of year.

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

May we have a debate on the double whammy that the music industry is imposing on small and medium-sized enterprises? Currently, both Phonographic Performance Ltd and the Performing Right Society are demanding significant amounts of money from small and medium-sized enterprises simply for playing the radio on premises that are accessible to the public. Will the Leader of the House raise the matter with the appropriate Minister, so that we can have some clarity about what powers such organisations have to demand such amounts from small and medium-sized enterprises?

[Sir George Young]

The Government are sympathetic. We want to deregulate, and the regime that the hon. Gentleman has described is the one that we inherited. There will be Department for Culture, Media and Sport questions in a week’s time, but if this is a Department for Business, Innovation and Skills issue—which it may well be—I will raise it with my right hon. Friend the Business Secretary. The hon. Gentleman might like to be here in a week, and I will ensure that whichever Minister answers his question is well primed.

[Karen Bradley (Staffordshire Moorlands) (Con)]

Leek further education college in my constituency has been providing excellent skills-based training to young people for over 100 years. It is now in negotiations to become part of the university of Derby, so that, for the first time ever, both further and higher education will be available to young people in Staffordshire Moorlands. Will the Leader of the House find time for a debate on how we can help all young people with educational aspiration, including those in Leek?

[Sir George Young]

I welcome that initiative, which is to have on one campus the two institutions to which my hon. Friend has referred. We are trying to reform vocational education to ensure that there are high-quality alternatives to academic subjects, such as the ones that she has mentioned, and to remove all the perverse incentives to push pupils into lower-level qualifications that might not improve their employment prospects. I am delighted to hear of the initiative to which she has referred.

[Paul Flynn (Newport West) (Lab)]

A total of 179 gallant British soldiers died in Iraq as a result of a decision of this House that was based on a deception. Some 383 died in Helmand as a result of a decision that was based on the hope that not a shot would be fired. When can we debate early-day motion 2515, in order to discuss the dreadful threat of a potential war in Iran actually happening?

[That this House is alarmed that the UK is stumbling towards a war in Iran that would have dreadful, unforeseeable consequences; recalls that in the past the momentum of preparations for war has frequently led to major wars; and urges the Government to seek to reduce tension, pursue conflict resolution and cease war preparations.]

The current war of words might become a war of weapons.

[Sir George Young]

I understand the hon. Gentleman’s concern about those who lost their lives in conflict. We had a debate in Government time relatively recently on a range of countries that included Iran—I am not sure whether he was able to take part in that debate—so I cannot promise another early debate on the middle east and related areas. As I said earlier in response to another question, he may want to put in for the pre-Christmas recess Adjournment debate or apply for a debate in Westminster Hall.

[Harriett Baldwin (West Worcestershire) (Con)]

May we have a debate in Government time about the state pension? In addition to the record cash increase announced this week, which I know pensioners have welcomed, the Government are proposing two other alternatives in their White Paper for reform of the state pension age, as the state pension is the foundation of the retirement income of 100% of our constituents.

[Sir George Young]

I would welcome such a debate. In the debate on Tuesday, a number of my hon. Friends drew the House’s attention to the generous pension increase next spring and reminded the House of the triple guarantee that we have introduced. My hon. Friend also trails the next development in pension policy, which I think will be warmly welcomed by pensioners in this country. My right hon. Friend the Secretary of State for Work and Pensions is taking that policy forward.

[Jonathan Ashworth (Leicester South) (Lab)]

I could never fall out with the hon. Member for Broxtowe (Anna Soubry), even if she will not accept that Leicester is the superior city. May I ask the Leader of the House about the scheduling of economic debates? He knows, of course, that the Government lost a vote. When we have a Budget, we have four or five days of debate immediately afterwards, as well as on the day of the statement. May we have a similar arrangement for autumn statements, so that we have debate on the day and perhaps for the following one or two days?

[Sir George Young]

I do not know whether the hon. Gentleman has had time to read the recommendations of the Wright committee, but we have done exactly what it recommended—namely, to provide in Government time a debate after the autumn statement. I drew to the attention of the shadow Leader of the House the fact that that was not a practice that had been adopted by a previous Government when we had a debate on the pre-Budget report only in response to a Standing Order request from my right hon. Friend the Member for Tatton (Mr Osborne), now the Chancellor of the Exchequer.

[Glyn Davies (Montgomeryshire) (Con)]

Yesterday an important report on atrial fibrillation was published. AF is a condition that, through lack of awareness, leads to a huge number of deaths and disability as a result of the much increased risk of strokes. Will the Leader of the House ensure that we have an opportunity to raise awareness of atrial fibrillation by having a debate on the Floor of the House?

[Sir George Young]

The Government are anxious to improve the diagnosis, detection and treatment of atrial fibrillation. Some work is going on at the moment to identify those at risk so that they can be helped at an earlier stage. We work closely with the Atrial Fibrillation Association and the Stroke Association on this issue. I will draw to the attention of the Secretary of State for Health my hon. Friend’s interest in this subject.

[Christopher Pincher (Tamworth) (Con)]

Despite improvements, many 11-year-olds in Tamworth go into secondary school with a reading age of eight, which severely limits their learning opportunities. May we have a debate on innovations in education, particularly on vertical integration between primary and secondary schools, which is being examined in Tamworth and can help to identify the problems and encourage the aspirations of many young people?

[Sir George Young]

I am interested in what my hon. Friend says, and I assume his local education authority would be the appropriate body to approach about merging those two types of schools. I hope that my hon. Friend will take comfort from what we are doing with the academies programme, driving up standards and putting parents and teachers in power, and what we are doing with free schools, which I hope will improve the education of those children to whom he referred, who are leaving school without the qualifications they need.

[Alun Cairns (Vale of Glamorgan) (Con)]

The Government are investing heavily in improving broadband capacity, which can bring about some great innovations such as home working and flexible working that can enhance the work-life balance. May we have a debate on such issues to encourage as many private sector employers as possible, following on from Government initiatives, to enhance the work-life balance?

[Sir George Young]

I am grateful to my hon. Friend. The roll-out of broadband is a priority for this Government, and I know that BT is doing a lot of work in this area. I will share with my right hon. Friend the Secretary of State the particular point that my hon. Friend has made and will ask him to write to him.

[Julian Smith (Skipton and Ripon) (Con)]

Local and regional newspapers are gutted that they cannot get accreditation for the Olympics. May we have a debate about how we open up the vast media centre at the Olympic site to newspapers from across our country?

[Sir George Young]

I understand my hon. Friend’s concern. There will be an opportunity to raise that issue at Culture, Media and Sport questions in a week’s time, and I will forewarn my right hon. Friend the Secretary of State that my hon. Friend is on the warpath on this issue.

[Martin Vickers (Cleethorpes) (Con)]

Just as religious fundamentalism can be damaging to social cohesion, so can anti-religious fundamentalism as exhibited by the National Secular Society in its attempt to stop prayers before council meetings. Will the Leader of the House find time for a Government statement to ensure that councils remain free to have prayers where they so wish?

[Sir George Young]

I strongly believe in local democracy, and I think that the decision to which my hon. Friend refers—on how to conduct council meetings and whether there should be a prayer before them—is very much one that should be taken by local councils. I hope that they will follow the example of this House, which has a short moment of prayer before we re-engage in normal hostilities.

Opposition Day

Thursday 8th December 2011 Commons Chamber

[Un-allotted Half Day]

Public Sector Pensions

Thursday 8th December 2011 Commons Chamber

[Mr Speaker]

I inform the House that I have not selected the amendment in the name of the Leader of the Opposition.

13:04

[Hywel Williams (Arfon) (PC)]

I beg to move,

That this House recognises and appreciates the valuable work done by public sector workers; believes that they should receive pensions which are affordable, sustainable and fair; further believes that the changes announced since June 2010 by the Government are primarily for the purposes of deficit reduction rather than a move to secure the long-term sustainability of public sector pensions; notes that these changes are unfair on public sector workers who will have to work longer, pay more and receive less in their pension when they retire; further notes the findings of the National Audit Office that the 2007-08 pensions re-negotiation changes will generate estimated savings of 14 per cent. by 2059-60 and the conclusions of the House of Commons Committee of Public Accounts’ Thirty-eighth Report of this Session on the Impact of the 2007-08 changes to public sector pensions (HC 833), that the cost of public service pensions has reduced substantially because of these changes; agrees with criticism in both reports of the failure to develop a long-term strategy for the role of pensions in recruitment and retention to the public sector; condemns the Government’s threat to cut devolved administrations’ budgets if they do not implement the Government’s immediate levy on pensions contributions; and calls on the Government to reverse its unfair changes to public sector pensions.

The motion stands in the names of my right hon. and hon. Friends from the Scottish National party and Plaid Cymru, and of Members from the Labour party and, I understand, from the Social Democratic and Labour party.

Last week, a day of action saw more than 2 million people across the UK join in protests against changes that will make those affected—mainly women—work longer, pay more and receive less when they retire. This year alone, bankers walked away with £7 billion in bonuses. As one constituent said to me last week:

“This is just a way of getting extra cash from public workers. And it is just not fair.”

We are proud to hold this debate on behalf of all those people across the UK who are directly or indirectly affected by the Government’s changes, and we note that despite having 36 Opposition day debates since the changes were announced in June 2010, the official Opposition have not seen fit to devote even one of those opportunities to debate the public sector pensions proposals. Whatever the evasions, the nods and the winks, and the ducking and diving of others, we are glad of the opportunity to show clearly where we stand.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

This is characterised as a joint debate between Plaid Cymru and the Scottish National party, yet last week we saw SNP Members of the Scottish Parliament cross the picket lines to ensure that the Scottish Parliament functioned, while Plaid Cymru Members of the Welsh Assembly refused to cross picket lines and the Welsh Assembly did not function. Where is the coherent position in that?

[Hywel Williams]

It has clearly escaped the right hon. Gentleman’s attention that the SNP are in government in Scotland, while in Wales—alas—we are not.

[David Mundell]

I am afraid that I do not find that a tenable explanation. All SNP Members of the Scottish Parliament are not in the Government, although they may act like it. Those people crossed the picket lines and spoke in a debate on this very subject.

[Hywel Williams]

Honestly, I think we need to move on to the subject of the debate. I am sure that the right hon. Gentleman will have time later to make those and other fatuous points.

[Alun Cairns (Vale of Glamorgan) (Con)]

I would like to take the hon. Gentleman back to what he said a few moments ago and remind him that when Plaid Cymru was part of the coalition in the Welsh Assembly Government, its members refused to cross the picket lines at that time, too.

[Hywel Williams]

Well, honestly, I am sure that you would not want me to be diverted down this particular route, Madam Deputy Speaker.

[Madam Deputy Speaker (Dawn Primarolo)]

Much as this topic might interest some Members, I think the hon. Gentleman should return to the subject of this afternoon’s debate.

[Hywel Williams]

Thank you, Madam Deputy Speaker.

To summarise our motion, we appreciate the valuable work done by public sector workers and believe that they should receive pensions that are affordable, sustainable and fair. I think that we can have agreement across the House on that. We believe that the Government’s changes are primarily for the purposes of deficit reduction—I do not think we are going to have agreement on that—rather than to secure the long-term sustainability of public sector pensions. These changes are, to our minds, unfair on public sector workers.

We also note that the findings of the National Audit Office for the 2007-08 period show that pensions re-negotiated at that time will generate estimated savings of 14% by 2059-60. The conclusions of the 38th report of the Public Accounts Committee reveal that the cost of public service pensions has reduced substantially because of those changes. We agree with the criticism in both reports of the failure to develop a long-term strategy for the role of pensions in recruitment and retention in the public sector, and we condemn the Government’s threat to cut the devolved Administrations’ budgets if they do not implement the Government’s immediate levy.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

I am following my hon. Friend’s argument closely and I agree entirely with what he says. Does he agree that there is a link between this drive to the bottom on public sector pay and the Chancellor’s view that we should be looking at regional pay? This flexibility is all about a drive to the bottom, and it is unacceptable out there; people will not have it.

[Hywel Williams]

My right hon. Friend makes an excellent point, to which I shall return later. The Prime Minister’s numerous assurances that he is not in favour of driving down public sector pensions, and that it is not a race to the bottom as far as he is concerned, are strange in view of the actions of his Government.

Finally, our motion calls explicitly on the Government

“to reverse its unfair changes to public sector pensions.”

Let me make it clear from the outset that no one I have spoken to wanted to go on strike. Everyone wants a reasonable settlement. My nationalist party colleagues and I hope that the talks between the unions and the Government will continue, and will reach a successful conclusion in the terms that I have outlined. We understand that the unions have accepted the continued need for negotiation and further change. Perhaps the Minister who winds up the debate will tell us when the two sides met most recently in the last month, who was involved—there have been questions about who was speaking for whom—and when they intend to meet again.

[Julian Smith (Skipton and Ripon) (Con)]

As the hon. Gentleman develops his argument, will he be comparing the positions of employees in the public sector with those in the private sector, who for many years have been having to increase their contributions in order to receive decent pensions?

[Hywel Williams]

Government Members have deployed such arguments time and again, which is strange given that in other contexts, such as that of education, they always deny that they are lowering standards. It is not about levelling down, they say, but about levelling up—yet when it suits them, it is the other way around. The hon. Gentleman clearly was not listening when I made that point earlier.

[Stewart Hosie (Dundee East) (SNP)]

The hon. Member for Skipton and Ripon (Julian Smith) has advanced a spurious argument. There are some very good private sector schemes and some very good public sector schemes. Some private sector schemes have gone bust, and some public sector schemes require an in-year top-up. This is not about “private good, public bad”, or the other way around. It is about having good schemes, full stop. It is about fairness, and about not levelling down in either the private or the public sector.

[Hywel Williams]

My hon. Friend has made a good point. If Government Members are concerned about the private sector, they should be concerned about the large number of people who have no pensions at all. That is what concerns me, and concerns my colleagues.

[Mr Mike Weir (Angus) (SNP)]

Certain members of the Government are suggesting, as one of their “public against private” arguments, that public sector schemes are gold-plated. In fact, the average public sector pension is about £5,000 a year, and local government pensions can be as low as £3,000 a year, or £80 a week.

[Hywel Williams]

My hon. Friend has anticipated a point that I was going to make, which will doubtless be made again by other nationalist party members. Anyone reading the popular press would imagine that public sector workers were driving around in this year’s model of car and enjoying two or three foreign holidays a year, but that is not, of course, the case.

We say “Let us have negotiations”, but is the 3.2% imposition itself negotiable? What the Government have announced today will merely shift the burden from one group of workers to another. They are trying to squeeze out some sort of deal, but we utterly reject that way of going about things.

[David Mundell]

I think it important for the hon. Gentleman to clarify whom he means by “we”. The Scottish National party is in government in Scotland, and a number of choices are available to it. For instance, there are funds that it could allocate to reduce pension contributions, but it has chosen not to do so.

[Hywel Williams]

Again, I do not want to go down that particular avenue—[Interruption.] I have some things to say that the Minister might like to listen to. My hon. Friends will be responding to his point later, but let me say now that the possibilities to which he alludes constitute a broad spectrum of theoretical options for consideration, and that the Scottish Government have expressed no preference. I am sure that others will say more about that later.

[Stewart Hosie]

The Minister said that a number of choices were available to the Scottish Government. As he will know, the choices are rather limited by the UK Government’s threat to withdraw £8 million a month— £100 million a year—from the Scottish budget if we do not stick to their timetable. I am sure he agrees that that rather limits the choice of manoeuvre for a Government who do not want to go down that path.

[Hywel Williams]

I am sure that the £100 million cut that the UK Government are dangling before them is proving very persuasive for the Scottish Government, given the difficult position that they are in. I am sure that more will be said later about that as well.

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

Because of the council tax freeze in England, the Barnett consequentials provided an extra £66 million for the Scottish Government, and they received hundreds of millions extra as a result of the autumn statement. Does the hon. Gentleman not agree that the Scottish Government can choose whether or not to use that money to prevent an increase in pension contributions?

[Hywel Williams]

The hon. Gentleman is a keen student of Scottish affairs, and possibly of Welsh affairs as well. He will know that the block grant has been falling, and that the choices available are limited.

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

Does the hon. Gentleman not accept that the Labour-run Scottish Executive also had to make choices? When they undertook to introduce free travel for the elderly, they had to do so on the basis of the block grant, and the SNP would have to take a similar hit if they did what the motion suggests.

[Stewart Hosie]

The budget was going up at that time.

[Hywel Williams]

As my Scottish colleague says, the budget was going up then.

[Mr Weir]

Does my hon. Friend agree that what was said by the hon. Member for Argyll and Bute (Mr Reid) was completely wrong? The Chief Secretary to the Treasury has specifically said that if the Scottish Government do not implement the UK Government’s proposals, their budget will be cut. Barnett consequentials emanating from elsewhere are irrelevant, and besides, the Liberals in Scotland have already called for the money to be spent on numerous things.

[Hywel Williams]

My hon. Friend has put it much better than I could have done. It is not surprising that the Liberals are, as usual, trying to spend other people’s money.

[Mr Reid]

Will the hon. Gentleman give way?

[Hywel Williams]

No, I must try to make some progress. No doubt the hon. Gentleman will have an opportunity to speak later.

Whatever the Government say, the 3.2% is seen by workers and by the general population as an additional and carefully targeted tax, aimed largely at those who have the least means to pay. As for the negotiations, they must be based on proper evidence rather than on the cases that the Prime Minister quoted selectively during last week’s Question Time, which were so effectively debunked in Radio 4’s “'More or Less” programme and in Channel 4’s “FactCheck”.

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

I congratulate my hon. Friend on the excellent speech that he is making. Is he aware of a study by the Fire Brigades Union, which found that 27% of its members were likely, or very likely, to leave their pension schemes if employee contributions were raised? What effect does he think that would have on the sustainability of schemes if it were translated across the public sector?

[Hywel Williams]

There is clearly a danger that some schemes will become unviable, which would mean that in the longer term those who no longer had pension schemes would become even more dependent on the state. I am sure that Government Members would not want that to happen.

[Guto Bebb (Aberconwy) (Con)]

I am sure I heard the hon. Gentleman say that the 3% increase in pension contributions would target those least able to pay. I believe that the average public sector wage in Wales is about £26,400, compared with £21,700 in the private sector. Furthermore, do not the Government’s proposals protect those earning less than £15,000 a year?

[Hywel Williams]

That argument fails to take several factors into account, such as the 710,000 people who will lose their jobs and the 1% pay freeze that looms before us at a time when inflation is eating into the real value of wages.

Our constituents have gone on strike with the greatest reluctance. They are not the wild-eyed extremists so beloved of those on the Government Benches. Members of the National Association of Head Teachers—scarcely a hotbed of left-wing insurrection—went on strike last week for the first time in 140 years. Anna Brychan, director of the NAHT in Wales, summarised the arguments advanced by many public service workers who felt that they had no choice but to go on strike. I shall paraphrase what she said, because it was very lengthy. She said that the NAHT was not persuaded by the unsustainable and unaffordable argument. The pension changes in 2007-08, according to the figures from the National Audit Office, showed savings of 14%, but no re-evaluation has been made since the previous apparently permanent settlement. May I draw the attention of the House to my early-day motion 2198, which makes that point?

[Guto Bebb]

Will the hon. Gentleman give way?

[Hywel Williams]

I must press on, as I have rather a lot to say. Time is pressing, and it is a short debate. Of course, the hon. Gentleman can make his own speech, unless he has to leave the Chamber, but I give way.

[Guto Bebb]

Was not the individual whom the hon. Gentleman has just mentioned—Anna Brychan—once a member of Plaid Cymru who worked for the party in Cardiff?

[Hywel Williams]

So did the hon. Gentleman, before he jumped. I know him very well. He is a very nice man and is trying hard to be a nasty curmudgeon, but he is failing entirely.

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

Does that not prove the general point that there is more rejoicing in heaven over one sinner who repenteth than over the 99 who remain unrepentant?

[Hywel Williams]

It depends on whether they are going up or down.

Returning to the comments made by the NAHT, I refer to the written question tabled by my hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) on 21 November. In his response, the Minister of State, Department for Education, the hon. Member for Bognor Regis and Littlehampton (Mr Gibb), said:

“The latest valuation of the teachers’ pension scheme was published in November 2006. This was the actuarial review of the scheme as at 31 March 2004.”—[Official Report, 21 November 2011; Vol. 536, c. 87W.]

In other words, there has been no formal published valuation since the 2007 changes were introduced, so how can the Government claim that the scheme is unaffordable?

The NAHT also says that contribution increases are all about plugging the deficit, not about making pensions affordable. Teachers are already doing their bit: they have a pay freeze, and below-inflation pay increases to look forward to. In respect of the higher pension age, they recognise the implications of the population living longer, as we all do. That must be debated, but we need to be sensible. Teaching, the NAHT says, is physically and emotionally demanding, and expecting people to do it at 68 is “an ask too far”. That is also the view of other unions that I have consulted. Shane Price, my local Fire Brigades Union representative, asked me:

“Would you want, or expect, to be carried out, coughing and spluttering from a blazing building by a 68 year old fireman?”

Clearly not. In any event, says the NAHT, the changes will distort the age profile of the profession. There is a need to ensure a throughput of young people, and that will be jeopardised. Younger teachers will be affected most by the proposed pension scheme, and they may opt out altogether, as we have discussed.

The NAHT says that this is an attack on education. It wants to attract the brightest and the best—that is what pupils deserve—and while the salaries are not great given the demands of the job, the professional rewards are enormous. We cannot afford for people to discount those professional rewards because their conditions of service are dramatically reduced. These are serious, responsible points. They are made, it is true, by people who are looking after their own interest, but uppermost in their mind is the future of our children, the future of education and of the teaching profession in general.

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

I thank the hon. Gentleman for giving way—he has been extremely generous in accepting interventions. Having read the motion, I agree with almost all of it, particularly the part in which he identifies who is responsible for the attack on public sector pension schemes. May I therefore assume that he will continue his criticism of the enemy within—the coalition Government—and not be tempted to criticise anyone else?

[Hywel Williams]

The bulk of my speech, as one would expect, is about the Government’s proposals, but the hon. Gentleman will have to wait and see.

Lleu Williams from University and College Union Wales told me:

“We are pleased that MPs will debate public sector pensions a week after tens of thousands of people in Wales took industrial action to show how angry they are…The action last week, alongside the debate on public sector pensions, is testament to the strength of feeling on these issues”

in Wales. He continued:

“We hope today’s debate sends a clear message from the people of Wales to Westminster that we will not go quietly into the night over these proposed changes.”

I have heard from the other side that union members did not support the strike—they have deserted the cause, as it were. UCU general secretary, Sally Hunt, confirms that it saw record recruitment levels both before and after the strike. That gives the lie to that one. Finally, the National Union of Teachers welcomes today’s debate and says that rather than creating an unnecessary and damaging divide between the public and private sectors, Ministers would do well to focus their attention on securing fair pensions for all if future Governments are to avoid pensioner poverty on an unaffordable scale, which is the point that I made earlier regarding future dependence on state benefits.

I shall refer briefly to that bunch of hard, crazed revolutionaries, the British Medical Association, which strongly opposes the plans set out by the Government to reform the NHS pension scheme, including increased contributions from doctors; raising the standard pensionable age for staff; and devaluing many pension settlements. It queries whether the NHS pension scheme is in need of reform, given that it underwent a major overhaul only three years ago. It says that the scheme is in very good financial health, and generates a surplus for the Treasury. Indeed, over the seven years from 2009-10 to 2014-15, the NHS pension scheme is expected to provide a surplus of £10.7 billion for the Treasury.

The BMA is engaged with the Governments in Westminster and in the devolved nations on the proposed reforms to pensions, but it has not ruled out balloting members on industrial action over the matter. It is thinking of moving towards action, and its decision will be informed by a ballot at the beginning of the year. That is just a sample of the views and arguments that we have heard—there are plenty more.

One of my constituents, a small business person—such people are often cited by the Government as those who would suffer as a result of the strike—said to me on the day of the strike:

“They”—

the Government here in London—

“think that people like me don’t support the strike. They’re wrong. A lot of my business comes from county council workers. How will I keep going if they don’t have the money to spend?”

That shows the interaction and co-dependence of the public and private sectors in areas such as mine.

[Alun Cairns]

If that argument is to be sustained, is it not logical that the way to resolve the economic problem is simply to make the public sector as big as possible, and the private sector can then profit?

[Hywel Williams]

I am surprised to hear the hon. Gentleman arguing for that. I thought he took the contrary view, but perhaps my sense of irony is underdeveloped.

The Office for Budget Responsibility estimated in March 2011 that 400,000 people in the public sector would lose their jobs. In its response to the autumn statement, that rose by nearly 80% to a disastrous 710,000. One further, crucial reason as to why we in Plaid Cymru and the Scottish National party have called this debate is that public sector jobs are disproportionately important to countries and regions outside London and the south-east. Paying an extra 3% out of their wages is bad for individuals wherever they live, and I have particular sympathy for those in inner-city areas with high costs such as public service workers in central London. Looking across the UK, the 3% imposition and the job losses will have a particularly strong impact on Scotland, Wales and the north of England, especially as the private sector is generally weaker in those areas.

That will be even more the case if the Government follow Labour’s lead in 2008 and introduce regional rates of pay, as my hon. Friends have said. The figures on the size of the public sector are clear, sad and revealing. Briefly, in Scotland the public sector accounts for 28.6% of jobs; in the east the figure is 23.7%; in the north-east it is 29.4%; in the south- east it is 22.8%; in Wales, unfortunately the figure is highest at 31.2%; and in London it is 22%. There is a clear north-south divide. The people we represent will be hit particularly hard, as will our local economies because of the grotesquely distorted, south-east-weighted economic development of the UK and the obsession with the City of London.

This morning I received an e-mail from Mr Mark Rowe, a PCS member from the Devon area. I do not know Mr Rowe; I have never met him, and I do not know what his politics are, but he said this in his e-mail:

“Dear Mr Williams, Thank you for supporting hard working public servants in their struggle over pensions. It is good to know that someone is. We had a huge rally through Torquay on the 30th, hardly a ‘damp squib’”—

as it was described by the Government. He added that there had been “much public support” and asked why Labour are not “fighting our corner”. Public sector pensions have not been the subject of a single full Opposition day debate in the House for the past 18 months, despite the fact that Labour has had 36 Opposition day debates since the public sector pension changes were first introduced in 2010.

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

Is the situation not worse than that? Not only has Labour never bothered debating this subject in the House of Commons despite having had so many opportunities to do so, but the Leader of the Opposition described these strikes as wrong.

[Hywel Williams]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I will be grateful if the hon. Gentleman returns to the topic of his motion, which is the Government’s plans on pensions.

[Hywel Williams]

I will obey your injunction, Madam Deputy Speaker.

As I have said, I have had a great deal of correspondence with the unions, and I have given their point of view, which concurs with ours. We are happy to fight the workers’ corner in this dispute. We are happy to press for a proper pensions settlement, which is why we will press our motion to a Division.

13:31

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The weather in Scotland today is very stormy, and our thoughts are with those who are having to endure the consequences of that. I do not know whether this debate will be equally stormy.

[Sheila Gilmore (Edinburgh East) (Lab)]

I hope the Minister will not think just about the people enduring travel disruptions, but will realise that the majority of those who will be working hard to resolve any problems that arise will be public sector workers.

[David Mundell]

I do realise that—and that may be the only point on which I agree with the hon. Lady.

I thank the hon. Member for Arfon (Hywel Williams) for opening the debate. He spoke for about 20 minutes, and in that time he at least said exactly the same about Scottish National party policy on this issue as was revealed in a two-and-a-half-hour debate in the Scottish Parliament last week, which was precisely nothing. I will return to that subject.

As the hon. Member for Edinburgh East (Sheila Gilmore) has already mentioned, no Member would disagree with the following sentiments in the motion:

“That this House recognises and appreciates the valuable work done by public sector workers”

and

“believes that they should receive pensions which are affordable, sustainable and fair”.

Indeed, those sentiments form the foundations of our reform of public service pensions. Our objective is to put in place new schemes that are affordable, sustainable and fair both to taxpayers and public service workers. Let us be clear: public service pension reform is needed. The costs have increased by a third in the last 10 years, to £32 billion, and the Office for Budget Responsibility forecasts that, without reform, spending on pensions will rise by almost £7 billion over the next five years.

Understandably, this is a contentious issue, but fairness remains the cornerstone of our approach. We believe that public service workers deserve a good pension in retirement, as a fair reward for a lifetime spent serving the public. We recognise the vital contributions made by teachers, nurses, council employees and civil servants to the well-being of our society now and in the future.

That is why in June 2010 my right hon. Friend the Chancellor commissioned Lord Hutton, a Work and Pensions Secretary in the previous Government, to take an unbiased and clear-headed look at public service pensions and make proposals for reform. His landmark report has set the parameters of the debate, and it has been rightly lauded for its depth and vision.

Lord Hutton set out an overwhelming case for reform. He said that

“the status quo is not tenable”,

that

“future costs are inherently uncertain”,

and that at present the public

“cannot be sure that schemes will remain sustainable in the future.”

In his interim report, he found that there was a clear justification, based on the past cost increases borne by the taxpayer, to increase contributions in the short term to ensure a fairer distribution of costs between taxpayers and members. We accepted that recommendation, and increases in member contributions will take place, starting next year. However, next year’s increase merely reflects the increase already planned by the previous Government. We remain committed to securing in full the overall savings of £2.3 billion in 2013-14 and £2.8 billion in 2014-15 that we announced at the 2010 spending review.

In his final report, Lord Hutton produced a blueprint for a new landscape of public service pensions. It is based on retaining defined-benefit schemes but moving to a fairer career-average basis, and increasing the retirement age in line with the state pension age to protect the taxpayer against future increases in life expectancy.

[Jim McGovern (Dundee West) (Lab)]

Presumably the Minister is talking about UK public sector pension schemes, whereas the motion seems to be specifically about devolved pension schemes. Does he agree that if there is a solution, it will be that the separatists in Edinburgh just say, “We won’t apply any changes”? Does he also agree that their excuse of continually saying, “The big bad boy in London did it” and then running away is wearing thin?

[David Mundell]

On that point, I can agree with the hon. Gentleman. The Scottish Government have considerable flexibility to make their own choices, but they have chosen not to do so.

[Mr Weir]

Will the Minister confirm that the Chief Secretary specifically said that if the Scottish Government did not accept these changes, he would fine them £8 million per month, which amounts to £100 million a year and half a billion pounds over the spending period? How are the Scottish Government supposed, effectively, to pay for this twice, and thereby pay £1 billion?

[David Mundell]

What I can make clear to the House is that as a result of last week’s autumn statement the Scottish Government will receive approximately £69 million extra in resource departmental expenditure limit funds, that as a result of the Budget they received an extra £112 million, and that between the Budget and the autumn statement they received an extra £90 million, which they had not budgeted for.

[Mr Weir]

However, will the Minister please explain what difference that makes, as we are still going to lose half a billion pounds over this spending period? There is still going to be a massive cut if the Scottish Government do not follow what this Government are imposing upon them.

[David Mundell]

The difference it makes is that the SNP will have the option to back up its words with deeds, but instead it fails to do so. Its argument is entirely based on blaming the Westminster Government. It has funds available to make these choices, yet it prefers to deceive public service workers in Scotland by suggesting that everything is entirely at the behest of the Westminster Government.

[Mr Weir]

Will the Minister therefore go to the Chief Secretary and say, “Take away this threat and allow the Scottish Government to do what they want to do for Scottish public sector workers”? Is the Minister happy that there will be this cut of half a billion pounds over the spending period?

[David Mundell]

I know the hon. Gentleman does not want Scotland to remain in the United Kingdom—that is his policy—but he and his Government have the ability to make this choice, as the hon. Member for Dundee West (Jim McGovern) set out, yet they have chosen not to do so.

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

We should look at what the SNP has actually done in this respect. It has responsibility for the Scottish Public Pensions Agency, whose submissions to the Hutton review were far worse than what the coalition Government propose.

[David Mundell]

I will not presume that the hon. Lady was complimenting the Government, but she is correct in that all four of the suggestions the Scottish Government made to the Hutton inquiry would certainly leave Scottish public sector workers no better off than under the UK Government proposals, and a number of those suggestions would leave them distinctly worse off.

[Pete Wishart]

As an Under-Secretary, the Minister surely recognises the difference between a Government agency and a Government spokesperson.

[David Mundell]

I recognise the full ambit of the First Minister’s many responsibilities and I do not believe that such a submission would have been made without consultation with the Scottish Government.

[Ian Murray (Edinburgh South) (Lab)]

I think we are getting to the crux of some of the issues. I would never agree with what the coalition Government are doing to public sector pensions in Scotland, but the Scottish National party did put in a report to the Hutton review that was far more draconian than what the Government are proposing. The SNP may be trying to say to the House that this was done by an agency, but why did the Scottish Government not contribute a proposal to the review?

[David Mundell]

The hon. Gentleman makes a valid point. It reinforces what all of us who are aware of day-to-day Scottish politics know, which is that the SNP Government in Scotland speak with one word but their deeds are quite different.

I return to what I was discussing before the interventions. The Government accepted Lord Hutton’s recommendations in full and can reassure the House that the reformed public—

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

The Minister has made much of Hutton’s report and fairness, but does he not agree it seems odd that the Government jumped the gun by announcing the 3% increase before Hutton’s final report? How does that demonstrate fairness?

[David Mundell]

I know that the hon. Lady was not in the House at the time, but the 3% figure is broadly equivalent to the sum that her Government had identified in the pre-Budget report in 2009.

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

rose—

[David Mundell]

I will give way in a moment, but I want to make some progress.

The Government continue to engage actively with the trade unions to agree what the new pension schemes will look like. Discussions began in February and the Government remain fully committed to meaningful engagement. Scheme-level discussions are continuing with the trade unions, with meetings yesterday, today and tomorrow, which deals with a question asked by the hon. Member for Arfon. Significant progress has been achieved and the trade unions have welcomed many of the commitments that we made at the start of this process, including the one that public sector schemes will remain defined-benefit schemes, with a guaranteed amount provided in retirement. That, of course, was one of the options not put forward by the Scottish Public Pensions Agency.

[Several hon. Members]

rose—

[David Mundell]

I am going to take an intervention from the hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) once I have completed this section of my speech.

The unions also welcomed the commitment that all accrued rights will be protected. Everything that public servants have earned until the point of change they will keep, and it will be paid out in the terms expected, at the retirement age expected. Final salary means just that: that someone’s accrued rights will be based on their final salary, not at the point of change but whenever their career ends or they choose to leave the scheme. No public service worker need worry about the entitlements they have already built up.

[Sandra Osborne]

The Minister talks about public sector reform, so why is the 3% rise going straight to the Treasury? That has nothing to do with the sustainability of public sector pensions.

[David Mundell]

As the hon. Lady knows, the Treasury underwrites the scheme. The Treasury requires to be paid out whatever is required to be paid out in relation to the scheme. The scheme does not operate on a basis of contributions and pay-outs, because the Treasury is underwriting the scheme so that everybody is paid in full as is their entitlement.

[Mr Donohoe]

rose—

[Hywel Williams]

rose—

[David Mundell]

May I just make a little progress and then give way again? I think I have been generous with my time.

Our reforms are not retrospective, nor do they seek to correct the past failure of the Labour party; they are driven by the need for fair, affordable and sustainable pensions in the future. We have reached agreement with the unions on the importance of transparency, equality impacts, participation rates and opt-outs, scheme governance and high-level principles to inform consultations on scheme-level pensions.

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

rose—

[David Mundell]

I will give way in a moment.

We have set out our proposals. When we make our reforms, the taxpayer needs to be properly protected from the future risks arising from increases in life expectancy by the link between the scheme normal pension age and the state pension age. On 2 November, after months of negotiations with the trade unions, the Government set out a revised offer that was more generous by 8%.

The offer is generous. Most staff on low and middle incomes will retire on a pension that is as good as what they expect today, and for many it will be better. Lord Hutton has said that it is difficult “to imagine” a more generous offer. The offer includes generous transitional arrangements for those closest to retirement; those closest to retirement should not have to face any change at all. This approach mirrors the steps taken in relation to increases in the state pension age, and it is fair that the same applies here. Anyone 10 years or less from retirement age on 1 April 2012 can be assured that there will be no detriment to their retirement income. However, this enhanced offer is conditional upon reaching agreement. It is an offer that can inform the scheme-by-scheme talks which will continue until the end of the year. Of course, if agreement cannot be reached, the Government may be required to revisit our proposals and consider whether those enhancements remain appropriate.

[Hywel Williams]

Some time ago, the Minister referred to a meeting held yesterday, but will he clarify who was involved? Was a Minister involved in the discussions?

[David Mundell]

My right hon. Friend the Minister for the Cabinet Office and Paymaster General and my right hon. Friend the Chief Secretary to the Treasury have made it clear that the meetings are ongoing on a regular basis in respect of the specific schemes. I am sure that I will be able to give the hon. Gentleman the information he requires.

Our objective remains to agree reforms of the main schemes—those for teachers, health and the NHS, the civil service and firefighters—by the end of the year, and my right hon. Friend the Chief Secretary will update the House in due course. The Government’s preferred scheme would produce better pensions for those on low and middle incomes who have devoted a lifetime to public service. At the same time, public service pensions will remain considerably better than those available in the private sector, as my hon. Friends have suggested. A primary school teacher earning £32,000 per year could receive a pension of £20,000 under our proposals. To earn the equivalent pension in the private sector, an employee would have to pay in more than one third of their salary.

[Bob Stewart (Beckenham) (Con)]

Several of my constituents who work in the private sector have told me that they totally agree that public sector workers should get sustainable, affordable and fair pensions, but they are concerned that for them to have a similar pension they would have to increase their contributions by a factor of three or four. They do not think that that is fair in the current circumstances.

[David Mundell]

My hon. Friend makes a good point and I empathise with it as the MP for a constituency that has some of the lowest private sector wages in the UK.

Only 10% of private sector workers have access to the type of scheme that I was describing, which is at a guaranteed level and is inflation proofed, while only one third of private sector employees currently get any contributions from their employers.

[Jonathan Edwards]

I come back to the issue of the divide-and-rule strategy of playing the public sector off against the private sector. Is the Minister aware that the average pension of a retiring teacher is £9,000 per annum, and that the figures for NHS workers, for civil servants and for members of the armed forces are £7,000 per annum, £6,000 per annum and £7,500 per annum respectively? Do those figures seem unfair to him?

[David Mundell]

It is a question not of playing the public sector off against the private sector but of setting out a fair scheme for public sector workers, and that is what this Government are seeking to do.

The motion mentions two reports, one by the National Audit Office and the other by the Public Accounts Committee, which do not provide us with sustainable and lasting models for the future. Pensions, as they stand, are not affordable. As Lord Hutton says,

“the status quo is not tenable.”

The Office for Budget Responsibility’s latest forecast demonstrates that long-term costs have continued to increase since March, so reform is now essential because the costs of public service pensions have risen dramatically over the past few decades. The fact is that we are all living longer; the average 60-year-old is living 10 years longer than was the case in the 1970s.

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

I thank my hon. Friend for the points he is making. Does he agree that unless these reforms go ahead public sector workers will not be able to rely on anything, because there might not be any money to pay them anything? That is why it is so important that these reforms go ahead.

[David Mundell]

I absolutely agree. The speech from the hon. Member for Arfon seemed to me, particularly on Wales, to be very much an argument for the status quo.

[Katy Clark]

We already know that public sector pensions are, on average, less than £5,600 a year, so if they are going to be even lower what will people live on—state benefits?

[David Mundell]

There is no suggestion that those on the lowest pay will receive lower state pensions. The Labour party has been very keen to engage in such scaremongering, but the Government’s proposals specifically protect those on the lowest earnings of below £15,000.

Before I finish, I want to turn to some of the specifics about Scotland.

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

rose—

[David Mundell]

Perhaps the hon. Lady will agree with me on them.

[Dr Whiteford]

I hope that when the Minister comes to explain the protection for low-paid workers he will be able to clarify something about which many people in trade unions have been asking. Will part-time workers’ earnings and the increase in their contributions be calculated on the basis of full-time equivalent wages?

[David Mundell]

They will be based on full-time equivalent wages. That point is clear. The difference on pensions between this Government and the Scottish Government is that we are clear on the points that people might not want to hear rather than pretending to people that they can have everything when that is not sustainable.

[Dr Whiteford]

The contributions of a woman who works part-time in a professional job—for example, as a nurse or a teacher—but takes home less than £15,000 a year will be increased not at the lower rate but at the higher rate of a full-time equivalent.

[David Mundell]

The hon. Lady knows that in all aspects of employment, the full-time equivalent applies. That is what will apply to pensions.

[Mr Reid]

Will my hon. Friend confirm that that decision in relation to a nurse in Scotland is entirely one for the Scottish Government to take?

[David Mundell]

Indeed. The hon. Gentleman makes a very good point and I am about to come on to some of the issues about the Scottish Government. The point that has been underlined several times in this debate is that there are many issues on which the Scottish Government could make a decision but have chosen not to do so.

[Susan Elan Jones]

Will the Minister give way?

[David Mundell]

I am sure it is not about Scotland, but I will.

[Susan Elan Jones]

I am sure it could be. The Minister refers to transparency and clarity but yet again refuses to answer the question about ministerial involvement, or lack of it, in negotiations. Why will he use those words yet refuse to do that?

[David Mundell]

My understanding is that my colleague the Secretary of State for Health is meeting NHS unions as this debate is going on. There are significant ministerial discussions.

We have set out that the budgets of the devolved Administrations, who have these powers, would not be adjusted accordingly if they chose not to implement the reforms, because they have received higher settlements that reflect the proposed changes. If the devolved Administrations do not implement our public sector pensions reforms, Barnett consequentials will be reduced.

The Treasury wrote to tell the Scottish Government they had to apply the 3.2% increase in contributions or make up the shortfall and presented them with a choice. They could have chosen not to apply the increased contributions and make up the difference to the Treasury, but they followed a now familiar pattern: they failed to take any sort of decision and blamed Westminster at every turn. Their manufactured outrage is a smokescreen designed to cover the fact that they have no answers for the people of Scotland on how they would fund public sector pensions, never mind the wider state pension. We have asked them often enough—

[Mr Weir]

rose—

[David Mundell]

And perhaps the hon. Gentleman will answer us.

[Mr Weir]

The Minister is talking absolute nonsense. Will he not accept that if the Scottish Government did that, they would lose £1 billion from a budget that is already being cut by making the payment then losing money through a clawback from the Treasury?

[David Mundell]

I have already set out all the additional money that the Scottish Government have received since the budget settlement last year from which they could have made these choices. Sometimes, choices are difficult, but the Scottish Government prefer to pretend to people that they are on their side while not being willing to take difficult decisions.

[Ian Murray]

You are talking about choices that the SNP Scottish Government will make and one of the big choices they made was to cut capital spending far faster and far further than your own Government.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Gentleman is referring to the Minister and should refer to him as the Minister or “he”. “You” means the occupant of the Chair, and this is nothing to do with me, fortunately.

[David Mundell]

That is a phrase often used in Scotland, Madam Deputy Speaker, by one of the—

[Madam Deputy Speaker]

Order. I say to the Minister that I am absolutely aware of the use of “you”, but I think that in parliamentary debates we should stick to the convention here, as I am sure he agrees.

[David Mundell]

I will indeed do that, Madam Deputy Speaker.

The SNP Scottish Government have played fast and loose with Scotland on pensions. Rather than making responsible suggestions, they resort to scare tactics. In this motion, the SNP and Plaid Cymru are frightening people by saying that they will receive less pension. The SNP’s submission to Lord Hutton, as we have heard, offered at best no better and in some cases a much worse deal. The Scottish Public Pensions Agency, an agency of the Scottish Government, headed by the Cabinet Secretary for Finance and Sustainable Growth, John Swinney, made a number of interesting suggestions when it illustrated options for further change. It suggested reducing current employer contribution cap levels with members meeting all costs above that cap. Alongside that, it proposed to reduce the levels of benefits available without necessarily reducing the levels of contributions.

[Pete Wishart]

I am listening very carefully to the hon. Gentleman. I suppose it should not come as a surprise to anybody in this House that there are now more giant pandas in Scotland than there are Tory MPs; listening to the Minister, we can see why. Will the Minister concede that there was no submission from the Scottish Government to the Hutton report, but there was a submission from an agency of the Scottish Government?

[David Mundell]

I do not accept that analysis. The hon. Gentleman might have got a laugh if he had thought that up himself rather than stealing it from the Twittersphere.

The Scottish Government’s proposals were a toxic cocktail topped up by suggestions to introduce later retirement ages, change accrual rates, apply changes to all members, not just new scheme members, and move to a defined contribution scheme, which places the risk of uncertainty over the value of the final pension on the member. All those proposals would mean a worse deal for public service employees than the coalition’s proposals.

[David Mowat (Warrington South) (Con)]

Will the Minister give way?

[David Mundell]

One last time.

[David Mowat]

I am listening very carefully to the Minister’s comments on the interaction between the Scottish Government and himself. Does he agree that one of the interesting features of the motion is the last part, which appears to concede the point that the Barnett consequentials should be reviewed and that certain types of expenditure should be taken out of them? If that is a principle that the SNP wishes to adopt, we should consider the Barnett formula more generally and the whole settlement and block grant for Scotland.

[David Mundell]

My hon. Friend makes an interesting point, because that is one issue on which there is an absolute divide between Plaid Cymru and the SNP. Plaid Cymru wants significant change to the Barnett formula and, as I understand it, the SNP does not. That is part of the inherent illogicality that is at the heart of their argument.

I am surprised that we hear nothing these days about independence, which is relevant. Perhaps that is because Plaid Cymru does not promote independence. I look forward to hearing SNP Members set out exactly how an independent Scotland would be able to fund not only existing pensions, but provide enhanced pensions, without consequences for pensioners in Scotland. I am sure that we will hear calls for the break-up of the United Kingdom.

I also look forward to hearing from Labour Members. I understand that Labour MSPs chose not to take part in the debate in the Scottish Parliament because they were working in their constituencies that day. I know that the Labour party has not been an effective Opposition in Holyrood, particularly since the hon. Member for Glasgow East (Margaret Curran) left, but not to turn up at all is taking that to an extreme. I look forward to hearing their contributions today.

14:01

[Mr William Bain (Glasgow North East) (Lab)]

I apologise to the hon. Member for Arfon (Hywel Williams) for missing the first few moments of his opening remarks. Let me begin by paying tribute to the contribution made by those who work in our public services, including 595,000 in Scotland, such as those who care for the sick and elderly in hospitals and care homes, those who provide inspiration to children through the gift of teaching and those who clean up our communities. They are the backbone of our society. They had no part in causing the great recession or the slump in tax revenues and demand in 2008-09. They deserve better treatment from the Government, whose economic policy is based on a further 310,000 of them being made redundant by the end of this Parliament, and their families suffering an uncertain future, and all because of the Chancellor’s adherence to a deflationary economic theory that is not working and is sapping hope and potential from communities across our country.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

I agree with the hon. Gentleman’s sentiments towards public sector workers and the excellent work they do, but they were a part of unsustainable Government spending, even in years of boom revenues. Does he accept that they deserve an apology for the role that he and his party played in giving us unsustainable public funding, which has now led to hard decisions having to be made by the Government?

[Mr Bain]

The current Chancellor agreed with every penny piece of spending from 2005 to 2008. He decided to change course on public spending only when the recession was beginning to hit. We can see from the economic illiteracy of the previous Budget and the autumn statement that to have adopted a deflationary policy at that time would have seen unemployment and public sector redundancies soar even higher. That is not the approach that would have safeguarded a recovery, and it is one that we were right to reject.

[Mr Stuart]

Will the hon. Gentleman give way?

[Mr Bain]

I will give way to the hon. Gentleman later.

Today’s concessions by the Secretary of State for Health on NHS pension contributions show that the Government’s plans are already unravelling under the weight of their own contradictions and injustices. Is it not disgraceful that the Chief Secretary to the Treasury did not come to the House today to make a statement on the details of this partial climbdown, instead of the Government briefing the press?

At first sight, the concessions stand up to no more scrutiny than the Government’s previous partial climbdown, which would have required a near 50% increase in annual contributions from affected workers, for up to eight years longer, with the claimed increased pensions paid for as much as eight years fewer, losing real terms value each year due to uprating in line with the consumer prices index rather than the retail prices index. Unison has already said in response to today’s announcements that a one-year delay before low-paid workers will pay higher contributions is cold comfort.

This is the Government who refuse to impose a tax on bank bonuses, but believe that nurses, teachers and catering staff should face additional tax rises instead. This is the Government who in the autumn statement sought to slash £1.2 billion a year from the tax credits of these same workers, hurting women and children four times more heavily than the balance sheets of the banks. We need a negotiated solution in which both sides give ground. The Opposition accept many of Lord Hutton’s points, but the Government pre-empted this with the hike in contributions, which must be subject to negotiations.

Let me set out the reasons why we find the Government’s current proposals unacceptable and urge them to produce plans for the future of public sector pensions that genuinely do not penalise those who are least able to shoulder the burden. First, the Chancellor’s proposals are not about fairness or long-term stability. They are motivated by a reckless plan of spending reductions that are made worse by his failure to grow the economy in the last year and the slump in growth that the Office for Budget Responsibility predicts for this year, next year and the year after. The Chief Secretary to the Treasury set out in the comprehensive spending review last October cuts in the public sector pension bill from next April of more than £1 billion, rising to £2.8 billion by 2014-15, coming from the 3.2% hike in contributions paid by 750,000 public sector workers, all as part of the Government’s plan to take £81 billion out of the economy by 2015 through public spending cuts. However, given that the lack of demand and growth is the biggest problem facing the country today, how will reducing the living standards of hundreds of thousands of public sector workers on top of the two-year pay freeze increase consumer confidence or strengthen the retail and service sectors, which will be harmed by this tax on public sector workers?

[David T. C. Davies]

How much will this plan B that the hon. Gentleman is outlining add to the national debt, and what will be the increase in interest payments each year as a result of the money he wants us to borrow from the banks that he despises?

[Mr Bain]

The hon. Gentleman has once again revealed that the Government simply have a plan for cuts and no plan for growth or jobs. A five-point plan for growth and jobs would cut VAT, reduce national insurance and create jobs, which would help pay down the debt and the deficit.

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

Does my hon. Friend agree that it is all about priorities and that the Conservative party has the wrong priorities and we have the right ones?

[Mr Bain]

My hon. Friend, who has been involved in setting up and running a business, knows what is needed for job creation in these difficult times.

[Mel Stride (Central Devon) (Con)]

Will the hon. Gentleman give way?

[Mr Bain]

I want to make some progress and will give way again in a moment.

The Government are attempting to create the politics of division between low-paid workers in the private and public sectors and to engage in a race to the bottom on public sector pensions instead of focusing on increasing provision among employees in the private sector, but the public will not be fooled. Cutting a dinner lady’s pension will do nothing to increase the pension of a call centre worker or end unfairness in private pension provision. Two in three private sector workers are not in a workplace pension scheme. Two in three public sector staff earning between £100 and £200 a week are in a pension scheme, but only one in seven private sector workers in the same wage band are in a pension. Only 11% of private sector employees are in defined benefit pension schemes. The Government simply fail to grasp or take action on the unfairness in the pension packages of top directors in the private sector, who have pensions worth nearly £4 million on average.

[Mr Graham Stuart]

Will the hon. Gentleman give way?

[Mr Bain]

I will give way to the hon. Gentleman a little later, because I want to make more progress with my argument.

The average public sector pension in local government is £3,000 a year, and half of female public sector pensioners receive less than £4,000 a year, or £80 a week. As Lord Hutton’s report makes clear, the notion that current public sector pensions are gold-plated is entirely wrong. The Government’s plans mean that a part-time 45-year-old school dinner lady with five years’ service, who is in the local government pension scheme and on a salary of £8,000 per year, would receive £400 a year less in her pension by the age of 65, or £672 a year less if she took it at 68, while she would pay £5,500 more in contributions by her retirement.

In April, the Government altered the indexation of public sector pensions from the retail prices index measure of inflation to the consumer prices index measure. The TUC estimates that the change has reduced the average value of public sector pensions by 15%, and the OBR has assessed the reduction to be 8.7% by 2017.

[Dr Whiteford]

If the hon. Gentleman is so concerned about the switch from RPI to CPI, why did he not vote against it on 17 February?

[Mr Bain]

Sadly, this Government will have had another three Budgets and, perhaps, another three autumn statements by the next general election, so we will make our spending plans clear at that general election—[Hon. Members: “Ah!”] We will, and those plans will not involve the massive cuts in capital spending that have put construction workers on the dole in Scotland—which the Scottish National party has made over the past two years.

[Mr Reid]

The hon. Member for Banff and Buchan (Dr Whiteford) asked a straightforward question. If the hon. Gentleman is now criticising the RPI-CPI switch, why did he not vote against it in February?

[Mr Bain]

I accept that Liberal Democrat Members might be prisoners of a coalition agreement that they have signed up to for five years, but the hon. Gentleman has to explain to the Scottish people why the Chief Secretary to the Treasury now proposes further austerity, with £23 billion more in cuts in the first two years of the next Parliament, and to explain its effect on the lives of the Scottish people. The switch is a permanent change that will still hurt ordinary families even after the public finances have been restored to stability. The Government’s proposals harm those who are within 10 years of retirement and would have to pay the 3.2% increase in contributions for a pension that would be 15% smaller due to the Government’s changes to contributions and indexation.

The Government’s plans are a further attack on the living standards of women, as 90% of those affected are women, and they add to the effect of the Chancellor’s other cuts in spending, which hurt women twice as hard as men.

[Mel Stride]

Will the hon. Gentleman give way?

[Mr Bain]

I will in a second. I just want to make further progress on this point.

The Government’s plans measure income with reference not to gross pay, but to full-time equivalent earnings, treating a part-time employee on a salary of £14,000 a year as if they were a full-time employee on a salary of £28,000 a year. The Office for National Statistics’ own figures from last year show that 806,000 public sector workers who work part-time earn less than £15,000 but have full-time equivalent earnings above that amount. Of that number, 91% are women. Only 16% of public sector workers have full-time equivalent earnings of less than £15,000 a year and would escape the rise in contributions. The 3% hike in contributions means that some women would pay almost 50% more in pension contributions.

Secondly, the OBR’s fiscal sustainability report, published this July, makes it clear that, even without implementing the recommendations in the Hutton report but taking into account the likely rise in the elderly population, the cost of providing public sector pensions as a proportion of GDP will fall from 2% to 1.8% by 2030, and to 1.6% by 2060. Lord Hutton has not disagreed that, even without those changes, the costs of providing public sector pensions in the long term are sustainable.

The previous Government signed an agreement with civil service unions, ensuring that new civil servants entered a career-average scheme with a pension age of 65 years old, thereby benefiting low-paid workers whose pay rises are generally less than inflation and who are unlikely to benefit from regular promotions. The agreement helped in particular women, black and ethnic minority workers and people with disabilities. The National Audit Office, in December 2010, evaluated that 2007 deal and concluded that it

“reduces costs to taxpayers by 14 per cent”,

saving £67 billion over the lifetime of existing schemes.

Thirdly, a 3.2% increase in contributions by public sector workers in return for a lower pension would fail the test of fairness at a time when people on low and middle incomes face the biggest squeeze in living standards since the 1920s. For a public sector worker on average pay, the effect of this further attack on living standards is to the tune of a £3,000 cut in gross pay. A worker on a salary of £18,000 per year could lose more than £1,500 over the years from next April.

Fourthly, average incomes are set to fall by 7.4% by the end of this Parliament—the largest slump on record, and all because of this Government’s economic failure; and disposable incomes are set to fall by 4%, according to the Institute for Fiscal Studies in data published last Wednesday. Imposing a higher tax on public sector workers at such a time, with those trends in falling disposable income, is grossly inequitable. The hike in pension contributions, together with the current pay freeze and the future 1% pay cap, will lead to an average 16% cut in living standards by 2014 for public sector workers.

[Mr Graham Stuart]

Will the hon. Gentleman share with the House his party’s views? I know that he is putting off an awful lot until near the next general election, but, given his level of criticism, will he explain why he did not vote against the RPI-CPI change, as he has singularly failed to do, and whether he thinks that the system of public sector pensions which this Government inherited was entirely fit for purpose and in need of no reform whatever?

[Mr Bain]

The responsibility for the hike in pension contributions, and for the loss in pensions that public sector workers are going to suffer, is the responsibility of this Government, and I will not be deflected from ensuring that they take full account of it.

The Scottish National party should also—

[David Mowat]

Will the hon. Gentleman give way?

[Mr Bain]

I have been generous enough in giving way. With respect, I encourage the hon. Gentleman to catch Madam Deputy Speaker’s eye if he wants to make further points.

The Scottish National party should thoroughly disown the proposals submitted by the Scottish Public Pensions Agency, which is accountable to Scottish Ministers, as its recommendations would be even more unfair for tens of thousands of Scottish public sector workers. The Scottish Government have power over the NHS, teachers, local government, police and firefighters pension schemes, with the exception of the local government pension scheme. They have not yet declared what they intend do in relation to local government workers, who face the possibility of paying additional contributions to their pensions, so they should end that uncertainty and make their position clear now.

The Government need to change course, to sustain and not destroy the living standards of public sector workers and to recognise that the crushing austerity that they seek to entrench for years to come will leave a legacy of higher child and family poverty. This country deserves better than a Government who are out of touch, out of growth and out of ideas for the future.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. A large number of Members wish to take part in this time-restricted debate. I am going to impose a time limit from the next speaker of seven minutes, because I have now been informed of how long the winding-up speeches will take. I cannot take account of how many interventions there will be, however, so the time limit may have to be reviewed downwards in order to get everybody in at a later stage.

14:19

[Jackie Doyle-Price (Thurrock) (Con)]

I had hoped, when I saw the text of the motion, that there would be some maturity in this debate about public pensions, which have become unaffordable and unsustainable in the long term, but I should have known better. The speech by the hon. Member for Glasgow North East (Mr Bain) was disappointingly partisan and failed to address the long-term sustainability problems that we face.

It is a truism that every Member of this House appreciates the valuable work done by our public sector workers, and it is not very helpful for any Opposition Member to try to paint Government Members as anti-public sector. I speak as someone who spent almost the entirety of my career working in the public sector, having worked for the police service, in local government, and as a regulator. Among my hon. Friends, we have NHS doctors, ex-servicemen and ex-teachers, so we have as much interest in supporting our public sector workers as any party in this House. However, we also recognise the need for long-term fiscal responsibility and acknowledge that in delivering to public sector workers pensions that are affordable, sustainable and fair, that fairness has to apply to those workers and to the taxpayer. As currently constituted, our pensions are not affordable in the long term, for the simple reason that we are all living longer.

The motion suggests—the hon. Member for Arfon (Hywel Williams) referred to this—that these public sector pension reforms are about deficit reduction. Given the time frame in which the Government are implementing the changes and the intention to implement them on a phased basis, I am satisfied that that criticism does not bear examination. These changes are about fiscal responsibility and about not saddling future generations of taxpayers with huge tax liabilities. This is not a short-term fix; it is about getting an appropriate balance between the contributions of workers and the contribution of the taxpayer.

The motion notes that the changes

“are unfair on public sector workers”

because they

“will have to work longer, pay more and receive less in their pension when they retire”.

I have to say to the House that that is the reality for all pension holders. In my last job, I paid into a private pension, and I have just had a look at how much it is worth. In the space of just two months, the value of that pension pot has eroded by some 25%. I suspect that many workers are having to revise their intentions with regard to retirement when they look at how their pension is performing, not least because of the annual raid on pension funds perpetrated by the previous Government.

[Mr Graham Stuart]

My hon. Friend’s point about support for public sector workers is absolutely correct. The fundamental question is about fairness. Opposition Members are saying that people on lower earnings in the private sector should work longer hours and pay more tax in order to guarantee the pension being provided to public sector workers, while those lower-earning private sector workers often have no provision at all. It is about fairness, and that means that this Government have to take the tough decisions, however unpopular, to put the situation right.

[Jackie Doyle-Price]

My hon. Friend makes my point much more powerfully than I do.

[Hywel Williams]

On 30 November, the Prime Minister said:

“We rejected the idea that we should level down public sector pensions.”—[Official Report, 30 November 2011; Vol. 536, c. 931.]

Does the hon. Lady agree with that?

[Jackie Doyle-Price]

I totally agree with that comment. I do not recognise any criticism that we are levelling down public sector pensions. We are trying to take this forward in a consensual way.

I welcome the fact that in our proposed reforms we are sticking with defined benefit systems. Many private sector schemes have had to migrate to defined contribution schemes because of the unaffordability of their existing schemes. We recognise that public sector workers are going to have to make a much bigger contribution, but they are doing so to achieve benefits that would be much more expensive if offered to workers in the private sector.

[Sheila Gilmore (Edinburgh East) (Lab)]

One of the things that might have brought more money in and created some fairness in the pensions system would have been to limit the tax relief on payments into private pensions to the basic rate of tax. Would the hon. Lady agree with that proposal?

[Jackie Doyle-Price]

I am trying to set out a case for wider structural reform. We have a massive structural challenge across the board in pensions for public sector workers and private sector workers. As regards tax relief for pension contributions, I will not take any lectures from Labour Members given what was done under the previous Government.

It used to be the case that the generous pension provision for public sector workers was a quid pro quo for working in the public sector, as higher salaries were traditionally enjoyed more regularly in the private sector. That is no longer the case. I refer to the comments by my hon. Friend the Member for Aberconwy (Guto Bebb) about average salaries in Wales, which show that public sector workers there often enjoy much higher levels of reward than private sector workers. This will reduce dynamism in the labour market and make us less competitive. Our economy benefits greatly from having people moving from the public sector into the private sector so that we all enjoy their expertise, but when there are such significant levels of differential between salaries, that is not going to happen. If we then add in the benefits that come from the generous pension provision, it becomes impossible for people to move from one job to another.

Let me give an example. In my last job, I worked for the Financial Services Authority, where I had a very senior colleague who had worked for the Bank of England and the FSA for some 28 years. She was offered a very highly paid job with a bank, as one would expect—we all expect bankers to be offered higher salaries than public sector workers. When she worked out the cost implications of moving from her job, with 28 years of a final salary pension, compared with what she would have to be paid by the bank to come anywhere close, she was somewhat crest-fallen to realise that in the longer term she would be taking a pay cut. That illustrates the competitiveness issues raised by how much we have in our pension schemes.

[Mr Graham Stuart]

In areas such as Wales and the north of England, where the discrepancy is particularly notable, small businesses and enterprises need people but they are struggling to recruit because of the level of salaries in the public sector. If we are to rebalance the economy, we need to make sure that our dynamic small businesses have equal and fair access to the labour market.

[Jackie Doyle-Price]

That is absolutely true. It is not very good for growth and competitiveness if we are pricing growing businesses out of the market simply because they cannot afford to recruit staff at sustainable levels.

The motion refers to the reports by the National Audit Office and the Public Accounts Committee. I am a member of the Public Accounts Committee. While it is true that we were pleased that the reforms introduced by the previous Government were moving in the right direction, we were not satisfied that they were sustainable in the long term. The NAO would not be drawn on that specific issue, because it recognised that it was a political decision. The PAC said that the Hutton commission provided the opportunity for the Government to develop a clear strategic direction for public service pensions and that we looked forward to those detailed proposals. The Public Accounts Committee report was therefore much more sympathetic to the Government’s approach than is indicated in the motion.

That said, the Committee did express concerns about pension reform. We expressed concern over its impact on staff morale. It would be helpful if employers and trade unions worked more collaboratively to address that. Sadly, that has not been the case to date. We also expressed the opinion that many employees did not understand the value of their pensions as part of their reward. If the colleague I mentioned earlier, who worked in financial services, did not understand the true value of her pension pot, God help any other public sector worker.

We must ensure that we do not discourage people from saving for retirement. I therefore welcome the Government’s decision to exclude the lower-paid from any increases. Obviously, 15% of salary is a lot—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

14:29

[Mr Brian H. Donohoe (Central Ayrshire) (Lab)]

I thank Plaid Cymru and the Scottish National party for securing this debate and for ensuring that the damaging pension plans continue to be at the top of the political agenda.

As the Minister said, the SNP had choices. In relation to the final part of the motion, the SNP gave away its choices in refusing the opportunity that it had in the Scottish Parliament to vary taxes by 3p. If it had accepted the need to continue with that, it could have used it towards the contributions that are required. There has been a lot of talk and nonsense about that from Members who have now left the Chamber. They know full well that that is the case.

[Dr Whiteford]

It sounds as though the hon. Gentleman is proposing that we increase taxes in Scotland to pay for pension increases. Is that really what he means?

[Mr Donohoe]

We live, at this stage, in the United Kingdom. If the SNP is suggesting that Scotland has a different set of circumstances for pensions than England or Wales, there is something wrong with the system. We live in the United Kingdom and SNP Members have to accept that. I have more in common with a joiner in Newcastle than with the director of the Royal Bank of Scotland. That is the way that SNP Members should think as well. They had choices and they denied themselves the opportunity to make them.

This matter affects many of my constituents. My constituency has 4% more public sector workers than the United Kingdom average. Some 39,300 of my constituents work in the public sector, about two thirds of whom are women. The pension proposals will affect women more than men, because they are the lower-paid in society.

[Mel Stride]

As Christmas approaches, could the hon. Gentleman find it in his heart to congratulate the Government on taking more than 1 million low-paid workers out of tax altogether, many of whom are exactly the women he describes?

[Mr Donohoe]

I do not accept that at all. This Government have put up VAT, which is affecting all the low-paid people across the country more than it is the likes of the hon. Gentleman. He should not delude himself that the situation is different.

My mind has been taken away from this subject over the past week, because young Jack Samuel Donohoe, my second grandchild, was brought into this world at five past 12 on Monday. Jack, his mother Pauline and his father Craig are all doing very well. I mention that only because when my first grandchild was born about three weeks ago, I mentioned it in a debate and I felt that it was only right to mention the second.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am sure that the hon. Gentleman will use that point to talk about how long we are all living and return to the motion.

[Mr Donohoe]

I am grateful to you, Madam Deputy Speaker, for that guidance. I am sure that that is what I was about to say. In about 70 years, my grandchildren will collect their first pension. I want it to be a decent pension, regardless of whether they are in the public sector or the private sector.

At the age of 22, I first became involved in pensions as a trustee of the pension scheme at the Ailsa shipyard where I worked. I have always had an interest in pensions as a result. Many people do not have a clue about pensions. I have always accepted that a pension is deferred income. My pension is part of my income, and pensions are the income of every person who contributes. It is income that this Government are taking from individuals. I know that and other hon. Members should know it.

[Guto Bebb]

I find the hon. Gentleman’s arguments very interesting. If pension contributions are deferred income, is not the disparity between pay in the public sector and the private sector in Wales even more scandalous?

[Mr Donohoe]

The hon. Gentleman obviously does not understand what I have just said. It is clear that most people do not understand that pension contributions by an employer are deferred income. They are part of a person’s income and should be treated as such regardless of whether they are in the private or public sector. That should be known to everybody.

The increase in contributions that was announced in the spending review will not be used to pay for pensions. My understanding is that that £2.8 billion is specifically to be used to reduce the deficit—that is in the Red Book. Perhaps the Minister would like to establish in his winding-up speech whether that is right. I also understand that the proposal was a political choice by the Government rather than being made out of necessity. They have scrapped Labour’s tax on bankers’ bonuses, which was to raise more than £3 billion in revenue, and replaced it with a tax on public sector workers’ incomes.

Those changes are being made against a backdrop of a two-year pay freeze for public sector workers, which of course was announced on the eve of last week’s strike. That was a very provocative statement intended, I suggest, to fan the flames of dissent among public sector workers. The changes also come at a time when inflation is running at about 5%. That in itself has reduced the value of public sector pay by almost 10% in real terms, which is not sustainable in the current climate. We all understand that we have difficult choices to make, and we all understand the state of the economy, but pensions should be considered for the long term. It is patent that that is not happening.

[Mr Graham Stuart]

Will the hon. Gentleman give way?

[Mr Donohoe]

No, I am just about to sum up, so I will not give way again.

I finally wish to touch on the effects that the changes will have on our armed forces, a section of the community for whom I have great respect. It goes without saying that this punitive reduction will have a damaging impact on the morale of those who are prepared to make the ultimate sacrifice for our country. We must not punish our young men and women in the forces because one man cannot see the practical implication of his economic policies.

14:37

[Guto Bebb (Aberconwy) (Con)]

First, may I say that I might not be here for the wind-ups, because I have to catch a train to Brussels for Welsh Affairs Committee work? I hope that I will be able to be here, but if not, I present my apologies in advance.

This is an important debate, and I am grateful for the opportunity to contribute. One of the disappointments so far has been the fact that many Opposition Members have implied that coalition Members, whether they are Liberals or Conservatives, despise the public sector in some way. That is simply not the case, and I reject the suggestion completely. As a coalition Member, I find such comments offensive. I depend on state schools for the education of my children, I am the son of teachers and I am married to a public sector worker, so I find such comments completely unfair. Opposition Members should consider the matter carefully before making them.

We are aware of the importance of the public sector, so much so that we are proposing changes that Lord Hutton, the Labour peer who produced the report on the matter, said were possibly not affordable.

[Susan Elan Jones]

Can the hon. Gentleman confirm that he is not in fact the son of Conservatives?

[Guto Bebb]

That is an interesting question, and I am not sure. My father certainly ended up voting Conservative, but I cannot comment on my mother, because I think that how somebody votes at the ballot box is their choice entirely.

We are quite often accused of attacking the public sector or introducing unfair policies, yet the coalition Government are trying to deal on a long-term basis with issues that the previous Labour Government did not deal with. When we talk about fairness, which is important in this debate, I wonder where the comments of Labour Members were on the raid on private sector pensions. Where were their comments in defence of people with poor rates of pension provision who were saving with their own money—working people saving for their retirement? Where was the Labour party when it came to defending those people when the previous Labour Government raided pensions to the tune of £5 billion a year? That was a scandal. It was not fair, but we heard nothing from Labour Members.

Even worse, the raid on private pensions was made with the justification of helping young people back into work. In 2010, the rate of unemployment among young people was higher than in 1997. The raid was unjustified, not effective and unfair.

[Sheila Gilmore]

The hon. Gentleman’s 2010 figure is not wrong—[Interruption.] Excuse me! It is true to say, however, that the money that was put into reducing youth unemployment worked and that youth unemployment was brought down from the very high level that was inherited in 1997—[Interruption.] No. Only the recession caused youth unemployment to rise.

[Guto Bebb]

I find the argument that my point was “not wrong” but that somehow the raid was justified to be bizarre to say the least. However, I would challenge the hon. Lady: if she thinks the raid on private sector pensions was justified because the policy miraculously worked—even though youth unemployment went up—I invite her to say that we should reduce public sector contributions because that would help in relation to youth unemployment.

[Mr Graham Stuart]

The Select Committee on Children, Schools and Families held an inquiry into young people not in education, employment or training. It showed that before the economic crisis, the number of unemployed young people was on a level plane with the number when the previous Government took office. That shows that in all those years of economic growth, young people were left behind by the Labour Government before the spike after the financial crisis. What the hon. Member for Edinburgh East (Sheila Gilmore) said was absolutely false.

[Guto Bebb]

I thank my hon. Friend for the clarity of his point.

The proposal is a reasonable one. We are aiming to protect those on lower pay. Some in my constituency of Aberconwy will be astounded by the figure given by the hon. Member for Glasgow North East (Mr Bain)—he stated that only 16% of public sector workers earn less than £15,000. The average wage in my constituency is £23,000 and the average private sector wage in Wales is £21,000, so there will be a question about whether the proposal is unfair.

That reminds me of the comments made on the RPI to CPI change. The change was illustrated with the example of a nurse or dinner lady who earns £8,000 a year. I recently did a call-in programme on Radio Cymru. A headmaster from the constituency of the hon. Member for Arfon (Hywel Williams), as it happens, called in and stated that the change from RPI to CPI was extremely unfair because it would cost him £200,000. The average private sector pension pot is £30,000. Hon. Members can imagine that the response of the general public when they heard that comment was pretty strong. The changes that the Government are trying to make are changes for the long-term, to try to ensure that we have a system that works.

It is imperative that hon. Members mention some of the e-mails that they have received from the trade union movement. I received one this morning from the Public and Commercial Services Union stating that the claim that the coalition is trying to protect the lower paid is not sustainable. The PCS directs us to a comment by Cathy Newman, who says that it is “fanciful” for the coalition Government to try to claim that they are protecting the lower paid. I am disappointed with that comment, but then the PCS does not bother to remind us of other comments that Cathy Newman has made. She also says:

“Having said that though, public sector pensions, even after these reforms, will still be the envy of many a worker in private enterprise.”

That is the key point in Wales. We are looking at how we can ensure that the people who benefit from extremely good pensions contribute a fair amount towards them. For example, will increasing a teacher’s pension contribution from 6% to 9% have an impact on their take-home pay? Yes, it will—I would be the first to acknowledge that—but it is important to state that to end up with a pension similar to what will be available to a teacher as a result of the changes, somebody working in the private sector would have to contribute 35% or 38% of their take-home pay.

[Katy Clark]

Will the hon. Gentleman give way?

[Guto Bebb]

No, I will not take another intervention.

That disparity will still exist because the coalition Government value public sector workers. That is not to say that we do not value people who work in the private sector, but we acknowledge the importance of the public sector, we want to protect it and we want to bring in changes that are sustainable, fair to taxpayers and fair to the public sector. I ask any Opposition Member to tell me what is unfair about asking a teacher to contribute 9% of salary for a pension that a comparable worker in the private sector would have to contribute 35% to achieve. I ask any Opposition Member to stand up and tell me why that is fair. I see nothing.

Finally, I will turn to the Welsh context—

[Katy Clark]

rose—

[Guto Bebb]

I want to get a few points in about Wales to finish.

In this debate, Plaid Cymru Members have said that they are standing up for their electorate and their workers. I applaud them for that. Of course people need to stand up for those who elect them to this place, but it is also important to point out that the constituency of the parliamentary leader of Plaid Cymru has the highest rate of self-employed people in the United Kingdom. What has Plaid said about supporting the pension provision of those individuals?

I accept that Wales has a high percentage of people working in the public sector, but in many constituencies the majority of people are striving to earn a living in the private sector. When we have a limited amount of money, the Government have a responsibility to all taxpayers to ensure that we have a system of pension provision that is fair to all. It is simply not sustainable to expect the three quarters of the people in Wales who work in the private sector or who are self-employed—many of whom live in the constituencies of Plaid Cymru Members—to pay through their taxes for the pensions of those who will retire on better pensions.

These changes will ensure that the public sector is protected, but they will share the burden in a slightly fairer way than at the moment, and I applaud the coalition for bringing forward a long-term change with courage and commitment.

14:47

[Lindsay Roy (Glenrothes) (Lab)]

I congratulate the SNP and Plaid Cymru on their choice of debate today. I take part in this debate with a heavy heart, and with genuine anger and frustration at the way in which public sector workers, who have done such invaluable work in our communities, have been treated by this Government. Some of what I have to say is constructive reinforcement of points already made, rather than unnecessary duplication. These raw sentiments reflect the views of hundreds of public sector workers in my constituency.

One of the hallmarks of a civilised society is the way we treat our citizens—people who have contributed immensely to society throughout their working lives. Indeed, for years there was a genuine trust and confidence in the public sector that, in return for often smaller salaries—although sometimes not—compared with the private sector, they would receive a fair, if generally modest, pension on retirement, and those pensions had been negotiated in good faith. That trust has well and truly evaporated. However, that erosion in trust has not occurred because of the Hutton report, which recognised again the need to review pension contributions as people live longer, but because of the cavalier way this Government have proceeded, on a unilateral basis, to disguise the real purpose of the precipitate 3% increase for public sector workers. To put it bluntly, public sector workers feel that they are sacrificial lambs.

The immediate increase has nothing directly to do with the present affordability, fairness and sustainability of public sector pensions, but everything to do with a cynical attack on ordinary working people at a time of pay freezes, increased VAT, higher fuel costs and a dramatic increase in living costs. The real reason for this smash and grab raid on the public sector was blatantly to contribute to the deficit reduction plan, as highlighted by the hon. Member for Arfon (Hywel Williams).

[David Mowat]

I have listened carefully to the hon. Gentleman’s argument and he seems to be saying that he supports the proposals in the Hutton report, but does not support what the Government have done. Which aspects of what the Government are doing are not in the Hutton report?

[Lindsay Roy]

The Government pre-empted Hutton and were precipitate in taking forward the action with the 3% increase.

Not only have public sector workers been penalised, but the wealthier owners in our society, particularly the bankers, have not been challenged in the same way. As taxpayers, we have bailed out the bankers, so some of the richest people in our society continue to be rewarded, and it was some of them who created this financial crisis. Patently, we are not all in this together.

As a cover for their actions, the Government continue to peddle a number of myths, which, if Members will pardon the pun, I will try to scotch. First, it is said that public sector pensions are gold-plated. As we have heard, there are varying figures for this, but they vary between £3,000 to £5,000.

Secondly, it is said that the public sector unions were spoiling for confrontation. Nothing could be further from the truth.

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

The hon. Gentleman is making a powerful point, and many of us have sympathy for those on small and medium incomes, but there are people on large incomes who also receive very large pensions. People pay taxation to provide those high pensions and that is a matter of concern.

[Lindsay Roy]

I do not want to be drawn to the lowest common denominator. We have already heard the issues surrounding tax relief in the private sector.

Industrial action is a last resort and a signal of anger and frustration among our constituents. Most of my constituents had never taken industrial action in their life and hope not to do so again.

The third myth was that the immediate 3% increase was recommended by Hutton; it was not. The fourth is that the intensive and serious negotiations between senior Ministers and senior trade union officials had continued right up until the 11th hour; they had not. Senior leaders last met on 2 November. To add insult to injury, this coalition Government decided to break the pension link with the retail prices index and move to the consumer prices index, thereby having a significant detrimental effect on the value of pensions, with a drop of between 11% and 14%.

All mainstream political parties fully recognise that there needs to be a comprehensive review of public sector pensions to ensure fairness, sustainability and affordability. At no time did we pretend that challenging decisions would not have to be made about contributions, entitlement and retirement age. Reform was to be strategic and phased and it would inevitably involve difficult decisions as people are living longer. It is now incumbent on the Government to engage as a matter of urgency in serious and meaningful negotiations at the most senior level and as immediately as possible with trade unions to agree an acceptable settlement.

Fundamentally, we need to draw up a long-term plan for decent pensions in the public sector, to continue to engage high-quality recruits, to retain the many committed public servants who do a tremendous job on our behalf and to reward fairly those who reach their pension age. I therefore urge the Government to go home and think again, rescind these unfair short-term changes and to bring to the table a fair, affordable and sustainable plan for long-term pension reform.

14:49

[Iain Stewart (Milton Keynes South) (Con)]

Although it is always a pleasure to follow the hon. Member for Glenrothes (Lindsay Roy), I must confess some disappointment that I have not yet heard from a member of the Scottish National party. In my short contribution to this debate, I should like to focus on what I think is the Scottish nationalists’ real motive behind the motion and the debate on public sector pension reform—their ambition for the Scottish Parliament to have full control over public sector pensions as part of its drive towards fiscal autonomy and full separation. Let me draw the House’s attention to the words last week of the First Minister, Alex Salmond:

“The way to stop this Parliament and Government being hamstrung by the policies of the UK Government is to give us the financial independence that we require in order to do that.”

That is clearly his aim. [Interruption.] And from a sedentary position, Scottish nationalist Members endorse it. That aim is at the heart of the motion.

Notwithstanding the local variation within the devolved Administrations over the administration of pension funds, to which my right hon. Friend the Minister referred, it would be a hugely retrograde step to move away from a unified United Kingdom public sector pension scheme.

[Stewart Hosie]

There is no unified public sector pension scheme, but there is a police pension scheme, a firefighter pension scheme, a Scottish teachers’ scheme, a local government scheme and an NHS superannuation scheme. They are all different; there is no unified scheme. The hon. Gentleman is simply wrong.

[Iain Stewart]

If the hon. Gentleman forgives me, I was using shorthand. I am well aware that there are different schemes for different professions within the public sector, but in a UK context they are broadly similar between Scotland and England.

Paragraph 5.26 of the Hutton report reads:

“There has been scope for some variations in terms to meet local circumstances, but the resulting pension schemes have essentially been the same as those established by the UK Government. That has, for example, helped to prevent pension terms becoming an obstacle to transfers of staff and skills within a sector of the public service. It seems reasonable to continue with this approach.”

Paragraph 5.27 reads:

“The key design features should be part of a UK-wide policy framework that extends to Scotland, Wales and Northern Ireland, with limited adaptations of other features to meet local circumstances.”

I agree with that but it would be hugely disruptive to try to break apart what has been a unified system up until now.

[Mr Weir]

How does the hon. Gentleman square that with the Minister’s accusation about the Scottish Government not making changes to the pension scheme?

[Iain Stewart]

As I said, in quoting from the Hutton report, local variations can be provided for, and that is exactly what my right hon. Friend the Minister said. There is no inconsistency at all.

Most public sector pension schemes—with the exception, I think, of the local government one—are pay-as-you-go schemes. There is not a separate fund, a pot of money or assets that are invested and then pay out. The current pensions are paid for from current receipts and underwritten more widely by the Government, with the expectation that tomorrow’s pensions will be paid for largely by tomorrow’s contributions. With fiscal autonomy or full separation, however, how would all that be disaggregated? It would lead to an enormous muddle over who was liable to pay for what and over who would be liable for the shortfall in future pension payments accrued under the current system? Were we to move down that road, I would wish to train as an actuary, because a lot of them would make a lot of money from disentangling everything. [Interruption.] Indeed, they earn a good money as it is. But they would earn even more.

[Stewart Hosie]

The hon. Gentleman cannot argue that these are in-year contributions and then make the case that there is a pension pot requiring actuarial rules. There is either a pot of money that is paid for and needs to be disaggregated, or there is not, but he has just said that there is not one because it is paid for in-year. Which is it?

[Iain Stewart]

That is not my point at all.

[David Mundell]

It is just a smoke screen.

[Iain Stewart]

Absolutely. It is just a smoke screen.

It would create an enormous muddle if we had to pull apart the pension contributions, and we have heard absolutely nothing from the Scottish nationalists about how they would do that.

[Gordon Banks]

Although there might not be a pension pot, there is a pot of responsibility.

[Iain Stewart]

I am sorry but I did not catch the hon. Gentleman’s point.

[Gordon Banks]

There is a pot of responsibility. There might not be a pension pot, but there is a pot of responsibility, and it is that responsibility for future pensions that the SNP would have to bear.

[Iain Stewart]

The hon. Gentleman makes a good point.

As well as the nightmare of disaggregating the fund, a range of dynamics would be set in train that would be difficult to forecast. I remember when the Scottish Executive set a pay increase for teachers that was more generous than that given to teachers in England—I think it was back in 2001. That resulted in a significant transfer of teachers wanting to work in Scottish schools because of the more beneficial terms. If we move from a unified pension scheme, we will set in train in those difficulties in accounting for who is responsible for paying what.

[Sheila Gilmore]

Will the hon. Gentleman give way?

[Iain Stewart]

If the hon. Lady will forgive me, I will not give way. I have been quite generous, and I want to bring my remarks to a conclusion shortly to allow as many other Members as possible to take part.

The other thing about which we have heard nothing from the Scottish nationalists is how they would pay for a more generous pension scheme in Scotland—if, as I assume, that is their intention. In the confines of a short speech, I shall not go into the whys and wherefores of the cost of separation from the United Kingdom; my point is that we should consider pension reforms in the context of the United Kingdom. There are passionate views on both sides about what that future should be, and I completely respect the views that many hold in arguing for a sustainable pension scheme for the future, which is what we all want.

The hon. Member for Central Ayrshire (Mr Donohoe) is not in his place now, but earlier he referred to his new grandson. I recall following him in a debate a few weeks ago in which he announced to the House the safe arrival of, I think, Rosie, his new granddaughter. It is those children—those being born now—for whom we should be looking to ensure we can afford a decent pension, whether in the private or public sector, when they reach retirement. I hope that we can come to a decent consensus and conclusion on pensions, but it is not helped when the Scottish nationalists raise a smokescreen and attempt to turn this into a constitutional point, in order to achieve their aim of separating Scotland from the rest of the United Kingdom. Breaking up that system would be a nightmare.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Before we proceed with the debate, I need to change the time limit again, because there are still more speakers left than time will allow for. I am reducing the limit to five minutes per contribution. Again, I cannot calculate the consequences of interventions. The time limit has gone from seven to five minutes because things are taking longer; therefore, it may be necessary to change it again, although I hope not. Members can either take less than five minutes or choose not to take any interventions. It is up to them.

15:02

[Graeme Morrice (Livingston) (Lab)]

Thank you, Madam Deputy Speaker. I shall try to take less than five minutes, which is predicated on my taking no interventions.

I welcome this afternoon’s debate, although I am somewhat surprised that the Scottish National party, whose Members have not given a speech yet, has chosen the topic of public pensions, given the very thin ice on which they find themselves with this issue. While 300,000 public sector workers and over 70% of the people of Scotland backed last week’s day of action, the SNP sided with the Tories and Lib Dems, and refused fully to support pensions justice. Not for the first time, the SNP’s warm words do not match up to its actions. Many are now asking: what is the difference between the SNP Administration in Holyrood and the coalition Government here? The SNP implements Tory cuts in public sector pensions, pay, jobs and public projects. Indeed, last week’s revelations about the submission to the Hutton inquiry from the Scottish Government’s Scottish Public Pensions Agency showed that the SNP is prepared to suggest even deeper cuts to pensions than those proposed by the Tory-led coalition. Perhaps the SNP Members here today can explain why their party in Scotland is doing the Tories’ dirty work for them.

Like, I am sure, those of numerous other Members, many of my constituents have contacted me to condemn the Government’s actions on public sector pensions. They have already had forced on them a change in the pension calculation from RPI to CPI, which Hutton says represents a 15% cut in pensions benefits.

[Dr Whiteford]

Why did the hon. Gentleman not vote against the move from RPI to CPI when he had the chance?

[Graeme Morrice]

What I am not supporting is this coalition Government’s position on public sector pensions, and I am certainly not supporting the SNP and Scottish Government input into the issue. When they had the opportunity, they went to the Scottish Public Pensions Agency and argued for a position that was even more draconian than that of the Tories and Lib Dems.

Many people face plans to increase contributions by an average of 3.2%, but, as we heard from several hon. Members, not a penny of the money raised will go into pension schemes. The constituents who contacted me are hard-working, public sector employees carrying out vital jobs. They have kept our public services going and have already made a major contribution to tackling the deficit. They have endured a pay freeze for two years and face an increase of only 1% when the freeze ends—in effect, another pay cut. They are not only angry about the Government’s proposals to make them pay more and work longer for less pension but are incensed at the insensitive and misleading way in which Ministers have dealt with this issue. Above all, they are fed up with hearing about “gold-plated public service pensions” and other misinformation about this complex issue.

The Hutton report clearly rejected the idea that public pensions are “gold-plated”. Figures from the National Association of Pension Funds show that the median salary-linked public sector pension currently paid out is worth £5,600 a year, compared with £5,860 in the private sector. Of course, there are many medium and low-paid workers in the private sector who have little or no pension provision, which is a serious problem, but that is not a reason for public service pensions to be attacked by this Government. The artificial divide that the Government have sought to foster, pitting public against private, is failing those at the heart of the debate—the millions of people who need a good pension on which to retire.

To conclude, it is time for the Government to come clean on this issue and drop the myths and misinformation about public service pensions that they have been peddling for months. Public service pensions were reformed by the previous Government and are both affordable and sustainable. The Pensions Policy Institute has estimated that existing pensions reforms have reduced the immediate cost of benefits by 12.5% and should result in savings of around £13 billion on the NHS, teachers’ and civil service schemes, spread over a 50-year period. The question now is whether the Government choose to negotiate a fair and reasonable deal or continue with their ideological drive to undermine public services, demoralise public service workers and destroy their pensions.

15:07

[Mr Mike Weir (Angus) (SNP)]

I congratulate the hon. Member for Livingston (Graeme Morrice), as it takes a special kind of brass neck to attack the SNP attitude to strikes when his own party leader condemned the strikes and the hon. Gentleman and his colleagues were quite happy to sit here and debate them on the day.

We in the SNP are committed to public sector pensions that are affordable, sustainable and fair, but we believe the coalition Government are wrong in their policy. It is blatantly unfair to increase public sector workers’ contributions to their pensions schemes at this time and in this way. Frankly, it is nothing more than a naked cash grab to reduce the deficit and it does nothing to address the sustainability of pensions over the longer term. It is especially wrong to impose an additional 3p tax on already hard-pressed households that are facing pay freezes—it will get worse over the next two years, as the 1% increase announced by the Chancellor last week is highly unlikely to keep pace with the rate of inflation—significant increases in national insurance contributions, higher VAT , rising inflation and rocketing costs for fuel and energy.

Indeed, it has been calculated that the impact of pay freezes and pay restraint over three years is costing public sector workers 15% of the value of their income, while the change from RPI to CPI, which I am glad my hon. Friends voted against, could worsen benefits by a similar amount. That is a dramatic reduction in living standards both for those working in the public sector and for pensioners.

Throughout this pensions debate, many Government supporters have consistently referred to gold-plated pensions in the public sector and, frankly, given the impression that anyone retiring from the public sector receives a substantial pension. That is utter rubbish: many public sector workers are in low-paid jobs and their pension entitlement is in line with what they earn and pay into the schemes, so the amount they get paid as pensions is correspondingly modest. Most public sector pension payments amount to less than £5,600 a year, and in local government the figure falls to £3,000, while 50% of women pensioners receive less than £4,000 a year, or £80 a week. That is hardly a fortune, especially in comparison with the grotesque amounts paid to the disgraced ex-bankers who caused the economic mess in the first place.

[Brandon Lewis (Great Yarmouth) (Con)]

Does the hon. Gentleman not think that there is at least some fairness in a system that puts several thousand pounds more into the pension pot of the lower-paid workers whom he mentioned, who will no longer pay for the largest pensions in the public sector under the new scheme?

[Mr Weir]

But the lower paid are being hit in every other way. They are being hit by higher VAT, the higher fuel price and everything else. Their living standards are falling.

Lord Hutton’s report also firmly rejected the claim that public sector pensions were gold-plated. It seems to me that the answer is not to attack public sector pensions, but to take action to try to help private sector pensioners. Unfortunately, however, previous attempts by Government to persuade people to opt out of state pensions, and the state second pension, into private pensions, and the mis-selling that went on, have undermined confidence in private pensions, especially among those on lower incomes. If the Government really want to do something about pensions, they should think about how they can encourage people in private occupations to save for their pensions.

For many years, we have been debating the future of pensions and how to encourage people to save more, but increasing contributions by such a large amount at a time when family budgets are under so much strain may well reduce the number of people who save for the future. There is a real chance that many will feel unable to make the larger contributions and will fall out of pension schemes, which could be a disaster for both the future of the schemes and the public purse. My hon. Friend the Member for Carmarthen East and Dinefwr (Jonathan Edwards) cited the results of an FBU survey, which suggested that 27% of people could fall out of their schemes. In his autumn statement, the Chancellor threw petrol on the flames of public sector discontent by casually introducing the idea of regional pay, which, if implemented, would have a serious impact on Scotland, Wales, Northern Ireland and the north of England.

[Ian Murray]

I have a tremendous amount of respect for the hon. Gentleman, but will he tell us what were the SNP’s proposals to the Hutton review, so that we can make an objective assessment of its position in relation to that of the coalition Government?

[Mr Weir]

I was about to deal with the position of the Scottish Government. They have taken positive action to help to protect household budgets by, for example, freezing council tax for the rest of the parliamentary term, increasing the Scottish living wage to £7.20 an hour for all staff for whom they are responsible, and committing themselves to imposing no compulsory redundancies. In contrast to the Westminster Government, the Scottish Government have sought to focus on protecting Scottish household budgets.

The amendment tabled by the Labour party referred to the devolved Administration. In Scotland—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The amendment was not selected. As the hon. Gentleman knows, he cannot refer to an amendment that has not been selected, and I am sure that he is not going to do so.

[Mr Weir]

Much of the debate has concerned public pensions in Scotland, Madam Deputy Speaker. I mentioned the amendment merely in passing, but I apologise for doing so.

There are five public sector schemes in Scotland—for NHS workers, teachers, the police, firefighters and local government—all of which are subject to constraints. Formal approval is required from the Treasury for legislative changes to the NHS and teachers’ schemes. It controls the purse strings. Scottish Ministers can determine the design of the police and firefighters’ schemes, although to date they have been negotiated on a UK-wide basis, a position supported by the Labour party. Scottish Ministers can decide on the funded local government scheme as long as the scheme regulations comply with primary legislation.

The Scottish Government sought to protect public sector workers in Scotland from the measures proposed by the UK Government, but the Chief Secretary to the Treasury made it absolutely clear that he would reduce the Scottish budget if they did so. In a letter to the Finance Secretary, John Swinney, on 5 September, he stated:

“If you decide not to take forward these changes, the Treasury will need to make corresponding adjustments to your budget. I would have to reduce the Scottish Government’s budget by £8.4million for every month's delay.”

The Scottish Public Pensions Agency issued a document putting forward options. Its contents were not Scottish Government policy, nor were they SNP policy, and at no time have the SNP and the Scottish Government made such suggestions. The document simply set out options and factual information. It is ludicrous for the two main parties to have a duopoly of despair and to attack the public sector based on the document—the SNP has done much more for public sector workers in Scotland than either of them has done in this Chamber.

15:15

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

It is an honour to follow that rant by the hon. Member for Angus (Mr Weir). I have great respect for him, and I never thought I would see the day when he would lose it, but there we go.

I had prepared a longer speech than I am able to make under the current time constraint, but I do want to make a few points. Thinking of the two Government parties reminds me that this is Christmas time, and as Scrooge is one of my favourite characters I am waiting for one of them to come up with a few statements such as that we should “reduce the surplus population” or, “Are there no workhouses?” That seems to be their policy on pensions and pensioners.

[Mike Crockart (Edinburgh West) (LD)]

Does the hon. Gentleman welcome the fact that 1 million pensioners in Scotland are now £5.30 a week better off because of this Government?

[John Robertson]

I thank the hon. Gentleman for the extra minute his intervention gives me.

I found it surprising that the nationalist parties wished to hold a debate on this issue as I could not remember their raising it in the past. In fact, so bad was my memory that I contacted the Commons Library to find out when a nationalist Member had last raised the issue. This was the response:

“Thank you for your enquiry which was passed to me by the Library’s Business and Transport Section. You asked for statements in the House by Scottish National Party and Plaid Cymru MPs on public sector pensions. Unfortunately, there were barely any mentions of public sector pensions so I have included references to pensions in general in case they are useful.”

The House of Commons Library staff could find only four examples of the SNP raising this subject, and those examples were far from “useful”. I felt relieved that I did not give the Library staff too much work to do.

The Library searched back to 2006 and found that the hon. Members for Na h-Eileanan an Iar (Mr MacNeil) and for Moray (Angus Robertson) have not made any references to pensions in the Chamber since then. When the Library staff asked if I wanted them to search back even further, I was worried they would have to call in an archaeologist. The hon. Member for Arfon (Hywel Williams) said in his opening speech that some parties’ Members did not raise this topic; I suggest he looks at his own house first.

[Jonathan Edwards]

The hon. Gentleman’s party has had 36 opportunities to raise the issue since the Government made their public pension proposals, so why has it not raised it for debate in the House?

[John Robertson]

I thank the hon. Gentleman for giving me a further minute, and I will now carry on with my speech.

The hon. Member for Aberconwy (Guto Bebb) has referred to my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) removing, when he was Chancellor, the £5 billion tax break to the insurance industry, which was worth more than £100 million at the time. However, the hon. Gentleman and his colleagues always let slip from their minds the actions of their Iron Lady. I have not seen the recent film on Margaret Thatcher, but I am reliably informed by someone who has that, sadly, it misses out how in 1980 she broke the link with final salaries, thereby hurting 10 million pensioners at the time and millions more since, and that that cost a minimum of £15 billion a year. That puts the £5 billion into perspective. I notice that the hon. Gentleman is no longer in his place; I think he left the Chamber about five seconds after finishing his speech. His train must have been leaving early.

Let me return to the question of why this is an important issue to me and my constituents. I have 13,500 pensioner households in my constituency. We have one of the highest concentrations of pensioners in Europe and the highest amount of single women pensioners in the entire country. About 6,500 claim pension credit in my constituency alone, which is consistently ranked seventh out of all parliamentary constituencies, so hon. Members can see why this subject is so important to me.

My home town of Glasgow is a fairly youthful city compared with others in Scotland. However it has a considerable and growing elderly population. We face large and severe pockets of pensioner poverty—my constituency is, sadly, not immune to that. In addition to the 8% of Scottish pensioners who live in absolute poverty, one in 10 over-65s are classed as “materially deprived”. When I was elected for my constituency in 2000, four out of five single pensioner households in Scotland lived on an annual income of £15,000 or less. So hon. Members can understand why I feel that we should not be heading for a race to the bottom on pensions. I want good pensions for those in both the private and public sectors.

I recall a debate in 2002 when the Minister for Universities and Science, complained that the then Labour Government were using misleading tactics. He must share my anger at the current Government’s misleading statistics on public sector pensions, for example, the constant use of enormous figures for overall pensions liability. There is a frequent tactic to cite figures as a proportion of a single year of GDP, ignoring the fact that payments on pensions are spread. To listen to the Government, we would think that these pension schemes are all in a ruinous state, but as of 31 March 2010, local government pensions in Scotland had a total of 226,554 active members making contributions, and 158,511 pensioners and dependants in receipt of payments. The local government scheme in Scotland has funds worth more than £20 billion, which is equivalent to a fifth of Scottish GDP. It could pay out all its pensions for the next 20 years without a single penny more in contributions—there is currently a £300 million surplus.

The reason I am standing up to speak today is that we have to stand up for the pensioners of the future. I believe, as I said in my speech in 2002, that all parties should put aside political points of view and stop their point scoring on pensions to make sure that they represent the people who really count. That offer was refused by those now on the Government Benches. I still make that offer, because I still think that we should all sit down to solve the pension problem as a group, not just as individuals.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I am going to have to change the time limit again if we are to get all the speakers in. I am going to reduce it to four minutes from the next speaker. I make the same point as I have made every time I have reduced the time limit, which is that interventions are not included in that calculation. If extra time is added for interventions, some Members will now not be called in this debate. I hope that is clear.

15:23

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

I strongly welcome the chance to debate this topic. I will focus very much on the Government, rather than on what the SNP Administration in Edinburgh are going to do, because the focus has to be on making sure that we have national schemes that ensure that everybody in this country has a decent pension. The negotiations are happening down here, but the historical reality has been that the Scottish schemes have simply led to a mirroring of whatever has been decided in the national discussions. So people in Scotland are looking closely at what the coalition Government are doing. It would be very unfortunate to do anything other than maximise the pressure on this Government at the moment.

When we have debates on this issue, Government Members all too often raise the appalling situation of private sector pensions in this country. We do need to treat that as a priority, because the loss of manufacturing, the rise of low-paid and insecure jobs in the private sector, and the decision by firms to take payment holidays and by employers to fail to invest in private pensions schemes when times were good have led to so many private schemes coming to an end. As we have already heard, however, on average public sector pensions in this country give people only up to about £5,600 a year. The reality is that those people will not be able to live on that kind of income in retirement.

I believe the debate we need to have is about how to set up schemes in both the private and public sector that ensure we are saving sufficiently both individually and collectively to ensure a decent income in retirement. I am therefore concerned that the Government are moving away from the decision on auto-enrolment, which will happen in May 2015 rather than April 2014. The Government’s proposals for public sector pensions mean that people will have to pay more with the 3.2% increase, will have to work longer and will get a worse pension at the end of it.

We have heard a lot about teachers from both the Minister and from the hon. Member for Aberconwy (Guto Bebb) and teachers are a good example. We hear so much about the deficit but this debate is not about that; it is about the long-term arrangements that must be put in place. The Government’s proposals are not about the sustainability of the schemes. We must ensure that both employers in the public sector and individuals are putting enough in. The proposals for teachers mean that compared with the current scheme, which costs 20.5% of pay with the employer paying 14.1% and the individual 6.2%, the employer’s contribution would be reduced to 10.5%. We are seeing that throughout the proposals put on the table by the Government.

The Government are using the economic situation to cut their contribution, as an employer, to public sector pensions while at the same time increasing the contributions of the worker. Many people will opt out of pension schemes if the proposals go ahead. Let us ensure that over the coming weeks we put pressure on the Government so that they seriously consider public sector pensions and make proposals that will lead to pensions that people can live on.

15:27

[Nia Griffith (Llanelli) (Lab)]

I want to pay tribute to all those public sector workers who work hard, often in gruelling and unglamorous tasks, day in, day out. Some are very highly qualified and have chosen to work in the public sector, passing up opportunities to work more lucratively in the private sector. Traditionally, the pay-off has been job security and pensions. Those who have perhaps not been so lucky as to get many qualifications are often in thankless tasks for which they get very modest pay—cleaners, refuse collectors and so on. They receive low wages and meagre pensions. The average public sector pension of £5,600 and the average for local authority workers of £3,000 are far from the gold-plated myth peddled by the Conservative party and its friends in the media.

Back in 2007-08, there were tough negotiations on public workers’ pension schemes, and I am sure that I was not the only Member who received correspondence, particularly from teachers. The then Labour Government entered into dialogue and negotiation, however, and unions played their part responsibly, accepting the need to make public sector pensions sustainable. Changes were agreed. The deal negotiated with the previous Government in 2007 made costs stable, and the National Audit Office described it in the following way:

“The 2007-08 changes are likely to reduce costs to taxpayers of the pension schemes by £67bn over 50 years, with costs stabilising at around 1% of…GDP or 2% of public expenditure. This”

is “a significant achievement”. Before this Government made any changes at all, public sector pensions had both been reformed and made affordable.

I turn now to the division between the private and public sectors, which is a disgraceful way to approach this topic. Frankly, we are all involved in both, whether through family members or people in our communities. John Hannett, the general secretary of the Union of Shop, Distributive and Allied Workers—a union that operates entirely in the private sector—says that it supports the strikes:

“We support our colleagues in the public sector in their fight for fair and decent pensions and to protect the services which our members rely on.”

We all know that the real scandal is in private sector pensions. Sometimes we are told that the costs or the recession have meant that nine tenths of final salary pension schemes in the private sector, once the most popular arrangement, are now closed. The fact is, however, that the employers have realised that they can get out of their obligations to society and their employees, leaving the taxpayer to pick up the costs of supporting people in retirement.

One of the biggest dangers is that more people will opt out of pension arrangements. There are three main risks associated with that. First, if people earning less than the average are asked to contribute about £80 a month, they will face a terrible choice of either feeding and clothing their children now or paying towards a pension for their retirement. That will leave many short of a pension when they retire.

Secondly, that leaves a huge problem for the state, because of what it will have to pick up. We will be sitting on a ticking time bomb. With private sector pensions going and public sector workers opting out, a huge number of people will be totally reliant on the state in their old age.

Thirdly—a problem for the present day—if people are not contributing now, there will soon be a cash crisis in those pension pots, which is something I do not think has been fully addressed. There will be a present-day shortfall in the money available for paying out to the people who have paid in to their pension schemes. Those are very real problems. Imposing a 3% increase on people in this undemocratic and devastating way is completely unacceptable. It needs a total rethink, and the sooner, the better.

15:30

[Mr Iain McKenzie (Inverclyde) (Lab)]

I think that we all agree that there is an economic crisis in the UK, but it was caused neither by excessive public spending nor by the “gold-plated” pensions and pay of public sector workers. It was caused by a recession triggered by the banking collapse of 2007. Employees in the public sector have been subject to pay freezes and continuous efficiency savings, and time and again they have risen to the challenge and accepted that they need to play their part in these difficult times. They now find the future quality of their retirement is at stake and their much-prized pensions, which are possibly one of the main attractions of a public sector career, will be greatly reduced.

The Government tell us that the average public sector worker will be better off following the change to their pension, but what they quote as average earnings is not what Opposition Members regard as average earnings. Many public sector workers in my constituency of Inverclyde earn nowhere near the average the Government quote and will not be better off with this change in their pension. The Government tell us that we must follow the lead taken on pensions by the private sector, but I believe that that would be a race to the bottom on pension provision.

The private sector visited its pensions long before the world-wide finical crisis hit. It took contribution holidays and savagely stripped employees of decent pensions while excluding new employees from joining final salary schemes. Indeed, I recall my predecessor, the late David Cairns, some time ago naming and shaming a major private sector employer in my constituency over its unacceptable cuts to its pension scheme.

[Pete Wishart]

We have just discovered that Labour Members are down to a one-line Whip, which means they will not vote on the motion. Surely they could put aside what they describe as their historic hostility to the SNP and do the right thing by public sector workers by supporting the motion. Why are they not backing it?

[Mr McKenzie]

I thank the hon. Gentleman and will now carry on.

We want to see not an equality of misery in pensions, but fairness. Public sector pensions are not gold-plated, but I accept that they require collaborative review. Instead, public sector workers are being told that they must work longer, pay more and expect less. Trade union leaders who called the strike action on 30 November were branded as militants by Government Ministers, and the Prime Minister described the day of action as a “damp squib”—hardly diplomacy, if they are indeed engaged in negotiations.

We again see the Government promote policies that are hurting but not working, and their plan to guide us out of these difficult times is clearly failing. For Scotland, this is a double whammy, with the SNP Government in Scotland in many ways excelling this Government in the failure league. We need to accept, as the Hutton report did, that public sector pensions are not gold-plated and that many public sector workers, especially women, will retire on an annual pension of around £5,600 a year.

[Mr David Hamilton (Midlothian) (Lab)]

Does my hon. Friend agree that many Labour Members are aghast at the SNP’s duplicity? On one hand the SNP is attacking the Opposition, and on the other hand it is putting forward proposals that are draconian, compared with what the Government have done. Indeed, it could do otherwise if it wanted.

[Mr McKenzie]

I agree. Public sector pensions are not gold-plated, and many, especially women, who work in the public sector will retire on an annual pension of some £5,600—a paltry £100 per week. They ask for fairness in their pensions now if they are not to ask for benefits in their retirement.

15:35

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

I just want to make a couple of brief statements, and I apologise for not being present for the opening speeches, but I was actually speaking at a conference on vulnerable workers.

I just ask the Government to let the negotiators negotiate. When the civil service unions attended the schemes’ talks this week, they were told what they can and cannot discuss. They cannot discuss pension age, despite the previous assurances that Ministers have given them. All schemes have to relate to the state pension age, so, even though some schemes may be able to afford a pension age of 65 years old, the Government are refusing to allow them even to negotiate it. The unions are also told that indexation is off the agenda, and that the index has to be CPI, not earnings, as Hutton recommended, or RPI, as currently.

The schemes have to be career-average. The civil service unions are not allowed to discuss contributions, which have to increase by 3.2% so that the average contribution is 5.6%. Costs always have to be within the scheme’s limit, but in addition the only transitional protection that they can discuss is 10 years for those aged 50, plus the three to four years of tapering for those just below that age. Even if the unions find savings, they cannot use them in another way for further protection. They cannot discuss Treasury assumptions about the discount rate, actuarial reductions for early retirement or any normal pension scheme issues. They are told also that they cannot discuss the abatement rules, which enable staff to take their accrued pension and work on. They can discuss the accrual rate, but that is all predetermined by the other elements not being open for negotiation.

So, what the civil service unions are allowed to discuss in the negotiations is nothing of substance, and in reality we face further industrial action because the Government will not allow negotiations to take place. The Government take an intimidatory attitude by putting things on the agenda and, if they do not get their way, then taking them off.

I echo what other Members have said about the contempt with which negotiators have been treated. I watched the discussion between the Minister for the Cabinet Office and Paymaster General and Mark Serwotka, the general secretary of the Public and Commercial Services Union, when the Minister accused him of not being at meetings. I now discover that Mark Serwotka was at every meeting that the Minister was at—matched on every occasion. If the Government are not deliberately provoking this dispute, they are walking into further industrial action because of their refusal to allow negotiations to take place.

I have toured around, talking to individual unions, and I have spoken to several union executives this week, but the depth of anger does not come from general secretaries or from executives; it comes from rank-and-file trade unionists, most of whom have never taken industrial action in their lives but all of whom are dedicated to the public service that they seek to provide.

So I just appeal to the Government: start negotiating properly; allow proper discussions to take place; seek to avoid industrial action; stop the abuse—the “damp squib” provocations that the Prime Minister has made; and start telling the truth about what people are going to get, because they are going to work longer, get less and pay more. If we look at the calculations that have been made using the Government’s own calculator, we find that no one will get more unless they work for many more years, and teachers and others do not want to work until they are 68 years old just to get some form of pension income that they can live off.

I urge the Government to get back to the negotiating table and to take their restrictions off the negotiations. They are dealing with people who are dedicated to public service, who are willing to settle and who do not want to seek further industrial action. I warn the Government that if they do not negotiate properly, there will inevitably be more disruption and more industrial action—and that the Government will be to blame for it.

15:39

[Sheila Gilmore (Edinburgh East) (Lab)]

I do not intend to repeat the statements about the importance of public sector pensions that have been made so eloquently by many of my colleagues.

I am surprised that SNP Members, who among others have called this debate, have apparently not wanted to speak in it, because only one has done so. However, some of the comments they have made in interventions need to be addressed. It is not true to say that Labour Members have not raised the subject of public sector pensions in this House. Perhaps SNP Members were not here on 30 November to hear what the Leader of the Opposition said at Prime Minister’s questions and were not here during the Opposition day debate that followed, when several Members from my party made very strong speeches in support of public sector workers and on the pensions issue.

Moreover, in this week’s Opposition day debate on the economy, only one SNP Member was present, for a short time—the hon. Member for the Western Isles (Mr MacNeil). I will not attempt to pronounce the Gaelic name for his constituency because, as a lowland Scot, Gaelic is not native to me, and I am not going to pretend that it is. That was the extent of their interest in debating the economy and the issues that are so important in underpinning this debate on pensions, because unless we get the economy right, we will be in some difficulty. Today, several SNP Members left the Chamber early, presumably to put out their press releases to say how they had raised this important issue, but in reality they have not.

In the motion, SNP Members condemn the coalition Government for not being prepared to give them the money directly so as to be able to relieve some, but by no means all, public sector workers in Scotland of the contribution increase. They cannot have their cake and eat it within the system. They cannot have the Barnett consequentials when they like them and decide that they do not want them when they do not like them. Yes, it would be different if they achieved independence, although at that point we would have to ask, “How are you going to afford all the things that you say you are going to afford?”

[David Mundell]

Is the hon. Lady as surprised as I am that we have not heard a single mention of independence from SNP Members? As I understood it, that was their solution to all the pension issues in Scotland.

[Sheila Gilmore]

I suspect that in the fantasy world of the debate on independence, as it tends to be, SNP Members would indeed say that that is the answer, but they have to know how they would fund that and about issues to do with tax and making people as well off as possible.

During the SNP Member’s brief appearance in Tuesday’s debate on the economy, he kept talking about the Scandinavian economies. Of course, in the Scandinavian economies there is a very different view of taxation. It is disingenuous of the SNP to want to pose as a low-tax party and tell people that they can have wonderful public services and, at the same time, council tax freezes—which, by the way, are very regressive because they most benefit the people who are best off. The SNP has to decide where it wants to be. It deliberately put such a sentiment in the motion because it wants to be able to say that Labour Members will not support it.

We are in support of public sector workers. We do not think that what the Government are doing is right. We feel, very strongly, that we have to stop what this Government are doing, which is constantly to pit one group of workers against others. They are setting public against private, setting people in work against people who are out of work, and stirring up what I heard described on two occasions on Radio 4 at the weekend as an atmosphere of anger and bitterness. In the discussions on phone-in programmes about what is happening, all the clips were of people shouting at each other, saying, “Why should I, as a private sector worker, pay for your pension?” No commentator said, “Where is that anger being generated from?”, but it is being deliberately stirred up by this Government—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I am sorry, but we have to start the wind-ups now.

15:44

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

This has been a wide-ranging debate and I think that there is agreement across the House that pension provision in the long term needs to be affordable, sustainable and fair, not just for public sector workers but for all old age pensioners.

Although we agree on those long-term objectives, the central contention of the debate has been that the short-term measures to reduce the deficit will hit public sector workers but be of no benefit to them. The issue at the heart of the debate is that the proposed 3.2% increase to public sector pension contributions is a straightforward cash grab by the Treasury on public sector workers. It has nothing to do with building long-term sustainability into our pensions system, but is unequivocally a short-term measure to cut the deficit.

Several hon. Members have pointed out that this is not fair and not affordable for a public sector work force who are already feeling the full effects of austerity measures that have gone too far, too fast. Most public sector workers are facing a two-year pay freeze, a 1% pay rise in 2013, increases in VAT and national insurance, and inflation of more than 5%. The cost of their essentials, such as heating, food and fuel, is going through the roof. The pressure on household budgets is intense and is getting worse.

In that context, increasing pension contributions for short-term gain is just the wrong thing to do. It is being done at the wrong time, for the wrong reasons and in the wrong way. It carries the risk that large numbers of people, especially part-time workers, will drop out of schemes altogether because of the immediate financial pressures that they face.

I think, and most Members on both sides of the House agree, that public sector pensions matter. They matter to the one in five people who are directly affected. They matter to the rest of us who depend on public services and who realise that our public service work force are critical to the delivery of high-quality services. Above all, they matter to all of us who care about the welfare of older people in retirement. All of us want to enjoy a decent level of income. For parts of the country that have a high dependency on the public sector work force, the issue is even more acute.

[David Mundell]

What I do not understand about the hon. Lady’s logic is that the Scottish National party has said that it wants to have a referendum on independence for Scotland in the next four years. The area on which that would most significantly impact is pensions and pensioners, yet in her contribution and in the contributions of her fellow SNP Members, we have heard nothing about independence or about how pensions would be provided, guaranteed or sustained in an independent Scotland.

[Dr Whiteford]

I refer the right hon. Gentleman to the Order Paper and the motion that we are debating. It will come as no surprise to anybody in the House that I believe in independence—I am an SNP Member. However, we are talking about public sector pensions and the Government’s proposals. It might be a nice distraction for the Government to talk about other issues that are equally relevant to Scotland’s future.

One of the most disappointing things about this debate has been that the Government have tried to defend their proposals by constantly highlighting the disparity between public and private sector pensions. We owe a debt to the hon. Member for North Ayrshire and Arran (Katy Clark) for pointing out the detrimental state of private sector pensions. When the Government responded to the interim Hutton report, my understanding was that they accepted its conclusion that pensions should not become a race to the bottom. However, speaker after speaker on the Government Benches has resorted to the argument that because private sector pensions are really poor, public sector pensions should be levelled down. That will not in any way address our pensions challenge. It is not sustainable and it is not fair to anyone in the private or public sector.

We have some of the highest levels of pensioner poverty in Europe. Currently, 30% of pensioner households and a massive 43% of single pensioners, most of whom are women, are in receipt of income-related benefits, whether that is pension credit, housing benefit or council tax benefit. Having large numbers of older people on means-tested benefits is not the way to do things. It is the price that we pay for poor pension provision. It is not an efficient way to support people in retirement.

The other big myth that has been well and truly blown out of the water today is that public sector pensions are gold-plated. Quite simply, they are not. Member after Member has pointed out that most public servants retire on modest incomes. The PCS points out that its average member’s pension is only £4,200 year. That is £80 a week, which is only £4 above the Government’s pensioner poverty figure. If such people’s pensions are reduced or they opt out because of the new conditions and contribution increases, it will simply put the burden back on means-tested benefits to keep people out of abject poverty in their old age.

In local government, in which 67% of the work force are women, the average woman’s pension is only £2,800 a year. Almost half of local government workers are on pensions of less than £3,000, and even in the NHS, in which salaries are much higher because of the professional qualifications involved, three quarters of members are still on pensions of less than £9,000 a year.

The Government have tried to sell us their proposals on the basis that low and middle-income earners will be protected from contribution increases, and may even be better off as a result. That is one of their key claims. However, because of the switch in indexing from RPI to CPI, all public sector workers will lose out in the longer term, and they will all be working longer. That indexing switch has been mentioned in the debate, and I am sorry that more Members did not vote against it when they had the chance to do so back in February. They have a chance to rectify that now, and I hope that they will support us in the Lobby today.

Perhaps the most misleading aspect of the Government’s approach to the contributions increases is that they have said there will be protection for low-paid workers. As the Minister admitted earlier, the contributions of part-time workers will be calculated on the basis of full-time equivalent salaries, which will have massive implications for women, who make up the vast majority of part-time workers. About 32% of the women in our work force work part-time so that they can combine employment with unpaid work in the home or looking after others.

The Government have said that workers on incomes under £15,000 will not pay increased contributions, and that other low earners on up to £21,000 will pay reduced contributions, but when we look at the small print, we see that those thresholds, calculated on the basis of full-time equivalent salaries rather than their actual take-home pay, will mean that even professional people such as nurses and teachers who work part-time will have their pension contributions increased.

[Mr Reid]

But in Scotland, the Scottish Government decide the pension contributions of teachers, health service workers, local government workers, the police and firemen. If the hon. Lady believes in her argument, does that mean that when the SNP implements the contribution increases in Scotland, it will make an exemption for low-paid part-time workers?

[Dr Whiteford]

I am grateful to the hon. Gentleman for allowing me to point out two things. The first is the Scottish Government’s living wage, which has been raised to £7.20. That will significantly protect the household income of low-paid workers. The second and more substantial is the role of the Scottish Government in the matter. There has been a lot of chat around the Chamber about the room for manoeuvre that the Scottish Government do or do not have. Let me make it clear that the Chief Secretary to the Treasury wrote to the Cabinet Secretary in Scotland, John Swinney, pointing out that the Treasury would cut the budget by £8.4 million a month—that is half a billion pounds over the spending review period—if the Scottish Government did not impose the pension increases.

[Mr David Hamilton]

Will the hon. Lady give way?

[Dr Whiteford]

Not at the moment.

The unions recognise that the Scottish Government have very limited room for manoeuvre. Their choice is very simple: they impose the increases or take the money out of another part of the budget, in other words pay twice. It is clear that even if the Scottish Government were to ignore the requirement and tried to find the money from somewhere else, the Government would cut that money from the budget.

[Mr Hamilton]

Will the hon. Lady give way?

[Dr Whiteford]

Not on that point.

I am grateful to the hon. Member for Hayes and Harlington (John McDonnell) for pointing out the approach that the Government have taken in the negotiations with the trade unions. It seems to me that they have used a similar approach with the Scottish Government, whose choice has been limited. They have been dictated to, and there has not been a basis for a sensible, grown-up negotiation.

Another point made in the debate has been about the Scottish Public Pensions Agency. The key point is that it was not recommendations that were put forward but a series of theoretical options. That was part of the process of the Hutton consultation, and it was quite proper for the Scottish Government to set out a range of theoretical positions. I am sorry that that has dominated the debate so much.

We all recognise the challenges of pension reform, but we want it to be done in a truly equitable way that does not encourage a race to the bottom. We have to acknowledge the progress that has already been made to put public sector pensions on a more sustainable footing and the mechanisms that already exist, but punishing public sector workers through a short-term tax grab will do absolutely nothing to tackle the inadequate pension provision in the private sector. It is nothing but a tax grab, and it is disappointing that the Government have relied so heavily on the arguments that we have heard today. In tough times, all people realise that they have to take a share of the pain, but public sector workers do not want to carry the can.

15:54

[The Parliamentary Under-Secretary of State for Wales (Mr David Jones)]

This has been a lively and at times impassioned debate—quite understandably, because the issue that we have been discussing is of the most extreme importance.

I should like to put a number of matters squarely on record at the very start of my remarks. First, I wish to make it absolutely clear that Government Members greatly value the services that the public sector performs, both in contributing to the economy of this country and in providing the services that each and every one of us needs. To suggest that we do not is grossly to misrepresent the case.

Secondly, I wish to object most strongly to the expression “gold-plated pensions”, which has been bandied about on the Opposition Benches. No one on the Government side of the Chamber is in any way suggesting that public sector workers enjoy gold-plated pensions—I have not heard that expression voiced by Government Members. Nevertheless, it was clearly a deliberate tactic on the part of Opposition Members to misrepresent the position by suggesting that Government Members regard the public sector as feather-bedded—we do not.

The fact of the matter, as one hon. Member mentioned some time ago, is that this time bomb has been ticking for a very long time indeed. The previous Government sought to address it but did so only partially. This Government are taking the difficult decisions that will be needed to put public sector pensions on to a sustainable footing for the years to come.

The hon. Member for Arfon (Hywel Williams), who opened the debate, suggested that it was positively Government policy for public sector workers to work longer, pay more and get less in return. The fact is that the Government’s proposals are aimed at ensuring that this generation and future generations of public sector workers receive pensions that properly reward their efforts after a lifetime’s work.

I echo the congratulations offered on the arrival of Jack and Rosie, the grandchildren of the hon. Member for Central Ayrshire (Mr Donohoe), but I should point out that they will benefit from the Government’s proposals. As the hon. Gentleman says, at the age of 70 they will require sustainable pensions, and they will thank this Government for taking the necessary decisions to put pensions on to a sustainable footing.

Lord Hutton’s analysis—many hon. Members said that they agreed with the general thrust of his report—shows that there are three drivers for reform, the first and most important of which is longevity. The average 60-year-old in this country will live 10 years longer than the average 60-year-old in the 1970s lived. Over the same period, the annual cost of public service pensions has increased by a third—it reached £32 billion last year. That simply must be addressed.

The second driver is flexibility, because public sector pension provision no longer reflects how the modern labour force work and live. The third driver is fairness, which is also important. The current schemes, which are predominantly final salary schemes, mean that lower-paid public sector workers effectively subsidise the pensions of the higher paid.

The reforms implemented by the previous Labour Government have not been sufficient to reverse the huge increase in the costs of public sector pension schemes as a consequence of increased longevity. The position is straightforward: either public service pensions are reformed, or our children and grandchildren—Jack and Rosie—will bear the cost of a virtually unsustainable financial benefit.

[Mr Bain]

The OBR fiscal sustainability report, which was published in July, makes it quite clear that public sector pensions are affordable. I refer the Minister to the chart that illustrates that the public sector pension share of gross domestic product will fall to 1.6% by 2060. Surely that does not tie up with his last remark.

[Mr Jones]

I refer the hon. Gentleman to the comments of Lord Hutton, who pointed out that his commission felt that there was a rationale for short-term cost savings in recognition of a substantial, unanticipated increase in longevity. In practice, these savings can be realised only by increasing member contributions. To suggest that it is impossible to address this problem in any way other than by increasing contributions is frankly fallacious and deceitful, and the Opposition know that.

The hon. Member for Arfon and others asked what negotiations were taking place. It is important to put it on the record that my right hon. Friend the Secretary of State for Health has met the NHS unions today, and my right hon. Friend the Minister for the Cabinet Office is also meeting the civil service unions later today. Negotiations are indeed proceeding apace, and to suggest that they are not—as the hon. Member for Hayes and Harlington (John McDonnell) did—is wrong.

The hon. Member for Angus (Mr Weir) claimed that 27% of workers will leave public sector pension schemes as a result of increased contributions. The Government have set out that those earning less than £15,000 will see no contribution increase whatever, and those earning less than £21,000 will see a maximum increase of 1.5 percentage points by 2014-15.

[Nia Griffith]

Does the Minister understand that that £15,000 limit is the full-time equivalent salary? If a person works fewer hours and earns only £8,000, but on a salary that full-time would come out as £16,000, they will pay increased contributions?

[Mr Jones]

Of course, that is indeed the case, as it was under the proposals that the Labour Government put forward. The fact of the matter is that it will not be the case that 27% will leave pension schemes. In fact, the independent Office—

[Mr Weir]

That is not what I said. I quoted a survey of FBU members which said that 27% may leave that scheme.

[Mr Jones]

I can do no better than refer the hon. Gentleman to the Office for Budget Responsibility, which indicated that 1% would opt out.

There is no doubt that this debate has raised passions, and that is understandable, but the Government’s aim is clear. We will do our best to ensure that public sector workers will continue to have access to pension schemes that are guaranteed, index-linked and inflation-proofed. In the current economic climate, there are many other workers who would be only too grateful to have a similar benefit. Most public sector workers will see no reduction in the pension that they receive, and some indeed will receive larger pension income on retirement than they would otherwise—

[Stewart Hosie]

claimed to move the closure (Standing Order No 36).

Question put forthwith, That the Question be now put.

Question agreed to.

Main Question accordingly put.

16:03

Division 410

Ayes: 11

---

Scottish National Party: 5
Labour: 3
Plaid Cymru: 2
Green Party: 1

Noes: 242

---

Conservative: 211
Liberal Democrat: 30

Local Government Ombudsman (Amendment) Bill (Money)

Thursday 8th December 2011 Commons Chamber

Queen’s recommendation signified.

16:16

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

I beg to move,

That, for the purposes of any Act resulting from the Local Government Ombudsman (Amendment) Bill, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the Act in the sums payable under any other Act out of money so provided.

Going back to yesterday’s debate, I appear to be the “accredited person” to move today’s motion. I see that my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) is not in his place today, but this is a private Member’s Bill moved by my hon. Friend the Member for Christchurch (Mr Chope), so this is a unique debate.

We are debating the motion because the Government are keen that the Bill in its amended state should move forward. The passing of a money resolution is an important step in that process. The costs to local authorities of implementing the new duties in the Bill—to give written notification of decisions and to review the decisions—are seen as a new head of expenditure to be met out of the grants that local authorities already receive from central Government. Similarly, any increase in the administrative costs of the local ombudsman service associated with the Bill will be seen as a new head of expenditure to be met from the grant that the ombudsman receives from central Government to fund the organisation. The motion refers to payments under other Acts being increased as a result of the Bill, because, technically, a new head of expenditure is a notional increase for the purposes of Commons financial procedure, even though it might not, in fact, give rise to an increase in expenditure.

Against that background, I pay tribute to my hon. Friend the Member for Christchurch for his work on the Bill. I thank him for working so constructively on the proposed amendments, which mean that I can confirm the Government’s intention to support it in its amended state. The Bill was last debated on 18 March. At that stage, the Government were unable to support it. However, it received its Second Reading and the amendments made since make it acceptable to the Government.

We think that the Bill will perform a valuable function. It is right that if a local authority decides to stop or impose restrictions of the kind referred to, the reasons should be set out in writing. There should also be an appeals mechanism if the decision is a negative one. The fast-tracking procedure is helpful. We think that the costs associated with the Bill are, in fact, negligible.

16:19

[Roberta Blackman-Woods (City of Durham) (Lab)]

I do not want to detain the House unduly. We do not wish to vote against the motion, although I should say that the Bill is being proposed at rather an interesting time. Both Houses of Parliament spent an enormous amount of time debating the Localism Bill, to which many amendments were tabled but were rejected by the Government on the grounds that they would impose additional burdens and costs on local authorities. It seems odd, to say the least, to find that the Government support a Bill that will definitely place additional responsibilities and costs on local authorities. I also believe that, in this age of localism, the Government are displaying some extraordinarily centralising tendencies, on which the Minister may or may not wish to comment.

[Robert Neill]

At risk of prolonging proceedings, may I say that the hon. Lady will understand that the Government can support the Bill because the amendments, effectively mean that a local authority will be obliged in stating its reasons to put in writing the product of a process that it must have gone through in any event? We are simply asking authorities to record and set out what they will already be doing as a matter of good governance, so the costs and burdens are rather negligible.

[Roberta Blackman-Woods]

Well, that remains to be seen. I do not think it is a good idea to legislate on the basis of chance and hope.

It is important, however, that the Bill proceeds to be debated properly in Committee. There are an enormous number of health and safety issues, and Opposition Members are concerned to ensure that citizens are adequately protected. We are also concerned to ensure that extra burdens are not placed on local authorities, especially at a time when they are the subject of such stringent cuts from central Government. We think that is a most unfair approach.

We will not oppose the motion. We want the Bill to go into Committee for thorough discussion, but I must make it clear that that does not mean that we support its provisions in any way.

16:22

[Mr Christopher Chope (Christchurch) (Con)]

I am sorry that this debate is limited to 45 minutes, but I am delighted that the Government have moved this motion and that they support the Bill. The Minister might have confused someone following our proceedings when he said that the amendments made the Bill acceptable to the Government. My hon. Friend is jumping the gun, because the Bill before us is as printed; it has not yet been the subject of any amendments. It will be for the Committee to decide whether the Bill should be amended. In due course, if it goes through Committee and comes back here on Report, it will be for the House to decide whether the Bill is in a form that it can accept.

It is unfortunate that there has been such a significant delay between Second Reading on 18 March—consideration was not completed on that date, but the Bill received a Second Reading in June—and the subsequent period, during which we have been waiting for the money resolution. Without a money resolution, a Public Bill Committee cannot consider a private Member’s Bill that requires such a resolution or even to get the issue before the Committee of Selection. A Committee to look at the Bill cannot be set up unless the Government deign to introduce a money resolution.

It used to be the custom and practice that a money resolution for a private Member’s Bill that had been given a Second Reading would, as night follows day, be introduced by the Government within a short period thereafter, enabling the House to proceed with the Bill by setting up a Committee for its detailed consideration. What is happening now, however, and has been happening throughout this long first Session of the current Parliament, is that the Government are using their power in relation to money resolutions effectively to curtail the private Member’s Bill process. There have been times when not a single private Member’s Bill has been in Committee, because the Government have been using the money resolution procedure as, in effect, a veto.

As you know, Mr Deputy Speaker, I am inherently supportive of my hon. Friend the Minister, and I do not want anything I am saying to be interpreted as being particularly critical of the Government. If they are indeed enthusiastic about the Bill, however, it is a pity that it will go into Committee, at best, shortly before the very last private Member’s day. It seems as though the Government are able to have the best of both worlds. They are able to say that they support the Bill, but by delaying the money resolution—although I accept that we are discussing it now—they are delaying its progress and implementation.

Today is something of a red letter day. This is my first private Member’s Bill that has secured a Second Reading, it is the first that will be given a money resolution—I am anticipating the House’s decision—and it will, I hope, be able to go into Committee. I am grateful to all my colleagues who have supported it. I am also encouraged by the fact that the Minister does not think that it will cost anything. He said in his speech that the motion was technical, and would not result in significant additional public expenditure. The whole purpose of the Bill is to reduce the burden of public expenditure and regulation on ordinary members of the public, and I should have been concerned if the resolution had been required in order to increase it significantly. I take the point made by the hon. Member for City of Durham (Roberta Blackman-Woods) in that regard.

I am delighted that we have at last been given the chance to adopt a money resolution, and I hope that the motion will be carried without the need for a Division. I look forward to working with Members in all parts of the House in due course to establish whether the Bill can be improved in Committee in a way that will satisfy my hon. Friend the Minister, but he must not anticipate matters and assume that it has already been amended, because it certainly has not been.

16:28

[Mr Clive Betts (Sheffield South East) (Lab)]

It is rather an unusual experience to hear the hon. Member for Christchurch (Mr Chope) support a private Member’s Bill in the Chamber. He generally has another function in life: to prevent new rules and regulation contained in private Members’ Bills from being inflicted on people.

I want to raise two issues. First, discussing a money resolution relating to a Bill giving new powers to a person who does not currently exist is a slightly strange experience. I understand that there is no local government ombudsman at present, which is a matter of concern to me. The other day I received a letter from the permanent secretary at the Department for Communities and Local Government, Sir Bob Kerslake—in response to a letter I sent to the Secretary of State—which provided the helpful explanation that the process for appointing an ombudsman had been halted because the Government were reconsidering the nature and focus of the post in the light of last July’s public services White Paper.

We have all experienced appointment procedures in which the candidate was not deemed suitable, there was disagreement about the candidate, or we reviewed what the candidate should be doing in the light of the appointment process itself. That appears to be the case in this instance, but the difficulty is that the interviews for the post were held in February. The Select Committee on Communities and Local Government was due to hold hearings to ratify the appointment, but it was only in November that the Government decided to terminate the process. That is nine months of dealing completely inadequately with an appointment to an extremely important position.

[Mr Chope]

The hon. Gentleman’s criticism of the Government rather mirrors mine of the delay in tabling the money resolution. In the light of his concern and interest, would he be willing to serve on the Public Bill Committee to look at the measure in more detail?

[Mr Betts]

I will come on to my concerns about the Bill in a second.

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. We are not here to discuss the Bill. We are just discussing the money resolution, which is rather narrow.

[Mr Betts]

Yes. I made my point about the ombudsman, because there are concerns about the delay to the service itself. Candidates have been waiting for nine months, and that is not an acceptable way of proceeding—I wanted to put that on the record.

I understand your strictures, Mr Deputy Speaker, about the money resolution and not discussing the Bill. However, I return to what the Minister said about not envisaging the measure costing anything to local authorities. There is potential for costs and the spending of extra money precisely because of the way in which the Bill is drafted and how it deals with the extension of powers relating to health and safety. It creates a relationship between the ombudsman and the local authority that is different from the relationship in any other matter that an ombudsman considers. On any other matter, the ombudsman can produce a report that an authority is bound to consider and tell the ombudsman what action it will take, but in this instance there is no requirement for the authority to act in line with the ombudsman’s recommendations.

As drafted, the Bill includes a clear right of redress for the ombudsman against local authorities, including the ability to compel them to pay compensation to event organisers for events that are unreasonably banned or restricted. That is where money comes in. The power that is granted in respect of that issue is different from the power in other issues with which the ombudsman deals. The power to spend the money does not rest with the local authority—it effectively rests with the ombudsman—so we are almost giving a blank cheque or an undetermined ability for the ombudsman to decide in any case how much the local authority should pay in compensation, with the cost to local council tax payers determined by an unelected official, rather than elected councillors.

That is a fundamental issue of public expenditure that the Bill, as drafted, opens up. The Minister may discuss amendments, but the promoter has said that the Bill has not been amended yet. As drafted, that is precisely what it would do, and I have serious concerns about it. The Minister cannot say that under the Bill as drafted there are no spending commitments, but he can say that there are potential spending commitments, which will be determined by unelected people. The counter-argument might be that, as the measure applies only to events that have been unreasonably banned there is a right for judicial review—in which case, why do we need the Bill? However, there is the potential for money to be spent.

[Mr Chope]

The hon. Gentleman will be reassured to learn that the amendments I have in mind will address his concerns about costs, and I hope that that is a consolation for him.

[Mr Betts]

I am more than happy to accept the hon. Gentleman’s assurance—perhaps that is what the Minister was alluding to. However, it is rather difficult to debate the Bill as drafted when there are amendments of which we are not aware that would alter its capacity to incur public expenditure. That is what we are addressing and, on that point, I shall conclude.

16:34

[Robert Neill]

I thank the Members who have contributed to the debate, and I wish to set their minds at rest.

I am grateful to my hon. Friend the Member for Christchurch (Mr Chope) for his comments. I am sure he agrees that he and officials from my Department have had a chance to hold constructive discussions in the time that has elapsed since the Bill was last before the House, and that he will therefore be able to propose amendments to which the Government will be happy to lend their support.

I also think the concerns of the hon. Member for Sheffield South East (Mr Betts) about costs will be allayed. Although I am always loth to correct the hon. Gentleman, who is Chair of the Communities and Local Government Committee, he will appreciate that the functions of the local government ombudsman, as we call that post, are legally carried out by the Commission for Local Administration in England, and while the post of chair of that commission is vacant, two commissioners are still in place, Dr Jane Martin and Ms Anne Seex, and Dr Martin is the acting chair of the commission so there is, effectively, a local government ombudsman in place and able to fulfil those functions.

Question put and agreed to.

Low Dose Naltrexone

Thursday 8th December 2011 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Angela Watkinson.)

16:38

[Nia Griffith (Llanelli) (Lab)]

First, I want to make it clear that this debate is not about fighting for a very new and expensive drug. Campaigns about drugs are often brought to the attention of Parliament because a patient is fighting to be allowed to have a new and expensive treatment on the NHS. Some of these new drugs are not just expensive because they are new; because of the complex processes required to make them, they will, in fact, often continue to be expensive to produce. Such situations raise dilemmas for decision makers about how access to such drugs can be funded.

This debate is about a very different problem: making an existing drug that is modestly priced available for the treatment of a wider range of conditions. Clinical trials are needed to get full approval for the drug under discussion, but I ask the Minister to consider whether there is any possible way in which it could be made more widely available.

Sometimes patients are faced with unacceptable options for treatment and find themselves researching possible new treatments. That is usually a road that leads to disappointment, but occasionally something useful is stumbled upon, such as low dose naltrexone, or LDN. The problem is that it is what is called an “orphan drug”, which means its patent has expired, so if someone does research on it, a generic manufacturer can subsequently steal the business.

I understand that naltrexone is proved safe in its normal mode of use, and now has a clinical history of 11 years of use in the UK with no problems reported and only minor side effects. LDN is also very low cost, and can be used to treat many conditions that are both chronic and often very expensive to treat with more conventional remedies. Sometimes those more conventional remedies have severe side effects, which then have to be treated with more expensive drugs.

The purpose of this debate is to ask how a drug such as LDN could be made available to patients who ask for it. The most desirable route would be via clinical trials leading to marketing authorisation and then official acceptance from the National Institute for Health and Clinical Excellence and the NHS. A much cheaper and more immediately practical route is to recognise that LDN is a safe choice for patients without many of the risks of drugs currently in use. Doctors could therefore be given official advice not to deny it to patients who want it or wish to acquire it from pharmacists who make it as a “special” at a fair price. There could also be a mechanism for protecting doctors and allowing patients choice. At present, doctors are in a difficult position. If they prescribe anything that is not on an official list, they leave themselves open to criticism, as well as to being sued and possibly losing their right to practise.

The third route is to get it listed as an over-the-counter drug, such as aspirin or paracetamol. I understand that it is considered safer than paracetamol which is sold over the counter, so this might be a reasonable option that would make prescription very easy.

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

I congratulate the hon. Member for Llanelli (Nia Griffith) on securing this debate. I am sure that, like me, she has a number of constituents who are benefiting from this drug—I refer particularly to members of the Purbeck and Wareham multiple sclerosis group. It is so frustrating that they cannot get hold of something, through the NHS or in some form that is easily accessible, given that it is definitely making a difference to their lives. I am sure that she would agree that there is a fear that they might not be able to get it one day. What do they do then?

[Nia Griffith]

The hon. Lady is quite right. These people fear that if they change from one GP to another, or if people are less sympathetic towards this drug—obviously this is something that people have to be convinced about—they may well not be able to get hold of it. Unless there is some form of authorisation and some form of making it an official drug that is more widely available, they do run the risk that she describes.

The problem is that many patients feel let down because what they see as perfectly good therapies, which are cheap but out of patent, are being withheld when patients want them. When doctors cannot refuse a patient’s choice, they can still deny it to them, because clearly the issue of their professional conduct is involved. If the NHS recommends another treatment, quite possibly one that costs thousands and has drug company support, it is often difficult to get the research done to prove the validity of a drug such as LDN.

Some 5,000 people in the UK with multiple sclerosis use LDN, and a few thousand more use it for other conditions, such as Crohn’s disease, cancers, fibromyalgia, autism and so on. Their GPs usually prefer not to sign NHS prescriptions for LDN—indeed, they may refuse to do so—but there are instances of GPs then charging patients for private prescriptions, explaining that they are worried that NHS prescribing guidelines would prohibit them from prescribing LDN and so they would end up in serious trouble if they did so. One GP in Glasgow who prescribes a lot of LDN was reported to the General Medical Council for doing so recently. My constituent Andrew Barnett has told me that his GP has said that his lawyers advised against it, so he writes my constituent a private prescription and charges him £8.50 a quarter for doing so. My constituent then also has to pay for the LDN itself, at a cost of £17.50 a month.

Some 100,000 people in the UK have MS, only 12% of whom use drugs offered by the NHS. Some of the drugs available are risky and very expensive, and there are questions about how effective they are. Yet some 5% of MS sufferers choose to use LDN, because they feel that it helps them and does not have the risks of some other treatments. LDN has proved to be safe in trials at very high doses, but it is unpromoted and hard to get. Because people are now making this choice, there must be a way to get this treatment legitimised on the NHS for patients who ask for it. However, we are told that without substantial trials that is not possible. It is very difficult to find a way to fund any such trials because the drug itself is already licensed and therefore drug companies would not be able to recoup the cost of funding the research by marketing the drug; there would be no money in it for them.

We live in an age where information, including real scientific papers and trials reports, is easily available. Patients who are really determined to make the most of their lives, despite terrible illnesses, and who have the wherewithal to look into the research do seek out information and solutions. We have been using LDN in the UK for some 11 years. Naltrexone has been trialled at high doses to treat heroin addiction and is known to be safe, so the only real thing missing is the marketing authorisation from the Medicines and Healthcare products Regulatory Agency—MHRA—for a formulation of low-dose naltrexone, perhaps in liquid or capsule form. A trial would add proof—or not—of its efficacy.

The cost of a trial is probably considerably lower than the cost of a high-tech drug, because the drug itself is so cheap. Estimates suggest that a single trial can be done with some £7 million, but that is just an estimate based on £1,000 per patient a year for the monitoring specialists, plus up to £3,000 a year per patient for LDN. There would be the costs of recruiting 500 to 800 patients and then something to cover the analysis of the results.

There are no systems available, however, for patients to translate their choice of therapy into a legitimate request, even when they vote with their feet in large numbers. Doctors do not see any danger in the choice except that they worry they might be denying people a more effective option, but, as patients have pointed out, if they need what is perceived to be a more effective option, they can take it alongside LDN anyhow.

My constituent Andrew Barnett, who is highly intelligent, scientifically minded and analytical, has made the assessment that LDN seems to have stopped his disease developing further. The constituents of the hon. Member for Mid Dorset and North Poole (Annette Brooke) have confirmed the same belief. My constituent regrets very much that he did not start using it earlier. If he had done so, perhaps some five years ago, he feels that he would still be working and contributing actively to the economy.

Doctors have to be able to say no to treatment choices for the sake of the patient, but when they have no reasons to deny an option, as is the case with LDN, that should not happen. We should try to ensure that we enable them to prescribe LDN. Doctors all tell us that without the trial, they do not have the confidence to prescribe, so patients face the potential loss of supply of prescriptions if they change doctor, quite apart from the cost of private prescriptions, which is hurtful for many patients who have been reduced to living on income support by sickness or disability.

So, the substance of the debate is about patient access to therapies that cannot get the trials they need for reasons such as not being patentable or the lack of profit in the therapy, especially when the therapy is known to be safe. LDN seems to be the most prominent, in that there are no sensible arguments to deny it to patients who want it and those patients report great satisfaction with it in most cases. It is frankly a disgrace that such options are denied to informed patients who ask for them on the NHS. It would save the NHS so much money to allow this. LDN can be supplied for as little as £17.50 a month, compared with some other expensive drugs, such as £60,000 for Copaxone, £15,000 for Avonex or £90,000 a year for another drug that was recently in the news.

The question is how we can get the trials and get people interested. Academics often rely on backing from pharmaceutical companies to put together their plans and proposals for a research project. It is very difficult to find academics who want to spend that time and energy if they do not know that they will get the backing. They could put in a lot of work without getting any funding for any proposal.

We must face up to the problem of what systems we have in place to provide licensing for drugs such as LDN. One doctor I have talked to, Dr Lawrence from Swansea, tells me that LDN not only seems to have acceptable uses for people with multiple sclerosis but, he feels, has enormous potential for the treatment of cancer. That would be a very worthwhile investigation, considering that we spend so much on looking for answers and on treating the various cancer diseases. Sanctioning the use of LDN would also allow doctors to collect clinical data that could be used to monitor and help prove the effectiveness of the drug.

Naltrexone is already an approved drug at higher doses and research and clinical trials have already shown its effectiveness at low doses to treat auto-immune diseases. Patients have difficulty in getting their GPs to write prescriptions and have to get the treatment privately, but it would be preferable for patients to work with their GPs so that their GPs can monitor them. GPs have had to seek legal advice to find out whether they should be prescribing it and lawyers have advised against it, putting them in a very difficult position.

Among the supporters of LDN are GPs, neurologists and oncologists who have seen patients’ diseases not get worse and there are cases where such specialists have supported its use for the patient and stated that in a written letter to the GP. Even then, the GP has felt unable to prescribe the drug for fear of being considered unprofessional.

Campaigners have worked with local health boards and PCTs to try to determine what knowledge there is about LDN and whether GP practices have heard of it or are using it. The responses came back negative. What can we do so that LDN is offered in addition to other drugs currently prescribed on the NHS? This is about patient choice. It would be nice to be able to make LDN available to patients on a much wider basis, but it is important that patients are monitored by their GPs when using any medication, so we do not simply want a free-for-all. We want the proper medical trials, proof and backing that is needed to show whether it is an effective drug, which will enable it to be made more widely available, but there is a real difficulty, despite the fact that the orphan drug could be a cheap option for the NHS, in funding the sort of research needed to trial it. I return to my initial request and ask the Minister whether there is any way he can make LDN more widely and easily available to patients.

16:50

[The Minister of State, Department of Health (Mr Simon Burns)]

I begin by congratulating the hon. Member for Llanelli (Nia Griffith) on securing the debate and hope that by the end of my comments, particularly the last section, she will feel that there is a mechanism and a way forward that she will find helpful. Like her, I am well aware of the interest in the subject from those who feel that LDN is a suitable treatment for a number of conditions, including multiple sclerosis, HIV and various cancers. I am grateful to her for the opportunity to clarify the Government’s position.

I will begin by talking about the process for licensing drugs in general. An unlicensed medicine is not necessarily illegal in the way an unlicensed driver is; it just means that the regulator has not yet been given the evidence it requires to support a routine place in the market. The Medicines and Healthcare products Regulatory Agency is responsible for the regulation of medicines used in the UK, which includes authorising applications for clinical trials and granting licences for medicines. MHRA gives licences for medicines only after evidence has been submitted to demonstrate the quality, safety and efficacy of the product for the conditions it is intended to treat. That system, whereby licences follow evidence, protects patients and means that there is always a robust, systematic and independent assessment of the safety and suitability of licensed medicines.

In the UK, naltrexone is currently only fully licensed in 50 mg tablet form. That dosage is used to help patients remain free from dependence on heroin, methadone and similar opiates and to help those who are dependent on alcohol, but the drug is not currently licensed at any dose for the treatment of the other conditions that the hon. Lady rightly mentioned, because the evidence necessary for a licence does not exist. However, naltrexone is being prescribed by some doctors in doses of up to 7 mg on an individual patient basis. This is referred to as low-dose naltrexone.

The reason MHRA has not looked into licensing LDN is that it has not received any application or evidence to support it, which means LDN is currently unlicensed. That does not mean that it is necessarily unsafe; it is just that a licence for its use in this country does not exist. The current position is that when a patient needs a medicine an appropriate licensed product should be used. If it is not available, doctors can prescribe a different licensed medicine if they think that it will do the job. If neither of those options is available, an unlicensed medicine may be considered. LDN currently falls into that last bracket. As it involves a significantly lower dose than the licensed form of naltrexone, and as it is untested, it is regarded as an unlicensed medicine.

Legislation supports clinicians when they want to prescribe an unlicensed medicine that they think is necessary to meet a patient’s particular needs. The MHRA checks that the medicine is being manufactured to the right standards, in a safe environment and with suitable materials. Any unlicensed product manufactured in the UK must be manufactured to the specification of the doctor, nurse, dentist or whichever professional prescribed it in the first place. The important point is that the use of an unlicensed medicine is the direct personal responsibility of the professional who prescribed it. They are aware that it is unlicensed, and they prescribe it with that knowledge. The position is reflected in professional guidance, including that of the General Medical Council.

Given that a licensed LDN product is not available in the UK, it can be supplied only as an unlicensed product either manufactured in the UK or imported from somewhere else. Most of the LDN used in this country is manufactured in the UK, but anyone who wants to import it must be authorised by the MHRA. In the UK, manufacturers produce a number of formulations, including LDN capsules, at strengths ranging from 1 mg to 6.5 mg, and these are produced under a “specials” licence.

The importation of any medicinal product not licensed in the UK must be in compliance with the Medicines for Human Use (Manufacturing, Wholesale Dealing and Miscellaneous Amendments) Regulations 2005, which provides for the import of products when a special clinical need exists for individual patients and when the regulatory authority has not objected to the import. Objections may be made on grounds of known safety or quality issues, or if an equivalent UK licensed product is available. In the case of LDN, there is no ban on the import of products of acceptable quality and safety, and I hope that those comments go some way to reassuring the hon. Lady on her point about the fears of some GPs who had been or were not prescribing the drug.

When medicines are unlicensed, such as LDN, the National Institute for Health and Clinical Excellence does not generally assess them, so it has not issued any guidance on the use of LDN in the NHS. When NICE guidance on a particular drug for a particular condition does not exist, it is for local primary care trusts in England to make funding decisions based on their own assessment of the available evidence. On behalf of their patients, doctors can, through an individual funding request, request treatments that are not usually funded, if they feel that there are exceptional clinical circumstances.

In this situation, a special panel that includes clinicians would carefully consider individual cases. They would use the latest available evidence and make a decision on the basis of a patient’s individual circumstances, but we recognise that there is demand from the NHS and from patients for better access to information about drug treatments, particularly when no licensed product is available, so we are keen to explore whether more can be done to support clinicians, NHS commissioners and patients in their own decision-making by giving them easier access to the best available information. That is why the Department of Health asked NICE to provide a service to support the NHS in deciding whether an unlicensed drug can be used to address an unmet need. Under our plans, NICE will commission expert assessments of the evidence that supports—or does not support—the use of unlicensed medicines, including in rarer conditions. That will help clinicians make decisions about effective treatments and address one of the access problems that patients face. As I said earlier, it is important that we preserve the integrity of the medicines licensing scheme, which is so vital to protecting patients. Any information provided will be designed to inform doctors’ decision making and patients’ choices, not to provide a simple yes or no recommendation.

The Medicines and Healthcare products Regulatory Agency is responsible for the enforcement of the advertising regulations—another important area with regard to this subject. There are also self-regulatory controls operated by the industry body—the Prescription Medicines Code of Practice Authority—and general controls on advertising operated by the Advertising Standards Authority. Regulations state that

“no person shall issue an advertisement relating to a relevant medicinal product which is a medicinal product in respect of which no marketing authorisation or traditional herbal registration is in force”.

The regulations apply to any person and are not specific to the pharmaceutical industry. This prohibition does not prevent independent patient charities from providing balanced and factual information about treatment options, including any that are not licensed. The MHRA has published guidance on its website. The MHRA would investigate any complaint about a breach of the legislation, but has not received any complaint about the advertising of low-dose naltrexone. Whether a charity or another third party was promoting a medicine or providing non-promotional information would be decided on the facts of any specific case.

The hon. Lady will no doubt appreciate that it is in everyone’s interest to see a booming medical research industry in the UK that is successful, is meeting its requirements, and is pushing forward our development and use of advanced medicines to help to bring relief to those suffering acute illnesses or long-term conditions and to help them to manage those conditions better.

[Annette Brooke]

The Minister is being very clear in his exposition. The question that my constituents continually ask is why the NHS is not in the least bit interested in a treatment that is so cheap, costing about 50p a day, and appears to defer care costs into the bargain. A constituent of mine has been with their consultant to see the prescribing committee of the local PCT, but we still do not have this drug on NHS prescription.

[Mr Burns]

I am grateful to the hon. Lady for raising that point on behalf of her constituents. The short answer is that it is simply because there have been no clinical trials to assess the drug in its low-dosage levels, and so the conditions of the NHS, under the ways in which we operate in the provision of drugs for patients, have not been fulfilled at this stage. If she will wait for a minute or two, I will get to the nub of the point made by the hon. Member for Llanelli about how we could move forward to seek to address that situation. I hope that the hon. Member for Mid Dorset and North Poole (Annette Brooke) will find the way forward helpful and positive.

The hon. Member for Llanelli will no doubt appreciate that it is in everyone’s interest to see a booming medical research industry in the UK, because that leads to real improvements in the lives of patients, their families and carers, and we are determined to support it. We demonstrated our commitment to health research by increasing spending in real terms up until 2015. In August, my right hon. Friends the Prime Minister and the Secretary of State for Health announced a record £800 million, five-year investment in a series of biomedical research centres and units, which will translate fundamental biomedical research into clinical research that benefits patients and the NHS.

The coalition Government are committed to the promotion and conduct of research as a core function of the health service. The Health and Social Care Bill, which is now passing through another place, will turn this into reality by placing appropriate powers and duties on my right hon. Friend the Secretary of State for Health, NHS organisations, Monitor, and local authorities. We will make sure that the systems and processes for commissioning by the NHS Commissioning Board and by clinical commissioning groups promote, support and fund clinical research. The Government will consult on amending the NHS constitution in order to support patients to have access to novel treatments and to be part of the development of wider patient benefits, so that there is a default assumption, with an ability to opt out; that data collected as part of NHS care can be used for approved research, with appropriate protection for patient confidentiality; and that patients are content to be approached about research studies for which they may be eligible to enable them to decide whether they want a discussion about consenting to be involved in a research study.

The clinical practice research datalink will be introduced by the MHRA in partnership with the National Institute for Health Research, building on the NIHR’s research capability programme. This £60 million investment will offer data services, including providing access to data for researchers, data matching and linkage services, and data validation, to support the clinical trial and observational study work of the life sciences research community.

The NIHR will launch an updated UK clinical trials gateway in spring 2012. That website will enable patients and the public to access information about clinical trials and will be a development of the test site launched in March 2011. To increase the number of patients who can benefit from being involved in trials via the gateway, the NIHR has also developed a free smartphone app, which is available for iPhone users and will shortly be available for Android users. It provides a practical and innovative way for patients to access information about clinical trials.

I will now turn to the question of clinical trials that the hon. Member for Llanelli raised and that the hon. Member for Mid Dorset and North Poole raised, by default, in her intervention. I think that this explanation may provide the hon. Member for Llanelli with the basis for making progress in her quest. Clinical trials are a fundamental part of the drug development process, as she accepts. Trials and health research more generally are funded by a range of groups in the UK, in particular by the NIHR, the Medical Research Council, medical research charities and industry. The NIHR welcomes high-quality funding applications for research into any aspect of human health, including the use of LDN. Such applications are subject to peer review and are judged in open competition, with awards being made on the basis of the scientific quality of the proposals. As she has suggested, a new clinical trial will be required to support a licence for the use of LDN.

The MHRA regulates clinical trials on medicines when they are carried out in the UK. That includes granting approval to conduct a clinical trial and ensuring, through inspection, that the highest possible standards are maintained. However, the MHRA does not initiate clinical trials. A clinical trial needs a sponsor. Sponsors have usually come from industry, the NHS or academia. The hon. Lady is seeking Government funding for a clinical trial to prove the efficacy and safety of LDN. I can tell her that funding is available and that university-based researchers can apply for it.

The efficacy and mechanism evaluation programme is funded by the Medical Research Council and managed by the NIHR. It funds evaluation of the clinical efficacy of treatments. If evidence from such evaluations is promising, larger-scale trials can follow. That is one of the purposes for which the NIHR funds the health technology assessment programme. That programme produces evidence on the effectiveness, cost and broader impact of treatments and other types of health care intervention. In the case of LDN, as with all other novel treatments, I cannot prejudge how successful that pathway of research might be, but I can tell the hon. Lady that a pathway does exist, as I have described.

In addition, the hon. Lady expressed concern about whether the systems in place make provision for patients to say what research they would like to happen. I can assure her that patients can make a suggestion for the efficacy and mechanism evaluation programme to consider. Topics prioritised for funding may be advertised, inviting researchers to submit proposals for clinical trials in those topical areas.

I am grateful to the hon. Lady for raising this subject and giving me the opportunity to explain the background to a matter of considerable interest to many people, not least some of her constituents and those of the hon. Member for Mid Dorset and North Poole. I hope the last part of my speech in particular, in which I have explained an existing avenue that they and others interested in LDN may wish to pursue, will be helpful to them.

[Nia Griffith]

May I take this opportunity to thank the Minister for his very full and helpful reply?

[Mr Burns]

And may I, in the spirit of Christmas, thank the hon. Lady very much for the way in which she presented her case? It was quite clear from listening to her speech that she rightly felt very strongly about the issue on behalf of not only her constituents but people up and down the country who need LDN and who, at the moment, are having to go through the procedures that she described.

Question put and agreed to.

17:10

House adjourned.

Petitions

Thursday 8th December 2011 Petitions

Thursday 8 December 2011

HMS Concord

Thursday 8th December 2011 Petitions

The Petition of William Leitch,

Declares that the Petitioner believes that it is a grievous injustice that the 1949 ship’s complement of HMS Concord were not recognised as a unit involved in the 1949 Yangtze campaign, due to what the Petitioner believes was a wrongful omission of important relevant documents relating to the role of HMS Concord between 28 and 31 July 1949, and declares that the Petitioner believes that those who served on HMS Concord between 28 and 31 July 1949 deserve justice, remedy and reparation.

The Petitioner therefore requests that the House of Commons sets up a Select Committee to conduct a comprehensive enquiry into the role of HMS Concord in the Yangtze campaign between 28 and 31 July 1949.

And the Petitioner remains, etc.—[Presented by Graeme Morrice.]

[P000987]

Proposed cuts to BBC Radio Merseyside

Thursday 8th December 2011 Petitions

The Petition of listeners to BBC Radio Merseyside,

Declares that the Petitioners oppose the 20% cut to BBC Radio Merseyside’s budget proposed by the BBC management; that the Petitioners note that BBC Radio Merseyside is the most listened to of the BBC’s 39 local radio stations outside of London with over 300,000 listeners who tune in for an average of 16.2 hours per week to popular programmes such as the Roger Phillips Show and the Billy Butler Show; further note that there are more staff at Radio 4 who work on the You and Yours programme than the whole of the current team of BBC Radio Merseyside; and that the Petitioners believe any efficiency savings should be fairly distributed, protecting local services and jobs where possible, in order to guarantee quality of programming which remains locally relevant and to preserve a service that is depended on by millions of listeners up and down the country, rather than maintaining the budgets of bigger channels and national radio stations.

The Petitioners therefore request that the House of Commons urges the Government to encourage the BBC to reconsider its cuts to BBC local radio.

And the Petitioners remain, etc.—[Presented by Luciana Berger, Official Report, 18 October 2011; Vol. 533, c. 869.]

[P000965]

Observations from the Secretary of State for Culture, Media and Sport:

The Government understand the important role BBC Radio Merseyside plays in the lives of its listeners. Its contribution to culture and life across the region to which it broadcasts is widely recognised.

The BBC is looking closely at what it does and how it should prioritise its resources in future. It is right that the BBC (like other parts of the public sector) should be expected to make savings. How best to achieve that, whilst securing the interests of viewers and listeners, is a matter for the BBC Trust. The BBC is operationally and editorially independent of Government under the terms of the BBC’s Charter and Agreement, and there is no provision for the Government to intervene in its day-to-day operations.

Delivering Quality First has been and will continue to be subject to extensive scrutiny by the BBC and the BBC Trust. The Government notes that the BBC’s proposals are subject to a full public consultation by the BBC Trust. This gives the public an opportunity to respond and put their views to the BBC. Details are available at http://consultations.external.bbc.co.uk/bbc/dqf/. The consultation closes on 21 December 2011.

Westminster Hall

Thursday 8th December 2011 Westminster Hall

Thursday 8 December 2011

[Mr Andrew Turner in the Chair]

backbench business

Thursday 8th December 2011 Westminster Hall

European Council

Thursday 8th December 2011 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Dunne.)

14:30

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

It is an unexpected pleasure to be opening this debate, and also that it is taking place at all. We should, of course, have a full-day’s debate in the main Chamber in advance of a summit of the importance of the European Council summit that is about to take place. Under the previous arrangements there would have been such a debate, but the Government somehow do not seem able to provide for one under the new arrangements. Nevertheless, it is a great honour for me to have been given the responsibility to set out what many of us feel should be addressed at the forthcoming summit.

There is no doubt that this is a momentous moment in the history of Europe, and you do not need to take my word for it, Mr Turner. Speaking in Toulon last Thursday, President Sarkozy of France said Europe must be “refounded”, and he is talking today about the crucial historic moment of this summit. I think he is upping the ante a bit, perhaps unnecessarily, because no treaty will be signed at the summit. The participants will merely be agreeing issues in principle, and there will be long and arduous negotiations about the treaty text before anything is signed. In her speech to the Bundestag last Friday, Chancellor Merkel of Germany said:

“We have started a new phase of European integration”,

so the idea that nothing much of importance is happening in Brussels except trying to save the euro is a distortion.

The leaders of France and Germany came together on Monday to hammer out their vision, not just of how to save the euro but of the future of Europe. There will be only one real issue on the agenda in Brussels tomorrow: the final desperate act of European integration—fiscal union. In other words, the issue will be the formation of economic government of the 17. According to President Sarkozy and Chancellor Merkel in their letter to Herman Van Rompuy, this will

“need a renewed contract between the Euro area Member States”.

The coalition agreement never envisaged confronting a major change to the EU treaties in this Parliament. The EU was meant to be off the agenda and, indeed, the leadership of the Conservative party deliberately downplayed the issue of Europe, both before the election and in the first part of this Parliament. The Government have, therefore, found themselves ill-prepared for this crisis.

Official rhetoric on the EU might have moved on a bit from the days of John Major, but the substance of policy remains remarkably similar. My right hon. Friend the Prime Minister now says that there should have been a referendum on the Maastricht treaty, but he has yet to criticise its substance. From today’s perspective, does anyone seriously doubt that John Major should have vetoed monetary union? Maastricht also established the principle of the two-speed EU, with its dangerously comforting opt-outs. Subsequent treaties, not least the Lisbon one, have proved that two-speed, multi-speed, or whatever you want to call it, means only one federalist direction for the EU, with the UK having less and less influence, since opportunities for veto have been given away more and more. As a result, at this summit the UK is presented with the unenviable dilemmas of the forthcoming decisions. Once again, the UK is reacting to an agenda set by other member states, and Ministers are left managing what can be described only as a retreat. To cite another of the Prime Minister’s phrases,

“we cannot go on like this.”

The Prime Minister has made it clear that

“the bottom line for us is always what is in the interest of the UK”,

and I agree, but what is the bottom line? In his article in The Times yesterday, the Prime Minister said that he was still committed to forging

“a new kind of Europe…a more competitive, dynamic and outward-looking Europe…a Europe that has the flexibility of a network, not the rigidity of a bloc. A Europe that looks beyond itself with its eyes to the horizon, and recognises that it must change fundamentally or fall behind. A Europe that cherishes its national identities as a source of strength.”

Well, amen to that. I do not think that a single member of the Conservative party would object to that, or indeed that a single person in the country could. But we have heard this before. It is an echo of the previous Prime Minister’s plea for a “global Europe”. Tony Blair spoke of a Europe that is “democratic”—one thing that the eurozone will not be—and John Major spoke of a Europe that recognises that

“the nation state is here to stay”.

These British visions of a different kind of EU have been proffered and offered to various EU summits down the decades, but they are not on the agenda of our fellow member states, or of the EU Commission and the other EU institutions. They never have been, and other member states are not spontaneously going to come round to our way of thinking. They are not interested in discussing those visions.

The Government say that they might veto the treaty changes discussed at the summit, unless the treaty has

“the right safeguards for Britain…around things like the importance of the single market and financial services”.

It is very important that the Prime Minister has put that on the record, but it gives the lie to the idea that it is unthinkable for the UK to refuse to accept the EU’s plans for fiscal union without making demands of our own. We are constantly being harangued by people, who say that if we are asking questions about the summit we must somehow want to wreck it, but the Prime Minister himself has offered the prospect of a veto, so they need to make that accusation to him as well, and of course that would be ridiculous. I commend the Prime Minister for making it clear that he will stick up for British interests.

There is no need to delay ratifying treaty changes unless other member states object to the reasonable demands that the UK Government should make. Then it will be our European partners holding up the summit, not the UK. The UK must hold out for the fundamental change in our relationship with the EU that fiscal union will make indispensable. The Prime Minister reminds us what this is really about. It is about competitiveness, jobs and the growth of our own economy in the short, medium and long term. And, I have to say, I commend the words of the Deputy Prime Minister, who warned of the dangers of a huge “club within a club.”

Yes, that is exactly the threat we are now facing. Our prosperity and competitiveness are already under constant attack from the burden of EU regulation, and the agency workers directive and the working time directive are typical of the costly and unnecessary regulations that destroy jobs. It is estimated that these two laws alone cost the UK economy £3.6 billion per year, and if we are not prepared to deal with that, we are not dealing with the problem we face. The British Chambers of Commerce calculate that the cost of additional EU regulation introduced between 1998 and 2010 is a staggering £60.75 billion. A recent Open Europe report entitled “Repatriating EU social policy: The best choice for jobs and growth?” has estimated that EU social law costs UK businesses and the public sector £8.6 billion per year.

This afternoon I wish to set out how the Government are asking us to believe two unbelievable things. The first is that a move towards fiscal union and even closer integration in the eurozone will not fundamentally alter the UK’s relationship with the EU, and the second is that the best time for the UK to negotiate to repatriate powers will be not now but in a few years’ time, after the changes in the eurozone have been made and by which time the eurozone crisis will supposedly have been settled. I will then set out what the UK must demand, and is entitled to demand, if fiscal union is to proceed, and finally I will explain why a referendum in the UK on the treaty changes will be desirable, necessary and probably inevitable.

First, fiscal union in the eurozone will utterly change the relationship with the EU, as it will fundamentally alter the nature of the EU itself. We will be linked by treaty to what will effectively be a new economic state, and we will be like a rowing boat dragged along in the slipstream of a supertanker. The EU will be dominated by a bloc of 17 euro countries with shared economic priorities and structures of government—that huge club within a club.

Social policy is just one area in which EU policy is operating contrary to the UK’s national interest. Let us not forget, too, the direct financial costs of EU membership: a net contribution of £7.6 billion by the UK this year, a sum similar to the aid budget and equivalent to around a quarter of our defence budget. Let us remember that all those pressures on the UK arise from our existing terms of membership. That is how the EU institutions operate against our interests. If they are doing that now, what will it be like in future?

The reality of what is happening in the EU was very well set out in The Spectator today by my right hon. Friend the Secretary of State for Northern Ireland. He rightly warns that the EU17 is planning to become

“a new and very powerful country which can dominate us”

through the existing treaty arrangements. The article continues:

“His concern is that a fiscally united eurozone will spend as a bloc, tax as a bloc — and, when it comes to European summits, vote as a bloc.”

As he is right to go on to say:

“It is wholly unacceptable to have a new bloc in which we would be permanently outvoted… if they want to go ahead and form their new country, we want to get the power to run our country back.”

Secondly, the Government are asking us to believe that we will have a better opportunity to discuss our fundamental concerns after the new EU treaty changes have been agreed and ratified, perhaps after another two or three years. Does anyone seriously believe that Germany and France would agree to that? What leverage would we have then? Why would they need to listen after we have already signed the new treaties? This is not only the best opportunity for us to renegotiate our terms of membership; it is likely to be the only one, short of taking unilateral action.

Let us, in passing, dispose of another myth. Unless all EU27 member states agree to those changes, there will be no fiscal union. Even a treaty of the 17 member states would need the support of all member states, or none of the EU institutions could be involved with the new proposed arrangement. That is why my right hon. Friend the Prime Minister was absolutely right when he stated in The Times earlier this week:

“These institutions belong to all EU states”.

We should not allow them to be hijacked by a wholly new organisation.

A treaty change through article 48 of the treaty on European Union—the internal treaty revision procedure—would still require ratification by the UK. Any agreement falling short of fiscal union that avoids treaty change, such as altering protocol 12, as proposed by Herman Van Rompuy in his report, “Towards a stronger economic Union” would still require the UK’s approval at the European Council. There is, therefore, no way we can be bypassed if we place our demands on the table.

Far from it not being the time to renegotiate bringing powers back, this is the moment when we have the most leverage. We cannot afford to settle for another limited opt-out, safeguard, or protocol. That would not be the fundamental change that the Prime Minister and so many others say they wish to see. Things would simply carry on, but under the new arrangements, they would be worse.

What should the Government do now? A recent report by the TaxPayers Alliance, “Terms of Endearment”, sets out a list of powers that it would be desirable to repatriate to achieve a satisfactory new relationship. They include business regulation, employment law, fisheries and agriculture, and immigration and taxation.

I also much admire the work being undertaken by the all-party group on European reform and the Fresh Start project, under the leadership of my hon. Friend the Member for South Northamptonshire (Andrea Leadsom). She is doing a great service for her country. That work certainly needs to be done, but as she acknowledges, it is detailed and complex, and it really would be unreasonable to embroil the EU machinery in such a breadth of contentious issues and in such legal complexity at this time. Attempts at this summit to nibble at certain powers are bound to be disappointing, as opt-outs and protocols have so often been circumvented by the European Commission and the European Court of Justice in the end.

There is an emerging consensus among many Members of Parliament and elsewhere that we need a more straightforward solution. Some of us in the Fresh Start group agreed a mission statement earlier this year to help guide our work. It said:

“UK citizens want co-operation and free commerce with our EU partners, but a majority believes that too much power has been transferred to the EU without their consent; in areas ranging from policing to employment law, from Health and safety to immigration, our citizens want control over their own destiny. The euro-zone crisis has created an opportunity for a new relationship with our EU partners, in which the UK can take more decisions and Brussels fewer; this would be in line with the basic principle that the authority to pass laws should be democratically accountable to those who are affected by them”.

That is relatively uncontentious; I do not see how anyone can object to that manifesto.

At this summit, or later, in the light of what we will learn about the detail of Germany’s intention for the euro 17, the UK should seek agreement in principle that the UK Parliament, and not the EU institutions, decide what laws apply in our own country, and how they should be interpreted and enforced. That would, in effect, be the UK nationalisation of the EU acquis communautaire. There would be no instant annulment of EU directives or regulations. It would be a matter for renegotiation with the EU on a case-by-case basis over time, and the same would apply to new proposals such as the ludicrous financial transactions tax. That would enable us to establish a new relationship with our EU partners on a fundamentally different basis, while remaining in the customs union, which is the founding element of the single market.

The Prime Minister can say, perfectly reasonably, that he has done his best to co-operate with our EU partners in the crisis but that he must take Parliament and the British people with him. He can say that fiscal union is too big a change in our relationship to countenance without a referendum in the UK, but that he should offer to put this new relationship to the British people, and on that basis he would campaign for a “yes” vote. I would vote for that and I would campaign for a “yes” vote, so we can stay in the EU on that new basis. There is absolutely no reason why that proposal should delay this summit. If the other states wanted to do so, it would be up to them, as I have said. That would allow Westminster politicians to fulfil the promises that we have made so often and broken, to give the people the right to decide the destiny of our nation.

As the Prime Minister has said:

“It is wrong that we did not have a referendum on Maastricht, Lisbon and those other treaties.”—[Official Report, 24 October 2011; Vol. 534, c. 33.]

The changes being proposed in this treaty are Maastricht-plus. Refusing to hold a referendum in such a situation will not stand. The Prime Minister told us:

“Future treaty change will bring opportunities for Britain. The country wants us to stay in Europe, but to retrieve some powers.”

Now, we want that opportunity. We may not have another chance like this. This is the time to renegotiate our relationship with the European Union. It is the catalyst that might bring about the reform of the EU. If not now, when?

14:38

[Mr Edward Leigh (Gainsborough) (Con)]

It is a pleasure to serve under your chairmanship, Mr Turner. We are all grateful to my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) for the way he has introduced the debate. I do not intend to weary the Chamber with his level of forensic detail. He has made the case, and I subscribe entirely to what he said.

I want to talk about the broad picture, in historical terms, because I think we lose track of history. We are on the cusp of a truly momentous moment in our country, which could reorder our entire relationship with history. I regret that economics is now considered to be the only science that politicians of note should understand, because history is just as important. The fact is that for 300 years this country had one historical imperative, and that historical imperative is born of the fact that we are a maritime and a trading nation. We have strained every sinew and have fought momentous wars to ensure that there is no conglomeration of power on the continent that could either exclude us from continental markets or have an effect on our trade, particularly our maritime trade.

It is a shame that, in our schools—I know quite a lot about education, because I follow what my children are learning—little knowledge is bred into our children about our own history. There is far too much emphasis on 20th century history and Hitler and Stalin, but our history is far longer than that. Virtually everything that we have undertaken for these 400 years has been to ensure that we retain our independence as a trading and maritime nation. In the 16th century, we were prepared to go to war against Spain because they were affecting our trade. We also did so in the 17th century with the Dutch; in the 18th and early 19th centuries with the French; and in the 20th century with the Germans. All along, I believe that, although we have stood on great principles—that is certainly true of 1914 and 1939—our prime motivation has been to retain our independence.

What we are seeing now is a truly frightening conglomeration of power on the continent. If the German Chancellor and the French President succeed in creating fiscal and monetary union tomorrow, we will voluntarily exclude ourselves. Do not think for a moment that this conglomeration of power would not have a decisive and dramatic effect on us. The United Kingdom accounts for 36% of the European Union’s wholesale finance industry and a 61% share of the EU’s net exports of international transactions in financial services. However, under new voting rules that will come into force in 2014, it will possess only 12% of the votes in the Council of Ministers, and 10% of the votes in the European Parliament. In contrast, France accounts for 20% of the EU’s market in agriculture, but enjoys a veto over the EU’s long-term budget and therefore retains substantial control over the sizeable EU subsidies received by its farmers. An express train is coming in the direction of the City of London.

[Martin Horwood (Cheltenham) (LD)]

On that basis, would the hon. Gentleman support a massive increase in Greece’s voting power over maritime matters, since it is a massive contributor to the European maritime economy?

[Mr Leigh]

To be frank, I do not think that that is a serious point. Everybody knows that the hon. Gentleman is trying to tilt at windmills. Things are getting worse, because the United Kingdom’s level of influence on new financial rules has decreased. Regulation is now geared less towards financial services growth, and more towards curtailing the financial market economy. The perception in many continental capitals—there may be a reason for this—is that the so-called Anglo Saxon light-touch capitalism needs to be reined in. In the past, EU politicians and policy makers generally, but not always, felt constrained from imposing financial regulation on the UK, but that has now ceased to be the case. I agree that United Kingdom regulation has moved from the light-touch concept, but its new focus on regulatory judgment looks set to clash with the prevailing rules-based culture at the EU. In addition, the eurozone crisis is increasingly likely to create exceptional needs and political incentives for the euro countries to act in the interests of their own eurozone of 10.

I believe that all those reasons—the new emphasis on qualified majority voting, our inability to use our veto in this marketplace, and the increasing tendency of the European Union to want to interfere in the financial marketplace—are as big a threat to the main motivator of our economy as anything that we have seen in history. What do we do about it? I think that this is a decisive moment for the Prime Minister. He has to say in the conference that he is not prepared to sign any treaty unless he receives cast-iron guarantees that our financial sector will be set free from interference. If he does not get such cast-iron guarantees, I believe that he must be prepared to veto any treaty. If he is then told that the 10 will go ahead and create their own treaty, he must declare that illegal. Although that may sound like a very dramatic thing to do, I have read in today’s papers that German commentators are already talking about even the threat of our Prime Minister standing up for British national interests as being “obnoxious,” but that is precisely what all European countries do. The first lesson of history, as I have said, is the overwhelming imperative on behalf of successive British Governments over the centuries to protect our commercial interests. The second lesson of history is that all Governments in Europe act in their own financial interest—all are determined by their own history.

We need not say much about recent German history, but we know that there is an imperative throughout German history to extend their marketplaces, particularly into the east in the Balkans. We know that there is an imperative on behalf of French Governments to hug Germany close, so the French President and German Chancellor will be acting entirely in their own national interest, which is what we demand of our Prime Minister.

I hope I will be forgiven for saying this, but we have had enough of spin and of reading about British Prime Ministers who, over the past 20 or 30 years, have said in the days preceding a summit that they will stand up for British national interests and ensure that they are protected, only to come back with a Chamberlain-esque piece of paper, saying, “I have negotiated very hard, got an opt-out from this and that, and succeeded in standing up for British interests,” when such guarantees are not worth the piece of paper they are written on. I suspect that agreements have already been made among the sherpas and the miners, and that our Prime Minister will be offered something, but that will not be enough unless it includes cast-iron guarantees that we can all accept and that protect our vital national interests, particularly those in relation to our financial sector.

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

Does the hon. Gentleman agree that it is not in our national interest that the Government are deeply divided on the issue, and that the Prime Minister is therefore weak and isolated in the European Union and less able to negotiate the sorts of things demanded by the hon. Gentleman?

[Mr Leigh]

What is in our national interest—we see it in this Chamber today—is that patriotic Members of Parliament are prepared to speak up for the vital national interest. By speaking out this afternoon, we are actually supporting the Prime Minister in his negotiating stance, because I believe that we stand for what the British people want.

[Kate Hoey (Vauxhall) (Lab)]

I would like it to be put on the record that, while not many Opposition Members are present, many of them, as well as many Labour party members and millions of Labour party supporters throughout the country, want to see our Prime Minister standing up for this country and making sure that we get some of those powers back. The most important thing that the country wants, however, is a referendum on the whole question of Europe.

[Mr Leigh]

I am very grateful to the hon. Lady for that intervention. Her courage, independence and intellect are widely admired throughout Parliament, because hers is a voice that stands up for reason and for democracy. I reiterate what the Secretaries of State for Northern Ireland and for Work and Pensions and many of us have said this week. The creation of true fiscal and monetary union throughout much of Europe, with the ability to compel nation states to, in effect, subscribe to particular levels of debt and taxation, is such a fundamental shift of power, that it would be a dereliction of duty, legalism in its worst form and slippery tactics, to say that that does not demand a referendum. We are talking about such a fundamental shift in our relationship with Europe that it would be an appalling attack on the good name of politicians and politics in general if, once again, we were to use mere legalism to say that a referendum is not needed.

I finish by joining my hon. Friend the Member for Harwich and North Essex and agreeing with what he said when opening the debate. An increasing groundswell of opinion in this country says that we want a renegotiation of our relationship with Europe. We want to concentrate on our traditional strength of having the free trade of goods and people with Europe, which, by the way, is not at risk. It is a complete myth that somehow we will lose that when Europe has a massive balance of trade surplus with us. We want a renegotiation and, having achieved that, let us put the decision to the British people and move forward.

15:00

[Kelvin Hopkins (Luton North) (Lab)]

First, may I apologise for arriving slightly late for the introductory speech? I congratulate the hon. Member for Harwich and North Essex (Mr Jenkin) on initiating a very important debate at this historic moment. It is important that Government Members and, indeed, the people of this country know that some of us on the left take a strongly critical view of the European Union and what it is doing at the moment, both in democratic terms and on economic grounds. I will not speak for long because many others want to contribute.

As powers have been transferred to the European Union, we have had a consistent erosion of democracy. Within the European Union itself, real power is not with the European Parliament, although it can make a lot of noise; real power is with the Commission. The Commission is a completely undemocratic body run in a secretive way by the Eurocrats who want to govern our lives bureaucratically, rather than democratically. We have already seen the beginnings of bureaucratic government in Greece and, indeed, in Italy. At some point, the people of those countries will react against that, particularly when they have increasing austerity and unemployment rammed down their throats.

I am concerned about how the economy is being run at the moment. The view is expressed in the media and by our politicians and some of our leaders that somehow dismantling the euro would be a total disaster and that we must do everything that we can to save it. That is not true. Some people who occasionally write in our journals say that dismantling the euro would not be that damaging. In fact, we need a controlled deconstruction of the euro for those countries that clearly cannot sustain their membership because their real exchange rate is way out of line with that of Germany and others. We must create a situation whereby those countries can recreate their own currencies, find an appropriate parity and start to reflate their economies behind those currency barriers.

I think that everyone now accepts that Greece will leave the euro at some point, and when that happens, it will re-establish the drachma. Greece will devalue substantially—30% or 50%—and all of a sudden, it will become the cheapest place in Europe to have a holiday. Everyone will go to Greece for their holidays and the Greek economy will recover, as it will do in so many other ways. Greece will not be able to buy as many BMWs and Mercedes from Germany, but it will start to regenerate its internal economy and its people will start to live a decent life again. Other countries that are much bigger than Greece are in a similar position, and so others will need to follow.

I do not agree with the idea that such an approach would be disastrous for us all. If those countries can get out of the euro, re-establish and start reflating their economies, their economies will start to grow. If we insist on their staying in the euro and having increasing austerity, that will mean more unemployment and a fall in demand, and the whole economy of the European Union will start to go into a deep black hole.

I have said this many times: the idea that being critical of the European Union or wanting to re-establish a national currency is being anti-European is nonsense. I see myself as a passionate European. I am European by history and by virtue of where I live. I love everything about Europe. I love the music, the culture, the languages and the people. I also stand shoulder to shoulder with working-class people in Europe. As a socialist, people would expect me to do that. Working-class people will not benefit from the continuation of this stupid system of a single currency. They will benefit only when their countries can re-establish some independence and start to reflate their economies.

Many millions of working people in those countries feel that their leaders have left them behind. Indeed, during the past two weeks, I spent several days in Copenhagen last week and two days in Brussels this week. I have heard people bemoaning the fact that they are drifting away from their politicians and that there is a gulf between the political class and the people. If people in many of those countries were asked what they want, they would probably say that their views are similar to ours.

The Eurobarometer shows that there is increasing Euroscepticism across the European Union. We are run by a bureaucratic elite who want unity at all costs on their terms and who are leaving behind their own people. We must avoid that. At least we have a more serious Eurosceptic voice in Britain from hon. Members on both sides of the Chamber and, indeed, among our electorate. I hope very much that our leaders will recognise that and start to suggest that we should have separate currencies and go back to a world where we perhaps even have pegged currencies at appropriate parities. Each country should be able to manage its own affairs with its own interest rates, its own fiscal policy and its own parity with other currencies. That is the world that worked in the post-war period, and it has been destroyed by those who want to create a country called Europe—or part of Europe, at least.

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

To reinforce that point, the hon. Gentleman may want to reflect on the fact that, since 1945, there have been around 80 situations in which countries have left currency unions. In the vast majority of cases, those countries benefited from that devaluation. It is an economic fact that devaluation allows greater competitiveness, and the austerity packages in Italy and Greece would therefore not need to be so severe.

[Kelvin Hopkins]

I thank the hon. Gentleman for his intervention. Indeed, he is absolutely right, and the Soviet Union is the best example. Many currencies were created after the break-up of the Soviet Union. When Slovakia broke away from the Czech Republic, it created a currency and that was not a problem. I am sure that both economies—certainly Slovakia’s—benefited from that.

From time to time, we have had to adjust the parity of our currency in relation to other currencies. That has been necessary and beneficial. The Bretton Woods settlement made provision for that in 1944; in fact, Bretton Woods wanted to go further. Keynes and others suggest that some countries ought to be required to revalue if they have a very large trade surplus, as indeed one major country in Europe has with the rest of Europe at the moment. Such countries ought to be required to get some balance within the international economy.

[George Eustice (Camborne and Redruth) (Con)]

I congratulate the hon. Gentleman on all the work that he has done over the years to keep Britain out of the euro. Does he agree that a big advantage to a country having its own currency is the ability to act and make decisions? Britain’s experience during the past 10 years has shown that the ability to act is far more important than having a seat at a table where people squabble and cannot agree.

[Kelvin Hopkins]

The essence of democracy must be elected Governments in nation states. Internationalism is not about getting rid of national Governments and international boundaries; it is about working in close co-operation with other countries. We can continue to be internationalist, while retaining our economic independence. That is the way forward.

I shall finish on this note. Things are changing. John Rentoul is a journalist who supported the European idea through decades. Two weeks ago, he wrote in The Independent on Sunday that he has to admit that Peter Shore and Bryan Gould were right to say that the euro would not work. I was friendly with both those great people, and when Bryan Gould was around, I was friendly with him, too. That is a sign that things are changing and that even those who have been what some people unkindly call Eurofanatics are changing their views.

15:08

[Andrea Leadsom (South Northamptonshire) (Con)]

I am delighted to follow the hon. Member for Luton North (Kelvin Hopkins) and to find myself agreeing with him yet again—we also agree on high-speed rail. I am also grateful to my hon. Friend the Member for Gainsborough (Mr Leigh) for his history lesson. I confess that I am one of those economists who tends to look at things from an economic perspective, rather than an historical one.

What concerns me about the latest proposals for eurozone crisis prevention measures is that they simply will not work. It boils down to the fact that what makes the difference between sovereign risk and credit risk is the undoubtedness of sovereign debt, backed by a lender of last resort. In the end, if a country is a sovereign risk, its lender of last resort can print money, its currency can devalue and it can get out of its difficulties that way. The eurozone has as yet failed to address that fundamental issue, and the measures that it now proposes mean nothing more than ever-greater fiscal integration, but without the ability to issue proper sovereign debt. Market chaos will therefore not cease for longer than the short term.

[Mr Jenkin]

Does my hon. Friend share my concern that, even if the European Central Bank was turned into a fully fledged sovereign central bank and printed unlimited sums, it might provide liquidity and buy some space for a while, but the fundamental structural problems between the different economies stuck in the eurozone would not be addressed? Austerity packages would still need to be applied, but the EU’s institutions do not have the democratic legitimacy to impose austerity on countries in that way.

[Andrea Leadsom]

Yes, I agree. The key issue is that if these countries are to have sovereign risk, they must completely guarantee and underwrite each other’s debt and obligations. That is very unlikely ever to be achieved in the EU, which just makes the problem of not having a lender of last resort even more existential for the eurozone. I therefore have genuine concerns about whether the proposals actually offer a solution.

Here we are on the eve of a very important summit, which is designed, on the face of it at least, to put the market’s fears to bed once and for all. The Prime Minister has a strong hand, because the German Chancellor and the French President need a treaty at the 27 member state level, for two practical reasons. First, if they started again, with just the 17 eurozone members trying to create a treaty between themselves, they simply could not do that in the time frame that the markets would permit them. That is a very practical issue, which they need to consider. Under the Lisbon treaty, however, treaty changes can be fast-tracked. Secondly, as was pointed out earlier, the 17, as a group, could not simply annex the EU institutions and use them for themselves; they would require the permission of the 27 EU members. For both those reasons, a treaty is needed at the 27 member state level, and that makes the Prime Minister’s hand very strong.

Like other Members, I am pleased that the Prime Minister is absolutely determined to protect Britain’s interests. What does that mean? First and foremost for every EU member, regardless of whether it is in or out of the euro, that must be about stopping the crisis—there is no doubt about that. If the euro descends into a disorderly collapse, that will easily cost 6% or 7% of British GDP, and it would probably push us into a worse recession than the one after the financial crisis of 2008. There is therefore no doubt that our top priority should be to solve the eurozone crisis.

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

As my hon. Friend will be aware, this is not the first time European leaders have met to try to resolve the crisis in the eurozone. Why does she think that eurozone leaders and, indeed, the leaders of the whole EU will be any more successful this time than they were on any of the previous occasions when they met to try to come up with a grand solution to save the euro?

[Andrea Leadsom]

I thank my hon. Friend for those remarks. There is a desire to come up with a solution; but as I said, I do not think that it will work, for reasons of economics and the markets’ actions. I hear what my hon. Friend says.

Britain is clearly struggling to recover. The eurozone crisis is testing us and is close to pushing us back into a no-growth, or even a recessionary, period. We therefore need to look after Britain’s interests by not only protecting the eurozone, but ensuring that we create safeguards for our most important industry, and I want to put in a plea for financial services.

There has been a lot of talk about holding a referendum, changing the common agricultural policy or simply repatriating powers, but what do all those things mean? If we hold a referendum, what would the question be? How quickly and easily could people understand enough about the implications of a question such as whether we should allow the 17 fiscally to unite? That is an extraordinarily complicated question, and referendum questions really need to be along simple lines, such as whether Britain should be in or out of the EU. At a time when these things are in flux, that is almost impossible to answer.

[Mr William Cash (Stone) (Con)]

I should like to ask my hon. Friend a simple question. How much more important can things get than when we face a fundamental change in the relationship between ourselves and the EU? It is as simple as that. This is an historic question, and it demands a referendum. Why does she think otherwise?

[Andrea Leadsom]

We will just have to agree to disagree. If people are in government, they govern. At the current moment, a referendum would be extraordinarily important in the history of Britain, but it would be extraordinarily difficult to get the sort of answer that would give the Government a coherent direction. It is for the Government to make the best decision at this moment. For what it is worth, I have always thought that a referendum needs to come at the tail end of a renegotiation of Britain’s relationship with the euro and that it should be used to ratify such a renegotiation, based on the simple question of whether Britain should be in or out of the EU on the basis of a pre-negotiated set of terms with the EU.

[Mr Jenkin]

I could accept that approach, and my hon. Friend has answered her own question about what the referendum question could be. We will not agree the treaty texts at the summit; the meeting will discuss issues of principle and the treaties will then be drafted, but their ratification will take months if not years. We are talking about a referendum some time during that period to ratify a new deal for Britain. Does my hon. Friend not think that that would be a sensible way to go? Would it not strengthen our Prime Minister’s hand if he was to put that view to those at the meeting this weekend?

[Andrea Leadsom]

I am perhaps not understanding. The calls that I have seen in the media are all about our needing a referendum, but now is not the moment for one.

[Mr Jenkin]

If I may say so, my hon. Friend has seen a bit too much of the Government’s propaganda, rather than heard what some of us have been saying. We cannot, of course, ask for a referendum on the spur of the moment; we are asking for a referendum on renegotiated terms of membership, which we desperately need and which this summit demonstrates that we will need. We should be able to tell our European partners, “Go ahead with your proposals for fiscal union. We don’t think they’ll work. It’s a big change for us, so we need these measures in return. As part of the ratification process, we will put this to the British people and recommend a yes vote, as long as you agree our terms.”

[Andrea Leadsom]

I thank my hon. Friend. In truth, right now, I genuinely believe that the Prime Minister has to focus his effort on creating the best solution for Britain, and that is what he is doing. As for all the demands for referendums, the fact that I am confused about what my hon. Friend has been saying, although I am quite close to these issues, demonstrates that other people will doubtless also be confused. The demands are seen as our party, at least, trying to cause trouble for the Prime Minister. For that reason alone, now is the time to get behind the Prime Minister, who has promised the British people that he will defend our interests.

Let me come to why defending the City is the key priority at the moment. People talk about renegotiating EU directives that have already been implemented, but as we have found as part of the Fresh Start project work, that is real spaghetti; it is extraordinarily difficult to unwind existing, implemented policies. I am a very practical person, and the best approach in terms of doability is to look at what has not yet been implemented and what the biggest threat to Britain is. On those two counts, there is no doubt that we should focus on financial services.

Financial services account for 11% of Britain’s tax take each year—about £50 billion. It employs nearly 2 million people; it is our biggest export; and it creates a huge positive trade surplus. Given that we have a big overall trade deficit, we would be looking at a far worse trade balance without financial services. Added to that is the fact that the potential for the future growth of financial services is all outside the eurozone; it is in the BRIC countries—Brazil, Russia, India and China—and America and Asia. That is where the potential lies. Yet, before the financial crisis, Britain was in a strong position in creating an EU financial services single market. We were influential. That was all about deregulation, open access to markets, growth and jobs. Britain did very well out of that and so, by the way, did the rest of Europe. Other eurozone countries did extraordinarily well, because the City was the entry-point to European financial services markets. That benefited us all.

Since the financial crisis, however, the agenda has changed. Britain has rightly changed its regulatory environment by greatly increasing controls, the closeness of supervision and the requirements for capital, liquidity and so on. The EU’s goal has been more to ban what it does not like: “Let’s reduce financial activity; we will constrain, prevent and reduce what is going on.” Nowhere in the EU treaties is there any talk of prudential decisions that the EU might make that would go against the fundamental commitment to single markets and growth opportunities, so the 49 EU directives and other proposals on financial services coming down the track are already in breach of the spirit of the EU treaties, which are all about creating better markets and more access.

I want to mention a couple of those matters in particular. First, on the financial transactions tax, people may think, “They will never do it; it would be cutting off their nose to spite their face and the business will simply go elsewhere.” Actually, however, I think many people in the EU are determined to do it, because they do not want the business. They think that Anglo-Saxon light-touch regulation and the success of financial services are partly to blame for the eurozone crisis. They are quite wrong, but that is where they lay the blame, so they would consider a financial transactions tax that would drive business abroad to be a good thing. To anyone who thinks, “They would not do it,” I would say that they would if they had the opportunity. Of course, that would be disastrous for Britain. It would not be a tax on bankers; it would be a tax on pensioners, investors and savers, because it would go straight to the bottom line of every investment portfolio. If anyone said that it would serve bankers right, I would reply that it would affect not bankers but savers. I could not support that.

Secondly, a slightly unbelievable idea has been proposed in the eurozone that a clearing house with more than 5% of its turnover denominated in euros should relocate to the eurozone. That would be daylight robbery and steal our business, and I am glad that the British Government are already challenging it in the European Court of Justice. Where in the single market treaties, which are all about growth and jobs, does that appear? How would it support British growth and jobs? It would not. I am extremely concerned about the tone and extent of EU directives coming down the track. They are not yet implemented; but unfortunately, under QMV, they could be implemented without Britain’s say-so.

[George Eustice]

I agree with my hon. Friend that the Prime Minister is right to prioritise the financial services directives in the negotiations. Is she aware that Open Europe has today published a poll of City institutions showing that more than 60% of them believe that the burden of regulation coming down the tracks from the European Union outweighs the benefits of the single market?

[Andrea Leadsom]

I have not seen the poll—I have been looking forward to seeing it—and I am not surprised by what my hon. Friend says. Although, as I have said, the treaties are all about expanding markets, growth and opportunities, some of the unintended consequences of EU policies have been the complete opposite of that, and never more so than in financial services. I think that a deliberate attempt has been made to reduce financial services activity in the eurozone.

Financial services should be the top priority for the Prime Minister. He has been clear about drawing a marker in the sand to the effect that Britain wants a secure legal agreement that, in the event that financial services legislation is against Britain’s best interest, we can prevent it from being imposed on us.

[Emma Reynolds]

The hon. Lady is making an eloquent speech. Does she support our idea that, to protect financial services and decisions on the internal market, the Prime Minister should call for all non-euro member states—the 10—to be observers at the euro group meetings that will be held so regularly?

[Andrea Leadsom]

Any attempt that the non-eurozone members make to protect their interests is important, but perhaps an even better way to do it would be to ensure that, if any vote is passed under QMV by the eurozone bloc, there should also be a supporting vote under QMV on the part of the out-group of 10, at a very minimum, to ensure that the in-group could not ride roughshod over the out-group.

[Mr Leigh]

We now know that the policy of Her Majesty’s loyal Opposition is to be an observer.

[Andrea Leadsom]

I thank my hon. Friend for his intervention.

[Mr James Gray (North Wiltshire) (Con)]

I entirely agree with my hon. Friend about the threat to financial services and the importance of focusing on the City and welcome the fact that the Prime Minister has said that he intends to do precisely that at the summit. None the less, does my hon. Friend agree that there is a subtle risk that he could come back from the summit, waving, Chamberlain-like, a piece of paper in the air and saying, “Haven’t I done well? I have protected a number of things that were under threat in the City of London”—despite having ignored the historic opportunity of the summit and allowed several other things to slip by without repatriating anything at all in the process?

[Andrea Leadsom]

That is an important point, because the Prime Minister will not be just having a chat and getting general agreement; he will want to get a firm assurance and put a marker in the sand saying, “We feel your pain and share your goal and will want to protect Britain’s specific national interest by including our own requirement in the treaty.” There cannot be simply a gentleman’s handshake, so that what is agreed can be watered down later. There must be a firm commitment on all sides that Britain’s national interest will be protected.

[Mr Nuttall]

Does my hon. Friend agree that the problem with marks in the sand is that, when the tide comes in, they get washed away?

[Andrea Leadsom]

That is a good observation and I have noticed that, but it was not what I meant, and my hon. Friend knows it. What I have outlined is down to the Prime Minister to achieve. He has committed to do it. We must have confidence in his determination to follow it through.

[Mr Stewart Jackson (Peterborough) (Con)]

I respect my hon. Friend’s intellect and erudition on this issue, but she will be familiar with the story of Pyrrhus and his remark, “One more such victory and we are doomed.” We can very well defeat the straw man of the financial transactions tax, while we ignore the creation of a de facto country, perhaps called Greater Germany, that will militate against the long-term financial, economic and political interests of the United Kingdom.

[Andrea Leadsom]

I do not see things as starkly as that. We are now in a position where the Prime Minister can protect Britain’s interest and is committed to doing so. We need to give him the chance to do that.

I want briefly to discuss things that we can do ourselves. First, there is an awful lot of talk about repatriation and things that we could do differently, but in the long years of the previous Government, the EU was largely ignored and many opportunities to improve how we do things at home were missed. Some quick examples include how we implement EU directives. We have an opt-out from the working time directive, as do 16 other member countries, which makes a majority in the 27, if my maths serves me correctly. We could band together with the other 16 and demand that the EU reconsider the directive in its entirety. I have talked to a British delegation of MEPs who think that there could well be interest in doing that. Why have we not done so, if we all like to think that the directive is disastrous?

Secondly, why do we have so few British workers in the EU institutions? Why are none of our people employed there? Why did the previous Prime Minister choose to put someone in the post of High Representative of the Union for Foreign Affairs and Security Policy, instead of having someone in the financial services commissioner post? It has been left to a Frenchman who does not understand financial services particularly well to do that job for us.

Something that should be entirely within our gift to sort out is scrutiny in Parliament, and we do not do enough of that here. We leave it up to the incredibly overworked European Scrutiny Committee, which is ably chaired by my hon. Friend the Member for Stone (Mr Cash). In areas such as financial services and agriculture, we should pass directives on to the specialist Select Committees, which have the interest and expertise to look at detailed areas, and ask them for their help and support to ensure that, before we receive directives that we then have to implement, we have done the best job that we possibly can for Britain.

15:30

[Martin Horwood (Cheltenham) (LD)]

I start the Liberal Democrat contribution to the debate. This may alarm the hon. Member for Harwich and North Essex (Mr Jenkin), but I am going to agree with him about something. This debate should have taken place on the Floor of the House. As the hon. Member for South Northamptonshire (Andrea Leadsom) has just pointed out, we need to reform how we scrutinise European affairs in this Parliament. It is not adequate. In fact, I have already made a contribution to the discussions on scrutiny by suggesting to Ministers that we involve departmental and other Select Committees in scrutinising forthcoming European legislation, as she has just suggested. I strongly welcome that suggestion.

[Mr Cash]

As Chair of the Committee in question, I assure the hon. Gentleman that we frequently have arrangements whereby we refer particular directives and regulations to departmental Select Committees. Sometimes they do not actually look at them, despite the fact that we have asked them to do so. We also asked the Government, on behalf of the European Scrutiny Committee unanimously, for a full three-hour debate on the Floor of the House, of the kind that is taking place here, and it was refused. That is the state of play. That comes largely from the fact that we are in a coalition.

[Martin Horwood]

I do not think that it comes from the fact that we are in a coalition. I do not want to risk my Liberal Democrat credentials by agreeing with the hon. Member for Stone (Mr Cash) as well, but I think that this issue is worthy of a debate on the Floor of the House. I know that his Committee refers matters for scrutiny to departmental Select Committees, and it is not good enough if those Committees are not prepared to scrutinise those matters. They have the expertise and the Committee experts who can make a serious contribution to the scrutiny process. I restrain myself from suggesting that that might remove the necessity for the European Scrutiny Committee, but the point is that we need wider and deeper discussion of European matters in this Parliament, and I entirely agree with that.

One of the healthy things about being in a coalition is that we can bring different points of view on issues such as Europe, as well as others, to the table without actually having to conceal them and pretend to be coming from exactly the same place, which the previous Government had to do. None the less, it is slightly frustrating. I thought that we had settled quite a lot of the issues that are being debated at the moment. When we discussed at inordinate length the European Union Act 2011, which has already been passed, we spent countless hours debating when to hold a referendum and when to look at renegotiation of powers. We came to a conclusion and a settled view, as a coalition and as a Parliament, which was pretty clear. It represented something of a compromise between the Liberal Democrat and the natural Conservative positions, which seemed quite acceptable: a treaty change should be subject to an Act of Parliament, but if that treaty change involves a fundamental and significant shift in powers from the British to the European level of government, then that should be automatically subject to a referendum. Yet now, only a matter of months later, this whole issue seems to have been reopened. That is a problem, because it makes it more difficult—let us put it no more strongly than that—for Ministers to negotiate with confidence, knowing what position they are representing back in this country. We are not so much sending them naked into the debating chamber, as sending them so wrapped up in unrealistic expectations that they cannot move, which is a problem.

Ministers need to focus on the issues at hand in the Council, which are threefold. The eurozone is not the only issue, because there are two other important topics for discussion. On energy, if I can put it in the language of this debate, I speak from a nuclear-sceptic point of view. There is the welcome process of independent scrutiny, at European level, of the safety of European nuclear programmes. In the wake of the Fukushima disaster, which will potentially cost the Japanese economy hundreds of billions of pounds, it is incredibly important that the process is ongoing and rigorous. If I have a concern that I would like to be raised at the European Council, it is that the Commission report makes the case for tighter safety rules but does so in a limited way, even though it concedes that many of the regulations that were already in force before the Fukushima disaster in March are still not being applied throughout the European Union. Some states, including the UK, Poland, Slovakia and Belgium, have not updated national legislation in line with a European directive from 2009. At present, there are no common safety standards or criteria for nuclear power plants across the European Union. [Interruption.] The hon. Member for North Wiltshire (Mr Gray) says, from a sedentary position, “Good.” He may have a lot of confidence in British nuclear safety regimes. I hope he has exactly the same confidence in Polish safety regimes and in the safety regimes of other European nations. The bad news for him, I am afraid, is that radioactivity, as we found out after Chernobyl, is no respecter of national boundaries.

[Mr Gray]

Does the hon. Gentleman recall that Chernobyl is in fact in Russia?

[Martin Horwood]

It is not, actually; it is in Ukraine. It was in the Soviet Union at the time, but the point is that it is only quite recently that some farms in Wales have had all restrictions lifted as a result of the radioactivity that swept right across Europe. The point is that the wider we can spread safety regulations on this the better. The European Union is an important vehicle for doing that. I hope that that message about a tighter safety remit and tighter safety monitoring regime has been well taken.

[Mr Jenkin]

Will the hon. Gentleman give way?

[Martin Horwood]

Is this on the subject of nuclear energy? Oh, okay.

[Mr Jenkin]

We have one of the best nuclear inspectorate and safety regimes in the world, if not the best. Is the hon. Gentleman seriously saying that he would prefer nuclear inspections to be run by the people who could not even get their accounts audited for the past 15 years, and who gave us the common agricultural policy and the common fisheries policy? Does he not see that these multinational European bodies are grossly inefficient and hopelessly unaccountable, which is why the British people have had enough of them?

[Martin Horwood]

Well, no, in short. If the hon. Gentleman has such enormous confidence in Britain’s safety regime, then he should be trying to export those safety standards to the rest of Europe. I cannot see how he can possibly conceive of a better vehicle for doing that than the European Union. Is he seriously going to approach 27 different European nations and try to encourage them to adopt our safety standards, or is he going to use the vehicle of—

[Mr Jenkin]

rose—

[Martin Horwood]

No, we need to move on from safety regimes. Is the hon. Gentleman seriously suggesting that that will be a more effective approach than trying to reach a common position across the European Union?

[Steve Baker (Wycombe) (Con)]

I am a chartered aerospace engineer who has a friend who is a chartered aerospace engineer working in the nuclear industry, and we agree that nuclear industry standards are quite poor. When I was a kid, the Eurofighter Typhoon was flying quite successfully as the EAP, with just British Aerospace backing it. What slowed that project down was making it pan-European. I do not share his optimism about the idea of pan-European technical standards, which is not borne out.

[Martin Horwood]

I congratulate the hon. Gentleman on his qualifications.

Apart from the eurozone, the other key issue that will be discussed at the summit is, of course, the accession of Croatia. We very much look forward to the accession of Croatia, which is a brilliant example of the transformative process of applying for membership of the European Union. Croatia has managed to address so many issues relating to its judiciary, economy and the reform of its political processes. That is an example that should be followed by other candidate countries looking to accede to the Union. It is inspiring to remember that in the area of Europe most recently torn apart by war, those in the Balkans still see European Union membership as something that helps to guarantee future peace. That is one of the founding principles of the European Union and one that we should not lose sight of in the current melee over the eurozone and possible treaty reforms.

The third, and obviously the most important, issue that the Council has to address is the crisis in the eurozone. Here, I think, we are on common ground in realising that the threat of a disorderly collapse in the eurozone is of enormous importance to this country. If the eurozone goes down, it will do considerable damage to the entire world economy, let alone to the British economy. It should be our No. 1 national priority at the Council to advance the process of securing the future of the eurozone, however it happens to proceed. That the eurozone countries have not yet agreed the treaty process or the rules that ought to surround it is a matter of enormous frustration and anxiety. It reflects badly on the leaders of those countries that they have not yet come to such an agreement.

The second clear national priority has to be to defend Britain’s interests in the process, which is rightly the instinct of the Prime Minister at the Council. To come with a list of unrealistic demands that would hamper and threaten the whole process of resolving the crisis, however, would be spectacularly reckless and playing politics with Britain’s national interest. I apologise to the thinly attended Labour Benches, but I am afraid that as a country we are still deep in the process of cleaning up the mess left to us by the previous Government. Our economy remains in a fragile position, which is possibly more fragile than we had expected at this stage.

[Emma Reynolds]

When the Labour party left government, the economy was growing. The policies of this Government have choked off the recovery.

[Martin Horwood]

The economy is still growing, actually, but that is a debate for another day. The voters made up their mind about who was responsible for the economic mess that we found ourselves in.

We are still in a vulnerable position, and all colleagues need to be able to go back to their constituencies, to look pensioners, small business people and others in the face and to say that we are doing everything that we can to speed a resolution of the crisis and that we are not throwing spanners in the works.

[Mr Cash]

Does the hon. Gentleman not agree that it is extremely unwise to make assumptions about the existing arrangements? They include so much over-regulation, centralisation and deprivation of oxygen for small and medium-sized businesses not only in this country but in the European Union that, precisely because there is no growth there—for all those reasons and some others—it is impossible for us to grow, what with the 40% of trade that we have with those other countries. Solving the causes of the failure of the European Union is so necessary.

[Martin Horwood]

The hon. Gentleman makes a rather interesting point about regulation of the smallest businesses, because we have a rather good case study. The Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey), has been active in going to other European Ministers, in particular those with a similar outlook on economic policy, and taking a collaborative, positive and co-operative approach to reach agreement that we should lift onerous accounting rules from the smallest businesses, not only in this country but throughout Europe. [Interruption.] It might be a small concession, but it was progress through a collaborative process that has lifted some of the burden of European regulation from businesses in the UK. There will be other examples of what Members may call repatriation, if they want. In fisheries policy, we are likely to see the movement of powers over fisheries from the European level to national and regional levels in future. So it is possible to achieve change without a confrontational attitude and, as in both those cases, without treaty change.

As I have said, to defend Britain’s interests during the whole process is important. One of the ways to do so is to prevent marginalisation, which is a real danger. To an extent, I share some of the anxieties expressed by Conservative Members—it could happen that we might be excluded from the core of decision making in Europe—and I would not be happy with the Labour party’s approach that we should be observers to the process. I want us to be participants. We must ensure that Britain plays a central role in whatever new structures emerge from the crisis, and we need to be able to discuss and debate with the members of the eurozone how their economies move forward. As EU members, we will always have more say in the process than we would do if we committed the ultimate act of economic suicide and left the European Union, as some hon. Members might want. The risk, however, is that some marginalisation is possible, although we increase the risk of that if we roll up at European Councils with a list of unrealistic demands and throw a spanner in the work of resolving possibly the biggest crisis to have faced continental Europe for decades. That does not do us much good.

[Mr Nuttall]

Will my hon. Friend give way?

[Martin Horwood]

I will give one example. The hon. Member for South Northamptonshire (Andrea Leadsom) mentioned clearing house regulations. Since that dealt with transactions governing euros, how would we have influenced that legislation had we been outside the European Union? We might have found that by leaving the European Union we had excluded ourselves from such decision making and enabled the EU to take precisely that kind of decision, to the immediate detriment of the British economy and the status of the City of London, which is a European asset as well as a British asset.

[Andrea Leadsom]

Specifically, that would not have happened. It is only because the UK is in the EU that the EU can require London clearing houses to go under this type of legislation. If we were not part of the EU, it would not affect us.

[Martin Horwood]

I hesitate to challenge an expert in her own field, but we might find that the kind of interests that we are able to defend in economic policy, and financial policy specifically, within the European Union would not be so easily defended if we were outside the EU. It is one thing for Norway or Lichtenstein to be allowed access to European markets and to gain the benefits of the European economic area, because they do not pose much of a threat to Germany, France or the other EU economies. It would be different if an economy the size of Britain’s was taking advantage of such a situation or trying to mould the rules to our own advantage. It is critically important to the City of London that we retain our membership of the EU.

[Mr Stewart Jackson]

The hon. Gentleman makes a number of assumptions about the likely ramifications of our leaving the European Union. Was that the basis on which he offered the voters of Cheltenham at the last general election a Liberal Democrat policy prospectus that included an in/out referendum? Yet, in the face of massive and irrevocable constitutional change today, he has resiled from that undertaking to his own electors.

[Martin Horwood]

I have resiled from no undertaking whatever. There is a great habit of selective quotation of the Liberal Democrat manifesto. The whole sentence said that we would offer an in/out referendum at a time of a fundamental shift in the relationship between Britain and Europe. That is why we supported a referendum at the time of the Lisbon treaty—I am not sure which way the hon. Gentleman voted on that, but I do not remember many Conservative Members coming into the Lobby beside us. Incidentally, we also supported a referendum at the time of Maastricht, and did not succeed then, either. If there is another fundamental shift in Britain’s relationship with Europe, I fully expect us to support a referendum at that point.

[Mr Jenkin]

Is the hon. Gentleman merely another of those politicians who only promises a referendum when he knows that he cannot deliver it?

[Martin Horwood]

That is a lovely rhetorical line, but that accusation has been levelled at the Liberal Democrats on many fronts, and yet we find ourselves in government and sticking to the letter and the spirit of our manifesto on a whole range of issues. [Interruption.] I opposed the increase in tuition fees and think that we ought to have stuck to that policy, too. We have, however, certainly delivered on the pupil premium and a whole range of things, such as taking many of the lowest paid out of taxation altogether or developing the green economy, and we will stick to our pledge on the European Union as well, which is to act responsibly and to propose referendums when it is appropriate, which will involve a wholesale examination of the relationship of nation states to the European Union. That is not happening at the moment, because we are looking at an economic crisis in which the eurozone countries face a fundamental question about control of fiscal discipline. Germany, quite reasonably, is saying that, in return for any shift towards, for instance, the European Central Bank acting as a lender of last resort, some process of fiscal discipline that is rather stronger than the one that has operated inside the eurozone until now must be enforced. The other member countries, however, retain the choice whether to submit to that fiscal discipline or to plan some different future for themselves.

[Mr Nuttall]

On a specific point about the proposals that the Franco-German axis has come up with, is it not the case that if the eurozone had stuck to the rules that already govern it, it would not be in the mess that it is in today? It is in a mess, because no one was enforcing the rules.

[Martin Horwood]

I surprise myself again by finding myself in agreement with that statement. I completely agree with it. That was one of the weaknesses of the euro’s establishment and the stability mechanism surrounding it. It is precisely the sort of weakness that the eurozone countries must now address, and I think they clearly understand that, too. I suspect that some member Governments—Greece may be one—deeply regret having entered such a relaxed arrangement without the sort of fiscal discipline that was needed to make it work. That is probably common ground among people of all parties in many different countries.

The important message for Ministers going to the European Council and for the Prime Minister is that British national interests are at stake in the process, but that we can serve them best by acting positively and collaboratively and by taking an approach based on co-operation, not confrontation. As I have said, it is not always necessary to confront people to achieve shifts in responsibility to national level—we have seen that with regard to small businesses, and we may see it with regard to fisheries—and we must develop that sort of grown-up approach to EU politics, not a constant obsessive, confrontational attitude.

When it comes to talking about the Prime Minister’s position being comparable with that of Neville Chamberlain, and therefore implying that in some way our European partners are comparable to the Nazis—[Interruption.] I am sorry, but if the Prime Minister is Neville Chamberlain, who is he getting the piece of paper from? Such language in this debate has been deeply offensive. It is unworthy of this Parliament; it is unworthy of the Conservative party; it is profoundly insulting to the Prime Minister; and it is exactly the sort of xenophobic rhetoric that risks discrediting this country and deeply damaging our national interests.

15:52

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

It is a pleasure, Mr Turner, to serve under your chairmanship. I congratulate my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) on orchestrating this debate. I will make my comments relatively short, because I am conscious that other hon. Members wish to speak. Having said that, I believe that the EU summit is a defining moment, and a once-in-a-lifetime opportunity to create a better relationship with the EU. I sincerely hope that the Prime Minister seizes that opportunity and seizes the moment.

[Mrs Anne Main in the Chair]

It is my belief that we need a fundamental renegotiation of our relationship with the EU, based on free trade, competitiveness and growth, and not political union and deadweight regulation. That is a relationship that other countries enjoy. One is not speaking of utopia or a textbook theory. Other countries enjoy such a relationship. For example, Switzerland has meaningfully good relations with the EU and trades with it freely, but it is not weighed down by political regulation and moves to ever closer political union. Such a relation reflects the fact that in 1973, and then in 1975, the British people voted for a free trade area and not political union. It reflects the fact that people generally are fed up with mindless interference from the EU. It reflects the fact that businesses, particularly small and medium-sized enterprises, are fed up with regulation, some 90% of which comes from Brussels.

Such a relationship would reflect the fact that taxpayers are fed up with the increased cost of the EU. If one takes into account the diminishing rebates, the budget will come to around £40 billion over the next seven years. That would pay for a 6p cut in small business corporation tax in each of the seven years. My goodness, would that not be the spur for growth that we all want and are wishing for? I also believe that such a relationship would reflect the fact that this Conservative party—my Conservative party—is fed up with promises to rein in the EU, when very little has happened over the almost 40 years that we have been a member.

I am slightly more sceptical than most that we can work the repatriation of powers. There has been a lot of talk about that, but our history in repatriating powers has not been good. Let us take the working time directive as an example. We all remember the great hullabaloo about the importance of extracting the opt-out from that directive. It will be no surprise to hon. Members here that that directive was reintroduced through the back door. What are we doing now, before the summit? Once again, we are talking about repatriating powers such as the working time directive. If my memory serves me correctly, that power was supposed to be repatriated some time ago.

[Mr Jenkin]

The problem is that the word “repatriation” is open to confusion. The basic principle of the EU legal system is that powers cannot be repatriated. There is a judicial doctrine—the doctrine of the occupied field—and once member states have delegated a power to the European Union, it cannot be recovered. There is no mechanism for doing that, which is why we need a fundamental change in our relationship with the European Union to address the fundamental problem. The problem is the treaties.

[Mr Baron]

As I said at the start, I do not buy the repatriation of powers. I want a fundamental renegotiation of our relationship with the EU based on free trade, competition and growth. Such a renegotiation would recognise the fact that we want good relations with our EU neighbours, and we want good trade relations in particular, but we recognise that we need to engage better with the faster-growing economies throughout the world. In many regions of the world—those of the BRIC economies—growth rates are so much faster. This is not a little Englander approach; it is a globalist approach that recognises that we need to engage better with those faster-growing areas.

[Mr Philip Hollobone (Kettering) (Con)]

I am hugely enjoying my hon. Friend’s speech; he is making some excellent points. Does he agree that in 1980 the EU’s share of world trade was some 30%, but by 2020 it is likely to have fallen to 15%? In other words, it will have halved over a period of 40 years, yet we find ourselves increasingly brought together with part of the world that will grow more slowly than the BRIC economies.

[Mr Baron]

My hon. Friend makes an excellent point. There is much talk of Germany winning market share, but one forgets that Germany has benefited from an artificially weak currency, to which the periphery nations have contributed. Germany has had a very strong manufacturing base allied to a weak currency, which has made for heady growth, but if we take Europe as a whole, it is falling behind. Many people do not recognise that.

I worry that the Government have ruled out the idea of a referendum. I think that is a mistake as we go into a summit, because it cuts off a key negotiating ability. I also worry that we seem to be saying we do not want a two-speed or two-tier Europe, but on the other hand we are trying to join in the chorus of “we must save the euro”, which can only mean closer fiscal union, which can only result, as Angela Merkel has readily acknowledged, in a two-tier, two-speed Europe. It is nonsense and a contradiction. Anybody who believes that closer fiscal and political union will not fundamentally or materially affect our relationship with the EU is living in cloud cuckoo land.

Before I finish, I will attempt to knock down one or two myths surrounding the debate. The first myth is that we must save the euro. In my 15 years in the City running hundreds of millions of pounds for charities, pension funds and private clients with some very large fund management groups, I have never heard so much economic clap-trap. The whole concept to begin with was flawed. The idea that we can bind divergent economies into a single currency without full fiscal union was and remains a mistake. Not only the concept but the solution is flawed. The problem is that we are not addressing the core issue of competitiveness. We have Governments spending too much relative to their means.

This recession, unlike all other post-war recessions, is built on debt. It is a deleveraging, not a destocking, recession. Accordingly, we have to grow our way out of that and reduce our debt. We cannot, as we all know, borrow our way out of debt. The solution does not fit, so I am not convinced that the solution put forward by the present eurozone leaders will work, anyway. However, let us give them the benefit of the doubt. Let us say it buys time. The problem is that by cutting off the option of devaluation—put that and the fact that the solution does not fit to one side for a second—even if it buys time, we are making the austerity packages much worse.

I have previously broached the fact that there have been some 80 situations in which countries have left currency unions since the second world war and have benefited from the growth that has followed. We saw it in our own case when we exited the exchange rate mechanism. By binding countries into a single currency, we have to make the austerity packages more severe, because we are ruling out the option of devaluation, which would increase competitiveness. The eurozone leaders do not seem to understand that. If there was an orderly break-up of the euro, certainly for the periphery nations, the Germans would still want to sell their cars and the French their wine. Believe me, life would go on.

Many say that the banking system could not survive the write-off of the debts. That point was made earlier. However, the markets have already discounted the debt in many of these countries by 60%. It would not come as much of a shock if there was a 50% write-down. In many cases, that would represent a 10% uplift by the banks themselves. This is an economic point that has not been widely acknowledged and accepted. The markets have already downgraded the debt, so this will be a downgrade instituted by politicians. Look at what the markets themselves are telling us.

Nobody has been able to quantify or substantiate why it would create economic mayhem if we did not save the euro. Siren voices also suggested that if we left the ERM something similar and awful would happen. Actually, almost to the day, our economic recovery kicked off.

Finally, if the eurozone wants to crack on and create closer fiscal union, that is fine. That is not, or should not, be mutually exclusive to our objective of wanting to negotiate a different and fundamentally new relationship with the EU. They are not mutually exclusive. Many commentators seem to suggest that by wanting to renegotiate the relationship, we are breaking up or being awkward about what the 17 eurozone members want to do. That is not the case. If they want to take that path, it is up to them, but their taking that path should not restrict us.

16:03

Sitting suspended for a Division in the House.

16:17

On resuming—

[Mr Baron]

I will keep my conclusion brief. It is often said that now is not the right time to renegotiate our relationship with the EU, but we have been told that for almost 40 years. If this is not the right time, when will be? The idea, perhaps, is that we will somehow renegotiate a new relationship after the crisis, but as I have said, our track record on doing such things is not good if one looks back over the past 40 years.

We are at a defining moment, and we need a fundamental renegotiation of our relationship with the EU based on free trade, competitiveness and growth—just like that enjoyed by other countries such as Switzerland—and not on the political union and dead-weight regulation that is harming this country and making it far less competitive than it should be. We are not paying our way in the world, and we need to fundamentally readdress the whole situation and create a new relationship. Now is an ideal time to do that. Growing elements in Parliament know that, as do people outside this place. My hope is that the Government, and particularly the Prime Minister, will now understand that as well.

16:19

[Mr William Cash (Stone) (Con)]

I congratulate my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) on securing this extremely important debate. It is a substitute for the debate that the European Scrutiny Committee has insisted should be held on the Floor of the House, but which has been declined by the Government so far.

[Mr Hollobone]

I am looking forward to my hon. Friend’s speech very much indeed. Would it not have been marvellous if the Leader of the House had timetabled an opportunity this week, perhaps on Wednesday afternoon, for the Prime Minister to hear hon. Members’ views on what he should say at the European Council? Then he would have been able to jet off today to that summit with all the suggestions fresh in his mind. Instead, it was up to the Backbench Business Committee to timetable the debate for this afternoon.

[Mr Cash]

I agree. People were not listening back in the days of Maastricht and they are not listening now. That is the problem. I give special thanks to my hon. Friend the Member for Harwich and North Essex not only for this debate but for the consistency that he has shown since the days of the Maastricht rebellion, which I had the honour to lead all those years ago and of which he was a very important member. He was a new Member of the House and he understood the position immediately, as did my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) and a number of others who have remained in the House.

This is not only an historic question but a national question. The now absent hon. Member for Luton North (Kelvin Hopkins) mentioned Peter Shore and Bryan Gould. When I set up the Maastricht referendum campaign, it was hon. Members on the other side of the House, such as Peter Shore and Bryan Gould, who joined me in that campaign. We presented a petition, which many people may recall, of well over 500,000 signatures; in fact, we reckon that we got 700,000 signatures all told. The petition was deposited, calling for a referendum on the Maastricht treaty. I was delighted that my right hon. Friend the Prime Minister said only a couple of weeks ago that there should have been a referendum on that treaty. As one who was very deeply engaged in the whole of that process, from beginning to end—much to the dismay of those who have now, in my opinion, lost the argument—I believe that the necessity of knowing the views of the British people remains implicitly entrenched in the arrangements that are now coming forward and that therefore a referendum is essential.

I should now like to move on to the present time. I want to address the question facing us today in terms of the broad landscape. I wrote a pamphlet that was published in effect in this very room when we had a conference between the leading Eurosceptics and the leading Europhiles. It involved Charles Grant of the Centre for European Reform, Roland Rudd of Business for New Europe and a galaxy of others. Both sides regarded it as essential that we should get together and properly debate the questions on both sides of the argument with many of the best people from the two sides of the debate. In that pamphlet, I set out details that I will not go into today, but I say to those who are interested and who read the transcript of these proceedings that it is available. Indeed, the Prime Minister has written to me, saying that it is a substantial document and effectively, therefore, it has to be answered. He has said as much to me, and it does have to be answered. I assume that my right hon. Friend the Minister for Europe will do so in due course.

This is an historic turning point for both the country and the Conservative party. The dream of ever-closer union and, indeed, political and economic union has failed, and the root of that trouble is the fantasy world, which has persisted for so many decades, of trying to create economic and political union among so many diverse countries with diverse cultures, diverse economies and diverse democratic traditions.

Only today I witnessed Mr Barroso on the television screens berating everyone in the most dictatorial language. He was saying that everyone had to come together for the sake of saving this project. They themselves are responsible for having created it and they are now attempting to save it, despite the fact that the causes of the present discontent come from the creation of this project in the first place by the very people who are now berating everyone else.

I will go further and refer to two documents that I have just obtained. One is dated 6 December. It is Mr Van Rompuy’s document, entitled “Towards a stronger economic Union”. There is not one word about democracy anywhere in that document—the word “democracy” does not appear. Similarly, in the letter written to the President of the European Council—Mr Van Rompuy, no less—by Mr Sarkozy and Angela Merkel, there is not a single reference to the democratic question. There is not one iota, not one jot of a reference to democracy in either of those documents, yet they are demanding that this failed project be continued with greater—deeper—integration. All the mistakes that have been made in the past are being reinforced in the new arrangement, which clearly will not work. It did not work before and it will not work now. It is a tragedy— I say that—that we are in the current position. I trust that the Prime Minister will address that during the next 48 hours.

This is not some theoretical experiment. It is about the daily lives of the British people and about our democratic traditions and economic performance. The idea that a fiscal union of 17 would be stable is simply and emphatically wrong. It will concentrate and increase the dangers of centralisation and will be fundamentally unstable. Germany will not be able to bail out the other countries, and it is a complete strategic failure for people, including the coalition Government, to think that it can.

Germany of course wants to preserve the euro, because it is doing so well out of it. One has only to consider the foreign direct investment by the Germans in other countries, the extent to which those countries are in effect economic satellites of Germany and the fact that the structural funds—I have the figures from the Library—are so incredibly important in generating investment backed by German contracts in those other countries, from which they then repatriate the profits. This is actually a German economic hegemony. Equally, I do not think that the Germans are inherently hostile about this. I say what I say without any hostile spirit, but I do say that we have to be realistic. We are desperately at risk. The British nation is in peril under these arrangements.

Furthermore, the impact of this economic conglomeration in the hands of one country in particular has led not only, in effect, to the dismissal of two Prime Ministers, whatever their merits or demerits, but to the voting arrangements, which follow from the qualified majority voting system. I am talking about the number of votes that are available to Germany when it wants to pursue a policy, because of its influence and, in effect, its control over the countries in question, which are dependent on it. That is the case not only in the eurozone of 17, but in so many of the other countries, including— I say this without any disrespect for them, because I love these countries—Poland and Denmark. Then of course there are Bulgaria, Romania, the Baltic states, Hungary and so on. The truth is that that is inherently in German national interests. Indeed, we have to look only at what Chancellor Kohl had to say in the 1990s, which I have included in a pamphlet that I wrote, called “It’s the EU, stupid”, to see the political determination behind Germany’s desire to ensure that the euro survives. Angela Merkel is now using that very language in the same context.

I do not blame the Germans. I have said in this Chamber that I recognise the fact that to a great extent they have shown their commercial nous—they have taken advantage of the system to ensure that they get the best out of it. The organisation is not a European union, but effectively a greater Germany.

We, above all other countries in Europe, ought to recognise that we should defend our own interests—not, as I said, in a hostile manner, but in a realistic and down-to-earth manner. We ought to get across the message that there should be, inherent in the proposed arrangements, a fundamental change in our relationship with the European Union. We and, if I may say so, the Prime Minister, have an absolute duty to protect the national interest that he says he wants to protect; to ensure that there is fundamental reform in the European Union, which he called for at the Mansion house the other day, to generate the growth that we need, with our 40% of trade with the Union and to guarantee that we are not drawn into an arrangement by which, through a majority block vote, we are consistently outvoted and become completely and utterly controlled by the system. It just does not make sense, and I believe that the system will not work.

It needs to be pointed out that not only is voting power naturally going to Germany, with its economic investments—it is doing extremely well out of the system—but Germany believes that it can require countries to obey rules. That is a much deeper question, a matter of attitude. We cannot require countries to obey rules just because we prescribe them. That is where I think the whole philosophy and the attitudes in the Eurocracy and in Germany go wrong. As we have heard, the Germans themselves have not obeyed the rules on the stability and growth pact when it suited them not to. An inherent dishonesty lies at the heart of the arrangements: someone disobeys the rules when it suits them, but insists that the rules be obeyed when they can benefit out of those rules. That cannot be right.

Countries are made up of individuals and individual companies, which have their own ideas as to how they should be democratically governed. Those ideas do not by any means fit within the rules prescribed from above or the conditions that are imposed. The Eurocrats, Germany and those who go with it on the matter simply do not understand that the lack of democracy is a fundamental flaw in the entire European project.

[Emma Reynolds]

Is the hon. Gentleman not a little unfair in singling out Germany? Germany is obviously the largest country to have done quite well out of the euro, but other eurozone countries in the group of healthy economies are doing pretty well economically. It is slightly unfair of him to single out Germany.

[Mr Cash]

I do not think it is. If the hon. Lady investigates, as I have, German FDI into the other countries, and then looks at the countries that are growing, she will see that there is a correlation with the amount of money that the Germans have provided. I give them credit for doing so on good investment projects, but some of them have been bad, as in Greece. The growth in some of the countries is buttressed and underpinned by German investment. That is the problem.

[Martin Horwood]

The hon. Gentleman is making an interesting speech. If he was Nicolas Sarkozy—if he can imagine that—exposed as his economy is to Greek debt in particular, what would he do, if he is so critical of the proposed arrangements?

[Mr Cash]

First, there is a strong case for getting out of the euro, because that would enable countries to—[Interruption.] It is described as irrevocable, but I have news for the hon. Member for Cheltenham (Martin Horwood): treaties and laws have been passed for not generations but centuries, and there are more treaties and international relationships that have been reviewed and changed than he might have had hot breakfasts. When those things do not work, there is a good starting point for reviewing them. That is what we are doing now.

[Mr Hollobone]

My hon. Friend thinks that there may well be a move to establish a fiscal union of the 17 eurozone countries. If that is not possible, and if an agreement of the full 17 cannot be achieved, does he think that there could be a move to establish a fiscal union with a smaller number of eurozone countries to let some of the peripheral economies have some kind of orderly default?

[Mr Cash]

I think that the crisis is so great that that suggestion has to be taken on board seriously. I agree with the sentiment that lies behind that suggestion.

[Mr Jenkin]

I follow on the point about foreign direct investment that my hon. Friend made to the hon. Member for Wolverhampton North East (Emma Reynolds). It is interesting that Poland, which one might describe as a pre-in—it is not in the euro, but a pre-in nation state in the European Union—supports the German line. That is precisely because it is such a huge beneficiary of public subsidies arriving through the European Union, largely paid for by the German taxpayer, and because it is massively dependent on FDI. As a result it is effectively already a satellite state of the eurozone.

[Mr Cash]

We must understand that countries need investment. Therefore, in a sense, I am not critical about it. However, I know that the consequences of that are the reasons behind the problems presented to the Prime Minister tonight. There are dilemmas in the matter. I am not just being generous-minded; I understand that there is a triangulation, which is a problem.

I regard the Prime Minister to be, as it were, standing alone at the moment in a quadrangle that is surrounded by four 40 foot-high walls. On one side, he has the Euro-elite—Angela Merkel and Nicolas Sarkozy—and the Eurocracy. Another wall is the fact that he has to reduce the deficit, which he cannot do without growth, and he cannot increase growth without a viable European Union. Another wall is the Conservative party, not only in Parliament but in the constituencies, and the country at large. The final wall—I pay my respects to the hon. Member for Cheltenham—is the coalition and its ideas on the matter, which preclude repatriation and renegotiation—[Interruption.] The hon. Gentleman may say that, but we had it quite clearly stated.

[Martin Horwood]

Will the hon. Gentleman give way?

[Mr Cash]

I am not going to take an intervention, because otherwise we will be here all afternoon—we are going to be anyway. I simply make the point that the leader of the Liberal Democrats has been quite specific in saying that there should not be any repatriation.

Within the electorates of individual countries, decisions can be taken to improve economic performance, develop small and medium-sized businesses and remove burdens on business, but that is not the European method. We may be driven into the formula of the notwithstanding arrangements, which was endorsed by the European Scrutiny Committee report on sovereignty and Parliament, because if the situation is so critical, we may have to override European regulation. However, the European method has locked people, by unanimous decisions, into a European system that cannot be changed, other than by renegotiation, which is almost impossible, or by a notwithstanding arrangement of the kind I have mentioned. Such oppressive regulations and rules are based on theoretical assumptions, as with the Lisbon agenda and the 2020 agenda, which have failed. The result is no growth.

We need to move away from centralisation and integration and back to decision making by Parliaments in the United Kingdom and elsewhere on behalf of the electorates of every country, and also into an association of nation states by co-operating. The other alternative is not to remain a member of the European Union at all. We are reaching that kind of critical point. We may not have got there yet, but we are getting to it.

Effectively, there would have to be a European Free Trade Association-type arrangement, with countries co-operating for free trade, competitiveness and growth, as my hon. Friend the Member for Basildon and Billericay (Mr Baron) so rightly said. However, that arrangement would also have to be based on democratic consent and not exclusively on majority block voting arrangements. That would provide free choice in the marketplace and at the ballot box.

That is the route to solving the problem, not imposing economic prescriptions and rules that have already been broken in the past—invariably—and that will not be observed in the future, because we are dealing with people and not economic or theoretical machines. That is fundamentally the difference between the British approach, which favours freedom of choice, and the eurocratic and—I say this with respect—the Germanic approach, which is rule-based and completely different.

This week’s meeting presents the Prime Minister with a historic moment, given the scale of the crisis, and it is essential that he takes the right path. We cannot have a fiscal union and be within the same treaty; that is a contradiction within itself. It is not a neat Russian doll; it is angular and impossible. Actually, it will not fit. A treaty within a treaty is a house divided against itself and because both are built on sand the result of going down this route will be even greater chaos, whether there are 17 or 27 countries involved. That is the problem and the European Court of Justice simply will not be able to deal with the overarching contradiction that those two competing arrangements provide.

Whether it is the eurozone 17 or the eurozone 27 that we are dealing with, the Prime Minister must recognise that the intentions expressed by the Germans and the French are to pursue a model that is entirely unsuited to the UK and that will create a fundamental change in the relationship between the EU and the UK. As I have said already, countries in the non-eurozone will vote for fiscal union, and that will be disastrous, not only with respect to the single market and how it affects the City of London but with respect to EU directives. I have looked at those directives, but I do not have time to go through all of them now. I simply say that there are literally hundreds, if not thousands, of directives in other areas of the treaty. For example, I have mentioned transport, but other areas include communications and energy—the list is endless. I have the list; in fact, the Library has provided it for me. It shows all those areas that are decided by qualified majority voting and the few areas that are decided by unanimity. The fiscal solidarity within the 17—or within the 27, if that is the way it goes—will use that QMV in all the areas, because that will be the new deal. So we are really in grave peril for those reasons.

I believe that the creation of another treaty within the framework of the existing treaties will deliberately target, for example, the City of London, and that is not just accidental. I remember saying before Mr Nicolas Sarkozy was elected—I say this with some respect to him—that he might prove to be a very dangerous president of France, and from our point of view that has been proved to be the case, much as I think he is looking after French interests. I cannot complain about that; we cannot try to defend our own interests and then say that the French should not look after themselves. The problem is the unreality—the Alice in Wonderland world—in which we are now living, where the French are allowed to renegotiate and throw down the gauntlet to us about what they want, but we are supposed to acquiesce and do nothing much about that. That is why this debate is so important and should be taking place on the Floor of the House.

The critical voting block against the UK will be extremely important. In fact, at the moment it is 213 votes to 130 between the eurozone 17 and ourselves. If it turns out that there is a eurozone 27, there will still be all the economic critical mass and consequently there will still be a voting arrangement against us. For that reason, we are in serious difficulties. Therefore I say that it is an illusion to imagine that that critical mass will not exist.

We also have to repatriate, although I have said repeatedly for months now—if not years—that the fundamental change in the relationship between the UK and the EU is the key question, because when we have got that right we can also address the question of repatriation. As my right hon. Friend the Prime Minister said in 2005 in the Centre for Policy Studies lecture, it is imperative that we repatriate social and employment laws.

Then there is the question of our current account deficit with the EU, which is minus £51 billion. That is up by something of the order of £35 billion or £40 billion in one year alone, and yet our trading surplus with the rest of the world is £15 billion. In other words, there is nothing wrong with our competitiveness; it is just that we cannot be competitive inside the European framework. Therefore we must deal with that issue too.

Effectively, that means that we must re-gear our relationships as a matter of fundamental foreign policy and economic policy. The Foreign Office and the Treasury, through No. 10, must re-gear our relationships with the rest of the world: with the Commonwealth countries, including India; with the United States, of course, which is not part of the Commonwealth and which must be addressed in its own right; and with all the other countries, including Malaysia, South Africa and other African countries, and south-east Asian countries. All those countries offer huge opportunities and many of them operate on the basis of British commercial law and British contracts, adapted indigenously to provide the basis of their legal system and constitutional arrangements. We can be enormously optimistic about the future if we go down that route, not abandoning our trade with the EU, but ensuring that we get a proper balance in our relationship with the EU and putting the emphasis in the right place.

We are told that 3 million jobs are at stake in our trading relationships with the EU. Nobody is suggesting that we would not continue to trade with the EU, but the problem is that the other EU countries have no growth and our trading generates a deficit.

This issue is not just a technical question about Schengen, or otherwise; we must concentrate on the bigger landscape, which is the failure of the European project. It is also about our democracy and the individual electors who voted us into Parliament on the clear understanding that we would protect their interests. That is why a veto is necessary unless a renegotiation of our fundamental relationship with the EU, along the lines that I have described, is achieved, as well as the protection of our democratic interests and the rights of our constituents.

That is also why a referendum is required. The idea being peddled that a referendum is not required—leaving aside the issue of timing—because of the coalition agreement is wholly misleading. The coalition agreement is not law, and even section 4 of the European Union Act 2011, which I sought to remove from the original Bill by an amendment that was rejected by the Government, is not definitive in excluding a referendum where a new treaty or series of legal devices that have been put together has the effect of merely appearing to make provision for member states other than the UK. That is a matter of legal interpretation and we are by no means finished with it; indeed, I have a Bill coming forward in January that has been signed up to by six Chairmen of Select Committees and that will make that clear. But the important thing is that we engage in this debate.

The assumption that is being made at the moment—that we are unable to have a referendum because of section 4 of the 2011 Act—is wholly misleading. The constitutional position for a referendum, let alone the political and economic situation, is not clear-cut by any means, and it cannot override the fundamental principle, as set out in 1975 when a referendum was conducted, because the renegotiations in this instance involve a fundamental change in the overall relationship between the UK and the EU. A referendum is required, quite simply because the current proposals vitally affect the people of the UK. We must have a referendum—it is a matter of principle, honour and trust.

[Mrs Anne Main (in the Chair)]

Order. Before I call Mr David Nuttall to speak, I will point out that there are three other Members who have attended the debate and who would also like to speak. I will be calling for winding-up speeches from about 5.10 pm. I call Mr David Nuttall to speak, and there are three other colleagues who may wish to catch my eye after him.

16:48

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

Thank you, Mrs Main, for calling me to speak. It is a pleasure to serve under your chairmanship.

I congratulate my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) on securing this debate this afternoon. I must say, as others have already said, that I find it incredible that, at a time when—as we all know—there is very little Government business going through the House of Commons, time could not be found for this debate to take place in the main Chamber. But we are where we are and we need to deal with the issue of what the Prime Minister should seek to do at this week’s European Council meeting.

At one level, European Union affairs are incredibly complex, with treaties, directives, regulations, protocols, opt-ins and opt-outs. It is all very confusing and legalistic. To be fair, it is very difficult for me, as a Member of the House of Commons with an interest in European matters, to follow the twists and turns of affairs in the European Union, so how much more difficult must it be for voters outside this House in their day-to-day lives? I say that without wanting to sound patronising. Politically, however, the issue is very simple: do we, as a country, want to continue with our present relationship with the European Union? Personally, I say, “No, we don’t,” and I believe that the overwhelming majority of the British people would also answer, “No,” to that question. This weekend’s European Council meeting presents a tremendous opportunity to start to rebalance the competences and powers between the European Union and this country.

Mention has been made of the danger of Europe developing into two groups, but we already have two groups. There are the countries in the eurozone and the ones that have not adopted the euro. We already have, if you like, a two-speed Europe, but I do not like to use that term, because it implies that countries that are going more slowly will sooner or later finish up in the same place as the ones going somewhat faster. It is right, however, to think of a two-tier Europe, with one Europe that is the eurozone, tied up in red tape and regulation, and looking only inwards, at how it can grasp ever more power. That is what we are seeing from the eurozone countries this weekend, and it is what we have already seen in the pre-meeting between France and Germany. They do not see the way forward as having less regulation, less bureaucracy and more freedom for nation states; they want to move faster towards the European Union’s declared aim of ever closer union. They see this as a great means of speeding up the project and bringing everyone together more quickly, so that Brussels will have yet more control over the member states in the eurozone.

We must be honest with our European neighbours. The whole structure of the European Union is being looked at, so there is no better time for us to sit down with our European neighbours and say, “Right. Great. No problem. If you want to get on with ever closer union, that’s fine. You crack on with it but, frankly, we don’t want to go there. We prefer another path, from where we can look to the rest of the world. We want our companies to be able to compete in a global marketplace, not just arguing within Europe and trying to get by with all the rules and regulations that are enforced by Brussels.” There is no better time than now to put our cards on the table and say what we want back. We could all have our own ideas, perhaps a shopping list of individual opt-outs, or the excellent idea presented in his opening speech by my hon. Friend the Member for Harwich and North Essex that what we need, and what I think the vast majority of the British people would expect, to be brought back from this European Council meeting is an opt-out, to the extent that in the future this country ought to be able to say, “Thanks very much for this but, frankly, it’s not suitable for the UK.” That should be retrospective as well as prospective. We should be given back the right to look through the European legislation that has already been enforced and determine what is not suitable for this country.

One would think that this would be quite a simple idea, but because Germany and France are wedded to the ideal of ever closer union enshrined in the founding treaty, the very idea that a member state could start repatriating powers is anathema to those who believe in the European Union project and in ever closer union. It is more than an economic union to them; they want not just a single currency but an economic and political union, with the development of what will become, effectively, the united states of Europe. I believe that the vast majority of the British people do not want that. I entirely respect the honourable position that has been adopted for many years, particularly by our friends in the Liberal Democrat party. That may well be why the party gets only 10% of the vote in opinion polls—I do not know—but it is nevertheless an honourable position. It is a small minority of the British people who think in that way, but it is an honourable position, and that is fine. It is great in a democracy that we have that other position, but I think that the vast majority of the British people want a much looser arrangement of our position within the European Union, and what better time to start than now? This weekend is the time to start renegotiating our position.

I know that other speakers want to get in, but in my final couple of minutes let me deal with the question of a referendum. My hon. Friend the Member for South Northamptonshire (Andrea Leadsom), who is not in her place, said that she thought that the Prime Minister had a strong hand. I agree that he does, because if others wanted us to not use our veto he could say, “Well, okay, I won’t use the veto provided I can have this, this, this and this.” However, how much stronger a hand would our Prime Minister have if this country had held a referendum of the sort we discussed on 24 October? If such a referendum had already been held, the Prime Minister of this country could have gone to Europe and said, “Look, I have the backing of the British people in a referendum.”

There has been much talk this afternoon about whether in view of the fact that we have the European Union Act 2011 it is right that there should be a referendum. I draw Members’ attention to paragraph 48 of the explanatory notes to what was then the European Union Bill:

“a referendum would be required before the UK can approve the extension of any competence of the EU relating to: (i) the coordination of economic and employment policies; or (ii) the EU’s common foreign and security policy.”

If what is suggested by Merkel and Sarkozy is not the co-ordination of economic policy, I do not know what is. So surely that Government explanatory note gives us our right to demand a referendum on the outcome of the negotiations.

16:59

[Steve Baker (Wycombe) (Con)]

It is a pleasure to serve under your chairmanship, Mrs Main. I congratulate my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) on securing this debate.

I confess that I was for a long time a great fan of the European Union. I was very pro-Europe and internationalist, as indeed I still am, but the Lisbon treaty caused me to look closely at the nature of the European Union. I do not have to find my own words for what I discovered the European Union to be, because I can quote, and I think I have done before, what the Prime Minister said in Prague in 2007, according to the BBC:

“It is the last gasp of an outdated ideology, a philosophy that has no place in our new world of freedom, a world which demands that we fight this bureaucratic over-reach and lead Europe into the hope and potential of a new, post-bureaucratic age.”

Hon. Friends might have heard me use the last part of that quotation in my question to the Prime Minister yesterday. I agree fully with what he said in 2007, but have we not been dropped into an awful pickle?

I want to say something about the remorseless logic of customs union to complement what the Chancellor has said about the remorseless logic of monetary union. It seems to me that the founders of the European Union were absolutely certain that they wanted peace and prosperity, so they set up a customs union and a free trade area between nation states. However, the problem was that those nation states were interventionist.

The argument runs as follows: economic intervention requires a territorial monopoly on the use of force. If capital and labour are not to move as a result of such interventionism not meeting its stated aims, that promotes protectionism and capital controls. In turn, that promotes autarchy as nation states struggle to provide everything for themselves in the face of their own barriers, which then promotes expanding borders. In the European Union, we find a customs union with trade barriers around it and a tendency to keep trying to expand. The ultimate outcome of that direction of travel is said to be militarism. I do not claim originality for that argument; it is set out in great detail in a book called “Omnipotent Government: The Rise of the Total State and Total War” by a classical liberal political economist, Ludwig von Mises. He was an interesting man, an Austro-Hungarian Jew who predicted the collapse of the Deutschmark and the rise of political radicalism and then had to flee the Nazis.

I am very interested in that argument. It is the inevitable direction of travel of an interventionist customs union. The crux of the matter is that if the nations of Europe will not abandon their policies of economic interventionism, there are only two directions of travel: either a return to nation states, fragmentation, economic nationalism and all the frictions and difficulties that that will cause, as well as a tendency to promote militarism, which was the worst fear of the founders of the European Union, or, on the other hand, strict centralisation, a territorial monopoly on the use of force and the raising of economic nationalism to the level of the customs union. That, in my view, is what the European Union has done. It is a terrible tragedy. While seeking to defeat economic nationalism, it has raised it to such a level that the continent is suffering what appears to be an imminent currency collapse.

In my view, everything is at stake this weekend. I encourage the Prime Minister to have the courage to believe what he said in 2007 in Prague, which was that the European Union is

“the last gasp of an outdated ideology, a philosophy that has no place in our new world of freedom.”

I hope that the Prime Minister and my right hon. Friend the Minister for Europe (Mr Lidington) can lead Europe into the hope and potential of a post-bureaucratic age.

17:03

[Mark Reckless (Rochester and Strood) (Con)]

I pay tribute to my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), who is not currently in his seat. I first met him 18 years ago as a UK economist for Warburgs, where we argued for Britain staying out of the euro. Warburgs invited my hon. Friend, who was then a new MP, to address a lunch of clients. He explained that we would be better off outside the euro. When a client asked, “But wouldn’t that push up gilt yields, and wouldn’t there be a risk premium for being out of the euro?”, he said, “No. There would be more risk inside the euro. If we stayed out of the euro, in due course, gilt yields would fall below those of German bunds.” That has now happened, and I pay tribute to him for his perspicacity on that issue.

My hon. Friend quoted from a TaxPayers Alliance piece that I found very helpful. It refers to a paper from 2004, which says that we should

“Change our relationship with the EU so that crucial powers are brought back”

and

“take back powers over trade, work and civil rights.”

It states that the British people believe that:

“Giving away power in the hope of influencing the EU has been tried for decades and the EU just gets more power over British life and uses it badly. We should be taking back power, not handing more over.”

Who was the author? My right hon. Friend the Member for Witney (Mr Cameron). Yet, going into the summit this weekend, we now hear that we can ask for only so much back—perhaps not much at all—because our priority must be to save the euro. Then we are told, rather contradictorily, that we cannot ask for too much back, because if we do, they will do it as 17 rather than 27. It cannot be both. In the short term, the only institution that can keep the euro ticking over—I fear it will be no more than that—is the European Central Bank, by printing money and buying Italian and Spanish bonds. Everything else is mood music for German public opinion, but what about our public opinion?

If the euro is to continue, the fundamental issue is competitiveness. Within the euro, the only way to deal with Germany’s overvaluation on competitiveness—it is 30% or 40% better than Italy or Spain, perhaps even more compared with Greece—is to have a significant and sustained period of inflation within Germany. If Germany will not accept that, the only way that peripheral Europe can be priced back into competitiveness with Germany is by a break-up of the euro. I believe that it would be better for that to happen sooner rather than later. It is 18 months since we saw that Greece could not pay its debts, yet it has been patched up, and we now risk throwing good money after bad to keep things going, when it is the euro that is preventing growth in Europe.

I do not dispute that a break-up of the euro will be damaging in the short term, but within two or three years, I believe that growth within Europe will be stronger after a return to national currencies than if we try to keep the euro going. My hon. Friend the Member for Stone (Mr Cash) discussed Germany repatriating its profits. The individual German company can repatriate profits, but Germany as a whole cannot, because Germany has used the euro as the latest manifestation of a system—it started with Bretton Woods, then the snake, then the exchange rate mechanism—to keep its currency artificially low, so that it exports vastly more than it imports. As a result, Germany must recycle its assets into sub-prime US mortgages or Greek Government debt. Only after Germany stops depressing its currency through that system will we come back into balance, and countries such as Greece, Portugal, Spain and Italy will be able once more to compete with Germany. We should focus on that during the summit.

The Prime Minister is going to the summit, and we will see what powers, if any, he seeks to bring back, but it is clear that there has been a fundamental change in the UK-EU relationship. Page 63 of the Liberal Democrat manifesto said that in such circumstances, there should be a referendum of the British people to decide whether we should stay in on those terms or whether, as I would like, we should again be an independent country trading with Europe but governing ourselves.

[Mrs Anne Main (in the Chair)]

I have a correction. I will call the Opposition Front-Bench spokesperson at 5.12 pm.

17:07

[Mr Philip Hollobone (Kettering) (Con)]

I believe that my constituents in Kettering see this weekend’s summit as a once-in-a-lifetime opportunity to renegotiate Britain’s relationship with the European Union. I also believe that they want me to state that they want their say in the future of our country’s relationship with the European Union through a referendum at the ballot box. It would be a huge credit to the Conservative party if we were to go to the country on any deal that the Prime Minister negotiates this weekend. It would expose the myths that we are being told by the Liberal Democrats about how in touch they are with popular opinion and would reveal once again the flaws in their manifesto. They seem increasingly to find ways to deny people a referendum on issues on which they promised them a vote.

My constituents in Kettering want us to be part of a common market. They want a free trade relationship with Europe and, increasingly, with the rest of the world, but the EU’s share of world output is falling year by year. It was 30% of world trade in 1980, and it will be 15% by 2020. Periodically, we all cut ourselves up about how important Europe is to this country, but we are increasingly tying ourselves to an economic bloc that is going south, not north. The future of our great trading nation lies with the emerging economies such as Brazil, India and China, many of which are Commonwealth countries with which we have deep and close relationships that could be deepened ever further.

On what the Prime Minister should be demanding back from the EU this weekend, we could not have a debate on the European Union chaired by you, Mrs Main, without mentioning the habitual residency test. The Secretary of State for Work and Pensions has said that the European Union is trying to overturn the United Kingdom’s rules on benefits to benefit tourists. This country refuses to give them benefits if they do not pass the habitual residency test, yet the European institutions are trying to overturn that regulation at a cost, according to the Government’s own figures, of between £2.5 billion and £5 billion every year. That is one thing to demand back from Europe.

My constituents would also like the Prime Minister to demand back control over our borders once again, because they are fed up with the mass immigration from the European Union on to our shores. We want our fishing grounds back and our agriculture policy back. Above all, we do not want to spend more and more each year on our membership subscription. In the last five years of the previous Labour Government, the membership subscription was some £19 billion. At the end of this coalition Government’s five years—should they last that long—it will be £41 billion. The cost of our membership has doubled as the red tape coming out of Brussels increasingly strangles the ability of British business to create the wealth that pays for our subscription in the first place.

This is a wonderful opportunity for our country. I hope that the Prime Minister has the courage to seize this golden opportunity to restate Britain’s relationship with the European Union and to create a brighter relationship not only for the EU but for Britain outside it.

17:11

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

It is a pleasure to serve under your chairmanship, Mrs Main, and I congratulate the hon. Member for Harwich and North Essex (Mr Jenkin). We might not agree on all the detail in relation to this debate, but I agree with him that the seriousness of the situation calls for time in this Chamber to discuss the European summit. The pre-summit dinner is only a couple of hours away, but it would also have been useful if the Prime Minister had been invited to last night’s dinner organised by the centre-right European People’s party, at which Chancellor Merkel, President Sarkozy, President Barroso and many other centre-right leaders—unfortunately, most European Union countries have centre-right Governments—were present. Unlike his centre-right equivalents, however, the Prime Minister was not invited, which is a shame.

[Mr Jenkin]

May I point out that if we had a Labour Prime Minister, he would not have been invited either?

[Emma Reynolds]

The hon. Gentleman makes a valid point. When we were in government in 1999, 11 out of 15 Governments were on the centre-left and we attended such meetings, which proved very useful indeed.

I respectfully beg to differ with those hon. Members who have said that the Prime Minister has a strong hand in the negotiations. Last Friday, the Prime Minister was relegated to a quick sandwich lunch with President Sarkozy in Paris, without the inclusion of even a press conference in the programme. The French press hardly noticed that he was there. Given that we are one of the largest economies in the European Union and used to be at the heart of its decision-making, it is incredible just how isolated this Government have made the UK. Today’s New York Times leads with an article that says that the UK is merely a “bystander” at this European Union summit. That is not in the national interest.

The past few days have served to remind us how the Conservative party likes to debate the European Union and of—perhaps this is a point of nostalgia for some—the long, tortuous and, in some cases, destructive history of the division in the Conservative party on the EU. It is worth remembering the context of the Prime Minister’s current position and the labyrinthine trajectory he took to get there. In his bid to secure his party’s leadership while in opposition, he promised to withdraw his MEPs from the centre-right European People’s party, but they still sit in the European Parliament with the same group, which the Deputy Prime Minister has called

“nutters, anti-Semites, people who deny climate change exists and homophobes”.

After becoming the then leader of the Opposition, the Prime Minister told his party to stop “banging on about Europe”, because he hoped that the issue could be put to one side and ignored. How wrong he was.

I say to this Government that, for a year, they ignored the impending crisis in the eurozone. It was only recently that they stopped being asleep at the wheel and woke up to the seriousness of the situation. Six weeks ago, we saw the unedifying spectacle of nearly half of Conservative Back Benchers defying the Prime Minister’s three-line Whip and voting for a referendum on our membership of the European Union. During that same debate six weeks ago, the Prime Minister said that he wanted to repatriate powers from the European Union. He reiterated that demand last month at the lord mayor’s banquet and declared himself a sceptic who wanted a European Union that was a network, not a bloc, while in the same breath extolling the benefits of our membership and demanding a say at the top table.

[Mr Baron]

It is rich for the hon. Lady to criticise the Prime Minister, because when her party was in government, it not only sacrificed the rebate that had been negotiated, but oversaw the transfer of swathes of power to Brussels. The list of measures that she is highlighting runs very shallow with those who remember when her party was in government.

[Emma Reynolds]

I say to the hon. Gentleman that, when my party was in government, we were not isolated in the European Union. The previous two Prime Ministers had a good relationship with both the French President and the German Chancellor, and such a relationship is very important to our national interest.

[Martin Horwood]

Will the hon. Lady therefore congratulate the Under-Secretary of State for Business, Innovation and Skills, my hon. Friend the Member for Kingston and Surbiton (Mr Davey) on his co-operative approach to lifting onerous accounting rules for the smallest businesses? Her Government did not manage to achieve that co-operative approach.

[Emma Reynolds]

I agree that a co-operative approach is needed and that we need to constructively engage with our European partners. When you go to a European summit, you get what you want not by banging on the table, but by the power of your ideas and the strength of your alliances. [Interruption.] Government Members may laugh, but my right hon. Friends the Members for Kirkcaldy and Cowdenbeath (Mr Brown) and for Edinburgh South West (Mr Darling) showed at the London G20 summit in 2009 just what you can achieve by the power of your ideas and the strength of your alliances.

[Mr Jenkin]

rose—

[Mrs Anne Main (in the Chair)]

Order. Before the hon. Gentleman speaks, may I ask the hon. Lady to address the debate through the Chair? I have never been to an EU summit and have certainly never given away any powers.

[Mr Jenkin]

I remind the hon. Lady that, after the collapse of the European constitution, Tony Blair went to the European Parliament and said that the trumpets were outside the walls of Jericho and asked whether anybody was listening. Nobody was listening and we got the Lisbon treaty instead. There is no evidence that any Labour Prime Minister had any influence over the general direction of the European Union any more than we do now.

[Emma Reynolds]

I disagree entirely. When our party was in government, we were at the centre of European decision-making, and the truth is that we are not any more.

Six weeks ago the Prime Minister demanded repatriation of powers, yet yesterday, in a 1,000-word article in The Times, in which he set out his position for the European summit, he did not mention repatriation once. We agree that the priority should be given to providing a lasting solution to the eurozone crisis, because we think it is in the national interest, but we also say that Britain should have a strong voice in these negotiations. Unfortunately, because the Prime Minister has tried to face two ways on the issue—on the one hand placating his Eurosceptic Back Benchers and some members of his Cabinet, and, on the other, trying to have a realistic negotiating position with our European partners—the risk is that he will not deliver on either of those objectives. Whereas many Conservative Back Benchers demand repatriation, a split has emerged, not only in the coalition, but in the Conservative party, over the past few days.

[Kate Hoey]

Will my hon. Friend give way?

[Emma Reynolds]

I will not, because I do not have much time. The Deputy Prime Minister has said that attempting repatriation would be economic suicide, and the Mayor of London and two Cabinet members—the Secretaries of State for Work and Pensions and for Northern Ireland—say that the treaty change would inevitably lead to a referendum, whereas the rest of the Government seem to be saying something quite different.

The fact that the Prime Minister is leading a divided party while negotiating on Europe is very much weakening his hand. By facing two ways, the Prime Minister’s position and the negotiating position of our Government are both confused and confusing. It is no wonder that our European partners are not entirely sure where the Prime Minister stands. It is clearly not in our national interest to have that weak voice and to stand on the sidelines. Splendid isolation is really not that splendid. The fact that we are in the slow lane of a two-speed Europe might chime well to the Eurosceptic ear, but, essentially, it could mean that other member states will take decisions that affect us without our being at the table.

I say to the hon. Member for Bury North (Mr Nuttall) that it is wrong to assume that eurozone members all agree on which direction they want to take regarding better economic co-ordination, because the French Gaullois tradition is an intergovernmental one that is very hostile and suspicious of supranational institutions. There are disagreements within the eurozone countries. We should not just assume that France and Germany agree on these issues.

If the eurozone crisis continues to deepen, it will have serious implications for jobs, businesses and banks in the UK. Our economy is closely entwined with the other 26 members of the European Union, and more than half our trade goes to those countries. Our banks are also extensively linked and exposed to eurozone banks, so it is clearly in the national interest for a solution to be found at the summit. Labour Members want the Government to push for a greater and more decisive role for the European Central Bank and a credible crisis fund with, of course, built-in conditionality. The so-called six-pack package goes a long way to creating credible rules and procedures to enforce those rules, but it is clear that a solution must also be found to tackle the balance of payments and trade imbalances, which several hon. Members have mentioned, between the different eurozone member states. It is also very important to enhance the competitiveness of the weaker economies.

In winding up, I would like quickly to ask the Minister a couple of questions. Why did the Prime Minister promise repatriation of powers six weeks ago and then suddenly drop those demands yesterday? What resources in the Foreign and Commonwealth Office were given to working through options on repatriation, or was that always a matter of rhetoric rather than something really considered in the corridors of King Charles street? Why have the Government been so complacent about the emergence of a two-speed or multi-speed Europe, and what specific reassurances are the Government asking for with regard to the City and the single market? Are the Government seeking, for example, an emergency brake to be extended to the area of financial services? Finally, are the Government hopeful of a fairly rapid treaty change, and what are the risks to the UK and the rest of the EU of a prolonged process of treaty change and ratification?

In conclusion, we want to see the eurozone succeed, because it is clearly in the national interest that a solution is reached. It is not in the national interest to engage in “I told you so” arguments or schadenfreude, nor is it in the national interest for the governing party and the coalition to be so divided on this issue. Our European partners are left scratching their heads about what the Government’s position really is. The Prime Minister should never have promised repatriation of powers, if it was never his intention to deliver on that promise. His promise has entrenched and deepened divisions in his party, as we saw today and yesterday at Prime Minister’s questions.

That is no way to negotiate with our European partners. Our country demands and deserves better leadership, and only then will the Government be in a position to effectively pursue the national interest and start being part of the solution rather than part of the problem. Division, isolation and weakness are, in fact, a betrayal of the national interest. My concern is that the Prime Minister will not be able to deliver on even the modest demands that he has set out because of his isolation.

17:24

[The Minister for Europe (Mr David Lidington)]

I congratulate my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) on securing the debate. While the debate was going on, I was thinking that he and I have known each other for more than 30 years. Although it is fair to say that we have not always managed to agree on political subjects, I have never had any doubt whatsoever about his integrity or his patriotism. I pay tribute to him for the way he put his case today.

We are, indeed, in the rather unusual position of debating a meeting that is about to start and that, to judge from what President Van Rompuy said on Monday, may well go on for many hours after dinner tonight and into tomorrow morning. I therefore need to preface anything I say with the caveat that events may overtake us. I will also be quite straight with hon. Members and disappoint the hon. Member for Wolverhampton North East (Emma Reynolds) by saying that I am not going to go into detail about the Prime Minister’s negotiating position. The only people who would benefit—indeed, who would be delighted—by a full disclosure of the Prime Minister’s negotiating tactics would be the Governments of other countries represented around the table, who might not necessarily share identical negotiating objectives.

I want to try to respond at least to the broad questions raised during this debate. I certainly agree with everybody who has said that the British Government have a duty to be vigilant and to defend vigorously the national interests of the British people. As the Prime Minister made very clear yesterday, we will support the objective of securing fiscal discipline in the eurozone, but not at the expense of either our industries or our independence. The crisis in the eurozone is forcing the European Union and the eurozone 17 in particular to confront fundamental choices. It matters hugely to the United Kingdom that the eurozone is successful in sorting out its problems.

One point on which I agreed with the hon. Member for Wolverhampton North East was the interconnection between this country’s economy and the economies around the wider Europe. Many of the statistics are well known. The eurozone accounts for roughly 40% of United Kingdom trade, and its stability matters globally. Around 15% of United States trade is with the eurozone and one can measure the concern of the United States Government by the fact that the Treasury Secretary, Mr Geithner, was dispatched on rapid visits to Paris and Berlin earlier this week.

The hon. Member for Luton North (Kelvin Hopkins) talked about wanting an orderly deconstruction of the eurozone, which was far too sanguine. He slightly skated over the fact that in every conversation I have had with Ministers of any of the 17 Governments of the eurozone, they have said that they are committed to keeping the eurozone project going. In addition, as far as one can tell from opinion research, the populations of those countries still consider the euro to be an essential part of the national interest of their country. Hon. Members may think that those views are misplaced, but they are the views of the countries that have chosen to join the euro, and, ultimately, we have to respect their sovereign decision.

What I am clear about is that the instability in the eurozone is already having what the Chancellor has described as a “chilling effect” on the United Kingdom’s economy, and a collapse of the eurozone or a prolonged recession in the eurozone as a result of financial instability persisting will be thoroughly bad news for jobs and for hopes of economic growth in our country. It is not only important but urgent to try to sort out the problems of the eurozone. As a number of hon. Members have said, many of us argued from the start that there were flaws in the way that the euro had been designed and that it seemed illogical to have a currency union and a single monetary policy and interest rate without some common agreements and structures in place to govern wider economic and, in particular, fiscal policy.

We can argue that those problems should have been tackled at the start and that the warning signals should have been read when countries breached the stability and growth pact and no action was taken, but we are where we are. I certainly believe that there is a sense of real urgency and of peril among serious-minded leaders of other eurozone countries. They are now speaking in terms of an economic catastrophe that will spread much more widely than the single currency area if this instability is not resolved, and resolved swiftly.

[Mr Baron]

My right hon. Friend is of course right. In the history of the world, there has not been a monetary union that has worked that has not also had to include fiscal union. It is fundamentally flawed. What is more important now is not history but the future. I suggest to my right hon. Friend that perhaps the one reason eurozone leaders are so passionate about the euro is that it is part of a political project for political union, and that they are therefore overegging the economic consequences. Where history can also help us is to remind us that since 1945, as I have highlighted—there has been no riposte from the Minister on this point—we have had 80 instances in which countries have left currency unions. The vast majority have benefited in growth terms from having left a currency union. I suggest to the Minister that he should think carefully. Perhaps the motive of these eurozone leaders is that they see the euro as a weapon that is crucial to political union.

[Mr Lidington]

My hon. Friend makes a perfectly sensible point about the fact that other countries have departed currency unions since the second world war. It is fair to say that we have not had such a break-up of a currency union on this kind of scale, with economies that are so closely integrated, and in an age when information and capital can be moved rapidly, not just in national jurisdictions but globally, at the click of a computer mouse. Studies that I have seen say that it would be much, much more damaging and risky for the eurozone to break up, particularly if it broke up chaotically, than it was for some of those other currency separations, such as those of the Czech Republic and Slovakia. Incidentally, Slovakia, having broken with the Czech Republic, then decided to enter the eurozone and has engaged in some challenging austerity and competitiveness measures in order to try to make a success of that commitment.

Where I would agree with my hon. Friend is that this has been seen, by those who took part, as a political project as well as an economic project. However, to an extent that we sometimes do not appreciate in this country, those political ambitions have a much greater resonance among the wider electorates in many countries on the continent of Europe than they do here. That is due to all kinds of historical reasons with which we are fairly familiar. I want to emphasise that the prime objective of the summit ought to be to sort out the issues that remain unresolved from the eurozone meetings of 21 July and 26 October. Whether we talk about the European financial stability facility, bank recapitalisation or the detail of the Greek write-down, there is detail that has yet to be finalised, and that needs to be addressed rapidly. So, too, does the need for competitiveness, not only in the peripheral eurozone economies but in the global context of the European Union as a whole. It needs to be embraced as a priority by every single one of the member states and the European institutions. If I have time, I will come on to that. There is some evidence that that challenge is starting to be recognised and addressed.

I accept too—I will make this point very briefly—that if eurozone countries choose to push forward with greater economic integration, there will be a democratic challenge as well. How are economic policies to be made democratically accountable? I accept that that is a challenge for those countries. It is clearly for them, as independent sovereign countries, to decide how they individually address that.

Many hon. Members raised the issue of possible treaty change, and the safeguards that the United Kingdom would require should the eurozone follow that path. Let me set out the options in broad terms. One way to introduce stronger rules for the eurozone, which of course would not apply to the UK, would be a change in the treaty governing all 27 members of the European Union. That would be the most comprehensive way to provide tough sanctions to ensure that eurozone countries stick to their own rules on debt. A second option would be to allow the 17 countries of the eurozone to create a separate intergovernmental treaty of their own. That has happened before, with the Schengen agreement on open borders and with the European stability mechanism. The 17 are free to do that again. The likelihood, however, is that the signatories to such a treaty would want to draw on the EU institutions that belong to all 27 member states to monitor and enforce compliance with any new rules on tighter budget discipline. In both instances, we would have the power of veto. Treaty change at 27 requires unanimity and, while the content of an intergovernmental treaty at 17 is a matter for the 17 signatories, it cannot cut across the provisions of the existing EU treaties, nor can it seek to use the EU institutions without the specific agreement of all the EU 27.

[Mr Cash]

My right hon. Friend, I am sure, recognises the extreme danger of creating a treaty within a treaty. I am sure he realises that that would be a house divided against itself, and catastrophic for our democratic system.

[Mr Lidington]

As I said earlier, this is not without precedent. I am not saying that this will happen, but it is an option that has been floated quite openly by a number of European leaders as a possible way forward. Just as there is a negotiation within the eurozone about the measures and mechanisms to enforce discipline, so there is a negotiation with us and fellow non-euro countries. In the course of these negotiations, whichever option is followed we will make sure that our interests are protected. Of course, there is another option, which is to use the existing frameworks and treaties. That option is still on the table.

In the debate, there has been extensive discussion of the repatriation of powers and a referendum. We need to remind ourselves that this is the first Government in British history to have introduced a legislative guarantee of a referendum. The European Union Act 2011 ensures that there is now a legal requirement on any Government to hold a referendum before any agreement on treaty change that transfers competence or powers from the UK to the EU. I have never pretended that the Act is a panacea. It does not address the issue of repatriation of powers and that was not its purpose. It is a guarantee.

There has been some suggestion from hon. Members that the UK should hold a referendum on any changes the eurozone countries may choose to make. I want to reiterate the point the Prime Minister has made on this issue. What the eurozone countries may or may not do is have arrangements between themselves that pool some of their sovereignty. To say that we have to have a referendum in Britain about something that other countries are going ahead with anyway would not only be a rather odd approach for us to take, but it would probably mean that those countries would choose to go ahead in any case but using purely intergovernmental means, however messy and unsatisfactory from their point of view such an alternative might be. That may well yet happen, but holding a referendum on such a treaty would not bring back a single power.

Personally, I could draw up a list of powers—we had the list in the Conservative manifesto at the previous election—that I think are better decided nationally than by the EU. However, we have to be ruthlessly focused on what is most important to our national interest and, at this time, in particular to our national economy. That is why our priority in the negotiations is safeguards to keep the single market fair and open for our most crucial industries, including financial services, to which my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) made reference.

[Kate Hoey]

Is the right hon. Gentleman saying that none of the options that he has mentioned and that might happen is making any real change to our relationship with the European Union? Surely the changes are fundamental and require the will and support of the British people in a referendum.

[Mr Lidington]

No. We do not know the shape, let alone the detail, of any agreement that might be reached over the next 24 hours or longer. The risk alluded to by a number of my hon. Friends, which perhaps lies behind the hon. Lady’s intervention, is that of caucusing. The risk is that the greater economic integration of the 17, and of more countries over time as other member states join the euro, as is still their intention, will lead to caucusing on single market measures, so that the UK would in effect be presented with a “take it or leave it” option. That is certainly a theoretical risk and I do not want to pretend otherwise. The political reality, however, is, first, that that is not how the eurozone countries have operated up till now. We were given similar warnings when the United Kingdom took the decision to stay outside the euro when it was created, but those dire warnings have not been justified by the events of the years since.

Secondly, when I talk to Ministers from the other 26 member states, I find that neither the eurozone 17 nor the euro-out 10 are cohesive or monolithic blocs. Talking to Dutch, German—in particular—Finnish, Austrian or Irish Ministers, one finds that they all very much want the United Kingdom, with its championship of free and open markets and an outward-looking European Union, to be centrally involved in taking decisions. There is not that drive towards a caucus that a number of my hon. Friends fear.

[Mark Reckless]

Will the Minister give way?

[Mr Lidington]

I will not, I am sorry. I want to leave some time to my hon. Friend the Member for Harwich and North Essex, so I must conclude my remarks shortly.

I will write to those hon. Friends who have mentioned particular subjects, such as my hon. Friend the Member for Cheltenham (Martin Horwood) who spoke about energy. I assure my hon. Friend the Member for South Northamptonshire that we completely recognise the importance of financial services. A thriving City of London is an asset not only to the United Kingdom but to the European Union as a whole. We should go out and sell that case loudly and confidently. We have made it clear that, if a financial transactions tax introduced at EU level were to cost jobs and growth—that is on the basis of the Commission’s own impact assessment—we would veto it. If others wanted to go ahead, foolishly, on the basis of an enhanced co-operation measure, that would be a matter for them.

It is clear that the next few days will be important for Europe. We head into the summit with a clear objective. Yes, we support the eurozone in sorting out its problems, but we will not sign up to fiscal discipline in the eurozone without safeguards and certainly not at the expense of our industries or our independence.

17:43

[Mr Jenkin]

I am most grateful, Mrs Main, for the opportunity to make a few remarks in the last couple of minutes available. My right hon. Friend the Minister for Europe is extremely generous, as always, in letting me reciprocate. No one doubts the sincerity of his commitment to doing the right thing for his country as well as for the party and the coalition. I also thank my right hon. Friend the Member for New Forest West (Mr Swayne), who has patiently sat through the debate on behalf of the Prime Minister, whose gesture we appreciate.

May I be brutally frank? I hear the Government still in denial about the significance of what will happen. We will have a treaty of the 27 that will create a massive shift in the focus of power to the 17. The EU institutions will be concentrating on that and we will become peripheral, so we need a fundamental change in our relationship with the European Union to compensate for that change, not least because our existing terms of membership are already very damaging to this country’s competitiveness, growth and job creation. At the summit, the United Kingdom should seek an agreement in principle—so that it does not hold the summit up—that renegotiation has to be on the table. If the Government cannot even obtain that at such a moment, they are not building a position from which to negotiate in future.

As for a referendum guarantee that does not actually guarantee a referendum, I have made my point about that Act of Parliament: it is not sufficient because it does not address our circumstances. The treaty change is without doubt significant and, if the Government want the British people to consent to it, they must inevitably concede a referendum or it will never be ratified.

17:45

Sitting adjourned without Question put (Standing Order No. 10(11)).

Written Ministerial Statements

Thursday 8th December 2011 Written Statements

Thursday 8 December 2011

Innovation and Research Strategy

Thursday 8th December 2011 Written Statements

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

The UK has a global reputation for innovation and research and our future prosperity rests on our ability to continue to compete in a global economy. Innovation and research is a key priority for this Government, and the Secretary of State and I are today publishing the Government’s “Innovation and Research Strategy for Growth” which seeks to build on our existing strengths. A copy of the strategy is being placed in the House Library.

Our universities, research councils and businesses are national assets that form the foundation of the UK’s future competitiveness. However, if we are to realise our vision for the UK’s future we need to strengthen our innovative capability and encourage further investment in innovation.

The Government have already made clear our commitment to the UK knowledge base by maintaining the annual £4.6 billion budget for science and research programmes with £150 million each year supporting university-business interaction. Going further, we intend to maximise the impact of our research base on economic growth and have announced £610 million to science capital investment projects since January 2011.

We will improve incentives for companies to innovate, especially small and medium-sized enterprises. In addition to our successful changes to the SME research and development tax credit we will invest an additional £75 million to support small business innovation including additional funding for Smart grants that support SME research and development. We will implement a new innovation voucher programme enabling small businesses to engage with universities and the wider knowledge base.

We will also support research innovation and collaboration overseas, focusing on innovation hot spots and high-growth economies, starting with China and India. We will make it a priority to secure greater European funding to support research and development by UK businesses.

The coalition Government are putting innovation and research at the heart of their growth agenda through greater investment and increased collaboration, ensuring that the UK has a promising future.

Unlocking Growth in Cities

Thursday 8th December 2011 Written Statements

[The Minister of State, Department for Business, Innovation and Skills (Greg Clark)]

The Government are today publishing “Unlocking Growth in Cities”, which describes a new framework for the relationship between our largest cities and central Government. In particular, the document sets out the terms for a system of “city deals”—binding agreements which enable cities to negotiate the devolution of specific powers, resources and responsibilities required to meet locally-determined economic and social objectives.

The Government are committed to the decisive action required to restore confidence in our economy. This, above all, rests on the principle that sustained recovery and long-term prosperity can only be achieved through private sector growth. This will not occur in the abstract, but through the success of real businesses in real places—especially our cities which, together with their wider commuting areas, account for 74% of England’s population and 78% of English jobs.

To achieve their full potential, our urban communities must be empowered to act in support of their local economies. It is widely recognised that, compared to their European counterparts, English cities have less influence over the key decisions that affect their competitiveness in national and international markets. Because power and influence over relevant policy making areas has been so heavily skewed towards Whitehall and Westminster, civic leaders have been forced to look upwards to central Government to resolve problems, rather than through direct engagement with existing and potential sources of private and voluntary sector investment and innovation.

We are therefore committed to revitalising the role of city leadership through a radical shift in power, allowing cities to take on certain responsibilities and resources from Government wherever they can make the case that this would improve the efficiency and outcomes of public policy.

The document sets out a series of indicative options for the transfers of control that could be considered as part of each deal making process. This list is not intended as a statement of policy or as an automatic entitlement for all cities, it is neither prescriptive nor exhaustive. Rather, the specifics of each city deal negotiation will be determined by city-led initiative and its conclusion dependent on the strength of the case presented. From the Government side, we will look for a clear economic rationale, a robust evidence base, an appropriate geography, the acceptance of a proportionate degree of risk and proper standards of governance, co-operation and accountability.

Supported by the Cities Policy Unit in the Cabinet Office, and in partnership with the Department for Communities and Local Government and the Department for Business, Innovation and Skills, I will, as Minister for Cities, work closely with city leaders and with colleagues across Whitehall Departments to agree a series of city deals over the coming months. Our timings will reflect the needs and readiness of each city, but given the national imperative to boost economic growth, and the enthusiasm in our cities for moving this agenda forward, we intend to move at pace, agreeing the first wave of city deals by spring next year.

Because of their size and economic importance, we are currently focusing on the largest cities in England. However, taking account of the lessons to be learned from this first wave, we will consider the case for extending the city deal process to other communities in due course.

I have placed copies of “Unlocking Growth in Cities” in Libraries of both Houses.

Bank Levy Double Taxation Agreement (UK and Germany)

Thursday 8th December 2011 Written Statements

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

A double taxation agreement with Germany was signed on 7 December 2011 in relation to both countries’ bank levies. The text of the agreement has been deposited in the Libraries of both Houses and made available on HM Revenue and Customs’ website. The text will be annexed as a schedule to a Treasury Order and laid before the House of Commons in due course.

RDEL Revisions

Thursday 8th December 2011 Written Statements

[The Chief Secretary to the Treasury (Danny Alexander)]

The autumn statement announced that public sector pay awards will average 1 % for each of the two years following the end of the current pay freeze, and that departmental budgets will be adjusted in line with this policy.

The pay policy will be applied to health, schools, and international development, but the savings will be recycled within existing budgets.

Departmental resource DEL budgets (excluding depreciation) will adjusted by the following amounts:

Local Government Finance

Thursday 8th December 2011 Written Statements

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

I am today publishing the Government’s formal proposals on distribution of formula grant to English local authorities for 2012-13. Total formula grant for 2012-13 will be £27.8 billion, of which redistributed business rates will be £23.1 billion, revenue support grant £477 million and police grant £4.2 billion.

The 2010 spending review set out how the Government are tackling the deficit we have inherited from the last Administration and put the public finances back in order. Every bit of the public sector needs to do its bit to help pay off the deficit, including local government, which accounts for a quarter of all public spending. The settlements for 2011-12 and 2012-13 set out on 13 December 2010 sought to achieve fair and sustainable settlements for local government between different parts of the country—from urban to rural, north to south, metropolitan to shire.

This settlement is supported by our extension of the successful council tax freeze scheme to a second year, building on the 2011-12 freeze offer taken up by all eligible councils. The offer being made to local authorities for 2012-13 is set out in the written statement of 14 November 2011, Official Report, column 27WS. Council tax more than doubled since 1997 and the freeze will offer real help to hard working families and once again save up to £72 compared to a 5% rise in council tax on top of this year’s saving of up to £72. All eligible authorities took up the offer of Government funding to freeze or reduce their council tax in 2011-12. By offering their local residents a council tax freeze again this year, it will offer real help now with the cost of living to local residents, including pensioners, private sector workers and public sector workers.

The estimated yield from business rates in England will be £23.119 billion in 2012-13. Since this is greater than the formula grant control total for 2012-13 agreed at the spending review, the second year’s funding for authorities which froze or reduced their council tax in 2011-12 has been included in formula grant for this year. This increases the total amount included as formula grant for 2012-13 to £27.791 billion.

The overall settlement is in keeping with that first proposed in February 2011. The sum of the provisional 2012-13 formula grant as at 7 February 2011 and the 2011-12 council tax freeze grant, therefore, form the allocations of formula grant for 2012-13. The council tax freeze grant allocations remain separately identifiable, and the subtotal given in the breakdown table for each authority is the same as the provisional 2012-13 formula grant allocations as at 7 February 2011 (my written statement of 7 February 2011, Official Report, column 1WS). This is in line with the Government’s policy on multi year settlements, which is that we will not change the provisional proposals first published in February 2011 except in entirely exceptional circumstances.

We have continued to focus resources in a way that gives more weight to those parts of the country with the highest levels of need. These are often the areas which are most reliant on central Government grant. As in 2011-12, in calculating the grant distributions we have acted to insulate them by distributing less money on a per capita basis, and giving more weight to the levels of need within different areas. We have also grouped councils into four bands and set different “floors” for their grant reductions. This is a fairer and more progressive system of calculating grant than before.

This year’s settlement means that the average spending power reduction for 2012-13 is expected to be limited to 3.3% (or £75 per household), less than last year’s comparable figure of 4.5%. We have also again made sure that no council will see their overall spending power fall by more than 8.8%. To fund this, I have transferred £20 million of my Department’s budget to local government for 2012-13. This additional funding will smooth the impact of this year’s settlement. Councils will have an average spending power of £2,186 per household at their disposal in 2012-13. Reflecting the fairness of the settlement, the average spending power per household in Hackney will be £3,050 compared with £1,537 in Windsor and Maidenhead.

Many councils have successfully shown that they can deliver significant efficiencies but there is still more to be done. Smarter procurement, reducing management and support services costs, greater transparency to cut waste, sharing services and tackling fraud can all deliver significant savings to help protect front-line services and taxpayers’ interests. And to support councils the Localism Act will trigger the biggest transfer of power in a generation to local communities.

Moreover, I would note that in the coming year, local government will have access to new financial measures including over £430 million of funding under new homes bonus, up to a £1 billion in community infrastructure levy, and access to the £2.4 billion regional growth fund and the £500 million growing places fund (through their local enterprise partnerships).

The Localism Act also includes powers to abolish Whitehall capping in England and instead allow local residents to veto excessive council tax rises. I can confirm that we are moving ahead with introducing arrangements for council tax referendums if an authority sets a council tax which exceeds principles endorsed by Parliament (i.e. is “excessive”). These provisions will be implemented for 2012-13 and I am also today giving an indication of the principles I am minded to propose for that year. I propose that local authorities will be required to seek the approval of their local electorate in a referendum if, compared with 2011-12, they set council tax increases that exceed:

3.5% for most principal authorities;

3.75% for the City of London;

4% for the Greater London Authority, police authorities, and single purpose fire and rescue authorities.

I am proposing that no equivalent principles will apply for town and parish councils for 2012-13, although they may in future years.

Of course, should all eligible local authorities take up the new council tax freeze offer for 2012-13 there will be no need for council tax referendums next year. After considering any representations from authorities, I will set out the final principles in a report to the House and seek approval for these in parallel with the final report on the 2012-13 local government finance settlement.

Any town hall that turns down the council tax freeze offer and tries to hike council tax bills unreasonably will now have to ask at the ballot box whether hard-working families and pensioners are willing to shoulder an increase in their cost of living.

Finally, this is a transitional settlement where we have set out details of the settlement for two years, striking a balance between the need to help councils plan for the future and the need to reform the system. Ministers believe the current system we have inherited from the last administration is broken. As the National Audit Office has observed, the formula grant system is

“highly complex and not transparent”

and

“the complexity of the four-block model... [serves to] obscure the link between needs, resources and funding”

(NAO, “Formula funding of local public services”, July 2011, HC 1090, p.26).

We have recently consulted on proposals that would lead to fundamental reform to the funding of local government, moving away from the existing arrangements where there is no connection between the health of the local economy and the funding of the local authority. Our proposals will provide councils with greater control over their funding, developing a direct link between the growth of businesses in their area, and the revenues available to them. These proposals, which we intend to introduce from 2013-14, will deliver direct financial incentives for authorities that promote economic growth and help many councils break free from dependency on grants from central Government. The Government will set out their response to the consultation proposals to the House shortly.

Today also marks the start of a period of statutory consultation with local government on formula grant distribution and I welcome their responses. Consultation closes on 16 January 2012.

I shall be making available full supporting information on the Department for Communities and Local Government website at:

http://www.local.communities.gov.uk/finance/1213/grant.htm.

This includes a “Plain English Guide to the Local Government Finance Settlement” for 2012-13 which I hope will be helpful in cutting through the jargon and the sheer complexity of the current system.

I have placed copies of the consultation paper and the Plain English Guide, as well as details of the location of other supporting material, in the Vote Office and the Library of the House.

Libya (Operation Ellamy)

Thursday 8th December 2011 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

In a written statement on 23 June 2011, Official Report, column 24WS, my predecessor the right hon. Member for North Somerset (Dr Fox) informed the House that the costs of Operation Ellamy—the United Kingdom’s contribution to coalition operations in Libya in support of United Nations Security Council Resolution 1973—for the six months from mid-March to mid-September were estimated to be £120 million. In addition, an estimated cost of replenishing munitions of up to £140 million.

On 12 October 2011, Official Report, column 30WS, my predecessor revised the figure for the whole operation, from mid-March to mid-December, to £160 million with an estimate of the cost of replenishing munitions used in Libya at £140 million.

I have previously informed the House, on 14 November 2011, Official Report, column 568, that I would provide a final estimate of the cost of operations in Libya in early December. With operations now over we estimate that the net additional cost of Operation Ellamy will be £212 million. This estimate is made up of £145 million of operating costs, plus a further £67 million on the cost of replenishing munitions.

As previously announced, the additional costs incurred by the Ministry of Defence on Operation Ellamy will be borne by the reserve, and will be in addition to the core defence budget. The fully audited cost of Operation Ellamy will be published in the Ministry of Defence’s annual report and accounts.

Submarine Service

Thursday 8th December 2011 Written Statements

[The Secretary of State for Defence (Mr Philip Hammond)]

I am pleased to inform the House that, following a review, women in the Royal Navy will be allowed to serve in submarines in the future.

The decision follows an 18-month thorough analysis, which included a study of legal, operational, health, social, technical, and financial issues. Key to this was the naval service’s operational effectiveness now and in the future. This decision to allow women to serve in submarines will enable the Royal Navy to maximise the deployability of its talent pool.

Recent medical research has shown that there are no risks to female health during normal submarine operations, so there are no medical reasons for excluding women from service in submarines, provided they are not pregnant. An independent peer review of this work concluded that, while there was no medical risk to women, there remains a risk to a foetus, which could emanate from the higher level of carbon dioxide in submarines in comparison to normal atmospheric conditions. There is no danger from radiation; the average annual dose of radiation accrued by Royal Navy submariners is actually less than the average annual background dose received by the general population of the UK (as submariners are not as frequently exposed to the sun). External legal counsel has advised that the scientific and medical evidence did not justify a ban on female submariners, but did require the exclusion of pregnant submariners.

Female officers will be introduced first into the Vanguard class as soon as the policy and practical changes can be made, which is expected to be towards the end of 2013, with a small number of volunteers commencing submarine training in late 2012. The first female ratings to join a Vanguard class submarine will be recruited and trained from 2014, to join sometime in 2015. Women will also be permitted to serve in the Astute class, but probably not before 2016, when the necessary modifications to accommodation and facilities have been made.

Academies Funding Transfer

Thursday 8th December 2011 Written Statements

[The Secretary of State for Education (Michael Gove)]

I am today publishing a consultation setting out my “minded to” decision in relation to the academies funding transfer for 2011-12 and 2012-13.

The decision has been reached in consultation with the Secretary of State for Communities and Local Government and takes account of the responses received from local authorities to our consultation, issued in July 2011, about the basis for the decision.

The decision takes account of the need to ensure that both academies and local authorities are funded fairly for the pupils they provide services for and the responsibilities which they hold. We have also considered how best we can ensure that the amount transferred better reflects the distribution of academies between local authorities.

We plan to make changes from April 2012 to the methodology for calculating the level of the transfer to ensure that the amount transferred properly reflects the services which transfer to academies from their local authority. We will do this in two ways. First we will, in future, only take account of net expenditure on education services; and secondly, in areas where some responsibilities remain with the local authority, we will only use a proportion of spend in those areas to determine the amount to be transferred.

To provide financial stability and certainty to local authorities we will cap the maximum amount to be transferred in 2012-13 at the level of the top-slice of formula grant which has been announced by the Department for Communities and Local Government. In addition we will make a calculation for each authority in January 2013 of the costs of the local authority element of local authority central spend equivalent grant (LACSEG) based on the number of academies in each authority. Where the costs calculated for an authority are below the amount top-sliced from formula grant, we will make a specific grant payment to that authority equivalent to the difference between the costs and the top-slice.

To provide further certainty to local authorities we plan to make no changes to the previously announced top-slice for 2011-12 as we believe that taking action to redistribute costs at this stage in the financial year would cause unnecessary turmoil and instability.

This arrangement, whilst providing financial certainty and stability to local authorities, means that the Government will continue to provide a considerable amount of double funding in this area. Given the poor value for money which this provides the taxpayer these arrangements should only be seen as transitional.

The Government are committed to resolving the double funding of local authorities for services which devolve to academies permanently from 2013-14. As part of the local government resource review, we will explore removing the funding for these services from formula grant into the budget of the Department for Education. In this option, the Department would then a administer a grant to authorities and to academies proportionate to the number of pupils for which they are responsible according to a national rate. We plan to consult, jointly with the Department for Communities and Local Government, in 2012 on how we could put our commitment permanently to solve this issue into effect.

I have placed copies of the consultation paper in the Vote Office and the House Libraries.

New Nuclear Waste and Decommissioning Financing

Thursday 8th December 2011 Written Statements

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

I have today laid before Parliament Funded Decommissioning Programme (FDP) guidance for prospective operators of new nuclear power stations, together with the Government response to the December 2010 consultation on draft FDP guidance and a Waste Transfer Pricing Methodology for the disposal of higher activity waste from new nuclear power stations.

The FDP guidance is statutory guidance that is provided for in the Energy Act 2008. It sets out the factors which may be appropriate for the Secretary of State to consider in deciding whether or not to approve an FDP, approve it with conditions, or modify an FDP which has already been approved. The guidance also sets out information about the preparation, content, modification and implementation of FDPs under the Energy Act.

The Waste Transfer Pricing Methodology is a technical document the purpose of which is to set out how the Government will determine the price for the transfer of title to and liability for intermediate level waste and spent fuel from a new nuclear operator to the Government, for disposal in the geological disposal facility that the Government will construct for the disposal of legacy wastes. The methodology also provides some worked examples.

I have placed an electronic copy of each document in the Libraries of the House. A copy of each document is also available on the DECC website at:

http://www.decc.gov.uk/en/content/cms/meeting_ energy/nuclear/new/waste_costs/waste_costs.aspx.

Water White Paper

Thursday 8th December 2011 Written Statements

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

I am today laying before Parliament “Water for Life”, our water White Paper. This sets out the Government’s vision for securing sustainable and resilient water supplies through to 2050. It builds on the success of the sector since water privatisation, while recognising that population growth and climate change will place extra demands on a system designed to meet the needs of today, not tomorrow.

The White Paper includes new scenarios of water availability in the 2050s. We need to start planning now to build flexibility and resilience into our water and sewerage infrastructure. Our approach must include better management of demand, but we will also need substantial new investment in infrastructure so we can capture more water and start to use the supplies we have more efficiently. We need to connect up our water system more effectively so that we can move supplies to areas where they are scarcer. We also need to ensure our drainage system can continue to operate effectively as infrastructure ages and pressure on capacity grows as the population increases.

The White Paper sets out how we will take forward our commitment in the natural environment White Paper to long-term reform of the water abstraction regime. Reform is vital given the challenges of climate change and population growth and the lack of flexibility in the existing regime to deal with them. This will be a complex task, and we will work closely with abstractors and other stakeholders to deliver it. We plan to consult on proposals in 2013, and aim to introduce legislation subsequently, implementing the new regime fully by the mid to late 2020s.

As well as looking to the future, we want to tackle the problems of pollution and over-abstraction affecting our rivers and wetlands currently. We can succeed only by drawing in the enthusiasm and knowledge of those with a clear stake in their local environment. We set out how Government and regulators are already starting to make this happen through new catchment pilots as well as a concerted effort to align advice, incentives and regulatory tools to address diffuse pollution and improve the environment. The White Paper explains how we will extrapolate from around 70 catchment scale pilot projects, and provide intensive support to 25 of them, as a precursor to rolling out this approach across the country.

We know that affordability of water bills is a growing problem for householders, and we want to enable businesses to keep their costs down. We set out our new framework to enable water companies to target more help on those household customers who need it most by introducing company social tariffs.

If bills are to be kept affordable over the longer term, and customers are to receive better service from their water companies, the regulatory framework governing the industry must change. The White Paper sets out how we are helping business customers and public bodies to reduce unnecessary costs by a package of deregulatory reforms to introduce more competition into the water industry. The reforms we propose will provide non-household customers with more choice and open up the market to new entrants, removing the anti-competitive barriers in the existing regime. Our proposals will increase the size of the market to include all non-household customers; remove a restrictive access price mechanism that makes it difficult for new entrants to compete on price and which unduly protects incumbents and replace it with a more transparent wholesale access price regime; increase opportunities for new entrants by extending the regime to cover sewerage services; and introduce changes to the existing regime for upstream competition to encourage new entrants and stimulate the market. We will work with the Scottish Government to enable a cross-border market in water and sewerage services.

As a result, we expect business and public sector customers to receive a range of benefits from more customer-focused suppliers with an incentive to improve the services they offer, such as aggregated purchasing, discounts for direct debits or improved information on how to improve water efficiency and cut costs.

However, we do not propose to introduce more fundamental structural reform of the water industry, for example through mandating legal separation of the retail arm of water companies. Given the challenges we are facing to build resilience in the sector, which will require ongoing investment in infrastructure, I am not proposing to make changes which could reduce the attractiveness of the water sector as a low-risk, stable home for investment.

If we are to deliver our vision for the future of a sustainable and resilient water system we must change the way we all value water. We need to start using water more efficiently, and recognising it as the precious and limited resource it is. We need to build awareness of the connection between water in the home and the condition of local rivers to encourage behaviour change. The White Paper sets out our approach to encouraging more efficient use of water, including through the linkage to the green deal.

The White Paper is available on the DEFRA website at http://www.defra.gov.uk/environment/quality/water/legislation/whitepaper/

Afghanistan (Outcomes of Bonn International Conference)

Thursday 8th December 2011 Written Statements

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

On 5 December, Germany hosted and Afghanistan chaired the international Afghanistan conference in Bonn, entitled “Afghanistan and the International Community: From Transition to the Transformation Decade”. The UK, together with over 100 international delegations, reiterated the international community’s long-term commitment to Afghanistan. I represented the UK.

The conference conclusions set out a plan for the international community’s long-term engagement with Afghanistan beyond 2014. They included commitments to provide economic support to Afghanistan for the decade after 2014, until Afghanistan becomes economically self-sustainable. The conference also agreed to produce a clear plan for the future structure and funding for the Afghan National Security Forces in advance of the NATO Chicago summit next May. In addition the conclusions set out an agreed set of guiding principles for the reconciliation process and its outcomes. This builds on the recent Traditional Loya Jirga in Afghanistan with support for an inclusive, representative peace process.

The Afghan Government committed themselves to make further progress on key development priorities, including governance, anti-corruption and rule of law. The Afghan Government also promised to uphold all their international human rights obligations and to protect women’s rights as enshrined in the constitution.

I reinforced the UK’s long-term commitment to Afghanistan and the aims of the international community post-2014 including development aid and support for the ANSF. I welcomed the political and economic framework agreed at the conference and the importance of regional engagement, building on the successful Istanbul conference in November. I reaffirmed our support for the Afghan Government in upholding human rights, including women’s rights.

President Karzai was due to visit London immediately after the Bonn conference to sign the UK’s own long-term partnership agreement with Afghanistan. President Karzai had to cancel his visit to the UK because of the tragic sectarian attacks in Afghanistan on 6 December. We had planned to sign the enduring partnership with President Karzai during his visit to London. Instead, we will sign this partnership in the near future. I condemn this attack and the terrorist attacks of 7 December that resulted in the loss of many innocent lives. While we strongly condemn such atrocities, these acts of terrorism will not undermine the commitments made at the Bonn conference by the UK and the international community. We will continue to build on these commitments to see the emergence of a stable and secure Afghanistan where the rights of individuals are respected.

Employment, Social Policy, Health and Consumer Affairs Council

Thursday 8th December 2011 Written Statements

[The Parliamentary Under-Secretary of State for Health (Anne Milton)]

The health part of the Employment, Social Policy, Health and Consumer Affairs (EPSCO) Council met on 2 December in Brussels. Andy Lebrecht, Deputy Permanent Representative to the European Union, represented the United Kingdom .

Council conclusions were adopted on:

closing the gap in health between member states through action on determinants of health, especially nutrition and physical activity;

non-communicable diseases: prevention and control of respiratory diseases in children; and

prevention and control of communication disorders in children, including innovative approaches to treatment.

The Commission provided an update on the health for growth programme and the presidency asked member states to comment on the priorities for the programme. The Commission underlined that the programme would focus on areas where the EU could genuinely add value, in particular, ensuring a smarter investment in health.

The UK welcomed the intention of the proposed programme, but indicated a preference for it to be brought forward as a decision rather than a regulation. A number of member states also emphasised that the programme should respect the principle of subsidiarity, particularly in relation to the health system elements.

The Commission gave an update on the suggestion of splitting the pharmacovigilance provisions from the Commission’s recently published information to patients proposals. It confirmed it would positively pursue this approach.

In addition, Denmark spoke about the plans for its presidency. It confirmed the intention to focus on innovation in health, anti-microbial resistance, and chronic disease (taking diabetes as a model).

Winterbourne View

Thursday 8th December 2011 Written Statements

[The Minister of State, Department of Health (Paul Burstow)]

I promised to update the House about ongoing activity in relation to Winterbourne View private hospital.

The House will wish to note that 10 people employed at Winterbourne View have now been charged with offences of ill-treatment and neglect under the Mental Health Act. They are due to appear in Bristol magistrates court on 15 December. A further three people who have also been arrested on suspicion of causing ill-treatment under the Mental Capacity Act 2005 remain on police bail pending inquiries.

PricewaterhouseCooper’s report on Castlebeck Care services was published on 25 November and Castlebeck has committed to taking forward all the action points from that report. The report can be found at:

www.castlebeck.com/docs/pwc_recommendations_ report.pdf

In October, I advised the House that the Care Quality Commission (CQC) had started its programme of unannounced inspections of services for people with learning disabilities. This review is now well under way—as at 2 December some 76 inspections had been completed. CQC is also carrying out around 1,000 inspections a month which include undertaking inspections where there are concerns that providers may not be meeting the essential safety and quality requirements

The first five reports from the focused learning disability inspections have been published today and can be found at www.cqc.org.uk/ldreview. We will, of course, ensure that the NHS and local authorities are continuing to take action required to address any concerns raised and review their own commissioning, care planning and oversight arrangements to support improvements and service transformation.

The results of the CQC inspections programme will feed into the wider departmental review of Winterbourne View. We are still gathering evidence from the serious case review and the NHS serious untoward incident review, and from other investigations and reports.

The departmental review is actively engaging with people with learning disabilities or autism and challenging behaviour and their families about how services can be improved. Ministers will report findings from the departmental review to Parliament and determine what further action is necessary.

I will continue to update the House as things develop.

Advancing Transgender Equality

Thursday 8th December 2011 Written Statements

[The Minister for Equalities (Lynne Featherstone)]

At the very heart of the coalition Government is a commitment to fairness and equality. Celebrating the diversity of the UK and enabling all to be able to play their full part will lead to a strong society which values all of its citizens. The UK has a record to be proud of in advancing equality for lesbian, gay, bisexual and transgender people but we must not be complacent. We know that challenges still exist and we need to take bolder actions to deal with these issues. Too many transgender people still face outdated prejudice at every stage of their lives, from discrimination in the workplace to tragic incidents of hate crime. This not only blights people’s lives, but undermines the principles upon which this country prides itself. This Government are committed to addressing these issues and advancing transgender equality.

In March 2011, the Government published “Working for Lesbian, Gay, Bisexual and Transgender Equality: Moving Forward”, which included cross-Government commitments to tear down barriers and advanced equal opportunities for lesbian, gay, bisexual and transgender people in all areas of society—including in schools, at work and in healthcare.

This document recognised that transgender people face distinct and specific challenges that sometimes need to be addressed separately.

Today we are publishing “Advancing Transgender Equality: A Plan for Action”, which builds on our programme of work to tackle outdated prejudices and ensure equal chances for everyone whatever their gender identity. It shows a real commitment across Government to take concerted action to tear down barriers to equal opportunities and to build a fairer society. This document also mirrors the aims of the Government’s “The Equality Strategy—Building a Fairer Britain” which aims to address inequality in social mobility, tackling deprivation, developing a fair and flexible labour market, promoting greater participation and opening up public services, and changing culture and attitudes.

Copies of the action plan have been placed in the House Library and will also be available on the Home Office website: http://homeoffice.gov.uk/equalities/

G6 Meeting (Paris)

Thursday 8th December 2011 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

The informal G6 group of Ministers of the Interior from France, Germany, Spain, Italy, Poland and the UK held their most recent meeting in Paris on 1 December under the French presidency of the group. The meeting was chaired by the French Interior Minister Claude Guéant. The meeting was divided into two working sessions which were attended by the G6 Ministers of the Interior. Additional guests included the US Attorney-General, Eric Holder; the US Secretary of Homeland Security, Janet Napolitano, and European Commissioner for Home Affairs, Cecilia Malmström.

The first working session of G6 Ministers and the Commission considered Schengen governance, asylum and itinerant (mobile) criminality. Delegates agreed on the need for a stronger political governance of the Schengen area that would preserve the achievement of the border-free zone while retaining the necessary safeguards. G6 Ministers agreed that member states should retain the possibility of re-imposing internal border controls in the event of a major failure of the external border or a large, unexpected migratory pressure. They called for an early warning mechanism to alert Schengen states in this regard, as well as a strengthening of the Schengen evaluation mechanism. On asylum, the meeting recognised the need for the Common European Asylum System (CEAS) to provide those member states taking part in it with the tools and procedures to respond quickly and effectively to asylum claims. Delegates noted the European Council’s desire to conclude the CEAS negotiations in 2012, and as far as possible before the end of Denmark’s EU presidency. I underlined the need to deal with asylum cases as swiftly as possible and to ensure that decisions were made properly to distinguish between those claims that were genuine and those that were not. On itinerant criminality, Ministers discussed the need to direct more effectively existing EU resources, such as Europol and Eurojust, to tackle the threat of mobile organised crime groups. I raised the issue of metal theft which affects G6 countries as well as the UK.

The second session, including the US representatives, focused on the recovery of criminal assets and transatlantic data sharing. Delegates discussed the ongoing difficulties associated with recovering the proceeds of organised crime, and agreed on the need for greater international co-operation and more robust asset recovery procedures. The US Attorney-General underlined the importance of civil procedures in asset recovery. I emphasised that financial investigation skills and techniques were not an addition but rather an essential part of the wider armoury of techniques required to investigate criminality. Delegates then discussed the progress of negotiations around the EU-US PNR and EU-US data protection agreements.

In addition to the two plenary sessions, I spoke about the preparations under way for the 2012 Olympic games, and presented the UK’s plans to reform the European Court of Human Rights under our chairmanship of the Council of Europe. I also held separate bilateral meetings with some of the other heads of delegation to discuss a range of issues including extradition, illegal migration, passenger name records and data protection. The next meeting of the G6 is expected to be held in Germany in June.

Provisional Police Funding Announcement

Thursday 8th December 2011 Written Statements

[The Minister for Policing and Criminal Justice (Nick Herbert)]

I have today placed in the Library my proposals for the aggregate amount of grant to police authorities (referred to in the report as the police core settlement) in England and Wales for 2012-13, for the approval of the House. The indications I gave last year for revenue funding in 2012-13 have remained unchanged and are set out in table 3.

Today the Department for Communities and Local Government also published proposals for the distribution of formula grant to English local authorities for 2012-13. The Welsh Government will shortly be setting out their proposals for the allocation of funding in 2012-13 for the four police authorities in Wales.

Overall police settlement

As set out in the Chancellor’s autumn statement on 29 November, public sector pay awards win average at 1% for the last two years of the spending review period. As a result, the Home Office budget will be adjusted in line with this policy. Subject to any recommendations from the police negotiating board and agreement on staff pay, we expect that this policy should also apply to the police. This revision should not reduce the overall revenue spending power of the police service. I will make decisions on damping levels for these years at a later date.

For 2012-13 I have applied damping as previously announced at the time of the spending review.

The total cash reduction in Government funding to the police remains at 5% this year.

I will continue to provide a specific neighbourhood policing fund for 2012-13. This recognises that neighbourhood policing provides a dedicated, consistent and visible presence in communities. From 2013-14 this funding will be rolled into the police main grant, enabling the new directly elected police and crime commissioners to have full discretion over their funding, recognising their accountability to the communities they serve. In London, the Metropolitan Police Authority received autonomy over this funding from 2011-12, in recognition of the role the Mayor of London and the Deputy Mayor, policing already play. That will continue in 2012-13.

I win also continue to provide specific funding for counter terrorism policing and have provided relative protection to this budget throughout the spending review period to ensure that critical national counter terrorism capabilities are maintained. Authorities and forces will receive their specific counter terrorism allocations in January.

In addition to the police core settlement, the Olympic safety and security budget has been prioritised. These provisions are detailed below.

The introduction of Police and Crime Commissioners

During 2012-13 the public will elect their first police and crime commissioners in England and Wales. It is the will of the House that police authorities will be replaced on the 22 November 2012 with directly elected individuals who will have the statutory duty to deliver an efficient and effective police force, which clearly demonstrates value for money and, above all, delivers policing and community safety services in the local and national interest of the communities within their force area. The precept that police authorities will set for 2012-13, will not be affected by the election of police and crime commissioners in November 2012. Once elected police and crime commissioners will begin to prepare their police and crime plan and budget for 2013-14.

Some £50 million was set aside for 2012-13 to fund the first elections of police and crime commissioners. This £50 million was added to the police settlement for this specific purpose. Additional funding has been set aside now that the 2012 elections are being held in November. The funding of the elections has had no impact on the amount of funding available to forces over the four-year period of PCC office and we expect it to represent no more than 0.15% of annual police funding.

The Police Grant Settlement 2012-13

I have set out below how I propose to allocate the police settlement between the different funding streams in 2012-13.

Abolition of Committals

Thursday 8th December 2011 Written Statements

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

It is in the interests of victims and witnesses, and of the criminal justice system generally, that court procedures should be made as efficient as possible, for example by cutting out unnecessary court hearings. More than 10 years ago, committal proceedings were abolished in indictable-only offences, and replaced by a new “sending” procedure. The Government have decided that the time has come to complete that reform by extending it to offences triable either way. This will enable the Crown court to manage such cases from an earlier stage, and facilitate efforts to encourage defendants who intend to plead guilty to do so sooner.

The change will be effected by bringing into force schedule 3 to the Criminal Justice Act 2003 on a phased basis from April 2012. Following the practice adopted when the existing sending procedure in section 51 of the Crime and Disorder Act 1998 was first introduced, commencement will initially be limited to certain geographical areas, which will be announced later. Subject to a satisfactory assessment of the first phase, the intention is to complete implementation over the next year.

The Government believe that this reform has the potential to contribute to their aim of reforming and improving the criminal justice system.

Independent Reviewer of the Justice and Security (Northern Ireland) Act 2007 (Annual Report)

Thursday 8th December 2011 Written Statements

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

I have arranged for copies of the fourth report of Robert Whalley CB, Independent Reviewer of the Justice and Security (Northern Ireland) Act 2007 (the “2007 Act”), to be laid before Parliament.

This fourth report provides an assessment of the operation of sections 21 to 32 of the 2007 Act and the procedures adopted by the Brigade Commander 38 (Irish) Brigade for receiving, investigating and responding to complaints. The report covers the period 1 August 2010 to 31 July 2011.

The report highlights the continuing security threat posed by residual terrorist groups, the activity of organised criminals and incidents of public disorder. The reviewer comments on the importance of the powers under the 2007 Act in dealing with this broad range of security-related threats, and therefore recommends that the powers be retained for a further year.

The reviewer states that the residual terrorist threat has continued on broadly the same level as 2010, but there have been positive signs of suppression of activity. He notes that the number of persons stopped under the 2007 Act has increased significantly but that overall stop activity by the PSNI has fallen by 36% over the last year. The reviewer welcomes the authorisation procedure for the use of stop-and-search powers which the Government are introducing through the Protection of Freedoms Bill. He comments on the importance of cross-border co-operation and points to the activity by An Garda Siochana, which has led to a number of arrests.

The report also reflects on the regrettable public disorder which we saw in Northern Ireland earlier this year and the attacks on the police, and the subsequent operational need for powers under the 2007 Act, such as stop and question and entry of premises, as part of the police response. The reviewer also acknowledges the significant reduction in complaints to the military over the last year.

The Chief Constable and the Brigade Commander 38 (Irish) Brigade have both welcomed the independent reviewer’s report and the recommendations made. I would like to thank Robert Whalley for his work and for the recommendations contained in this report. I will consider them carefully.

Court Notification of Drink-Drive Offences

Thursday 8th December 2011 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Mike Penning)]

In conjunction with my hon. Friend the Under-Secretary of State for Justice, the Member for Huntingdon (Mr Djanogly), I wish to inform the House of serious errors that have been identified in the way in which data on drink drive convictions are shared between the police, courts and the Driver and Vehicle Licensing Agency (DVLA).

At the end of last year, I asked the DVLA to review communication between the courts and the DVLA. As a result of these investigations it became clear that the alcohol levels for some drink-driving convictions were either not provided to the DVLA by the courts, or were inconsistent when there was a delay between the court sending the information and the reconciliation of this information by DVLA. These errors have been happening for more than 20 years. As a result, in some cases, driving licences were reissued to individuals whose ban had expired, but without them undergoing legally required medical tests.

As soon as the problem was reported to me in August 2011, DVLA put in place manual checks so that any court notification received at DVLA without an alcohol reading was immediately investigated and no licences were re-issued without the alcohol level being provided. In addition, DVLA have worked to identify cases where information was incomplete in the backlog of data since 1991.

The courts and DVLA are now implementing IT changes which will mean that their systems will not allow cases to be processed at either the courts or DVLA unless valid alcohol readings are provided. Furthermore, new operational guidance has been issued to staff who deal with these cases.

Drivers convicted of drink-driving offences with more than two and a half times the permitted legal alcohol limit are regarded as high-risk offenders (HROs). The law requires that such convicted drivers are required to prove their medical fitness before they can be re-licensed at the end of their disqualification period.

As a result of the review DVLA has undertaken, I was informed that some convicted drivers who should have been treated as HROs have been granted a driving licence at the end of their disqualification on the basis of their own declaration of health, without undertaking the required medical assessment.

In total, 265,225 driver records have been found to be missing the relevant information on alcohol levels. Correct alcohol levels have now been obtained for 50,330 of these. We have identified within this group 3,895 drivers who should have been treated as HROs—and therefore should have undergone a medical assessment—before being granted a licence following their disqualification. These drivers present a potential risk to road safety and are being contacted so that they can undergo a medical assessment immediately. Those who fail to comply, or cannot demonstrate their medical fitness to drive, will lose their entitlement to drive.

The Ministry of Justice, Her Majesty’s Courts and Tribunals Service, The Scottish Courts Services and the police are working together urgently to identify the correct alcohol readings for a further 28,830 records. Any further HROs identified from these will also be required to undergo a medical assessment.

We have identified that of the 265,225 cases, some 53,028 relate to convicted drivers who have not yet applied to renew licences. These individuals do not therefore pose an immediate road safety risk. Their records have been blocked to ensure that if they do apply for a licence in future any identified as being HROs will have to undergo the medical assessment before a licence can be issued.

Records retention policy and the time limits set under the terms of the Rehabilitation of Offenders Act 1974, means that it will not be possible to act upon the alcohol readings in the remaining 133,037 cases identified. We cannot therefore say how many of these drivers would have been HROs at the time of their conviction.

It is with great regret that I inform the House that we have identified two cases in 1996 and 2006 where a driver who was issued a licence without first proving their medical fitness to drive, has subsequently caused death while driving under the influence of alcohol. Every death on the road is a tragedy and we have the deepest sympathy for anyone affected by the actions of these drink-drivers. It is not possible to say whether the drivers in these cases would have got their licences back following a medical examination. Every effort is being made to contact the victims’ families to inform them and to ensure they receive full and proper support.

I can assure the House that we regard road safety and ensuring convicted drivers are treated correctly as of critical importance. Everything possible will be done to take action, where we are legally able, against those who represent a risk to other road users. The Under-Secretary of State for Justice and I have ensured that immediate action has been taken to deal with this issue and to make sure it does not happen again. I must make clear that this investigation is continuing but due to the complexity of accessing very old court data, final figures will not be known for a number of months.

Bus and Community Transport

Thursday 8th December 2011 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Norman Baker)]

I am pleased to announce today a £60 million package of bus measures to improve buses and community transport coupled with the £30 million investment to improve the environmental performance of the bus fleet that was announced by the Chancellor in the autumn statement, this is a £90 million boost for our buses.

A new £50 million better bus area fund will provide grants of up to £5 million to a minimum of 10 local authorities working in partnership with local bus operators for them to spend in 2012-13. The aim of the fund is to increase bus patronage in busy urban areas, and the Department’s aims of creating growth and cutting carbon.

Authorities wishing to bid for bus funding will be asked to submit bids in February to allow the Department to make awards by the end of March. Detailed bidding guidance will be placed on the departmental website shortly.

To support further the establishment and development of community transport, I am also making available £10 million to be distributed to 76 local authorities in England, outside London, by formula; this is a repeat of the Supporting Community Transport Fund announced in March 2011. Letters will be sent to eligible local authorities in the new year, with details of the timing of payments. This comes on top of the £10 million distributed back in March 2011.

As well as these two new funds, last week the Chancellor announced £25 million of funding for environmental improvement to buses. £20 million of this will be available to bus operators to help them buy low-carbon emission buses through a further round of the green bus fund, for which detail bidding guidance will be published shortly. The remaining £5 million will allow older buses in London to be retrofitted with pollution-reducing equipment to help deliver air quality improvements in the capital. Together with additional funding from Transport for London, the total amount being committed is £10 million. Not only should this deliver a step change in the environmental performance of buses in the capital, but it will help promote jobs across the UK in the companies that supply clean vehicle technology.

Employment, Social Policy, Health and Consumer Affairs Council

Thursday 8th December 2011 Written Statements

[The Minister of State, Department for Work and Pensions (Chris Grayling)]

The Employment, Social Policy, Health and Consumer Affairs Council met on 1 December 2011 in Brussels. I represented the United Kingdom.

There were two negotiations at this Council. In the first negotiation, the presidency secured a general approach on a package of amendments to Regulation (EC) No 883/2004 on the co-ordination of social security systems. One of the proposals in the package would take UK income support out of the regulations. Some member states expressed concerns at some elements but accepted the package in the spirit of compromise. I intervened to stress that a broader policy debate was required at the political level on mechanisms to prevent benefit tourism.

In the second negotiation, the presidency failed to reach political agreement on extensions of the crisis derogations to the European globalisation adjustment fund. I intervened to state that in our view EGF did not add value and that we could not accept any compromise amendments. A blocking minority which included the United Kingdom held out comfortably during the vote.

There was a policy debate on the implementation of the Europe 2020 strategy in the field of employment and social policy. The debate was informed by three papers; the Commission’s annual growth survey (including the joint employment report); a set of conclusions on the European semester; and an opinion of the Social Protection Committee on the social impact of the crisis. I intervened to welcome the annual growth survey and emphasised the need for all member states to have a credible and determined approach to fiscal consolidation and, structural reform, including through deeper growth-friendly labour market reforms. I also stressed that it was vital that the EU did not take any counter-productive measures which might actually end up having the effect of reducing employment. I suggested that Ministers bring specific ideas to the February EPSCO for further discussion.

There were progress reports on three topics; minimum health and safety requirements regarding the exposure of workers to the risks arising from physical agents (electromagnetic fields); the pregnant workers directive; and the equal treatment of persons irrespective of religion or belief, disability, age or sexual orientation.

Ministers adopted three sets of Council conclusions; ageing as an opportunity for the labour market and the development of social services and community activities; the review of the implementation of the Beijing platform for action; and the follow-up of the first European semester and thematic surveillance in employment and social policies.

The Commission presented a report on the functioning of the transitional arrangements on the free movement of workers from Bulgaria and Romania.

Under any other business the presidency and Commission reported on the first annual convention of the European platform against poverty and social exclusion. The presidency provided information on the legislative proposals in the area of migration (single permit, intra-corporate transfers and seasonal workers) and reported on the informal meeting of Ministers for family and gender equality. The Commission provided an update on the review of the working time directive; the posting of workers directive; and the state of play on the European debate on women on company boards.