House of Commons

Monday 21st May 2012 Commons Chamber

Monday 21 May 2012

The House met at half-past Two o’clock

Prayers

Monday 21st May 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Monday 21st May 2012 Commons Chamber

The Secretary of State was asked—

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

1. What steps she is taking to reduce the burden of administration on police. [108027]

[The Secretary of State for the Home Department (Mrs Theresa May)]

I have made it clear that police should focus on cutting crime and not on doing paperwork. That is why I have already announced a package of policies that will cut police bureaucracy, saving up to 4.5 million police hours per year, the equivalent of putting more than 2,100 officers back on the beat.

[Eric Ollerenshaw]

Does my right hon. Friend agree that the election of police commissioners in six months’ time should allow a much more localised focus on lifting these burdens and enabling more police time to be spent on the front line?

[Mrs May]

I do agree. My hon. Friend makes an important point about the role of police and crime commissioners. They will indeed be the voice of local policing, and I am sure that as such they will want to ensure that police officers are spending as much of their time fighting crime—and not doing paperwork—as they can, and that they will be a powerful force in removing bureaucracy from the police.

[Keith Vaz (Leicester East) (Lab)]

In evidence to the Select Committee, the chief constables of the West Midlands and Surrey informed the Committee that £5 million had been allocated to work with the private sector in order to cut costs and reduce administrative burdens. Given what happened at the Police Federation conference last week, would it not be a good idea for the Home Secretary to sit down with all the stakeholders to discuss exactly what the role of the police should be in the 21st century, rather than there being a public dispute between the Government and the police?

[Mrs May]

I have made it absolutely clear that the focus of the police is on fighting crime. I have set them only one target, which is to cut crime. Indeed, it is right that forces up and down the country are now looking—as they have done for several years, including under the last Labour Government—at bringing in the private sector to their forces where they feel that functions can be done more cost-effectively by the private sector. But I have also made it clear—as I did at the Police Federation conference last week—that we will not move the powers of warranted officers from officers to the private sector.

[Philip Davies (Shipley) (Con)]

One of the most pointless, expensive and time-wasting aspects of the bureaucracy that the police have to deal with is the equality and diversity industry that mushroomed under the last Labour Government, which I saw for myself when I visited West Yorkshire police on Friday. Could I meet the Home Secretary or the Minister for Policing and Criminal Justice to discuss how we can streamline this process so that we can get more resources on to the front line?

[Mrs May]

It is entirely right that we encourage the police to see more diversity in their ranks. There are many ways in which we do want to see more women and people from black and minority ethnic communities joining the police force and being able to press through the ranks, but my hon. Friend makes the important point that in looking at these issues we do not want bureaucratic processes to take over. Either I or my right hon. Friend the Minister for Policing and Criminal Justice will meet him to discuss this.

[Mr David Hanson (Delyn) (Lab)]

Even if I accepted what the Home Secretary said about the changes in administrative burdens, the reality is that 16,000 police officers are being lost. Last week at the Police Federation conference, they told me that 20% cuts would lead to administrative workloads increasing, not decreasing. Only today, the chief constable of Dyfed-Powys warned of “an austerity crime wave” as a result of the Government’s approach to policing. Will the Home Secretary now recognise that despite any package of policies she takes forward on administration, there will be fewer police on the beat and more administrative work to do?

[Mrs May]

No, the whole point of the approach the Government are taking is that we are cutting the bureaucracy for police to enable them to spend more time on the beat. The challenge is this: I was willing to go to the Police Federation conference and be absolutely honest with the police about what we are doing. I trust that the message that the shadow Home Secretary and the shadow policing Minister gave to the police was that Labour Front Benchers support the same level of cuts in funding as the Government are putting through, and the impact that that would have. I wonder if the shadow policing Minister told the police about his view that £600 million should be taken out of police overtime.

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

Exempting the National Crime Agency from the Freedom of Information Act will reduce the administrative burden on the police, but will the Home Secretary set out how the principles of transparency and accountability will be upheld in the way that the NCA operates?

[Mrs May]

I am happy to give my right hon. Friend what I hope will be reassurance on this issue. We are clear that the NCA, when it is set up, should be transparent about how it operates and we will set out clearly those aspects that we expect it to be transparent about and publish information on. However, given the nature of many of the cases that it will deal with and some of the information behind those cases, it is right that we exempt it from the FOI. It is our intention that, on those matters that it can tell the public about, it is as transparent as possible.

[Harriett Baldwin (West Worcestershire) (Con)]

2. What assessment she has made of the effectiveness of the permanent cap on non-EU work migrants after its first year of operation.

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

4. What assessment she has made of the effectiveness of the permanent cap on non-EU work migrants after its first year of operation.

[Karen Bradley (Staffordshire Moorlands) (Con)]

10. What assessment she has made of the effectiveness of the permanent cap on non-EU work migrants after its first year of operation.

[The Minister for Immigration (Damian Green)]

The annual limit, together with other measures such as raising the minimum skills level, has ensured that we have kept the numbers of non-EU workers at sustainable levels while allowing employers to access the brightest and best migrants.

[Harriett Baldwin]

The seasonal agricultural workers scheme, which expires in December 2013, allows farmers and growers to bring in workers from as far away as Ukraine and Moldova. Does the Minister agree that welfare reform should make it more attractive for British crops to be picked by British workers?

[Damian Green]

My hon. Friend makes a good point. Immigration reform is one necessary element of creating a more balanced labour force, but the other two elements are welfare and educational reform, which will ensure that British workers are trained and have the right attitude to take the jobs available, in agriculture or in other sectors. [Interruption.] The Opposition Front-Bench team appear to deride these types of jobs. I suggest that is a big mistake.

[Iain Stewart]

I welcome the new income and language criteria introduced alongside the cap. Does the Minister agree that these measures give the public confidence that economic migrants are here to benefit the economy and contribute to society?

[Damian Green]

It is important that we create, as we are doing, a more selective immigration system designed to attract and reward migrants who can make the biggest contribution to our economy. By raising the minimum skills threshold and the English-language requirements, we have ensured that only migrants who are highly skilled or who have skills that are in short supply can come to the UK to work and settle.

[Karen Bradley]

Of course, immigration is not just about those coming but about those leaving the country.

[Chris Bryant (Rhondda) (Lab)]

No, it’s not.

[Karen Bradley]

I apologise; I meant migration. Will the Minister tell the House what the Government are doing to break the link between coming here temporarily and settling here permanently?

[Damian Green]

One of the many failures of the previous Government was that they made settlement an automatic consequence of five years’ residence in the UK. Settlement in the UK is a privilege, not a right, and unrestricted settlement rights are not in the UK’s best interests. The changes we implemented in April will mean that, from April 2016, those wishing to settle here will have to earn a minimum salary of £35,000 or the appropriate rate for the job, whichever is higher. That is better for the long-term health of our immigration system.

[Mr Frank Field (Birkenhead) (Lab)]

Given that the Government have just released data showing that one in five unemployed households contain a member who has never had a job, is there not a case, while this recession lasts, for temporarily restricting movement generally from Europe, so that the Government’s welfare reforms can have a fair wind?

[Damian Green]

I have great admiration for the right hon. Gentleman’s work on immigration and welfare, but I do not think that closing off the European labour market would be appropriate in a recession, because it would presumably apply both ways, meaning that British workers looking for jobs in the rest of the EU would also be badly affected. He is quite right to suggest, however, that the problems of the British economy need to be solved at the same time as the severe problems in the eurozone.

[Fiona Mactaggart (Slough) (Lab)]

My impression is that the fact that companies have never reached the cap in the number of available work permits suggests that it is not the Government-imposed cap that has affected this. One consequence that I see is that companies are exporting the work that would have been done in the UK to other countries, or using intra-company transfers. What is the Minister doing to ensure that we keep work in Britain?

[Damian Green]

First, we are putting limits on intra-company transfers—limits that were never there under the previous Government. We have set a minimum salary threshold of £40,000 for those who stay for longer than one year and a minimum salary of £24,000 for those who stay for less than one year. The hon. Lady identifies a potential problem, in that people could use intra-company transfers to try to drive out British workers, but that is precisely why we have taken these effective measures—to stop that kind of abuse of the system.

[Mr Denis MacShane (Rotherham) (Lab)]

18. Is the Minister concerned that France now attracts 50% more visitors from India than we do and that Switzerland, which has joined Schengen, is also experiencing a disproportionate surge in business visitors and tourists as a result? Is it reasonable to impose a £78 visa charge? People have to travel hundreds of miles to visit Britain for any reason. We might be open for business, but we are jolly well closed to foreigners under this Government.

[Damian Green]

I have to say that that is complete nonsense. Our tourism industry is doing better than ever before. Somebody planning to fly here on holiday from India would have to pay £78 for a six-month visa, which would not be an even remotely significant part of the total cost of their holiday, so I have to say that the right hon. Gentleman has simply got it wrong.

[Jason McCartney (Colne Valley) (Con)]

3. What steps she is taking to tackle alcohol-related antisocial behaviour.

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

8. What steps she is taking to tackle alcohol-related antisocial behaviour.

[The Secretary of State for the Home Department (Mrs Theresa May)]

On 23 March, I published the Government’s alcohol strategy, which set out radical proposals to tackle the harms caused by alcohol misuse and builds on the legislative steps we have already taken to give the police and local communities more powers to tackle problem premises and deal with late-night drinking problems.

[Jason McCartney]

Will my right hon. Friend introduce measures to encourage safe and responsible drinking in community, family-friendly pubs, rather than pre-loading at home on cheap bargain booze?

[Mrs May]

I know that my hon. Friend has long championed the cause of rural pubs in particular, and pubs that are a key part of their local communities. One of the proposals that we have put forward in the alcohol strategy, on which we are consulting, is the introduction of a minimum unit price, as well as banning bulk discount offers. We believe that both will have a significant impact on preventing people from pre-loading—which is so often a lot of the problem—after buying cheap alcohol from supermarkets. Those measures will have a real impact in helping friendly, local, well-run community pubs.

[Anne Marie Morris]

Alongside one of my local town councillors, I am working on a Safer Streets campaign in Newton Abbot, which will involve our asking local businesses to become safe havens for those who encounter antisocial behaviour in the town centre. Does the Minister agree that such schemes are effective in creating a safe environment for businesses to thrive, while also helping our attempts to deal not just with alcohol-related incidents but with all forms of antisocial behaviour?

[Mrs May]

My hon. Friend is absolutely right, and I commend those in Newton Abbot who have put forward the scheme and are putting it in place. I think it will have a real impact. We see responsible businesses coming together with local agencies in a number of towns and cities around the country to provide people with safe drinking places, which will ensure that we can reduce alcohol-related violence and antisocial behaviour. The evidence from many places—including Durham, for example, which put forward such a plan—is that such schemes are good for the local economy, as well as for reducing crime.

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

When those responsible for antisocial behaviour are arrested, they should surely be dispatched to the police cells as quickly as possible. Does the Home Secretary therefore share my disappointment at the Metropolitan police’s decision to close all the cells at Harrow police station, leaving us with no cells at all—we are one of the few London boroughs in that position—and causing significant logistical and administrative problems for the police in Harrow?

[Mrs May]

It is a matter for the Metropolitan police how it chooses to arrange the provision of cells and operational matters on the ground. It is for the police to decide operational matters because they have operational independence—something that I would have thought the hon. Gentleman supported.

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

The Government might talk tough on tackling antisocial behaviour, but their policies do not live up to that rhetoric. Will the Home Secretary explain to my constituents why the Government are weakening powers to tackle antisocial behaviour and, in particular, why their replacement for antisocial behaviour orders does not constitute a breach of a criminal record?

[Mrs May]

We are not weakening the powers to deal with antisocial behaviour. What we have proposed—I will be publishing a White Paper on this tomorrow—will ensure that it is easier for people at the local level, including the police, local councils and others, to exercise powers on antisocial behaviour. Crucially, for the first time we are also giving individuals and communities an opportunity to trigger action to ensure that when there is long-standing antisocial behaviour that has not been dealt with, action must be taken.

[Dr Sarah Wollaston (Totnes) (Con)]

Will the Home Secretary join me in paying tribute to the work of special constables in tackling antisocial behaviour associated with alcohol? A group of special constables from Brixton are in the Gallery today. Between them they have put in more than 680 hours of voluntary work, and they are quite clear that the bulk of antisocial behaviour is associated with alcohol and/or drugs.

[Mr Speaker]

The sentiment is greatly appreciated, but just for future reference, we do not in this place refer to the Gallery, no matter how distinguished or worthy the people in it are.

[Mrs May]

I value the work done by special constables. There are many examples, like the one my hon. Friend cited, of special constables actively working in the community to reduce antisocial behaviour. Special constables do a good job all the time, so I would encourage more people to become special constables, which is a valuable way of volunteering and giving a great deal back to local communities.

[Gloria De Piero (Ashfield) (Lab)]

Breach of an ASBO is a serious business. That is why it is a crime. Will Ministers confirm that a breach of their proposed replacement—the crime prevention injunction—will not be a criminal offence?

[Mrs May]

The Government intend to produce a White Paper. I have said that it will be published tomorrow, so I suggest the hon. Lady waits to see what is in it.

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

5. What recent assessment she has made of the effectiveness of UK border controls.

[The Minister for Immigration (Damian Green)]

Security of the border is our top priority. In February, the independent chief inspector published his report into border security checks last summer. We have accepted all the report’s recommendations, and we are implementing important changes to improve the effectiveness of UK border controls.

[Tom Greatrex]

I thank the Minister for that reply, but given that up until as recently as last week people are waiting up to three hours to come into the country through Heathrow, should not the Minister, instead of accepting whatever this week’s excuse is—whether it be the royal wedding, the snow, the rain, the wrong type of rain or the wrong type of wind—accept that it is his responsibility, and get on and sort the problem out before the Olympics?

[Damian Green]

I am happy to assure the hon. Gentleman that we have already introduced more staff at peak times and established mobile teams that can be moved around. Within a couple of weeks, a new control room will be operating at Heathrow, which will enable us to have better real-time information about what is happening in each of the terminals. We are already seeing considerable improvements. If the hon. Gentleman does not want to take that from me, he should take it from Colin Matthews, the chief executive of BAA, who said at the Home Affairs Select Committee last week:

“we can detect some improvement in the last week or so since that announcement was made.”

[Mr James Clappison (Hertsmere) (Con)]

Will the Government take a look at the case for restoring the discretion of immigration officers in countries of origin—a discretion that was undermined by the previous Government, who made it all too easy for the wrong people to enter the country?

[Damian Green]

Yes, I am happy to give my hon. Friend the assurance not only that we will do that, but that we already are doing it. We have instituted a pilot scheme for extended interviewing in some countries, showing significant positive results in ensuring that people cannot get on a plane to this country if they do not have the right to do so.

[Sajid Javid (Bromsgrove) (Con)]

6. If she will bring forward proposals to amend the immigration rules to prevent misuse of article 8 of the European convention on human rights.

[Mr Stewart Jackson (Peterborough) (Con)]

7. If she will bring forward proposals to amend the immigration rules to prevent misuse of article 8 of the European convention on human rights.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

20. If she will bring forward proposals to amend the immigration rules to prevent misuse of article 8 of the European convention on human rights.

[The Secretary of State for the Home Department (Mrs Theresa May)]

By this summer, we will have in place new immigration rules, which will help to end abuse of article 8. The Government are considering responses to the public consultation on changes to the family migration rules carried out last year, and expect to announce the results shortly. This will include changes relating to article 8.

[Sajid Javid]

The UK Border Agency recently reported that almost 4,000 foreign criminals are free to walk our streets. My Bromsgrove constituents know that it was the previous Labour Government who put the rights of criminals before the rights of ordinary law-abiding citizens. What steps does my right hon. Friend plan to take to start deporting these criminals?

[Mrs May]

My hon. Friend rightly raises an issue that causes considerable concern to members of the public. We have changed the way in which we deal with foreign national offenders. We now start deportation action 18 months before the end of the sentence, and in order to speed up the process we are chartering more flights to remove foreign offenders, but we are indeed having to make good a system that was of course put in place by the last Labour Government. When we deal with article 8, we will ensure that it provides less reason for people to claim that they need to remain here in the UK.

[Mr Stewart Jackson]

The abuse of article 8 undermines faith not only in our own criminal justice system but in human rights generally, as envisaged by the original British jurists who founded the convention in 1946. Will my right hon. Friend confirm that the Government will hold true to the Brighton declaration and make it clear that the sovereignty of our Parliament and our UK courts must be sacrosanct?

[Mrs May]

As my hon. Friend knows, we are making a number of efforts to ensure that the operation of the European convention in relation to the United Kingdom and the United Kingdom courts is as we believe it should be. That does indeed entail the decisions made at the Brighton conference concerning changes in the operation of the European Court of Human Rights. It also involves what we are doing to clarify the fact that article 8 is a qualified right and not an absolute right.

[Mr Evennett]

There is real concern in my constituency about appeals being lodged under article 8 allowing people to remain in the UK longer without leave to remain. Does my right hon. Friend agree that changes in article 8 will complement the Government’s changes to the family route of settlement policy, and will prevent further abuse of the system?

[Mrs May]

Yes. That is why the Government will be making changes in the family migration route along with their changes to article 8. Given that article 8 is about the right to a private and family life, the two are relevant to each other. What is crucial, however, is that article 8 is not an absolute right. It is qualified, and it allows the Government to operate a system under which people do not have an automatic right to stay here for the purposes of a family life. We want our courts to operate article 8 in the way in which it is written in the convention.

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

I listened carefully to what the Home Secretary said about changes that might be forthcoming. Does she believe that decisions should be made in a timely manner? My constituent Daniel Omonkhua was told by the UK Border Agency back in October 2010 that his article 8 application would be determined within a month. Why is he still waiting a year and a half later?

[Mrs May]

We do indeed want decisions to be made in a timely manner. That is better for the individuals themselves and for their families, if it is possible. If the hon. Lady writes to my hon. Friend the Minister for Immigration, he will look into the case.

[Bill Esterson (Sefton Central) (Lab)]

9. What assessment she has made of the effect of change in police numbers on the level of crime since May 2010.

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

16. What assessment she has made of the effect of change in police numbers on the level of crime since May 2010.

[The Minister for Policing and Criminal Justice (Nick Herbert)]

The Home Affairs Committee said last year:

“We accept that there is no simple relationship between numbers of police officers and levels of crime.”

The Government agree.

[Bill Esterson]

There are 385 fewer front-line police officers in Merseyside than there were in March 2010. According to the British crime survey, there has been the biggest increase in recorded crime for a decade. People in Merseyside could be forgiven for thinking that there was a link between the two. Will the Minister now stand at the Dispatch Box and deny the existence of that link?

[Nick Herbert]

I have already quoted the Select Committee’s view that there is no simple link. However, I can tell the hon. Gentleman that according to the latest official figures relating to crime in Merseyside, published earlier this year, in December last year overall crime had fallen by 2% and the number of instances of violence against the person had fallen by 7%. There are areas of specific concern, but it is not true to say that overall crime has been rising in the hon. Gentleman’s police force area.

[Huw Irranca-Davies]

The Minister said that there was “no simple link”. The Police Federation has suggested that by 2015 the number of serving police officers in Wales will have fallen by about 1,600, and according to Her Majesty’s inspectorate of constabulary the figure is closer to 800. Even if the more cautious figure were correct, does the Minister really believe that a drop of 800 would have no effect whatsoever on crime in Wales?

[Nick Herbert]

The hon. Gentleman ought to ask what police officers are doing. If they are tied up in red tape, as they were by the last Government, or if they are in back-room positions in which they do not need to be, that is not necessarily the best possible deployment of resources. The latest official figures show that in south Wales overall crime has fallen by 7%, and at the end of last year the chief constable of south Wales said:

“We are not just treading water, we are improving the service and improving the way that we deal with members of the communities we serve.”

[Robert Halfon (Harlow) (Con)]

Is my right hon. Friend aware that the number of burglaries in Harlow has fallen by 15% in the past year, and that similar results have been produced by many other crime indicators? That is thanks to not just the excellent work of Essex police, but the work of community organisations such as Harlow Street Pastors which are doing so much to reduce crime.

[Nick Herbert]

I congratulate Essex police on that achievement. Up and down the country, police forces are showing that, despite having to make savings, they are continuing to reduce crime. What matters is the effective deployment of resources to ensure that we maximise the use of the sworn officer.

[Andrew Bridgen (North West Leicestershire) (Con)]

Overall crime is down in my constituency, with a massive drop in antisocial behaviour. However, repeat antisocial behaviour can destroy the quality of people’s lives. What steps is my right hon. Friend taking to ensure that the police act in such circumstances?

[Nick Herbert]

Tomorrow my right hon. Friend the Home Secretary will launch the Government’s proposals to combat antisocial behaviour, strengthening the powers available to the police to deal with antisocial behaviour and giving citizens greater power to tackle repeat antisocial behaviour that they feel insufficient action is being taken to address.

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

The Home Secretary has frequently claimed that her 20% cuts to police funding will not reduce front-line policing. I am sure we all agree that 999 first responders, including traffic, CID and neighbourhood police, are, indeed, front-line officers. Will the Minister therefore confirm that recent freedom of information requests show that front-line police numbers have fallen by 5,261 since March 2010?

[Nick Herbert]

Why does the Labour party never admit that its proposed spending reductions of over £1 billion would also result in a reduction in the police work force, and why does it also never admit that it supports the two-year pay freeze, and that the right hon. Member for Delyn (Mr Hanson), the shadow policing Minister, supports further savings to the police budget, which means it is committed to a greater saving than we are? That is a fact, and the hon. Member for Kingston upon Hull North (Diana Johnson) should attend to the real issue, which is that there have been 25,000 police officers in backroom positions rather than on the front line. We are seeking to redress that.

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

11. Whether her Department has carried out an impact assessment on removing the deterrent of a criminal record in dealing with antisocial behaviour.

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

No, because we are not removing the deterrent of a criminal record in dealing with antisocial behaviour.

[Robert Flello]

I thank the Minister for that interesting answer. Under Labour, antisocial behaviour was driven down and my constituents saw the real benefit. With front-line policing now being hit by Tory cuts, my constituents are facing a weakening of powers to tackle antisocial behaviour, despite the spin we heard a moment ago. In drafting the upcoming White Paper, will the Minister acknowledge that public confidence is low and a weakened rebranding of antisocial behaviour orders is the wrong priority at the wrong time?

[James Brokenshire]

It may not surprise the hon. Gentleman to learn that I do not share his characterisation of the antisocial behaviour measures on which we have been consulting. The criminal behaviour order would carry a tough criminal sanction for breach, and other measures, such as the crime prevention injunction, are about having speedier justice to bring relief to communities. These measures are about strengthening the response to antisocial behaviour, not weakening it. The hon. Gentleman will see that when the White Paper is published tomorrow.

[Mr Julian Brazier (Canterbury) (Con)]

Does my hon. Friend agree that one of the best ways to strengthen the impact of antisocial behaviour legislation would be to extend the welcome category of offences that he and my right hon. Friend the Home Secretary are considering for which the police can themselves prosecute, without having to go through all the bureaucracy of the Crown Prosecution Service?

[James Brokenshire]

I absolutely agree. This is about reducing bureaucracy and giving discretion to the police to be able to get on and conduct such charges. My right hon. Friend the Home Secretary is examining precisely that issue and the relevant offences which may apply.

[Ann Coffey (Stockport) (Lab)]

Stockport Homes is very effective in dealing with antisocial behaviour by its tenants, using a number of measures made available under legislation introduced by the previous Labour Government. Does the Minister agree that civil orders and injunctions should still be available to social landlords, on application, in any future proposals?

[James Brokenshire]

I agree with the hon. Lady about the role social landlords can play in dealing with antisocial behaviour. Injunctions and civil orders are important tools. We are looking at how to extend them, and to make them more flexible and speedier, so as to bring relief to social tenants and others who are victims of antisocial behaviour.

[Nicholas Soames (Mid Sussex) (Con)]

13. What recent reports she has received on the time taken to enter the UK through Heathrow airport; and if she will make a statement.

[The Minister for Immigration (Damian Green)]

I receive daily reports on queuing times at Heathrow. Our sampling of queues shows that the vast majority of European economic area passengers at Heathrow pass through immigration control quickly. However, queue lengths have on occasions reached unacceptable levels and we introduced a range of measures to combat this.

[Nicholas Soames]

May I welcome the steps that my hon. Friend has taken to improve this situation? However, does he agree that all other law enforcement agencies, including the police and the Revenue, use risk assessment in the normal planned course of their business? As security is such a major issue, will he assure this House that every available desk at Heathrow will be manned at busy times?

[Damian Green]

My right hon. Friend will know that we have introduced more staff, as well as the range of other measures that I mentioned in answer to an earlier question. BAA—and the airlines themselves, including the head of safety and security at Virgin Atlantic—has said that we have seen some improvement in the last few weeks. I am also able to assure my right hon. Friend and the House that more people are working there this week than last week, and that there will be more next week. As the summer gets busier and busier, there will be an increasing number of staff on the desks.

[Chris Bryant (Rhondda) (Lab)]

I thought that the whole point of hosting the Olympics was to try to increase the number of visitors to this country. Our anxiety is not just about the queues now, but about the queues when the Olympics are over. There is one thing that the Minister just does not seem to grasp, so let me ask him a very simple question, which a schoolchild could answer: if it takes 400 passengers 60 minutes to pass through 10 manned controls, how long would it take those passengers to pass through if the number of controls is cut by 20% to eight?

[Damian Green]

I can tell the hon. Gentleman about the Olympics, as he is, for once, right about that. I, too, am concerned about what happens after the games. That is why I announced last week that we are bringing forward the recruitment of the first wave of people who will be needed for terminal 2 when it reopens, so that they will be available after the Olympics. We will have extra people at the border not only up to and during the Olympics, but after the Olympics. I am happy to tell the hon. Gentleman that his concerns have been fully met.

[Mark Pawsey (Rugby) (Con)]

14. What recent assessment she has made of the preparedness of the police for the London 2012 Olympics.

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

The Government and everyone involved are focused on delivering a safe, secure and successful games. We are confident about police preparations, which are at an advanced stage of readiness and are on track for the Olympic and Paralympic games.

[Mark Pawsey]

I thank the Minister for his reassuring words. To ensure a safe Olympics, it will be important for the police to work closely with other blue light services, such as the fire and ambulance services. What discussions have taken place on collaboration between all the emergency services?

[James Brokenshire]

I thank my hon. Friend for his question, and I know that as chair of the all-party group on emergency services he takes a keen interest in these issues—indeed, I understand that he recently arranged a visit to the Olympic park. I can assure him that the Home Secretary has chaired various cross-governmental meetings with ACPO, the fire service and the ambulance service to ensure that there is a strong and co-ordinated blue light response, enhancing our emergency services.

[Kevin Brennan (Cardiff West) (Lab)]

Of course, the 2012 Olympics are not only taking place in London; many events will also be held in Cardiff, including the first one, before the opening ceremony, at the millennium stadium. What consultation has the Minister had with South Wales police to make sure that people attending the Olympics in Cardiff and other cities across the country have just the same level of safety as will be enjoyed in London?

[James Brokenshire]

The hon. Gentleman is right to highlight the connections; indeed I visited Weymouth last week to examine the preparations for the Olympic sailing event, which we are very much looking forward to there. The police and the national Olympic co-ordinator have been actively bringing the police response together. We have been testing and carrying out exercises, and focusing not simply on London, but on all parts of the country involved in the Olympic games. We look forward to celebrating them very much.

[Jeremy Corbyn (Islington North) (Lab)]

15. How many children and their families are being held in immigration detention.

[The Parliamentary Under-Secretary of State for the Home Department (Lynne Featherstone)]

During 2011, 99 children entered immigration removal centres, short-term holding facilities and pre-departure accommodation, which compares with 436 in 2010 and with 1,119 in 2009. The numbers held at any one time in 2011 were very low; snapshot figures from the end of each quarter ranged from zero to one child.

[Jeremy Corbyn]

When the coalition Government made their unequivocal statement in May 2010 that they would end all

“detention of children for immigration purposes”,

many of us welcomed that, because we had always thought such detention to be wrong. Will the Minister therefore explain what response she has given to the Refugee Council’s “Not a minor offence” report, which describes the detention of unaccompanied children arriving in this country from Afghanistan, Iran or Iraq? These children arrive deeply disturbed and very frightened, and they find that their first interaction with this country is to be put in detention and kept there. Will she please guarantee that no more children will be kept in detention, and that instead cases will be referred to the relevant local authority immediately where children arrive in this country?

[Lynne Featherstone]

The hon. Gentleman raises the issue of the report by the Refugee Council that was published this morning. Obviously, we will consider the Refugee Council’s recommendations as we continue to improve at all levels, but I point out to the hon. Gentleman that under the Labour Government it was 28 days before Ministers got involved, whereas under this Government it is 72 hours.

[Mr Philip Hollobone (Kettering) (Con)]

What happens to families who are claiming asylum in this country having passed through other safe countries before getting here? Are we returning them to the last safe country that they left or do we offer them the opportunity to stay in this country indefinitely?

[Lynne Featherstone]

We return where we can, obviously, but the important point is that we have a process for returning and we follow it.

[Lisa Nandy (Wigan) (Lab)]

Many of the children whom the Minister describes are age-disputed young people. Will she confirm that the appalling and shambolic X-ray pilot—described as “appalling” by the four UK Children’s Commissioners and subsequently abandoned—will not resume and that she will work with children’s professionals and medical experts to find an effective solution to the very difficult problem of determining the age of children?

[Lynne Featherstone]

The hon. Lady might or might not know that, in light of the view expressed by the National Research Ethics Service that that trial is research and therefore requires NRES approval, we have paused it while we work with our partners to seek formal ethical approval.

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

17. What recent assessment she has made of any link between sales of the drug khat and serious organised crime; and if she will make a statement.

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

The Government are currently reviewing the case for control of khat under the Misuse of Drugs Act 1971. The Advisory Council on the Misuse of Drugs will consider all available evidence, including any links with serious organised crime. Its advice will inform the Home Secretary’s decision.

[Mark Lancaster]

The UK will shortly become the only legal port of entry for the drug khat in western Europe, so what steps will the Government take to ensure that the UK does not become a drug smuggling hub for the rest of Europe?

[James Brokenshire]

I know that my hon. Friend has followed this issue with close interest. The Government are monitoring the situation carefully and seeking evidence from the Serious Organised Crime Agency and others to inform the advice of the Advisory Council on the Misuse of Drugs. That advice is due in October, earlier than expected, and we will form our final decision on the basis of that.

[Paul Flynn (Newport West) (Lab)]

Will the Minister study the evidence that every ban on every new drug since 1971 has resulted in an increase in that drug’s use? A ban on khat will not only increase its use but drive a wedge between the police and the Somali and Yemeni communities. Is this a sensible idea?

[James Brokenshire]

We will form our decision based on the evidence and the information provided by the Advisory Council on the Misuse of Drugs. I do not accept the hon. Gentleman’s characterisation; bans can be very effective. For example, part of the problem with legal highs has been that young people have been taking them because they equated legality with safety. That is why we have taken action in that sphere and we will continue to take action on the legal framework.

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

21. What recent steps she has taken to eradicate human trafficking.

[The Parliamentary Under-Secretary of State for the Home Department (Lynne Featherstone)]

In 2011, the Government published their human trafficking strategy, opted into the EU directive and improved the support arrangements for adult trafficking victims. Since then we have been working across Government and with stakeholders further to strengthen and improve our approach to tackling human trafficking.

[Andrew Selous]

Many people believe that trafficking is about foreigners being trafficked into the UK, but do the Government accept the need for great vigilance on the question of British citizens being trafficked within the United Kingdom and outside it, which has recently been shown to be happening?

[Lynne Featherstone]

Of course, the terrible incident in Bedfordshire highlighted the issue of internal trafficking and the Government have taken action. We recently passed clauses in the Protection of Freedoms Act 2012 to make internal labour trafficking a criminal offence, which will come into force in April 2013. We also made it an offence for a UK national to traffic a person for sexual or other exploitation, regardless of where in the world the trafficking occurs or is intended to occur.

[Mr John Spellar (Warley) (Lab)]

22. What her policy is on appeals against refusals of applications for visas for short-term visits.

[The Minister for Immigration (Damian Green)]

Genuine visitors will always be welcome to visit the UK. Only the family visitor route currently offers a right of appeal. Subject to parliamentary approval, that will be removed by 2014.

[Mr Spellar]

That reply will be heard with very considerable concern and anger in many communities across the country. Families who are trying genuinely to have family reunions, weddings and so on are being held up. Does the Minister not recognise that the main problem is that the appeals process is jammed up because of the low level of decision making in the UK Border Agency and the stubborn refusal of managers to review that, saying that it will be sorted out in the appeals system? I have letters to that effect. Why does not the Minister address the issues and look after the community?

[Damian Green]

I am addressing precisely those issues. Clearly, the right hon. Gentleman missed the first part of the answer—genuine visitors will always be welcome to visit the UK. The current appeals process takes around eight months. Re-applying takes about 15 days, so it is quicker and easier for people to apply again. The current visit visa appeal system costs about £29 million a year to administer—money that could be much better spent on other parts of the immigration system.

[Stephen Hammond (Wimbledon) (Con)]

T1. If she will make a statement on her departmental responsibilities.

[The Secretary of State for the Home Department (Mrs Theresa May)]

On 10 May we introduced in the other place the Crime and Courts Bill, which will establish the National Crime Agency. The NCA will be a powerful operational crime-fighting agency which will defend our borders, fight serious and organised crime, tackle economic and cybercrime, and protect children and vulnerable people. I will be further discussing the workings of this important new agency when I meet representatives of the Association of Chief Police Officers later this week.

[Stephen Hammond]

The weekly e-mail from Commander Williams showed that crime in Merton and Wimbledon was falling again last week. Residents of the Wimbledon constituency rightly attribute that to the Mayor of London ensuring that police numbers were kept up during his first period of office, so what can the Home Secretary say to the residents of Merton who want to ensure that the police can recruit the brightest and the best talent?

[Mrs May]

That was one of the issues that Tom Winsor looked at in the second part of his review of pay, terms and conditions for police, and he has proposed a number of ways for direct entry at various levels in the police for those from outside the police so that we can see a broader range of experience and skills being brought into policing. Those proposals, like other proposals from the Winsor report part 2, are currently going through the appropriate police negotiating body and other bodies.

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

The borders inspector has said that the number of people absconding at border control, slipping through without permission, escaping from detention or disappearing after temporary admission has more than doubled since the election, and the number who are later caught has fallen. Can the Home Secretary explain why that has happened?

[Mrs May]

We take the issue of security at the border extremely seriously. That is why we have been following up the report of the chief inspector of the UK Border Agency, as his title then was, in relation to the Border Force and ensuring that the—sadly—poor situation that had developed over a number of years under the Labour Government is being addressed.

[Yvette Cooper]

The problem has got substantially worse since the election. At terminal 3 alone the number of absconders was 115 in 2009; in 2011 the report estimates that it was “between 300 and 350, significantly higher than previous years”, and the proportion being caught later has halved. That is what the report says. Time and again, the situation is getting worse month on month, not better. Is not the truth that this is another example of failing border control and weaker action on illegal immigration on the Home Secretary’s watch? We have controls being downgraded hundreds of times, hundreds of staff being cut and at the last minute re-recruited, drugs and gun checks stopped, and more people like Raed Salah managing to walk through, when they should have been stopped. Will the Home Secretary get a grip?

[Mrs May]

I say to the right hon. Lady that it is this Government who are putting in place controls on our immigration system; it was the previous Labour Government who allowed people to come in without any controls on the immigration system. We are putting in place a policy that will see the number of people coming into this country reduced and in both the UK Border Agency and the UK Border Force, we are putting right the problems that grew up under the previous Labour Government. She talks about the relaxation of controls, but the inspector said that that had been happening since 2007. It is about time that the Labour party accepted responsibility for what it did in government.

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

T4. I commend my right hon. Friend’s steely determination in dealing with Abu Qatada and his slippery legal team, but the fact remains that such a situation might happen again. That man has cost the British taxpayer £3.2 million over the past 10 years. In light of that, will she report what progress she has made in investigating how the Italian Government made early deportations of suspected ne’er-do-wells like Abu Qatada?

[Mrs May]

I have indeed undertaken, as I think my hon. Friend knows, to look at how deportations are managed in other countries, and not just in Italy but in France which, as has recently been mentioned, was able to deport two individuals rather more quickly than we have been able to deport Abu Qatada. I will report to the Commons when that work is complete. We want to be able to deport as quickly as possible people who should not be in the United Kingdom, and I am pleased that we are now closer to deporting Abu Qatada than we ever have been.

[Sheila Gilmore (Edinburgh East) (Lab)]

T2. Given that the vast majority of international students leave the UK at the end of their courses, why do the Government insist on counting them when calculating net migration figures, which other countries do not do, to the detriment of institutions such as Edinburgh university in my constituency that are competing with other countries for those students?

[The Minister for Immigration (Damian Green)]

First, I assure the hon. Lady that there is not a limit on the number of students coming in. The reason we include them in the immigration system is simply that the UN definition of an immigrant is someone who comes to a country with the intention of staying there for more than a year, so any student who comes to stay for more than a year, according to the UN definition, is an immigrant.

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

T5. Of course, controlling immigration does not happen only at our borders; it also involves ensuring that migrants abide by their obligations under immigration rules. With that in mind, what more is being done to tackle the problem of persistent over-stayers?

[Damian Green]

We have taken action against employers, in particular, as the main reason for people over-staying is in order to work illegally. Last summer we had a big effort against over-staying illegal workers. I am happy to report to my hon. Friend that that is working. The last quarter of 2011 showed an increase in enforced removals and voluntary departures of those who should not be here, on both the previous quarter and the last quarter of 2010, so the effective and tough measures we are taking are now visibly working.

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

T7. A 20% cut will see 1,200 police officers go in the west midlands. A further 20% cut in the next comprehensive spending review would mean, in the view of the police service, the end of community policing. Has the Home Secretary told the Chancellor of the Exchequer that, and can she rule it out?

[The Minister for Policing and Criminal Justice (Nick Herbert)]

The hon. Gentleman knows perfectly well that we are not going to speculate about a future spending review. He might have pointed out that the latest figures show that recorded crime in the west midlands has fallen by 7% overall, and he might have congratulated the chief constable on that achievement, despite the fact that, like every other chief constable, he is having to make savings.

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

T6. I, like many other MPs, was horrified and disappointed to receive an e-mail today from the Police Federation implying that Tom Winsor was effectively discriminating against black and minority ethnic applicants to the police. Instead of trying to smear Tom Winsor as a racist, would it not be better for the Police Federation to look at how to increase the number of successful BME applicants?

[Nick Herbert]

I share my hon. Friend’s view about the e-mail that the Police Federation sent this morning, which included the absurd claim that British policing will be transformed into some kind of paramilitary model, which is palpable nonsense. Tom Winsor’s independent report included an equality statement and the Home Secretary specifically asked the negotiating bodies to consider the impact of his proposals on equality and diversity.

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

T9. The crimes of the nine Oldham and Rochdale men convicted of the appalling sexual exploitation of vulnerable and young children have been condemned throughout the community. In Oldham, the police are working across agencies and on Operation Messenger to prevent such attacks, which they say exist across the UK in all communities and in all kinds of homes. What is the Home Secretary doing to ensure that such vital work does not suffer under the police cuts, and will she commit to ensuring that the Government’s response to these crimes is based on evidence, not on a knee-jerk reaction?

[Mrs May]

The hon. Lady raises a very important issue in relation to the terrible situation that we have seen in Rochdale, but, as she and others have said, sadly we see too many such cases throughout the country of grooming and sexually exploiting girls. We have already had a report from the Child Exploitation and Online Protection Centre on the issue, and we will look at it again and at how it is dealt with across the country. We have made sure that in the Police Reform and Social Responsibility Act 2011 there is a specific duty on police forces and on police and crime commissioners in relation to the care of children.

[Karen Bradley (Staffordshire Moorlands) (Con)]

T8. Will the Minister join me in congratulating Staffordshire police and, in particular, Chief Constable Mike Cunningham on meeting the requirements of the budget reductions in the spending review while maintaining visible front-line policing?

[Nick Herbert]

I will happily join my hon. Friend in congratulating Staffordshire police on that achievement. They, like many other forces, have seen an overall fall in crime—in their case, of 7%—despite having to make savings, and the chief constable has made a particular commitment to protect neighbourhood policing.

[Nick Smith (Blaenau Gwent) (Lab)]

Binge drinking by young people is a serious public health issue. “Men in Black 3” will be on our screens soon, and cinemas are important channels for alcohol marketing, so will the Home Secretary take the lead on more effective controls on advertising in cinemas?

[Mrs May]

The hon. Gentleman makes a very interesting point. I am not quite sure why he felt that “Men in Black 3” had to be promoted in his question, good though the first two films were. We have looked at the issue of alcohol advertising in relation to the alcohol strategy, but I will certainly take on board his point about cinemas.

[Jo Swinson (East Dunbartonshire) (LD)]

I thank the security Minister for the interest that he has taken in the superfluous security fencing at Milngavie reservoir since I raised the issue with him in 2010. Can he confirm that the Home Office has now acted, along with the Centre for the Protection of National Infrastructure, to give Scottish Water the power to remove any unnecessary and unsightly security fences?

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

I am grateful to the hon. Lady for highlighting that important constituency issue. As she knows, the Centre for the Protection of National Infrastructure has reassessed the site following the installation of a water treatment facility and confirmed the security measures, and I can confirm that I have signed the necessary direction.

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

As the Minister responsible for national security, will the Home Secretary provide us with her understanding of the comments made yesterday by the Justice Secretary, who told the BBC that he has revised his proposals for closed material proceedings in civil cases so that judges always have the final say on when they are used?

[Mrs May]

The right hon. Gentleman will see the Government’s proposals when the relevant Bill is published, but I am sure that with his wealth of knowledge and experience he will know that, on a number of issues such as control orders in the past and terrorism prevention and investigation measures now, the decision to hear such matters in closed proceedings, and the decision on whether they should go ahead, is initially taken by the Secretary of State and then put to the court for the court to agree.

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

In recent times there have been a number of controversial applications to extradite British citizens to the United States, including that of Mr Christopher Tappin. Some appear to have been based on American police sting operations on British soil. How are they approved, and how many have been approved in recent times?

[Nick Herbert]

I appreciate my right hon. Friend’s concern about the matter. Operational activities such as covert investigative action would have to be approved in this country by the relevant law enforcement agency. As to the types of investigation, the approval processes and the numbers, I am about to write to my right hon. Friend, and I will set them out in detail for him.

[Hugh Bayley (York Central) (Lab)]

Does the Minister share my concern that the former chief constable of North Yorkshire, having been deemed guilty of serious misconduct, was nevertheless paid £250,000 in compensation when the police authority decided not to extend his contract? Will the Minister take some action to stop the use of public money in this way? How many police officers would £250,000 pay if the money had been used for that instead?

[Mr Speaker]

I did not realise that the hon. Gentleman still had two thirds of his important question to go. I apologise for almost stopping him in his tracks, but I should know that nothing can stop the hon. Gentleman in his tracks.

[Nick Herbert]

I share the hon. Gentleman’s concern about that matter. Such a payment is permissible under the current law. Tom Winsor has made recommendations in his independent review relating to the matter, which we are looking at carefully. I can understand that the people of north Yorkshire, and indeed more widely, would be concerned about this payment.

[Mr Peter Bone (Wellingborough) (Con)]

The Home Secretary can be proud of the fact that adult victims of human trafficking are being looked after better than ever before, but there remains the scandal that some child victims of human trafficking, instead of being put into special safe homes, are returned to local authority care only to be re-trafficked time and again. That scandal needs to be ended; what can be done?

[Damian Green]

I agree with my hon. Friend, who does a lot of essential work with the all-party group on human trafficking, that re-trafficking is an important issue. However, those who have expertise in looking after children are, by and large, in local authorities, so that is a natural place for children to be put where they can be kept safely. Where there is the problem of re-trafficking, clearly it is for the Government and for local authorities to look at ways of better protecting children from the traffickers.

[Heidi Alexander (Lewisham East) (Lab)]

In December, the Home Secretary announced a national review of stop and search as used by the police. What progress is being made with that review and when will the report be published?

[Mrs May]

Initially, I asked the Association of Chief Police Officers to look at good practice in relation to stop and search. It has been doing that, and it is currently putting the results together. Alongside that, similar activity is taking place in a number of police forces, particularly the Metropolitan police, who have been looking at their stop-and-search arrangements and actively working with communities to ensure that this important power remains available to them but that they are operating it in the correct and proper manner.

Speaker’s Statement

Monday 21st May 2012 Commons Chamber

15:32

[Mr Speaker]

I wish to make a short statement on a matter of privilege before we move on to the main business. The hon. Member for Maldon (Mr Whittingdale) has written to me concerning the conclusions of the Culture, Media and Sport Committee, as set out in chapter 8 of its 11th report of Session 2010-12, on News International and phone hacking. Having considered the issue, I have decided that this is a matter to which I should allow the precedence accorded to matters of privilege. Therefore, under the rules set out at pages 273 to 274 of “Erskine May”, the hon. Gentleman may table a motion today for debate at the commencement of public business tomorrow, Tuesday 22 May. The hon. Gentleman’s motion will appear on tomorrow’s Order Paper to be taken after any statements.

Employment Law (Beecroft Report)

Monday 21st May 2012 Commons Chamber

15:33

[Mr Chuka Umunna (Streatham) (Lab)]

(Urgent Question): To ask the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk), if he will make a statement on the Government’s plans in respect of the report on employment prepared for the Government by Adrian Beecroft.

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

May I apologise to you and to the House, Mr Speaker, for the absence of the Secretary of State? He is currently travelling back from the north of England, where he has been visiting a number of businesses, and will return to the House later this evening.

The Beecroft report was commissioned by the Department for Business, Innovation and Skills as part of the red tape challenge and the employment law review. Mr Beecroft was asked to give his initial thoughts on areas of employment law that could be improved or simplified to help businesses and for the purposes of job creation. The report was intended to feed into the work that the Department is carrying out to review employment laws to ensure that they maximise flexibility and reflect modern workplace practices. That is important to employers and employees. The report was designed specifically to strengthen our international competitiveness in difficult economic times. It is worth noting that the UK is considered to have the third most flexible labour market in the OECD. That is good for jobs, and we intend to maintain that situation.

Mr Beecroft was asked to take a candid look at a wide range of issues. He submitted his report in October last year. Over the past few months, Ministers have been working on the red tape challenge and the employment law review. We are already actioning 17 of the 23 topics that he raised.

On considering the Beecroft report, it was clear that further evidence was required, most notably on the issue of no-fault dismissal for micro-businesses. The call for evidence on that began on 15 March and will conclude on 8 June. Given that that date falls when the House is not sitting, the Government decided to bring forward publication of the report to this week, so that it could inform the debate. Last week, the Home Secretary announced the outcome of the equalities red tape challenge, which impinges directly on employment and workplace issues. Our intention was therefore to publish the Beecroft report this week, in time for Business, Innovation and Skills oral questions.

However, I noticed in the press today that an earlier draft of the report is in circulation. Therefore, in the interests of accuracy and so that the House has the correct information before it, I confirm that I have instructed officials that the report will be published later this afternoon. Copies will be placed in both Houses.

The Government are taking positive action to reform the labour market and to ensure that we can help more people get back to work as soon as possible.

[Mr Umunna]

What a complete and utter shambles! I understand, as the Minister said, that the Secretary of State is in the north-east today. However, will he explain why the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for North Norfolk (Norman Lamb), who is responsible for employment relations and is the author of this book

“to help you to maximise compensation awards”

in the employment tribunal, is not responding to this question, given that he would appear to be the expert on these matters?

The Secretary of State has called the Beecroft report, which has been promoted by the Prime Minister, “bonkers”. However, on page 3 of the report, Mr Beecroft says that he owes a “debt of gratitude” to the deputy director of labour law at the Department for Business, Innovation and Skills, who helped to produce it. Will the Minister confirm that his Department was complicit and fully co-operated in the production of the report, despite the misgivings of the Secretary of State?

We agree that improvements can be made to the way in which employment tribunals operate, for the sake of employees and employers, but we do not think that watering down people’s fundamental rights at work is a substitute for a growth strategy.

The Secretary of State has said that there is a “reasonably good balance” between workers’ rights and employers’ flexibility. The Prime Minister and the Chancellor, however, suggest that the balance has gone too far in favour of employees. Will the Minister tell us who is determining Government policy in this area—his boss or his ultimate masters in Downing street?

On growth, Beecroft suggests that his recommendations will solve all our problems. However, the double-dip recession that we are in is not a consequence of people’s right not to be unfairly dismissed or of our employment law regime; it is a consequence of the huge drop in demand that has flowed from the loss of business and consumer confidence caused by the Government’s policies.

Is it not the case that putting people in fear of being fired at will, far from promoting growth, will have a huge detrimental impact on consumer confidence? I ask that because Mr Beecroft proposes to give businesses of fewer than 10 employees the power to fire at will through compensated no-fault dismissal. That could affect more than 3.6 million workers in the private sector. Mr Beecroft said:

“The downside of the proposal is that some people would be dismissed simply because their employer did not like them.”

That, he said, was “a price worth paying”. That is wrong. Does the Minister agree?

Does not the noise from Government around this report demonstrate what our business leaders have made very clear: that the Government have lost the plot on growth? Having sought to blame British businesses for the lack of growth, with Ministers telling firms to stop “whingeing” and to “work harder”, the Government now want to blame the hard-working employees in those businesses for the mess that they created. The truth is that they have run out of excuses for tipping the country into a double-dip recession. Everyone wants them to change course to get more people into work. That is what they should concentrate on, not on making it easier to do precisely the opposite.

[Mr Prisk]

A lot of clichés but not a lot of substance, I am afraid.

The hon. Gentleman asked whether I was complicit in the production of the report. If he had listened to what I said in my statement, he would have heard that the Department commissioned the report. He can use the term “commissioned” or “complicit”, but we still want to check what everyone says.

The hon. Gentleman asked where the employment relations Minister is. He is in the west country, speaking to and working with postal workers, who are keen to hear his views, and so he should be.

The hon. Gentleman asked about the quote including the word “bonkers”. Let us just clarify that, shall we? What the Secretary of State said was that the way in which the current working time directive works is bonkers, and he was right. It operates in such a way as to prevent hard-working people from earning more money. I have no problems in supporting the Secretary of State on that.

The hon. Gentleman then turned to the question of how to develop an economy that can grow more jobs. He may not have spotted the fact that 600,000 new jobs have been created in the past 20 months. There is no simple magic solution, and Government Members understand that although Mr Beecroft has his views, there are others, and we want to listen to them. That is why we have issued a call for evidence and want to consider that evidence.

Last week, I had the privilege of meeting the work force at Vauxhall, where there are to be 700 additional jobs, with a potential 4,000 extra jobs in the supply chain. Why? Because the staff there are prepared to be flexible and work on a modern basis. It is a shame that the Labour party does not understand that.

[Mr John Redwood (Wokingham) (Con)]

What is the Department’s estimate of the increase in output if all the measures recommended by Beecroft were adopted?

[Mr Prisk]

I do not have a specific estimate, and that is why we have issued a call for evidence. My right hon. Friend is right to ask about that issue, which the hon. Member for Streatham (Mr Umunna) unfortunately did not mention. We need to understand that there is a cost to every regulatory measure that is brought forth, not only economically but for people on the edge of the labour market who want the chance to have a job. If we regulate them out of work, we have to take responsibility for that, so my right hon. Friend is right to reflect on the costs.

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

Does the Minister not understand that if the recommendations go forward, it will be an appalling attack on millions of employees? Their basic security at their place of work will be taken away. Is that not characteristic of a Tory-led Government?

[Mr Prisk]

May I suggest that the hon. Gentleman reads the report this afternoon, looks at what it says and understands what is in it before condemning it? There is a balance to be struck. We need to ensure that we have modern workplaces, but also that we can compete in a world in which there are real pressures. The workers at Vauxhall and elsewhere understand that. I hope that he will read the report, and then we will be happy to have a conversation with him.

[Mr William Cash (Stone) (Con)]

The Minister is aware that vast amounts of European legislation affect the workplace. He also knows of the Prime Minister’s promises on that matter before the last general election. Will the Minister confirm that we will not merely have a report on the outcome of Beecroft, which has much to commend it, but actually deal with the enormous amount of damage done to small and medium-sized businesses by excessive European legislation, which costs billions of pounds and a huge percentage of our gross domestic product? Will we have action and not just words?

[Mr Prisk]

I am delighted to confirm to my hon. Friend, who studies these matters very closely and is right that European legislation impinges on small businesses, that we have ensured that there will no longer be gold-plating of directives from Brussels. Just as importantly, we have secured the agreement of the European Commission that small businesses will now be exempted as a point of principle unless the Commission can show that they should not be. We need to make that work, and I hope I will have his support in ensuring that we do.

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

May I take this opportunity to apologise to business organisations? When this idea was discussed previously, I said that they were driving it. However, business organisations have been in touch with me and told me that they do not support the proposed legislation.

[Mr Prisk]

With respect to the hon. Gentleman, Mr Beecroft has submitted his report and we have submitted a call for evidence. Business organisations are now providing that evidence, and when we publish the report later this afternoon they will be able to comment on it. They recognise the value of ensuring that we have modern, flexible workplaces.

[Lorely Burt (Solihull) (LD)]

I agree with the Minister on the need for balance, but does he agree that we would create a climate of fear in employees by introducing a fire-at-will option, which will not help productivity or growth, and which could be just plain bonkers?

[Mr Prisk]

Absolutely. We need to ensure we get the balance right so that businesses are competitive and we do not tie them with the red tape they suffered under the previous Government, but as the hon. Lady rightly says, we also need to ensure we do not strip away those basic rights. I understand that and we are sensitive to it, but we need to recognise that we face tough economic circumstances. I want to ensure that everybody who has the opportunity to get a job can do so. Red tape can sometimes make that very difficult to achieve.

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

What does the Minister think will do most for growth in this country: the introduction of a fire-at-will culture, or tackling the banks that are failing to lend to small business? If the latter, why is there so much more activity from the Government on employment legislation and pathetically little action on getting bank lending going?

[Mr Prisk]

Sadly, because of the failure of the previous Government, we had to ensure we tackled credit and the problems of red tape so that businesses can grow. Both things are important, as the right hon. Gentleman knows all too well. What matters in that context is ensuring we have the workplaces, access to credit and industrial investment that will enable our businesses to grow. We saw good news last week; I am sorry the Labour party seems unable to reflect on it.

[Conor Burns (Bournemouth West) (Con)]

Has the Minister had the opportunity to read the World Economic Forum global competitiveness report, which showed that between 1997 and 2011, the UK fell from seventh to 10th in the years when the Labour party was in power? Does he agree that if the Beecroft report leads to a new focus on deregulation and the undoing of the burdens placed on business by the Labour party, it will be welcomed by small business throughout the UK, which we rely on to be the engine of economic recovery?

[Mr Prisk]

I entirely agree with my hon. Friend, who is right to point out that we need to restore the sad decline in our competitiveness that we saw before the last election. We need to restore not just the Government finances, but the strength of the economy. Ensuring that flexible workplaces and modern work practices are in place is part of that.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

There is a flaw in the Minister’s logic. He cannot on the one hand claim credit for the creation of hundreds of thousands of jobs in the private sector, including the welcome announcement at Ellesmere Port last week, and then say there is a huge problem for employers wanting to hire people. Flexibility in labour markets is a good thing, but does he accept that what is really stopping companies hiring is the lack of confidence in economic prospects in this country and the eurozone? In that context, are not the proposals fiddling while Athens burns?

[Mr Prisk]

It was worth the right hon. Gentleman getting to that metaphor at the end. He is right that confidence is one of the critical issues in the corporate sector. The Government need to understand that, which is why we have ensured that we look at all such issues, whether workplaces or employment tribunals. Government Departments are working hard on those things—they are all important—but he is right that we need to ensure we get the appropriate balance. He says there is surely no problem if we have all those extra jobs, but we must compete in a tough world. I am proud that there are 600,000 extra private sector jobs, but we need more.

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

Does the Minister agree that when we look at employment legislation, we should look not only at no-fault dismissal, but at all such legislation in the round? Activation policies that help people to get into work are as important as focusing on what happens when the relationship between an employer and employee goes wrong.

[Mr Prisk]

Absolutely. One of the encouraging things about the Beecroft report and other submissions is that they look at the issue in the round, and not just at employment tribunals, and the challenges of Criminal Records Bureau checks and visas. We need to ensure we think about the issue in the round and have an effective work programme alongside that.

[Mr Dennis Skinner (Bolsover) (Lab)]

Is not this new proposal of stripping employment rights for workers another example of how this Tory and Lib Dem Government are determined to attack workers’ rights while letting the bosses off the hook? Workers have already had a pay freeze and have to work longer for pensions, while the bosses get bonuses and even fatter pensions. Whatever happened to “We are all in it together”?

[Mr Prisk]

The hon. Gentleman needs to read the report and see what it says. I would also remind him that it is this Government who are ensuring that parents have much better rights. We have put those rights in place because we want to ensure that we balance work and home life. The analysis that he offers is somewhat out of date.

[Anna Soubry (Broxtowe) (Con)]

As a former shop steward and proud trade unionist, I welcome many of these proposals. Does the Minister agree that we need to change many of our rules and regulations so that, instead of having a “can’t do” culture, we have a “can do” culture?

[Mr Prisk]

I totally agree, and I only wish that that were the case on the Opposition Benches.

[Ann Clwyd (Cynon Valley) (Lab)]

If the Business Secretary has read the report, why did he say to the BBC this morning:

“Britain has already got a very flexible co-operative labour force…We don’t need to scare the wits out of workers with threats of dismissal. It’s completely the wrong approach”?

[Mr Prisk]

Because, as the Secretary of State rightly points out, we need to ensure that we are able to continue to compete. It is good that we have been able to secure 600,000 jobs in the private sector, but we need more. We are not in the business of trying to scare the workers. We are not somehow trying to rip up their basic rights. We want to ensure that an effective modern economy has the quality and calibre of employees that it needs. That is at the heart of our policies, and I hope that the Opposition will join us and ensure that they do not seek to scare people.

[Tony Baldry (Banbury) (Con)]

Adrian Beecroft, who is a constituent of mine, has spent a considerable amount of time on this report. Would it not be sensible for right hon. and hon. Members to take the time to read what he has to say before expressing views on a document, the conclusions of which none of them has yet had the opportunity to consider? When they do get around to reading it, perhaps the only test should be whether each recommendation would make the UK more or less competitive.

[Mr Prisk]

I entirely agree with my hon. Friend; he is absolutely right. That is why I have made sure that the report will be available to the House, so that we can look at the facts and not just at the speculation in the newspapers.

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

Last week, the Secretary of State paid warm tribute to workers and their union, Unite, for their role in the transformation of the automotive industry. This week, the Prime Minister wants to make it easier to sack workers. With 1 million young people out of work, should not the Government concentrate on making it easier to hire workers, rather than to fire them?

[Mr Prisk]

Again, I appreciate that the hon. Gentleman is at a disadvantage because he has not read the report; the question that he raises shows that rather clearly. If I may, I would suggest that he has a look at it. He will see that we are focusing on how to make the market more flexible so that it is easier to hire people. That is important. He is right about the workers at Vauxhall; they have done a fantastic job and I respect that. That is the attitude of this Government.

[John Hemming (Birmingham, Yardley) (LD)]

Although the Opposition’s fantasy finance will not solve the growth problems, will the Minister accept that there are supporters of the Government who, when they read the report, will want to see that workers’ rights are protected?

[Mr Prisk]

Absolutely. That is why I have ensured that the report is published this week, while the House is sitting, out of respect for the House. The call for evidence will close on 8 June, when we are not sitting. I hope that Members will take the opportunity to participate in it; I am sure that the Secretary of State will be delighted to hear from colleagues on the matter.

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

On the question of clichés versus substance, may I remind the Minister that the deal at Vauxhall was struck under the law as it is, rather than under the law as he would like it to be? Will he therefore list his top 10 priorities for changing the law to make such deals more likely to happen?

[Mr Prisk]

Mr Speaker, I would test your patience if I were to list the full 10 elements of employment law as the hon. Gentleman requests, but he is right to say that that deal was struck under the current law. We do not live in a static world, however, and we need to ensure that we have examined all the changes in the workplace, whether in a large car plant or a small firm.

[George Freeman (Mid Norfolk) (Con)]

Does the Minister agree that, when the Government have decided how to respond to the report, it will be important to listen more to the small businessmen and women around the country than to those on the Labour Front Bench—I do not think that any of them have started a business—and to remember that micro-businesses are the key to the growth that we all want to see? Does he acknowledge that too many of our small companies are struggling with big-company legislation, and that well intentioned employment legislation often has the opposite effect, in that it puts employers off taking the risk of employing people and creates a licence for spurious claims at employment appeals tribunals?

[Mr Prisk]

My hon. Friend is absolutely right. We saw an unreformed employment tribunal system that—as my right hon. Friend the Secretary of State for Energy and Climate Change, who used to be an employment Minister, knows all too well—had failed under the last Government. This Government changed it, and that is a record we can be proud of.

[Mr Frank Doran (Aberdeen North) (Lab)]

The last Labour Government were just as concerned about flexibility in the workplace as this Government, and the last Government asked the TUC and the CBI to report on what changes needed to be made. Those changes were put in legislation. Both those organisations have the most intimate knowledge of the workplace. What special qualifications does Adrian Beecroft have, as a venture capitalist, to report on the situation in the workplace?

[Mr Prisk]

Mr Beecroft is an employer. He has a significant record. He works in the marketplace not only as a venture capitalist but as an employer in his own right. He has tremendous business experience. We want to hear all voices; that is why we have a call for evidence. I hope that the hon. Gentleman will contribute.

[Mrs Helen Grant (Maidstone and The Weald) (Con)]

Does my hon. Friend agree that overt and extreme employment protection can be a disincentive to enterprise and growth, and that that is the case especially for small businesses? I say that as the owner of one.

[Mr Prisk]

There we have the practical evidence of someone who is actually running a small business. When we put in well intentioned legislation to try to remove every possible risk from the employment market, the greatest danger is that the most vulnerable workers—those on the edge whom it takes a lot of effort to bring into the labour market—can be kept out by such legislation. That is what we always have to bear in mind.

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

I hope that the Secretary of State enjoyed his visit to Teesside Cast Products today, itself a control of major accident hazards site and protected workplace. What are the implications of the Beecroft report on chemical and other process industries on COMAH site safety?

[Mr Prisk]

The Beecroft report does not relate specifically to COMAH, which is a specific area. We always want to ensure a careful balance, especially where health and safety issues are a special concern.

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

Last Friday, I met various business leaders from my constituency. One of their major concerns was the complexity of employment law. May I urge my hon. Friend to take whatever action is necessary to simplify employment laws, cut red tape and get the unemployed back to work in my constituency?

[Mr Prisk]

Absolutely, and by making sure we revert to the position where someone has to work for an employer for two years and not one year before unfair dismissal procedures apply, we have already started down that positive path.

[Grahame M. Morris (Easington) (Lab)]

Does the Minister recognise that one of the fundamental problems with lack of growth is the lack of domestic demand caused by lack of confidence and the unwillingness of employers to invest because of that lack of confidence? Does he think that introducing this fire-at-will concept will do anything to boost domestic consumer confidence?

[Mr Prisk]

As I said before, I genuinely advise the hon. Gentleman to read the Beecroft report. This is not a Government who will go about firing at will in the way he has described.

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

Over 50% of Britain’s smallest businesses say that they would hire more staff if they were given greater clarity about how to end an employment relationship. Does my hon. Friend agree that there may be a voluntary third way for no-fault dismissal, and will he meet me and bring along the Secretary of State?

[Mr Prisk]

I welcome that positive suggestion, and I am more than happy to accede to it—as I am sure the Secretary of State will be.

[Mrs Jenny Chapman (Darlington) (Lab)]

The Minister said in answer to a previous question that confidence is all important. Can he explain for those of us who have not read the report exactly how firing at will will increase consumer confidence?

[Mr Prisk]

If I may repeat my point, I urge the hon. Lady to read the report. This is not a Government who are in the business of hiring and firing at will. We are about ensuring that employers have the confidence to know that if something goes wrong, they have the ability to unpick that in a reasonable fashion. Many of them are deterred from taking on anyone in the first place, and that is bad for those on the edge of the labour market.

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

The Minister will recall that under the previous Government, businesses faced 14 new regulations every working day. May I assure the Minister that, on the Government Benches, we support businesses, want to reduce their burdens and stand on the side of businesses that want to grow and be competitive?

[Mr Prisk]

I am grateful to my hon. Friend for his support. This is an important matter and we need to have an intelligent debate, which is why we are publishing the report.

[David Wright (Telford) (Lab)]

Consumer confidence is low and the housing market is fragile. In towns such as Telford, thousands of public sector workers fear losing their jobs. How does compounding this problem by making private sector workers fear for their jobs help? When will the Government come forward with a definitive statement—they need to do it now—on their position regarding this policy?

[Mr Prisk]

Again, surely the point is to involve experts and ask them for their evidence, and then to make a decision. Sadly, I detect among the Opposition a wish to make up policy and then to try to make it fit the evidence. That is not how we do things.

[Mr Stewart Jackson (Peterborough) (Con)]

May I reassure the Minister, not least on behalf of many of my younger constituents, who are unemployed, that Government Members strongly welcome these labour market reforms? Will he take with a pinch of salt the obvious opportunism of the Labour party, which, while in office, doubled the number of households not in work and doubled the number that had never worked?

[Mr Prisk]

That is the point. Striking a balance is crucial. Not only is my hon. Friend absolutely right but youth unemployment rose by 40% under the previous Government. The Opposition claim that they care about this issue, but caring is not enough; we need to get the law right to ensure that those on the edge of the labour market have the chance to work. That is what we will do.

[Chris Evans (Islwyn) (Lab/Co-op)]

Is there not a danger that having a different employment regime for workers in small businesses employing fewer than 10 people could be a disincentive to growing that business?

[Mr Prisk]

The hon. Gentleman is right that when devising policies we have to be careful not to create unintended ceilings to growth. That is certainly something we will want to consider carefully.

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

Fifty per cent. of SME 500 companies were set up during the recession. Now is the time to encourage entrepreneurs. It takes courage, grit and determination to be an entrepreneur. May I urge the Minister to do all he can to help people to set up businesses and create employment?

[Mr Prisk]

Absolutely. It is crucial to ensure that when we devise employment law we recognise that often those small micro-businesses cannot cope with the kind of well-intentioned red tape that often comes from Whitehall and Westminster. We need to get the balance right. Those are the people in my mind when we devise these laws.

[Julie Hilling (Bolton West) (Lab)]

Out of the 36 richest countries, Britain is 34th for employment protection. That means it is already very easy to get rid of people in Britain. What evidence does the Minister have that his policy will do anything for growth, rather than making people more frightened of losing their jobs and not spend their money?

[Mr Prisk]

Again, I urge the hon. Lady to look at the report and talk to employers, who make it clear that the law needs to allow them to take people on in comfort, knowing that if something goes badly wrong, they can change things. This is not only about employment law, however, but about looking at the whole of the workplace. What matters is looking at all the issues in the round and we are working on each of them.

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

A key reason the eurozone crisis is unfolding is that politicians are failing to introduce the sweeping supply-side reforms needed to generate growth and close the gap between what Governments earn and spend. Will the Minister therefore ignore the cries from the Opposition and take a knife to employment regulations, which SMEs believe are the key reason they are not taking on new staff?

[Mr Prisk]

Ensuring that SME owners have the confidence to take on that next member of staff—perhaps even someone who is not as experienced as they would like—is a challenge and a risk for them, which is why we need to rebalance the law. I am happy, then, to take a knife to bad red tape, but I will ensure that our workplaces are modern and flexible, which is good for both employers and employees.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Will the Minister concede that given the huge problems facing our economy of a lack of aggregate demand and confidence, further adding to job insecurity, as the report suggests, could make the UK’s recession even worse? People who fear for their jobs do not spend their money.

[Mr Prisk]

In a sense, that is why we want to get this report into the public domain—to get past some of the speculation in the newspapers. We are concerned to ensure that good policy is based not on rife speculation but on facts. That is what we are working on.

[Duncan Hames (Chippenham) (LD)]

What thought has the Minister given to ensuring that no-fault dismissal cannot be applied unfairly so as to discriminate against workers looking to start families, especially young women?

[Mr Prisk]

This is precisely one of the issues that Beecroft is considering and one that the Department is reviewing. Some good, positive ideas have been presented since we called for evidence on 8 March, and we will continue to reflect on it and seek to strike the right balance.

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

The Minister said that there was always a cost to regulation, but there will also be a cost from weakening employment protection. I suspect that women, especially those with caring responsibilities, will pay a higher price. Will he promise the House that the report and any proposals will be subject to an equality impact assessment?

[Mr Prisk]

As I said in my statement, we did not progress this matter until the Home Secretary spelled out the equalities aspect last week. The hon. Lady is right: we need to look at the issue in the round. In the end, however, I want to ensure that flexibility in the workplace is paramount. Why? Because for women, being able to balance home and work life is often crucial.

[Elizabeth Truss (South West Norfolk) (Con)]

In 2005, Germany exempted businesses with fewer than 10 workers from unfair dismissal regulations, as well as introducing a new category of mini and midi-jobs. Since then, youth unemployment has halved and more women have found their way into the workplace. What can we learn from countries such as Germany?

[Mr Prisk]

That we need to look at this issue in the round—that is, not just at specific aspects of employment law, but at other aspects throughout the workplace. My hon. Friend is absolutely right: we need fresh ideas. It is just a shame that we do not get them from Labour.

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

Can the Minister explain the evidence base on which the “fire at will” recommendation has been made? Is the rushed consultation not an admission that there was no evidence and that the recommendation was based on prejudice?

[Mr Prisk]

I think we need some balance in this debate. We are talking about one element in a report of nearly 25 or 30 different elements, and this idea—“firing at will”, as the hon. Gentleman cavalierly described it—is not something on which the Government intend to proceed. The whole point of having a call for evidence is to ensure that we get things grounded properly. That is very important.

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

Any idea that unites the shadow Business Secretary and Lord Oakeshott from the other place has to be worthy of proper thought and attention. I would urge my hon. Friend to consult not only those two individuals, but small businesses in general, because I think he will find a huge amount of support for the ideas contained in the Beecroft report.

[Mr Prisk]

A number of areas—perhaps, sometimes, parts of the work force and the employer-employee relationship—support the idea of looking at this issue in a fresh way. That is an important part of the process.

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

Has the Minister not considered the report by Howard Reed for the TUC two years ago, which concluded that slashing employment protection at work could increase the problems of job creation and decrease productivity? With 6.3 million people desperately trying to find full-time jobs but unable to get them, will the Minister explain how his proposals would increase demand in the economy?

[Mr Prisk]

With the greatest of respect to the hon. Gentleman, employment law, whether good or bad, does not increase demand in the economy. The important thing is to ensure that employment law enables employers to have the confidence to take people on. That is crucial, and the idea behind the temporary measures that we have had from Labour, which would give perhaps one year or 18 months of support, is complete nonsense.

[Bob Stewart (Beckenham) (Con)]

A few years ago I ran a small company with 20 employees. One of them was grossly inefficient and incompetent. That person was highly unpopular and should have gone, but I was unable to remove them. It cost a great deal of money and effort, and in the end I failed. I hope that we will get legislation that allows good employers to deal with people like that.

[Mr Prisk]

The whole point is to ensure that the balance between the employer and employee is struck in a way that enables us to resolve exactly that kind of dispute. It is no good for the hard-working people left in my hon. Friend’s business to see someone who is clearly not able or willing to play their part. We need to ensure that they have the opportunity.

[Mrs Anne McGuire (Stirling) (Lab)]

The Minister talks about introducing new practices. I would suggest that he is actually reintroducing some pretty old practices, in allowing someone to be dismissed because someone does not like their face. Will he reflect on what he is saying today and think seriously about whether he wants to return to the really bad old days, when people were summarily dismissed for no apparent reason?

[Mr Prisk]

As the right hon. Lady should realise, the discrimination laws will not be changed or affected in any way, so the description she gives is completely false.

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

Is the Minister aware that 70% of the micro-business community are sole traders? When asked why they are sole traders, they say that the prime reason is the complexity and bureaucracy of employment legislation. Does he agree that if we changed the rules as he suggests in the consultation, we would increase the number of jobs and deal with our unemployment problem?

[Mr Prisk]

There has been a substantial shift within the small business base, so that we have seen a higher proportion being sole traders rather than employers. We need to try to encourage more of them to take people on; my hon. Friend is absolutely right.

[Jonathan Ashworth (Leicester South) (Lab)]

Given the falls in consumption in the economy and given the chronic lack of business confidence, would it not be better for the Minister to come to the Dispatch Box to announce some workable schemes to support manufacturing investment and schemes to support business access to financial credit rather than making it easier to sack people?

[Mr Prisk]

I say to the hon. Gentleman “Vauxhall”. We are making sure that the British automotive industry is alive and well with £4 billion-worth of investment. I will not be lectured by a party that saw more than a million manufacturing jobs lost.

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

When I worked in a large company, it was difficult at times to do what was best for it because of the employment restrictions and the advice of lawyers. Let me provide an example. When we had a redundancy programme, several people were asked to be put out of its scope because of risk, which was unfair on the people who were not in certain special groups as determined by the lawyers. It is that kind of complexity that we need to remove to ensure that employers do what they do best—providing British jobs and growing the economy.

[Mr Prisk]

My hon. Friend is absolutely right. This is the sort of informed and balanced overall debate that we want. That is why we have called for evidence and why we are publishing this report. The issue should not be about just the clichés we have heard from the Opposition; it should be about making sure that we get the whole workplace right.

[Mr David Crausby (Bolton North East) (Lab)]

Will the Minister tell me how making British workers terrified of their employers will deliver growth and confidence in the British economy—or is it that the Government simply cannot resist the Tory habits of a lifetime?

[Mr Prisk]

I wish the hon. Gentleman would read the report and stop using words such as “terrified”. Does he really think that that helps small business owners or people in work? Language like that will be taken up by the media and spun, and I do not think it helps anybody to use that kind of language in half an hour of partisan banter.

[Jo Swinson (East Dunbartonshire) (LD)]

Some critics of the Government policy to let parents choose how they share parental leave have a view of family life that is, frankly, stuck in the 1950s. They fail to take account of the benefits to business of employing mothers who might be able to return to work more quickly or the benefits to the wider economy of giving parents the flexibility to play a fuller role in the labour market. Whatever is in this report, will the Minister confirm that the Government are committed to introducing shared parental leave, with the benefits it will bring both to families and the economy?

[Mr Prisk]

It was made very clear in the coalition commitment that we understand how important it is to get the balance right. That is why I can confirm that that commitment has not changed in any way.

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

Is it not a totally bizarre approach to policy making to publish a report and then call afterwards for evidence to back it up? Does that not confirm the views of many of us, here and outside, that the Government have made up their minds on this issue? The fact is that the Government have not been able to provide a single piece of real evidence to show how this will support economic growth. The questions put on both sides of the Chamber illustrate that this approach is motivated not by policy, but by ideology?

[Mr Prisk]

No, what the Government do is to set out an agenda and then to seek evidence, which is an important part of the process, on the basis of which policy is made. That is how it should be done—not how it was done under Labour, when policy was made in between the phone throwing at No. 10.

[Christopher Pincher (Tamworth) (Con)]

The British Chambers of Commerce reckons that the last Labour Government burdened British business with £77 billion-worth of bureaucracy. Does not the attitude of Labour Members, who have not even read the Beecroft report, this afternoon demonstrate that they have learned nothing and forgotten nothing from their time in office, and that they remain viscerally anti-business?

[Mr Prisk]

Sadly, I am afraid that my hon. Friend is absolutely right.

[Ian Lavery (Wansbeck) (Lab)]

This can hardly be described as an independent report. Beecroft is a paid-up member of the Tory party and he funds the Tory party. When will the constant and continuing barrage of attacks on hard-working people stop and the focus shift to the people who created the problems in the first place—the bankers?

[Mr Prisk]

There is one slight flaw in the hon. Gentleman’s question. The Department for Business, Innovation and Skills, which commissioned the Beecroft report, is led by the Secretary of State for Business, Innovation and Skills, the right hon. Member for Twickenham (Vince Cable) and then there was his colleague, who is now the Secretary of State for Energy and Climate Change, the right hon. Member for Kingston and Surbiton (Mr Davey). The last time I looked, both were members of the Liberal Democrat party.

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

Does the Minister agree that employment tribunals are a huge cost not only to business, but to taxpayers who actually fund them. Is it not right that there needs to be more balance in the system so that taxpayers do not have to pay so much and businesses can get on with growing their business?

[Mr Prisk]

My hon. Friend is absolutely right. I am pleased to say that the Ministry of Justice is leading the way in streamlining the process to reduce the costs and remove red tape which, sadly—as he says—existed in the past.

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

There is no international evidence of any connection between the weakening of employment protection and growth. We have yet to see the report, but will the Minister tell us whether it contains any evidence to justify its conclusions, or whether it simply contains the author’s opinions?

[Mr Prisk]

As my hon. Friend the Member for South West Norfolk (Elizabeth Truss) pointed out a moment ago, Germany has made important reforms recently, and that has helped. We will look at all the evidence. We have a call for evidence, which will close in June, and I hope that the hon. Lady will contribute.

[Sheila Gilmore (Edinburgh East) (Lab)]

Opposition Members might be more able to discuss the issue if they had read the report. It has been kicking around in Government for several months, but the Government have resisted calls for its publication. Why do the Minister and his colleagues persistently repeat the statement that they have created 600,000 jobs since the election, when the Minister knows that—in the words of his own Prime Minister—the first 500,000 were created in the first six months, and were clearly a result of the stimulus created by the last Government?

[Mr Prisk]

It is true that 600,000 private sector jobs have been created since the last election, and we are proud of that. However, as the hon. Lady ought to recognise, Governments do not create wealth and jobs but business does, and our job is to ensure that it can do so more confidently.

[Several hon. Members]

rose—

[Mr Speaker]

Order. There is a growing phenomenon in the House whereby Members who were not standing at the start of a statement are suddenly motivated to pop up towards its conclusion—but I would not want the hon. Member for Nuneaton (Mr Jones) to be disappointed, so I think we had better hear him.

[Mr Marcus Jones (Nuneaton) (Con)]

Thank you, Mr Speaker. I recently attended a meeting with people who run small businesses in my constituency. Many of them said that they were keen to take on more employees, but were often put off by the additional red tape and regulation that had been imposed on them by the Labour party. Can my hon. Friend confirm that this Government will take account of the issues raised by my constituents, and will try to help them to create more employment in my constituency?

[Mr Prisk]

Absolutely. Not only have we already taken action in the last two years, but this programme will enable us to try to do even more to help the businesses in my hon. Friend’s constituency.

[Kevin Brennan (Cardiff West) (Lab)]

Adrian Beecroft is an asset-stripping venture capitalist. Is not putting him in charge of a inquiry into whether it is a good idea to make it easier to sack workers—I mean no disrespect to the absent Business Secretary—a bit like putting Hannibal Lecter in charge of deciding on the nutritional benefits of cannibalism?

[Mr Prisk]

I hope that the hon. Gentleman has got his press release out, because that is a good joke. However, I think that he should be careful about referring to asset-stripping vultures and so forth. If we want people to develop and create jobs, and to invest in this country, we need to watch our language very carefully.

[Paul Flynn (Newport West) (Lab)]

Will the Prime Minister demonstrate his new enthusiasm for sacking failures by example and exhortation, and sack the Culture Secretary? A sacking delayed is a disgrace multiplied.

[Mr Prisk]

I think that you, Mr Speaker, would rightly rule me out of order if I went as far as that; and if you did not, the Prime Minister might.

[Mr Speaker]

I am grateful to the Minister, and to colleagues for their pithy questioning.

Points of Order

Monday 21st May 2012 Commons Chamber

16:18

[Mr Peter Hain (Neath) (Lab)]

On a point of order, Mr Speaker. May I thank you personally, and also thank the whole House—whose opinion was expressed in an early-day motion sponsored by the right hon. Member for Haltemprice and Howden (Mr Davis) and my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) in the last Session—for supporting me in connection with the prosecution brought by the Northern Ireland Attorney-General? It is perhaps no coincidence that common sense finally prevailed last week and the Attorney-General dropped the prosecution, but issues of free speech for Members and the ancient offence of scandalising a judge are still unresolved. Will you consider, Mr Speaker, how the House could present proposals to give greater protection to freedom of speech for Members over contempt actions—whether or not statements are made in the House or outside—and make recommendations to the House?

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

Further to the point of order, Mr Speaker. As you might imagine, since the right hon. Member for Neath (Mr Hain) has been suffering this burden, a number of us have been looking into the possibilities. If you are able to answer the right hon. Gentleman’s question in the affirmative, will you tell us whether the House could also consider recommending legislation to the Government, given that it is almost certainly necessary?

[Mr Speaker]

I am grateful to the right hon. Member for Neath (Mr Hain) for his point of order, and for notice of it. I am also grateful to the right hon. Member for Haltemprice and Howden (Mr Davis) for his follow-up. Let me first say, for the benefit of both the right hon. Member for Neath and the House, that, as he will recall, my concern was that Members who wish to table an early-day motion upon this matter should be free to do so in terms that reflect their beliefs—and it was then up to them to seek support from other Members of the House, which, indeed, was forthcoming in very substantial number. I note the thanks the right hon. Gentleman has given, but I simply thought I was doing my democratic duty by the House.

Secondly, I may disappoint the right hon. Gentleman by saying the following, but it remains a fact: it would not be for me to recommend any such course of action in relation to the ancient offence to which he referred. That is not a matter for the Speaker, but the right hon. Gentleman, or any other non-ministerial Member, is free to propose legislation by way of a private Member’s Bill. Moreover, the right hon. Members for Neath and for Haltemprice and Howden and other Members are very well versed in the use of the procedures of this House to highlight what they judge to be a continuing omission or an area of policy that requires, let us say, corrective action. Knowing the right hon. Member for Neath and his track record of public campaigning on matters big and small over four decades, I doubt that he will require any further encouragement from the Chair.

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

On a point of order, Mr Speaker. On 19 March 1997, the House passed a resolution which said, among other things:

“Ministers should be as open as possible with Parliament, refusing to provide information only when disclosure would not be in the public interest”.

Recently, I tabled the following question to the Prime Minister:

“To ask the Prime Minister whether he was aware at the time that on 13 December 2010 Rebekah Brooks had discussed with the Chancellor of the Exchequer News Corporation’s bid for BSkyB.”

If ever there was a question that required a yes or no answer, that was it. I accept entirely that, like your predecessors, you, Mr Speaker, have always said you have no responsibility for ministerial replies—and I am sure you are very pleased about that. However, the Prime Minister replied:

“I had no role in the BSkyB takeover nor did I seek to influence the decision.”—[Official Report, 17 May 2012; Vol. 545, c. 246W.]

I never asked him that; I asked him the question I have quoted. I therefore wonder whether the Prime Minister is in some way in conflict with the resolution passed by the House on 19 March 1997.

[Mr Speaker]

The short answer to the hon. Gentleman’s point of order is that I am not aware that there is any conflict with the terms of the resolution. As the hon. Gentleman also noted in his point of order, the Chair is not responsible for the content of answers. The obligation upon a Minister is to provide an answer to the question posed. Whether it is an answer of sufficient quality to satisfy Members, and in this instance the hon. Gentleman, is, sadly, another matter. However, the hon. Gentleman may wish to return to this matter, and it is open to him to do so in a variety of ways—which, as he first entered the House 46 years ago last March, he will not require advice from me to identify.

Local government Finance Bill (Programme) (No. 2)

Ordered,

That the Order of 10 January 2012 in the last Session of Parliament (Local Government Finance Bill (Programme)) be varied as follows:

1. Paragraphs 5 and 6 of the Order shall be omitted.

2. Proceedings on Consideration shall be taken in the following order: New Clauses and New Schedules relating to council tax; Amendments to Clauses 8 to 12; Amendments to Schedule 4; New Clauses and New Schedules relating to nondomestic rating; Amendments to Clauses 1 to 7; Amendments to Schedules 1 to 3; and remaining proceedings on Consideration.

3. Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.—(Robert Neill.)

Local Government Finance Bill

Monday 21st May 2012 Commons Chamber

Consideration of Bill, as amended in the Public Bill Committee

New Clause 9

Regulations about powers to require information, offences and penalties

‘(1) The LGFA 1992 is amended as follows.

(2) After section 14 insert—

“14A Regulations about powers to require information

(1) The appropriate authority may by regulations provide for the exercise, for prescribed council tax purposes, of—

(a) powers to require the provision of information;

(b) powers to require a person to enter into arrangements under which access is permitted to the person’s electronic records.

(2) The appropriate authority may by regulations make provision about arrangements for access to electronic records for prescribed council tax purposes where the arrangements are entered into otherwise than under a requirement of the kind mentioned in subsection (1)(b).

(3) The appropriate authority may by regulations—

(a) make provision about the persons by whom powers conferred by regulations under this section may be exercised;

(b) make provision about the persons by whom arrangements under regulations under this section may be made;

(c) in particular, make provision for the authorisation by billing authorities of persons to exercise those powers or make those arrangements.

(4) The provision that may be made by regulations under this section includes, in particular, provision equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the appropriate authority thinks fit

(5) For the purposes of subsection (4), each of the following enactments as it had effect on the day on which the Local Government Finance Act 2012 was passed is a “relevant enactment”—

(a) section 109A(8) of the Social Security Administration Act 1992 (application of section 109B of that Act to the Crown);

(b) section 109B of that Act (powers to require information);

(c) section 110A of that Act (authorisations by local authorities to exercise powers of investigation);

(d) section 110AA of that Act (power of local authority to require electronic access to information);

(e) section 121DA of that Act (interpretation of Part 6 of that Act);

(f) section 191 of that Act (interpretation of that Act).

(6) This section does not affect the operation of Schedule 2 (administration of council tax).

(7) In this section “council tax purposes” means purposes relating to a person’s liability to pay council tax.

14B Regulations about offences

‘(1) The appropriate authority may by regulations provide for the creation of offences that may be committed by a person in prescribed circumstances—

(a) by intentionally delaying or obstructing a person in the exercise of a power conferred by regulations under section 14A(1);

(b) by refusing or failing to comply with any requirement under regulations under section 14A(1)(b) or with the requirements of any arrangements entered into in accordance with such regulations;

(c) by refusing or failing, when required to do so by or under this Act or by or under regulations made under this Act, to provide any information or document in connection with a person’s liability to pay council tax;

(d) by making a false statement or representation in connection with such liability;

(e) by providing, or causing or allowing to be provided, in connection with such liability, a document or information which is false;

(f) by failing to notify, or causing or allowing a person to fail to notify, a matter that is relevant to such liability (including in particular any matter that is required to be notified by or under this Act or by or under regulations made under this Act).

(2) Regulations under subsection (1)(a), (b) or (c)—

(a) must provide for an offence under the regulations to be triable only summarily;

(b) may not provide for such an offence to be punishable with a fine exceeding level 3 on the standard scale.

(3) Regulations under subsection (1)(a), (b) or (c)—

(a) may provide, in a case where a person is convicted of an offence under the regulations and the act or omission constituting the offence continues after the conviction, for the person to be guilty of a further offence and liable on summary conviction to a daily fine;

(b) may not provide for the daily fine to exceed £40.

(4) Regulations under subsection (1)(d), (e) or (f) that create an offence that may only be committed by a person acting dishonestly—

(a) must provide for the offence to be triable summarily or on indictment;

(b) may not provide for the offence to be punishable on summary conviction with imprisonment for a term exceeding 12 months or with a fine exceeding the statutory maximum;

(c) may not provide for the offence to be punishable on conviction on indictment with imprisonment for a term exceeding 7 years (and may provide for the offence to be punishable on conviction on indictment with a fine).

(5) Regulations under this section which create an offence within subsection (4) that may be committed before the date that section 154(1) of the Criminal Justice Act 2003 comes into force may not provide for such an offence committed before that date to be punishable on summary conviction with imprisonment for a term exceeding 6 months.

(6) Regulations under subsection (1)(d), (e) or (f) that create an offence that may be committed by a person acting otherwise than dishonestly—

(a) must provide for the offence to be triable only summarily;

(b) may not provide for the offence to be punishable with imprisonment for a term exceeding 51 weeks or with a fine exceeding level 5 on the standard scale.

(7) Regulations under this section which create an offence within subsection (6) that may be committed before the date that section 281(5) of the Criminal Justice Act 2003 comes into force may not provide for such an offence committed before that date to be punishable with imprisonment for a term exceeding 3 months.

(8) The appropriate authority may by regulations make provision—

(a) about defences to an offence under regulations under this section;

(b) about the commission by a body corporate of such an offence;

(c) about the conduct of proceedings for such an offence;

(d) about the time limits for bringing such proceedings;

(e) about the determination of issues arising in such proceedings;

(f) about other matters of procedure and evidence in relation to such offences.

(9) The provision that may be made by regulations under this section includes, in particular, provision equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the appropriate authority thinks fit

(10) For the purposes of subsection (9), each of the following enactments as it had effect on the day on which the Local Government Finance Act 2012 was passed is a “relevant enactment”—

(a) section 111 of the Social Security Administration Act 1992 (offences relating to powers under that Act);

(b) section 111A of that Act (dishonest representations for obtaining benefit etc);

(c) section 112 of that Act (false representations for obtaining benefit etc.);

(d) section 115 of that Act (offences by bodies corporate);

(e) section 116 of that Act (legal proceedings);

(f) section 121DA of that Act (interpretation of Part 6 of that Act);

(g) section 191 of that Act (interpretation of that Act).

14C Regulations about penalties

‘(1) The appropriate authority may by regulations make provision for the imposition of a penalty by a billing authority on a person where in prescribed circumstances—

(a) that person’s act or omission results or could result in the amount of council tax that a person (“P”) is liable to pay being reduced or subject to a discount, and

(b) P is not or will not be entitled to that reduction or discount.

(2) The appropriate authority may by regulations make provision for the imposition of a penalty by a billing authority on a person where in prescribed circumstances—

(a) that person’s act or omission results or could result in a dwelling in respect of which a person (“P”) would otherwise be liable to pay council tax being treated as an exempt dwelling for a period, and

(b) the dwelling is not or will not be an exempt dwelling for all or part of that period.

(3) Regulations under this section must—

(a) make provision with the effect that a penalty may only be imposed on a person where the person agrees to the imposition of the penalty as an alternative to criminal proceedings being taken against the person in respect of the act or omission to which the penalty relates,

(b) make provision with the effect that a penalty may only be imposed on a person where the person has not been charged with an offence in respect of the act or omission to which the penalty relates, or

(c) make provision within paragraph (a) and (b).

(4) This section does not affect the operation of Schedule 3 (penalties).

(5) The provision that may be made by regulations under this section includes, in particular, provision equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the appropriate authority thinks fit.

(6) For the purposes of subsection (5), each of the following is a “relevant enactment”—

(a) section 115A of the Social Security Administration Act 1992 (penalty as alternative to prosecution);

(b) section 115B of that Act (penalty as alternative to prosecution: colluding employers etc);

(c) section 115C of that Act (penalties in respect of incorrect statements etc);

(d) section 115D of that Act (penalties in respect of failures to disclose information);

(e) section 121DA of that Act (interpretation of Part 6 of that Act);

(f) section 191 of that Act (interpretation of that Act).

(7) The reference in subsection (6)—

(a) to section 115C or 115D of the Social Security Administration Act 1992 is to that section without the repeals in it contained in Part 1 of Schedule 14 to the Welfare Reform Act 2012;

(b) to any other provision of that Act is to the provision as it had effect on the day on which the Local Government Finance Act 2012 was passed.

14D Sections 14A to 14C: supplementary

‘(1) In sections 14A to 14C—

“the appropriate authority” means—

(a) the Secretary of State, in relation to England, and

(b) the Welsh Ministers, in relation to Wales;

“prescribed”, in relation to regulations made by the Welsh Ministers, means prescribed by such regulations.

(2) A statutory instrument containing regulations made by the Secretary of State under any of sections 14A to 14C may not be made unless a draft of the instrument has been laid before and approved by a resolution of each House of Parliament.

(3) A statutory instrument containing regulations made by the Welsh Ministers under any of sections 14A to 14C may not be made unless a draft of the instrument has been laid before and approved by a resolution of the National Assembly for Wales.”

(3) In section 113(3) (application of negative procedure to orders and regulations under the Act), after “except in the case of regulations under section” insert “14A, 14B, 14C or”.’.—(Andrew Stunell.)

Brought up, and read the First time.

16:24

[The Parliamentary Under-Secretary of State for Communities and Local Government (Andrew Stunell)]

I beg to move, That the clause be read a Second time.

[Mr Speaker]

With this it will be convenient to discuss the following:

Government new clause 10—Power for HMRC to supply information for purposes of council tax

New clause 2—Discounts—

‘(1) Section 11 of the LGFA 1992 is amended as follows.

(2) In subsection (1), for the word “shall”, substitute “may”.

(3) In subsection (2)—

(a) for the word “shall”, substitute the word “may”;

(b) for the word “twice”, substitute the words “a multiple of”.

(4) Omit subsections (3) and (4) and insert—

(a) In this section “the appropriate percentage” and “multiple” are to be determined by the relevant local authority and approved as part of their Council Tax Reduction Scheme as set out in Schedule 1A.

“(b) The eligibility for any reduction shall be determined as part of the Council Tax Reduction Scheme.

(4) Schedule 1 to this Act shall have effect for determining who shall be disregarded for the purposes of discount.”.’.

New clause 5—Report on effects of provisions—

‘At a date no later than three years from the implementation of this Act the Secretary of State shall prepare a report detailing the effects of these provisions on—

(a) the number of people receiving council tax support in each local authority including the number in employment, the number actively seeking work, and the number of pensionable age, and

(b) the costs incurred by each authority in running the scheme, including the cost of appeals.’.

New clause 7—Power to set higher amount for second homes—

‘(1) The LGFA 1992 is amended as follows.

(2) After section 11A insert—

“11C Higher amount for second homes: England

(1) For any financial year, a billing authority in England may by determination provide in relation to its area, or such part of its area as it may specify in the determination, that if on any day a dwelling is a second home—

(a) the discount under section 11(2)(a) shall not apply, and

(b) the amount of council tax payable in respect of that dwelling and that day shall be increased by such percentage of not more than 50 as it may so specify.

(2) The Secretary of State may by regulations prescribe one or more classes of dwelling in relation to which a billing authority may not make a determination under this section.

(3) A class of dwellings may be prescribed under subsection (2) by reference to such factors as the Secretary of State thinks fit and may, in particular, be prescribed by reference to—

(a) the physical characteristics of, or other matters relating to, dwellings;

(b) the circumstances of, or other matters relating to, any person who is liable to the amount of council tax concerned.

(4) Where a determination under this section has effect in relation to a class of dwellings—

(a) the billing authority may not make a determination under section 11A(3), (4) or (4A) in relation to that class, and

(b) any determination that has been made under section 11A(3), (4) or (4A) ceases to have effect in relation to that class.

(5) A billing authority may make a determination varying or revoking a determination under this section for a financial year, but only before the beginning of the year.

(6) A billing authority which makes a determination under this section must publish a notice of it in at least one newspaper circulating in its area and do so before the end of the period of 21 days beginning with the date of the determination.

(7) Failure to comply with subsection (6) does not affect the validity of a determination.

(8) For the purposes of this section, the Secretary of State may by regulations prescribe the definition of a dwelling to be considered a “second home”.

(3) In section 11(2) (discounts: no chargeable residents) after “sections 11A”, insert “, 11C”.

(4) In section 11A (discounts: special provision for England) after subsection (4B) (inserted by section 9) insert—

“(4D) Subsections (3), (4) and (4A) are subject to section 11C (4).”.

(5) In section 66(2)(b) (matters to be questioned only by judicial review), after “section 8(2), 11A”, insert “, 11C”.

(6) In section 67(2)(a) (functions to be discharged only by authority), after “section 8(2), 11A”, insert “, 11C”.’.

Government amendments 42 to 48.

Amendment 6, in clause 8, page 5, line 28, leave out ‘2013’ and insert ‘2014’.

Amendment 7, page 5, line 29, leave out ‘2013’ and insert ‘2014’.

Amendment 4, in clause 10, page 7, line 41, at end insert—

‘(12A) After sub-paragraph (7) insert—

(7A) In this paragraph, “increase” means an increase under section 11C(1)(b) (higher amount for second homes: England).”.’.

Government amendments 49 and 50.

Amendment 1, in schedule 4, page 48, line 43, at end insert—

‘(8A) Before making regulations under sub-paragraph (8), the Secretary of State must consult with local authorities regarding any proposed requirements for schemes.’.

Government amendment 51.

Amendment 9, page 49, line 15, at end insert—

(d) notify all persons within their area receiving council tax benefit on or immediately following 1 April 2012, of the implications of the draft scheme, including the estimated impact of that scheme on their living standards.’.

Government amendment 52.

Amendment 2, page 49, line 22, leave out sub-paragraphs (4) and (5).

Amendment 10, page 49, line 44, leave out ‘2013’ and insert ‘2014’.

Government amendments 53 and 54.

Amendment 11, page 50, line 2, at end insert—

‘(3A) The default scheme must be designed in such a way as to ensure, insofar as can reasonably be assessed, that no person below pensionable age, in or seeking employment, shall receive a lesser entitlement to a council tax reduction than that to which they would have been entitled under council tax benefit.’.

Amendment 12, page 50, line 2, at end insert—

‘(3B) If the default scheme has the effect of reducing or removing a reduction to which any class of persons was entitled under council tax benefit, it must include such transitional provision relating to that reduction or removal as the Secretary of State, after consultation with representatives of local government, thinks fit.’.

Amendment 13, page 50, line 5, leave out ‘2013’ and insert ‘2014’.

Amendment 3, page 50, line 14, leave out sub-paragraphs (2) and (3).

Government amendments 55 to 61.

[Andrew Stunell]

I am delighted to be taking part in the resumption of the debate from the previous Session, as it is good to be resuming our consideration of this important Bill and these important provisions. The Bill is a major step forward in localising fundraising and decision making to local councils and restoring to them local control. Discussing local government finance is very much an acquired taste, albeit one that I can see has not been acquired by too many hon. Members today.

May I draw the House’s attention to the publication of the statements of intent, which the Department has tabled for the benefit of hon. Members over the past few days? The statements bring to the House’s attention a great deal of the technical work behind the Bill and of how the Government intend that the scheme should be implemented over the coming months.

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

The Minister mentions the seven technical notes. Dozens and dozens of pages about how the Government are going to approach this were released on the working day before Report and Third Reading in this House, and three and a half months after this House finished its Committee stage. Does the Minister accept that to anyone outside this House it looks as though, at every stage, this Government are going out of their way to avoid people being able to take a proper look at this and to avoid this House being able to do its job of scrutinising this Bill properly? We will be leaving too much to the other House to do.

[Andrew Stunell]

I am extremely disappointed by the right hon. Gentleman’s intervention. May I just remind him that when I assured the House that these papers would be published, there was universal astonishment that we proposed to do that before the Bill left this House? There was a universal assumption that I had somehow misspoken and that we actually meant to do this at a later stage. It is very much for the convenience of this House today that it should have these very important documents available for consideration, but the right hon. Gentleman is right to say that Members of the other place will have every opportunity to give further consideration to the information. Of course, the reason for publishing these papers in advance of the Bill completing its passages through the two Houses is to give local authorities and those who have to work on these schemes the maximum length of time to implement the necessary provisions, so that an appropriate and speedy commencement can be made next year.

[Helen Jones (Warrington North) (Lab)]

In fact, the Minister promised us not statements of intent, but draft regulations. He said:

“we intend to publish draft regulations while the Bill is still before the House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]

Where are they?

[Andrew Stunell]

When the hon. Lady has taken the opportunity to look at the statements of intent, she will see that they are in effect—indeed, my note refers to it—draft statutory instruments. I remind her that we cannot publish draft statutory instruments until we have a Bill to publish them against. We have brought the statements of intent before both Houses so that matters for consideration are fully in view.

New clause 9 allows the Secretary of State to make regulations to introduce the necessary powers for local authorities to tackle fraud in claims for a reduction in liability to pay council tax, which will be effective from next April. Powers to investigate potential fraudulent claims for reductions in liability to pay council tax and to issue the appropriate penalties are a vital weapon for local authorities if they are properly to administer schemes and protect the public purse. The change from the existing scheme to the new scheme means that the new clause is needed to provide the necessary safeguards. Rather than simply reintroducing all the powers that local authorities have to tackle council tax benefit fraud, the clause allows us to work with local authorities to identify those powers and offences that will be needed to make local schemes work. The overall aim is that the regulations will reinstate only the necessary powers, offences, penalties and safeguards that are appropriate for the new scheme.

[Mr John Redwood (Wokingham) (Con)]

It would be very helpful if the Minister explained to my constituents what extra power is being granted to the council and how it will prevent fraud.

[Andrew Stunell]

The provision allows us to enter into discussions with local authorities about the point my right hon. Friend raises. It is our intention not to increase the powers of local authorities but simply to transpose them from the existing scheme to the new scheme while recognising that a range of provisions in the current scheme needs to be considered rather than simply transposed without any further thought. New section 14A, which the Bill inserts into the Local Government Finance Act 1992, will allow the Secretary of State to make regulations giving local authorities the power to authorise officers to carry out investigations. Regulations may provide that officers so authorised may require relevant information from specified bodies to check whether a claim that they believe to be fraudulent is in fact so. The regulations may also provide authorities with powers to require that certain bodies must enter into arrangements allowing access to a person’s electronic records.

[Mr Redwood]

That is the point I am trying to get at. It is already an offence to make a fraudulent declaration and to try to get out of paying this tax, and we all want to stop the fraud, but we also want to keep some civil liberties in this country. I must press the Minister again. What extra powers to investigate people and get access to their data are being taken?

[Andrew Stunell]

I am sorry if I did not make myself clear. The powers that local authorities rely on to guard against fraud in the current council tax benefit scheme will, in effect, lapse with the introduction of the new scheme. They are not competent to be used under the new scheme, so we need a new scheme. The purpose of the new clause is to ensure that the scheme takes account not just of concerns such as those held by my right hon. Friend but of the need to protect the public purse and that they are kept in proper and proportionate balance. We will not be giving local authorities powers to enter premises or to conduct inquiries and remove and copy documents from such premises. I hope my right hon. Friend finds that assurance helpful. The powers we are giving will require people to enter into arrangements under which access is permitted to relevant records and will, in our view, be sufficient for council tax purposes.

New section 14C will enable the Secretary of State to make regulations providing that authorities may issue penalties as an alternative to prosecution or where a person has not been charged with an offence. That will ensure that local authorities are able to take proportionate action, rather than being faced with the choice of pursuing prosecution or doing nothing. Before the debate on the amendments in the other place, we intend to publish a detailed statement of intent that will spell out clearly our proposals for regulations in accordance with the new clause. We have also made it clear in the new clause that any regulations will be subject to the affirmative procedure and will therefore be debated by both Houses. I hope my right hon. Friend will be somewhat reassured by what I have said.

[Helen Jones]

Will the Minister explain to the House, for my benefit and, presumably, for the benefit of others, how regulations in this section can

“create an offence that may be committed by a person acting otherwise than dishonestly”?

Presumably, if a person is not acting dishonestly, they are acting honestly. How can that create an offence?

[Andrew Stunell]

The hon. Lady is well aware that there are such things as negligence and avoidance of reality. We are all aware of such cases. I see quite a few examples in the House from time to time.

New clause 10 inserts into the Bill powers allowing Her Majesty’s Revenue and Customs to supply information for prescribed purposes relating to council tax to billing authorities in England and Wales and to local authorities in Scotland, and provides for offences relating to the misuse of that information. It is the matching part of the preceding clause, the one that gives local authorities the power to ask bodies for information. This clause allows HMRC to supply that information.

Data sharing will be an important way of maximising convenience and reducing complexity for claimants, while also helping to reduce administrative costs. It will reduce the need for individuals to have to provide the same information repeatedly to different public bodies and produce evidence about their situation to those bodies. Section 131 of the Welfare Reform Act 2012 provides for the sharing of information relating to social security benefits and welfare services with a qualifying person for prescribed purposes relating to welfare services or council tax. The two new clauses, together with that provision, will enable data held by the Department for Work and Pensions in relation to current benefits and, in future, to universal credit, to be provided to English and Welsh billing authorities and Scottish local authorities for the administration of local council tax reduction schemes.

[Hilary Benn (Leeds Central) (Lab)]

I understand the point that the Minister is making about requiring organisations such as DWP to offer information relating to individuals, but section 14A(1)(b) refers to

“powers to require a person to enter into arrangements under which access is permitted to the person’s electronic records.”

I find it hard to see that that is to do with the Department for Work and Pensions. Can the hon. Gentleman assure the House that this does not relate to individual council tax payers and any electronic records that they have—for example, held on personal computers?

[Andrew Stunell]

I may wish to return to the right hon. Gentleman’s point later in the debate, if the opportunity arises. My understanding is that there is nothing in the provision that in any way takes the powers of public bodies beyond what they are currently able to do in pursuit of council tax benefit and alleged fraud and misuse of council tax benefit. As I understand it, these powers are absolutely parallel to the existing provisions. I am sure that I will have an opportunity to return to that point later in the debate if I have in any way misguided the House.

New clause 10 inserts paragraphs 15A and 15B into schedule 2 to the Local Government Finance Act 1992. Paragraph 15A(1) and (2) will allow Her Majesty’s Revenue and Customs to supply information held for the purposes of its functions to billing authorities in England, as well as to a person authorised to exercise any of an authority’s functions on its behalf.

[Mr Redwood]

On new clause 10, when the Revenue has shared information with a local authority, what right will the individual concerned have to make sure that the Treasury has shared the correct information and has not made a mistake?

[Andrew Stunell]

HMRC is obviously under the same obligations when transferring data in such a case as it is in every other case; it must ensure that the data are relevant to the question being asked, accurate and appropriate, and there are of course safeguards via the Information Commissioner should that be broken. HMRC takes data protection extremely seriously, and the provisions in the Bill, which lie on top of the provisions in the Welfare Reform Act, are needed precisely because it is necessary to ensure that we have safeguarded HMRC and given it specific, explicit and closely confined powers on the transfer of data.

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

I must say that that is not an adequate response to the question asked by the right hon. Member for Wokingham (Mr Redwood). We have seen a lot of evidence on data sharing recently. The Electoral Commission has been undertaking data-matching exercises that have revealed huge problems of inaccuracy in data shared between Government Departments. This is a serious matter and the Minister is not justified in brushing it aside like that. There needs to be more certainty and more checks and safeguards need to be in place.

[Andrew Stunell]

I remind the right hon. Gentleman that at the moment HMRC shares these data with DWP, which then takes a view on an individual’s income and shares it with the local authority that administers the benefit. Under the provision, that information will go directly from HMRC to the billing authority. We absolutely share the view, expressed by both the right hon. Member for Greenwich and Woolwich (Mr Raynsford) and my right hon. Friend the Member for Wokingham (Mr Redwood), that it is extremely important that that creates neither opportunities for error nor opportunities for the misuse of data in any other way.

[David Wright (Telford) (Lab)]

The real danger, as the right hon. Member for Wokingham (Mr Redwood) said, is that there will be mission creep. Experience under previous Governments, including the Labour Government, shows that there is mission creep on data exchange. Discs are produced and information is passed around. What we really need from the Government is a definitive statement on what data can be passed between Departments, because there is a danger that people’s information will be passed around and that the parameters and scope of the data that ought to be shared will be extended.

[Andrew Stunell]

I am certainly keen to offer, on behalf of the Department and the Government, a clear undertaking that it is not the intention that that should happen, and that the provisions before the House do not create the opportunity for that to happen.

To return to the question asked by the right hon. Member for Leeds Central (Hilary Benn), proposed new section 14A, which relates to the investigation of fraud, will enable local authorities to investigate the eligibility of a person for a council tax reduction, which might require access to the individual’s records, in the same way as can currently be done for council tax benefit. That is separate from the provisions elsewhere relating to HMRC’s sharing of data with local authorities.

Proposed newparagraph 15B(7), of schedule 2 to the 1992 Act, sets out the procedure that Welsh Ministers must follow when making these regulations, which will be through a statutory instrument, subject to annulment procedures. Proposed new paragraph 15C(7) sets out the procedure that Scottish Ministers must follow when making regulations in respect of the data-sharing provisions, which will be through a Scottish statutory instrument, subject to the negative procedure. Without that legal gateway, HMRC would not be able to provide the information that billing authorities need for council tax purposes, such as calculating an entitlement to a reduction under a council tax reduction scheme, and if that were the case it would clearly increase the complexity for claimants and the administrative costs for billing authorities.

16:45

Government amendments 42 to 50 and 56 to 60 would provide Welsh Ministers with the powers to place a duty on specified bodies in Wales to introduce council tax reduction schemes in Wales. Welsh Ministers have developed plans for locally delivered council tax reductions and asked for these amendments, which will enable them to prescribe, by regulations, for establishing in Wales council tax reduction schemes that are broadly similar to those that billing authorities in England will be required to introduce in accordance with the Bill. Those powers would provide Welsh Ministers with the scope to establish the remit for council tax reduction schemes in Wales that were appropriate for Wales.

Welsh Ministers have said that they intend to use the powers to introduce a single national scheme set out in regulations and include the reforms necessary to meet the 10% reduction in funding. They intend local authorities to be given an amount of local flexibility in the new scheme’s delivery, and deviation from the national scheme will be funded locally. Welsh Ministers have recently consulted on the policy’s detail, and they intend to set out their proposals on vulnerable groups, including pensioners, in due course.

Amendment 44, to section 13A of the Local Government Finance Act 1992, would provide Welsh Ministers with the power to require specified bodies in Wales to introduce council tax reduction schemes, and the proposed change details the scope of the regulations that Welsh Ministers would be able to make. Amendment 45 sets out the procedure that Welsh Ministers would have to follow when making regulations on the introduction of council tax reduction schemes.

The amendments include a series of provisions that I am very happy to bring to the House’s attention if Members would like me to do so, but it might be sensible if I proceed by saying simply that the amendments set out a range of requirements and rules that are intended entirely to ensure that the scheme can be applied as Welsh Ministers determine in the Welsh environment.

Amendments 51 and 54 are technical amendments to ensure that we can deliver our policy to protect pensioners, enabling regulations to provide for a default scheme that largely replicates current council tax benefit, and providing reassurance to local authorities that their schemes can incorporate certain features of current council tax benefit when they choose them to do so.

Taken together the amendments to schedule 4 would achieve that aim by ensuring that regulations prescribing requirements for schemes and regulations prescribing the default scheme may incorporate provisions equivalent to those that are, or could be, provided for in the sections of existing legislation relating directly to council tax benefit.

[Helen Jones]

Why does the default scheme replicate the existing scheme on a 10% cut? Is the intention to penalise financially those councils that do not come up with their own scheme in time?

[Andrew Stunell]

There is certainly an incentive for local authorities to introduce a scheme of their own choosing. The whole point of this is that local authorities should have the capacity to have their own scheme, designed as they see fit. If they have not formed such a scheme by the relevant date in January, the default scheme comes into play, and that scheme will, in essence, continue with the existing council tax benefit scheme in its entirety. Taken together, the amendments to schedule 4 ensure that regulations prescribing requirements for schemes and prescribing the default scheme allow local authorities to take this approach and, if they so wish, to adopt the existing scheme lock, stock and barrel.

The Government have already confirmed their commitment to protecting pensioners on low incomes and have said that there should be no change in support to them as a result of the introduction of this reform. Support will continue to be rules-based, with provisions about the calculations to be made set out in regulations under paragraphs 2(8) and 2(9) of new schedule 1A to the Local Government Finance Act 1992, which is inserted by schedule 4 to the Bill. As the House is aware, it is intended that the support scheme for pensioners will be protected so that their support is as close as possible to what they receive at present. Paragraph 4 of new schedule 1A provides powers for the Secretary of State to prescribe a default scheme in regulations to take effect in any authority that has not made its own scheme by 31 January. The default scheme will cover those who have attained the qualifying age for state pension credit and those who have not yet attained it. The Government have been clear that they intend the default scheme to be as similar as possible to the existing scheme.

These technical amendments will enable regulations prescribing the requirements for pensioner protection and the default scheme to make use of the same powers, definitions and treatments as set out in the detail of the existing council tax benefit legislation. The Government believe that that will help to facilitate their provision of protection for those of pension credit age and provide the legal backstop of a default scheme that can take effect should a local authority not complete its own scheme. In particular, amendment 51, new schedule 1A, paragraph 2 and sub-paragraph (10) will allow the Government, when they set up the scheme, to make equivalent provision to that contained in the one of the enactments listed in sub-paragraph (12). New paragraph (3A) in amendment 54 allows the default scheme to make equivalent provision to that capable of being made under the same enactment.

There is a great deal of detail that I am happy to bring to the House should Members wish to have it, and more in the statements of intent. If the House is content at this point, I will move on to Government amendment 52. As set out in the statements of intent that we have published on our plans for localising support, the Government do not propose to make regulations as to how a billing authority will prepare a scheme because that would not enhance the existing requirements and duties of authorities in consulting and involving local people. It therefore does not make sense to prevent billing authorities, after consulting their major precepting authorities, from proceeding to publish their scheme and to consult others if they are in a position to do so prior to the Bill’s receiving Royal Assent. Amendment 52 allows councils to proceed in that direction if they wish. In other words, if, after consulting its major precepting authorities, a billing authority wants to publish its local scheme and to consult any other person with an interest in the scheme, it can do so straight away without running any additional risks arising from carrying out those steps in advance of Royal Assent.

[Helen Jones]

Are not the Government too often taking steps to implement legislation before it has been passed? We saw that with the Health and Social Care Bill and we are seeing it again now. The essence of a democratic Parliament is that legislation has to go through two Houses and get Royal Assent before it becomes law. Are not the Government trying to compensate for the fact that they are rushing this change in far too quickly, instead of giving local authorities time to prepare properly?

[Andrew Stunell]

In the last Session, the hon. Lady spent a lot of time telling us that we had not produced enough detail, nor given local authorities enough warning or flexibility. It seems a little perverse for her to say now that she does not want local authorities to have the flexibility to get a scheme under way pronto, if they are in a position to do so. I do not understand her confused logic.

Government amendment 53 is a minor technical amendment, which will ensure that the first financial year to which the default scheme relates is the same as that specified for the implementation of council tax reduction schemes in clause 8(4). Amendment 55 relates to claims that are in progress when the schemes come into force: in essence, any claims in the pipeline will be rolled over, rather than applicants being required to start again with a new scheme.

That completes my remarks about the Government proposals, but it is right and proper that I comment on the proposals from other parts of the House. New clause 2, tabled by the right hon. Member for Wentworth and Dearne (John Healey), would do away with the automatic entitlement to the single person discount, which has been a feature of council tax since its introduction. I remind the House that households with just one adult are eligible to claim the single person discount on their council tax bill, and that is not a benefit but a tax discount that has been a fundamental feature of council tax since its creation in 1993. Eight million households in England receive the single person discount, of which 90% are in bands A to D; it is therefore not a subsidy for the wealthy. Indeed, 29% of households in Great Britain are single-person households and another 7% are single-parent households, which are also eligible for the tax discount.

New clause 2 would pass to local authorities discretion on whether to grant a discount to such people and the size of the discount as part of setting their council tax reduction scheme. Clause 8(2) provides that

“Each billing authority in England must make a scheme specifying the reductions which are to apply to amounts of council tax”.

[Mr Kevan Jones (North Durham) (Lab)]

Is this not another example of not giving local councils freedom, but trying to push the blame on to local authorities? Would it not cause chaos in places such as London, where the 32 boroughs could have 32 different schemes? How does the Minister think that could be run efficiently?

[Andrew Stunell]

That is a severe criticism of new clause 2, which would pass down to councils the capacity to change single person discounts. As the hon. Gentleman rightly points out, that would create difficulties in implementation. I am sure that the right hon. Member for Wentworth and Dearne, when he speaks in favour of the new clause, will explain to the hon. Gentleman exactly how it would work.

New clause 2 would not only interfere with the single person discount, but give billing authorities discretion on whether a 50% discount should be granted in other circumstances. Currently, that applies when a dwelling is not unoccupied but is no one’s sole or main residence. At one time, that would have meant second homes, but the provision on those was amended in the Local Government Act 2003. The 50% discount still applies in some cases, when the second home is job-related. That is a matter of particular importance to the clergy and to service personnel. I suspect that the new clause would have an effect that the right hon. Gentleman does not intend.

17:00

Whatever the superficial attractions of the new clause—particularly to billing authorities, whose revenue-raising powers would be increased—it would certainly not be attractive to the 29% of households in which people live alone or the 7% of households that are single-parent families. Those categories include many older people, including widows and widowers, and the Government have made it clear that we intend that they retain their protection. We have prefigured that with our two-year council tax freeze, and our clear intention is to ensure that there is no loss of single person discount.

New clause 5 is interesting. The Government will monitor and review changes as part of the equality impact assessment process, as they do after every Act is implemented to check that it works as planned and to screen for unexpected equality impacts. There are already powers in the Bill to allow for that. Schedule 4 will insert into the Local Government Finance Act 1992 a new schedule 1A, which will enable the Secretary of State to require authorities to supply specified information to him. In the Government’s equality impact assessment of that reform, we made it clear that those powers could be used to collect information to support future evaluation of the policy. In other words, new clause 5 is not necessary, as what it suggests is already covered entirely in the Bill.

[Helen Jones]

Is the Minister therefore committing to produce a report, as requested in new clause 5?

[Andrew Stunell]

If the hon. Lady looks at the impact assessment submitted alongside the Bill, she will see that the specific question of whether the policy will be reviewed is addressed. The answer to her question is yes, and, if I remember correctly, the time interval before the publication will be three years.

Taken together, amendments 10, 13, 6 and 7 would delay by a year the localisation of the council tax reduction scheme, pushing it back from 2013 to 2014. The Government are very clear that the reform needs to be implemented in 2013 to secure the agreed savings set out in the 2010 comprehensive spending review. I think the Labour party is still struggling to come to terms with the fact that in 2010, £1 was being borrowed for every £4 spent and we were adding £400 million to the national debt every day. Tackling the deficit and establishing fiscal responsibility is a central part of the coalition Government’s strategy, and the changes to the scheme are fundamental to achieving the savings set out in the CSR.

There are things that councils should already be doing to prepare for the change, and we are supporting them in doing so, not least through the provision that the hon. Lady queried a few minutes ago. They should understand the circumstances of those in their area who currently claim support, ensure that elected members are aware of the decisions that they will need to take and engage with precepting authorities, such as police and fire authorities. They have the opportunity to prepare for and carry out consultation as soon as they are ready to do so—Government amendment 52 supports local authorities in their preparations by making that clear. The Government therefore believe that the amendments to delay the scheme are inappropriate and would create an unnecessary burden for local authorities, which will continue to be subject to their existing equalities duty and so will have to take that fully into account in their decisions.

The public sector equality duty includes a requirement for local authorities to have regard to advancing equality of opportunity between people who share a protected characteristic and those who do not, and to the need to eliminate unlawful discrimination. That continuous process requires relevant decision makers in local authorities to consider equality issues. That has a bearing not only on the question of delaying the scheme, which would incur costs and difficulties, but on amendment 9, which would require local authorities to notify current claimants of the potential impact of the draft scheme. Local authorities are already required, by paragraph 3(1) or proposed new schedule 1A to the 1992 Act, to consult on the draft scheme with such persons as they consider

“are likely to have an interest in the operation of the scheme”.

Furthermore, public sector bodies, including local authorities, are obliged to comply fully with the public sector equality duty.

[Helen Jones]

On a point of clarification, the Minister appears to be saying that local authorities have a duty to consider those with protected characteristics. The problem he is not grappling with is that if local authorities seek to do that in their council tax schemes—in respect of disabled people, for example—the cut imposed on the working poor will be even greater. Which mode of operation is he arguing they should undertake? Is he arguing that there should be equal cuts for everyone except pensioners, or that cuts should fall more on people who are in work?

[Andrew Stunell]

The Government have made it absolutely clear that that is a matter on which local authorities should take a decision. I remind the hon. Lady—she made this point—that it is open to councils to continue with the default scheme if they wish to do so; to look at other provisions in the Bill relating to discounts for empty and second homes; to take resources from other parts of their budget, which they could choose to do; and to scale back the benefits they provide in a scheme on which they have consulted.

[Mr Kevan Jones]

My hon. Friend the Member for Warrington North (Helen Jones) raises an interesting point. Clearly, many northern councils whose grants have been slashed have very little room for manoeuvre compared with Wokingham, whose grant has been increased. Does the Minister agree with the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who said that those in greatest need will ultimately bear the cost of the cuts? How can that be equal and fair?

[Andrew Stunell]

The hon. Gentleman has made his point. I should make it absolutely clear that, from the Government’s point of view, it is right for local councils to take account of the local circumstances in their communities and to draw up a scheme that they believe is appropriate for them. I again make the point that other measures in the Bill give greater discretion to local authorities on raising council tax on second and empty homes. The vast majority of local authorities potentially have a substantial stream of additional income, if they believe they will face difficulties because of the reductions in income resulting from this part of the Bill. The Bill has to be taken as a whole.

[John Healey]

The Minister has just said that the Government want councils to be able to draw up schemes to take account of local circumstances. Why then is he putting this funding noose around their necks by cutting the available money by 10% from the start?

[Andrew Stunell]

I dealt with that point a minute or two ago, when I pointed out that the UK-wide reduction announced in the 2010 comprehensive spending review of some £500 million—with an impact of approximately £440 million in England—was part of the Government’s deficit reduction programme. Of course that has implications, as Opposition Members have pointed out. We think that pensioners are the important group to safeguard, which is why we are putting the statutory safeguard in the scheme and saying that local authorities should have regard to the most vulnerable in their area when drawing up their schemes.

[Nic Dakin (Scunthorpe) (Lab)]

Will the Minister acknowledge that yet more demand and stimulus will be taken out of local economies as a result of the measure? Will not the Government then have to revise their borrowing figure yet again, and borrow even more than £150 billion?

[Andrew Stunell]

I think the hon. Gentleman has got that slightly topsy-turvy. We are ensuring that it will always be better to work and that it will always pay to work. One of the statements of intent sets out the Government’s view on how that can sensibly be integrated with universal credit, which will start in a year or two.

[John Healey]

How can the Minister say that? He talks about protecting pensioners. In Rotherham, there are 2,600 people who are in work but on incomes so low that they need the support of council tax benefit to get by, week to week and month to month. They will lose out as a result of this measure, and they will do so by significantly more than 10% of the overall cut, so how can the Minister piously say that work incentives matter to this Government?

[Andrew Stunell]

It would be interesting to hear the right hon. Gentleman tell the House how many of those 2,000 people received an income tax rebate as a result of the decisions taken by this Government. Indeed, I suspect that many of them will have been taken out of income tax altogether.

[Hilary Benn]

You are giving with one hand and taking away with the other.

[Andrew Stunell]

At least the right hon. Gentleman acknowledges that we are giving with one hand. It is right for local authorities and local communities to take account of the circumstances they face, and I hope that the council in Rotherham will do precisely that.

[Mr Kevan Jones]

Is not the Minister making it quite clear that this is not about the reform of local government finance, but about deficit reduction? The point that my right hon. Friend the Member for Leeds Central (Hilary Benn) has just made is that those people might well have been taken out of tax, but they will now be hit by this measure as well as by housing benefit cuts. Furthermore, the poorest are the hardest hit by the VAT increase—a policy that he once believed in.

[Andrew Stunell]

The hon. Gentleman needs to take stock of just how much council tax benefit someone in band A in his local authority might be getting and compare it with the discount that they might receive through the raising of tax thresholds. He might then grudgingly have to agree that the situation is not as bad as he maintains.

Amendment 1 would require the Government to consult on regulations prescribing requirements for schemes. Of course external scrutiny of plans for the framework is important, which is why the Government have published the detailed statements of intent for the key regulations that will deliver the policy. We will publish further statements of intent at each stage, as necessary. That will provide an opportunity for us to engage with local government on the detail of our plans before draft regulations are produced, and give local authorities the key information they need to develop their schemes. There is no need for additional requirements to consult with local authorities, such as amendment 1 would impose. In addition, we are working closely with local government representatives to design the framework within which local authorities will be required to operate, including considering what—if any—provision needs to be made for how local authorities should prepare schemes.

16:54

Amendment 3 is a bit of a stray. It would remove the deadline of 31 January for making revisions to or wholly revising schemes. The Government are clear that schemes cannot be amended in-year, but changes can be made between years. It is necessary to set a deadline of 31 January for revisions to schemes to provide certainty for council tax payers about when a final scheme will be issued. To remove the deadline could create significant uncertainty for low-income groups concerned about what support they will be able to claim.

Amendments 11 and 12 relate to the default scheme. I hope that I have already said enough to make it clear that the Government propose that the default scheme should retain the criteria and allowances currently in place for council tax benefit. We published a detailed statement of intent setting out how we expect to provide for the default scheme of regulations. As it is not intended that the default scheme will provide for any reductions in support, there will—as the hon. Member for Warrington North (Helen Jones) said—be a strong financial incentive for local authorities to avoid that, but the amendments are designed to guarantee that under the default scheme there will be no reduction in the level of support. Well, the scheme itself will have no reduction in the level of support.

[Mr Raynsford]

As I am responsible for the amendments, may I remind the Minister that the first of the two he described simply requires that there should be no reduction in benefit entitlement for pensioners. As he has already given that commitment to the House, how can he possibly object to that amendment?

[Andrew Stunell]

It is completely unnecessary. The right hon. Gentleman could have tabled an amendment that said today is Monday, and I would have resisted it on the grounds that we already know that. We do not need it.

New clause 7 was tabled by my hon. Friends on the Liberal Democrat Benches. It would introduce a premium on second homes that is an exact mirror of the Government’s proposal for the council tax premium on empty homes. The empty homes premium came from the Liberal Democrat stable and I am pleased that it is in the Bill. I am sure that my hon. Friends will be eloquent in supporting their proposition, but I have to tell them that the Government believe that it is right to invest heavily in bringing empty homes back into use, and that is why we are using the policy levers available to us. Certainly, there are difficulties in the second home sector; we fully acknowledge that and we fully understand the concerns that my hon. Friends have expressed.

[Mr John Leech (Manchester, Withington) (LD)]

I thank the Minister for addressing our new clause. Does he accept that there is a real problem with second homes in some parts of the country? If that problem does not decrease as a result of the changes, will the Government look again at measures to ensure that such areas are protected from a massive increase in the number of second homes?

[Andrew Stunell]

My hon. Friend makes a very good point. For some rural areas, especially tourist-focused ones, a significant fraction of the housing stock may be occupied—or perhaps unoccupied—as second homes, which makes it very difficult for those who live and work there to secure accommodation. I am sure he has taken note of our changes to the second home discount provisions, which give local authorities in those areas the opportunity to bring their council tax bills up to 100%. His new clause proposes a premium on top of that. I am sure that, in the years ahead, he and I will work jointly on proposals for a Liberal Democrat Government beyond 2015, and I look forward to working with him on that proposition.

[Helen Jones]

The Minister keeps referring to the right the Bill gives councils to increase the charge on second homes, as though all councils could gain a lot of money from that. Will he accept that in the poorest authorities, which will be hit hardest by the Bill—places such as Gateshead, Rotherham and so on—there is not an awful lot of second homes?

[Andrew Stunell]

I understand the hon. Lady’s point, but in Rotherham the funding gap is £1.8 million and the total value of discounts and exemptions granted by the Bill £1.9 million. To be clear, a 10% reduction for Rotherham is easily covered by the discounts and exemptions in the Bill. That is not true of every local authority, but it perhaps illustrates that there is a good deal of unnecessary trouble stirring by the Opposition. They are paid to do it, I understand that; but sometimes it is important to refer to the facts. In particular, I noticed that one of the leading financial officials on whom the Local Government Association draws for advice is the chief finance officer of Rotherham, so I am sure that those figures, which he submitted to the Department, are correct.

I am extremely sorry to have detained the House for so long, but I hope that I have provided a good foundation for the debate. The Government believe these to be important and significant reforms that will return power and responsibility to local government and take them out of Whitehall. We believe that is the right direction in which to head. I commend the Government’s proposals to the House and urge right hon. and hon. Friends and Members not to support the other amendments and new clauses.

[Mr Raynsford]

I draw attention to my interests as declared in the register.

This is a shocking example of how not to legislate. It is three months and 21 days since we completed a rushed Committee stage on the Floor of the House, and during that time, the Government have sat on their hands. Why, during that period, did we not have proper time to discuss the Bill’s very serious implications? Why did the Government not use it to publish the draft regulations that the Minister promised in the debate on 31 January? I remind him of what he said:

“I recognise, of course, that local authorities and suppliers need as much information as possible as soon as possible. For that reason, we intend to publish draft regulations while the Bill is still before the House.”

My right hon. Friend the Member for Wentworth and Dearne (John Healey) sharply picked up on that and asked the Minister whether he meant

“this House or the other House”.

The Minister replied:

“I am looking for a nod somewhere”—

he was clearly in need of guidance—

“but let us stick with this House.”—[Official Report, 31 January 2012; Vol. 539, c. 777.]

That was his commitment on 31 January 2012. As I said, three months and 21 days later we still do not have the draft regulations. The Government, belatedly and to cover their embarrassment, pushed out a series of positioning papers on 17 May—four days before this debate—rightly provoking anger and criticism in local government that it had not been given time to consider the detail far enough in advance of today’s Report stage to issue briefings. We had the worst possible example of the Government rushing the Committee stage, preventing proper scrutiny. I remember well the lack of detailed scrutiny, with a number of amendments simply not being called because of the lack of time. The Government then did nothing for three months and 21 days, and now they have come to this House without draft regulations. They should be deeply ashamed of themselves and should apologise to the House for the shambles they have made of introducing this legislation.

[John Healey]

Does my right hon. Friend agree that one other consequence of taking the Committee stage on the Floor of the House, rather than in a Public Bill Committee, was that those organisations responsible for implementing the system with concerns about its consequences did not have the opportunity formally to give evidence to the House, and thereby inform the debate and scrutiny, and ensure that the legislation was better than it is now?

[Mr Raynsford]

My right hon. Friend, who is extremely experienced in these matters, makes a telling point. That was just one further way in which the Government could have ensured proper scrutiny, giving a proper opportunity to those most profoundly affected by the changes to give evidence to us and to help shape a better Bill than the one we face today. But no, the Government simply did not want scrutiny because, as we shall see, they are pushing through a crude measure that will have a profound impact—of some £500 million—either on individuals or on local authority budgets, and they are doing so without proper care or consideration of those consequences. As I have said, they should be deeply ashamed of themselves.

This is a complex matter. The introduction of housing benefit in the 1980s, many years ago, was bungled. It was bungled because it was rushed and local authorities did not have enough time to prepare. There were horror stories from all over the country of people not receiving the benefits to which they were entitled, and huge backlogs of cases building up in local authorities. One would think that a Government who had experienced that in their history—or at least the Conservative part, which went through that experience in government—would want to avoid doing the same thing again. But here we are, with a Government once again rushing to introduce complex changes in benefits that will have profound impacts on many individuals’ potential entitlement, and doing so to a ridiculously tight timetable.

[Mr Kevan Jones]

I think the Minister answered the question earlier: this measure is not about reform of local government finance, but about deficit reduction. However, is it not also about devolving the responsibility—and the blame—for implementing these proposals to local authorities?

[Mr Raynsford]

My hon. Friend is absolutely right: this measure is not about reforming the benefits system or creating a benefit; it is about imposing crude cuts in expenditure either on individual recipients or on local authorities. It is about the Government passing the buck, putting the responsibility and blame elsewhere.

Let us look at the timetable. We know how many tasks are involved if a local authority is properly to introduce its own local scheme of council tax benefit next April. What will a local authority have to do? It will first have to consider in detail the implications of the regulations—it has to know what law it has to comply with. Over the last year or so we have heard about various aspirations from the Government. We heard the Minister say that no pensioner should lose; we have also heard the aspiration that there should not be any work disincentives. How those two are compatible we have never had explained to us. If we have a benefit that goes to a substantial number of pensioners and a substantial number of people in low-paid work, and if we exempt one of those groups from any losses and then announce a 10% cut overall, the other group has to face that loss by definition. It is, I am afraid, a simple piece of logic. The Government have not come forward with any explanation of how the aspiration that there should be no work disincentives can possibly be achieved. It is the most flabbergasting case of what George Orwell would have described as “doublethink”.

The first task of local authorities, when they have seen the regulations, will therefore be to consider the implications. Then they will have to devise a draft scheme, taking account of the needs of the area and local aspirations. Many people in this House support the concept of localisation, but want it done properly. That would require local authorities to have the opportunity to consider what the best shape of a local council tax benefit scheme would be for it to respond to the needs of the area. Having done that, they should consult, which we all know is part of good administration. Consulting the considerable numbers of people affected is not trivial—we are talking about 6 million households nationally, which means tens of thousands in every local authority area. After a proper consultation, so that individuals will know the likely implications, local authorities should finalise their schemes and then brief their IT suppliers to produce the software necessary to administer them.

17:30

Ministers are seriously suggesting that local authorities should conduct that particular process in a matter of little more than eight months, because January next year is the cut-off date by which the benefits scheme has to be finalised. What world are they living in? What experience do they have of implementing complex changes in benefits? If they had any real-world experience, they would immediately realise that they have set local authorities an impossible task.

What makes this sinister is the fact that we know what the Government expect to happen. They know that local authorities will probably respond by saying, “This is too difficult, so we had better take the hit ourselves. We will take the cost of the reduction in subsidy and absorb it into our own budget to avoid upsetting too many of our local residents by imposing harsh cuts on them.” That, we know, is the reality. As I said earlier, that is why the Government are guilty of trying to offload this £500 million package of cuts either on recipients or on local authorities. That is why amendments 6, 7, 10 and 13 seek to get the Government off the hook by delaying implementation for 12 months to allow proper consideration and a proper orderly transition so that implementation will not lead to the problems I have described.

There is no logical case against that course. The Select Committee was adamant when it looked at the problem, and it recommended that the Government should delay. Local authorities are all backing these amendments, so why will the Government not accept them? We have heard the feeble excuse offered once again by the Minister, “Oh, it’s due to cuts. We can’t do anything else because of cuts.” I am sorry to say that this is not a Government looking intelligently or carefully at how to make savings without causing difficulties and hardship; rather, they are simply trying to offload these problems.

There is one other consideration to which the Government should give some thought, and I suspect some local authority lawyers are already giving thought to it. If it is impossible for local authorities to administer the scheme in a way that makes the savings by reducing benefits, and they conclude that they have to absorb the costs themselves, this amounts to a new burden imposed by the Government. Under the new burdens doctrine, Governments have said repeatedly—and this Government have repeated it—that they should cover any additional costs imposed on local government that result from Government decision.

I therefore advise Ministers to think a bit more about the implications of their new burdens doctrine. The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), who, when in opposition, was only too keen to talk about new burdens and to attack the Labour Government of the time for not honouring the new burdens doctrine, would do better if he now ensured that his own Government followed the words he used then. It is an interesting case of someone changing their tack once they find themselves on the Treasury Benches—briefly, I suspect, in his case. [Interruption.] This is not a unique or personal slight aimed at the Under-Secretary, as I would apply it to the entire Government Bench.

Amendment 9 seeks to impose an obligation whereby councils, in devising their local scheme, should inform recipients in advance of what the impact will be “on their living standards”. This is a fairly straightforward and sensible proposal to make people aware of what the local authority is proposing. It was suggested for that reason, and I would have thought that any reasonable Government would support it.

Amendments 11 and 12 deal with the default scheme that the Government are going to produce. Amendment 11 simply confirms what the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) has said he intends—that there should be no pensioner losers. It is extraordinary, therefore, that he is so reluctant to accept it. He says that it is not necessary. However, because we know that so many Government pledges unfortunately prove worthless, we would rather have this on the statute book than in the form of a ministerial assurance, and we will draw our own conclusions from his refusal to accept the amendment.

Amendment 12 concerns transitional protection. If the Minister argues that there will be no losses under the Government’s default scheme, his argument will suggest that there is no need for such protection. The amendment would ensure that if losses are implicit in the default scheme, the scheme must include the transitional protection that is proposed. That is an entirely reasonable and logical formulation, and I am surprised that the Government are reluctant to accept it.

This series of badly thought out proposals will cause widespread hardship and serious financial difficulty to local authorities, and it is being rushed through in a way that will make it difficult to implement properly. It is a sad and sorry saga, and I find it regrettable that the Government have not the realism and the sense of respectability to admit that they have made a serious mistake. They have got themselves into a difficult mess, and the only honest thing that they can, and should, do now is agree to the amendments that would defer implementation until 2014. That would provide time for the issues to be considered seriously and properly by all involved, and would enable the Government to escape from this mess.

[Mr Kevan Jones]

As my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, the Bill has not changed greatly since we last debated it. The underlying theme remains. As the Minister made clear, it has nothing to do with reform or enabling councils to implement a local scheme; it is actually about the Government’s deficit reduction targets. That is why they are so keen to aim for implementation in 2014.

The Minister seems to think—and I recall that the hon. Member for Mid Dorset and North Poole (Annette Brooke) said this during our last debate—that all local authorities are on a level playing field, but they are clearly not. The Minister suggested that, following the 10% cut in council tax benefit, councils could make up the difference if they wished to, which may be all well and good for councils in areas where the benefit is being increased. I hate to return to my favourite example of Wokingham, but a few weeks ago a very good article in the Financial Times stated that its budget was rising by 3%—unlike the budgets of authorities such as Durham, which are declining by as much as 15%.

We are not dealing with level playing fields; we are dealing with a strategy that the Government have worked out quite well. As we can see from the playbook according to which the Conservative part of the coalition is working, it is nothing new. The same strategy was adopted by the Conservatives in Canada in the 1990s. They made savage cuts in public services and devolved decision making to local level: in their case, federal level. What they were saying was “We are giving you freedoms, but we are ensuring that you take all the blame for the cuts.” The flexibility that councils will be given will, in fact, cause them great difficulty, unless they are in Wokingham.

That very good article in the Financial Times, published on 7 May, was headed “The well-to-do towns that austerity forgot”. I think that it is worth looking at, and not just because it makes it plain that the Government are rewarding their own councils while penalising poor areas. Let us look at the calculations for Wokingham. It is among the 8% of local authority areas—out of a total of 152—that are expecting a real increase in local government spending over the period set out by the Government. Meanwhile, 20% of councils, including Durham, are taking cuts in excess of 15%.

We are being told that we are all in this together and that what is being done is fair, but let us look at the difference between Wokingham and Wigan. In the index of multiple-deprivation, Wokingham scores 5.5 whereas Wigan scores 26. On average, there is an additional 1% increase in local government spending cuts between 2009-10 and 2011-12. Not only are local authorities in the north-east and other deprived areas suffering because their grants are being cut, but they are now going to be hit again by the council tax benefit cut. Local authorities will be told they are being given the flexibility to administer the scheme, but the result will be a 10% cut.

[John Healey]

My hon. Friend mentions Wigan in the north-west and authorities in the north-east, but the case he makes is equally true for many authorities in Yorkshire and the Humber, such as Barnsley and Rotherham. As he has access to the figures, he might care to look at them in this regard. Wokingham may be facing an increase in its grant, which is astonishing given that local government is taking such a hit across the board, but Barnsley and Rotherham are facing double-digit reductions in their grant, despite increasing need and increasing pressure on services in their communities.

[Mr Jones]

I agree. My right hon. Friend’s authority and mine are among those that are having to take £152 million out of the budget over the next four years. In Wokingham, however, the council is planning to overhaul its town centre at a cost of £30 million, and it is not closing its libraries and its voluntary sector groups have not lost their funding. In communities such as mine and that of my right hon. Friend, councils are having to find savings—and they are having to find them in areas such as libraries and non-statutory services.

In Durham, the bulk of expenditure goes on adult social care. The Labour-run local authority is rightly making sure the most vulnerable are protected, but that restricts where savings in the budget can be made. I send a clear message to the Liberal Democrats sitting on Durham county council that, as a result of their Ministers’ actions and their Members’ votes on this Bill, Durham and other local authorities are having to make savage cuts. The idea that they can be found simply through efficiencies is complete nonsense. No organisation could reduce expenditure so much without affecting front-line services.

[John Healey]

Does my hon. Friend agree that not only is the current settlement unfair, but it is the baseline for the future system, and the Bill will lock in that unfairness for at least a decade?

[Mr Jones]

That is a very important point. That will limit the ability of my council in County Durham and my right hon. Friend’s authority to effect any change. That will lock in the unfair and disproportionate effects, which have been caused by no account having been taken of deprivation. We have just heard a Minister saying this Bill takes account of equality, but it must be the first Bill in history that supports a system by which the poorest in our society and those councils with the largest need—growing aged populations and increasing numbers of looked-after children, for example—will suffer the most.

[Nic Dakin]

My hon. Friend is making a powerful case, identifying the regional inequalities at the heart of these proposals.

17:44

[Mr Jones]

Huge regional inequalities are involved. In addition, the pressures on councils in South Yorkshire, and in Middlesbrough and South Tyneside, which I cited in a previous debate, compared with leafy Wokingham, mean that if services such as providing for looked-after children and a growing elderly population are to be protected, the scope for cuts is very limited. The Minister laid it bare in his response: this is not about reforming or giving local councils the ability to be flexible; it is about implementing the deficit reduction strategy of this coalition Government. As my hon. Friend said, that will take demand out of areas such as mine. It is impossible to implement this system without further cutting the support for some of the most vulnerable in our society.

[Mr Raynsford]

My hon. Friend is making a powerful case, and I wholly agree with him about the adverse impact on some of the most deprived areas. Does he also recognise that one of the bizarre features of the Government’s proposals is that they will inflict losses on people throughout the country? There are 6 million recipients of council tax benefit, many of whom are in low-paid work in parts of the country that are relatively more affluent than the area he represents, and those people will suffer, too. Although he is absolutely right in what he is saying, the impact of the Government’s proposal will be even more savage and unfair.

[Mr Jones]

Well it will be. The mistake that the Government are making in the spin they are clearly putting out is in saying that this will affect only the “undeserving poor”—the workshy and feckless. As my right hon. Friend rightly points out, many people in receipt of council tax benefit are in low-paid work. In sectors where jobs are growing, the increases are mainly in part-time, low-paid and low-skilled jobs, so more people might come into this bracket.

This measure will affect people, and not only in terms of their council tax benefit; we need to add on the ludicrous nonsense in the housing benefit changes, which will result in individuals in my constituency who have an extra bedroom suddenly finding themselves up to £10 to £15 a week worse off. The Government’s measures will have a cumulative effect on the poorest communities and, I have to say, some of the hardest-working individuals in this country. We might add to that this Government’s VAT increases, which the Liberal Democrats and the Deputy Prime Minister were clear in opposing before the election only then to implement and turn a blind eye to, saying, “It does not really matter because we have a commitment to reducing income tax.” The cumulative effect of these measures will be to take a vast amount of money out of the poorest communities in the country. The opportunity to gain full-time employment is very limited in some areas, because of short-time working, which means lower wages, and the growth in the number of part-time workers.

The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) has at least admitted that this is exactly what the Government are doing. I have a cutting here from the Daily Mail of 11 June 2010 headlined, “Tory minister under fire for gaffe as he tells MPs: ‘Those in most need will bear the burden of cuts’”. The article states:

“Unveiling a 1.2 billion package of cuts to councils, Local Government minister Bob Neill suggested the poorest areas would suffer the most.

Asked why northern cities were losing…more than southern areas, Mr Neill said: ‘Those in greatest need ultimately bear the burden of paying off the debt.’”

That comes from exactly the same Government who were happy to slash the income tax rate from 50p to 45p, giving huge tax breaks to some of the wealthiest in the country. The Minister should come to North Durham to speak to some of my constituents in low-paid work who are earning less than what some of these individuals are going to get in tax breaks in a year. That clearly shows that the Government do not have a clue about the effect on the poorest in our society. The idea that we are all in this together is complete nonsense.

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

The hon. Gentleman will be aware that for nearly the entirety of the period for which his party was in office the higher rate of tax was lower than it is today. As for the hypocrisy we are hearing from the hon. Gentleman and his colleagues who put this country in a position where public expenditure must necessarily be brought under control, his party always leaves office with unemployment higher that when it entered it and it is under his party that the money has all gone. This Government are having to deal with that, and he should show some shame for his part in the situation.

[Mr Jones]

I do not know whether the hon. Gentleman is old enough to remember records—I think he is—but if he does he will remember that trying to play a broken record is very difficult. The rhetoric from the election, when the Government blamed everything, including the world recession, on the Labour party, has now become a broken record. We are now into another recession in this country that was of this Government’s making. It is interesting that the Chancellor of the Exchequer now argues that the British economy is not doing well because of the eurozone. In 2008, 2009 and 2010, when the banking crisis hit, it was all Labour’s fault; now it is all Europe’s fault. The only people who are not accepting any responsibility are this coalition Government.

Was our borrowing in 2008 and 2009 the right thing to do? Yes, it was. It was the right thing to do to ensure a growing and stable economy. We do not have that now; we have a recession that has been made in Downing street by this coalition Government. The idea that the fair way of dealing with that is to reduce the top rate of income tax so that it will, through Reaganomics, trickle down to boost the economy is complete nonsense. We have also heard complete nonsense this afternoon that the way to get growth is to slash employment rights. The Government are living in cloud cuckoo land if they think that that will not have an effect on local people.

I was in local government for about 11 years, and I know that if a Government tinker with the system only to get it wrong they pay for it dearly. I remember the Conservative Government getting the poll tax wrong. Even when it was quite evident that it was going to be complete chaos, they would not change their mind. We are trying to rush through a system that will affect some of the poorest people and the poorest councils, adding to the injustice of the skewed way in which the Government have rewarded their friends on councils in the south. We are setting local government an absolutely horrendous task. The idea that the system can somehow be changed tomorrow at the flick of a switch is complete nonsense and I hate to think of the sleepless nights these provisions will give local treasurers. The practicalities will have an effect on councils’ individual income while they try to work out the system.

[Mr Raynsford]

One of the nightmares that local authority treasurers might well be thinking about is the downside risk in future years. Up to now, we have been talking only about the 10% cut, which totals £500 million, but under the scheme local authorities will be liable if there is an increase in demand for council tax benefit, possibly because of the closure of a local business or because the double-dip recession, which the Government have created, has caused further hardship and unemployment, meaning that more people are claiming council tax benefit. That risk is clearly now with the local authority and many treasurers will be nervous about the implications for them.

[Mr Jones]

My right hon. Friend makes a good point. Let me take my constituency as an example. Compared with April last year, 384 more people are unemployed. The figure represents nearly 7.2% of the population and shows no sign of decreasing. The demand will not be on the central pot but on the councils. If councils have the large pressures that we see in Durham and elsewhere, because of the number of children in care and adults with social needs, where will that money come from? We can add the 10% cut to those pressures, too.

As for the chaos that the process will lead to, although some councils—certainly Wokingham—will be able to afford to absorb such a reduction to their budget, not many will be. The mechanics of putting the system in place will be very difficult. What will happen if, with the best of intentions and advice, the computer systems cannot be put in place? Where will a local council find its money? What will happen if a scheme is put in place that has teething problems that lead to mistakes? What will happen with appeals and with the process of dealing with the situation? There is no remedy at all.

Chaos and uncertainty will be faced by many low-paid families in this country and they will not know how the change will affect them. That is why amendment 9, tabled by my right hon. Friend the Member for Greenwich and Woolwich, is right. It must be made crystal clear what the effect will be on individuals. I support my right hon. Friend’s amendment, but I think that it might be playing into the Government’s hands, as they will want to blame the local council—in my case, Durham—for what is happening. Councils need to make it very clear that responsibility for the cuts lies with this Conservative and Liberal Democrat coalition Government. If they do not do that, the tactics that the Conservatives are using and that the Liberal Democrats have sleepwalked into mean that local people will blame local councils.

Local Liberal Democrat councillors in Durham, for example, are arguing against changes to library hours and to local leisure centres. They will sign petitions to their hearts’ content. Small equatorial rainforests are decimated for local Liberal Democrat copies of “Focus” that state that they are supporting decisions against such moves by Labour Durham county council. They are not explaining to the people, however, that their coalition with the Conservatives in government nationally is cutting the county council’s budget savagely while helping the leafy Wokinghams of this world. That is the message we must get across to people: these cuts and their effect on local services and on people’s income are down to the coalition Government.

I reiterate what I have said before: not one single piece of the legislation that has such an effect could go through without the complicity and support of the Liberal Democrats. They must take as much of the blame for the pain and heartache coming the way of many people in County Durham over the next 12 months as the Conservatives and it is no good hiding behind the idea that County Durham has somehow been given the freedom to come up with this scheme.

18:00

My other concern is the differentials between schemes. That will create particular problems in parts of London, where there is a transient population and people frequently move around. They understand the present scheme and know what is expected of them. Different schemes in operation in different boroughs will lead to chaos and confusion not only for individuals but for borough treasurers trying to keep track of what people earn.

The Minister made it clear today that the measure is about deficit reduction. It is no great radical idea about devolving responsibility to local authorities, and no great victory for the Liberal Democrats who believe in the devolution of local decision making. If the scheme has been properly worked out, why can we not have a transitional scheme, as my right hon. Friend the Member for Greenwich and Woolwich suggested, so that the people and the councils affected have time to adjust? That would give some local authorities the stability that they will not get from the proposed scheme.

I hate to say it, but, as my right hon. Friend said, in 12 months or less, we will say we told you so. The misery and heartache that will be created for some of the most vulnerable people in our society is shameful. That is to be expected of Conservatives, but not of Liberal Democrats. The Minister may say that according to his impact study, equality is taken into account, but it is not. The measure will affect some of the poorest in society, including many women, who will not be protected in any way. The only group to have been taken out of the system for electoral reasons is the elderly. Having borne the wrath resulting from the granny tax, the Government clearly did not want to upset the elderly by allowing the council tax benefit reduction to affect them.

But the Government cannot have it both ways. They cannot say that they are devolving responsibility to local councils, and then tell local councils that they must take one section of society out of that scheme from day 1, along with a 10% cut. If it were genuine devolution, it would not have been so rushed, and if the Minister genuinely believed in devolving power, although I have never believed that Whitehall would want to give truly devolved powers to local authorities, there would be no ring-fencing. The Government are doing that because they know that the measure will be unpopular with a large section of the population who actually vote. That is the only reason why older people are excluded from the provision.

A delay is needed, but the Minister let the cat out of the bag and said that the measure is nothing to do with local government finance, but is aimed at deficit reduction. The Opposition would enter into dialogue with the Government about genuine devolution and proper reform of local government finance, but they have shied away from the elephant in the room—the re-banding of council tax. Ministers will not go near that for fear of upsetting a lot of people. If there is going to be radical change in local government finance, it must include a review of council tax bandings. I am sorry if that scares members of my own Front-Bench team. Without that, the Bill is no more than a short-term measure to achieve savings, as the Minister admitted, as a means of deficit reduction.

The strategy has clearly failed. We are now in a continuing double-dip recession, which this time will be blamed on the euro crisis. Why pay for that on the back of some of the poorest parts of the country? That is inexcusable in the Government’s approach to the Bill. Let us do away with the pretence that it is about reform. It is about deficit reduction and about hitting the poorest hardest. We need to remind people at local level that the decisions taken in this place by Conservatives and Liberal Democrats will take financial support from the poorest in our communities and some of the most hard-working families in this country.

[John Healey]

It is a pleasure to follow my hon. Friend the Member for North Durham (Mr Jones), who has more than a decade’s experience in local government and knows what it is like for local authorities trying to deal with central Government cuts and central Government diktats. He knows that local government across the board, irrespective of party, is willing to change but wants that change to be implemented properly and fairly. Much in the Bill will make that more difficult for local government in the months ahead.

The Bill signals that council tax benefit is no longer a benefit or an entitlement for those whose incomes are such that they need help with council tax costs. In future, there will be a means-tested, cash-limited discount on council tax bills. That limit next year will be 10% less than the spend on and cost of council tax benefit this year. I have the figures released recently by the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), showing the total subsidy properly paid by councils to those entitled and then properly reclaimed from Government in 2010-11. In Rotherham, the figure was £22.5 million; in the other local authority that my constituency partly covers, Barnsley, it was nearly £20 million; and the total for South Yorkshire was £112 million. That money went to many of the poorest, who need help with their council tax costs and who currently have an entitlement to that help. In future there will be a smaller cash-limited pot and a severe means test, with that £112 million cut from the outset by 10%.

Earlier, from the Dispatch Box, the Minister gave some figures—£1.8 million and £1.9 million—which he said were the figures for the value of the reliefs and discounts compared with what he argues is the shortfall in Rotherham. Of course, reliefs and discounts are part of the council tax scheme. They bear no relation to the level of council tax subsidy, which under the current system is paid by councils and reclaimed from central Government. If the Minister was telling the House and telling me, as one of the MPs representing Rotherham, that there will be no cut in the pot available for council tax benefit payments next year compared with this year, I will willingly give way to him, but I think he was using those figures to make a completely different case, entirely separate from the challenge that Rotherham and every other council will face next year because of the decision taken, as he admitted tonight, for the purposes of crude deficit reduction, not as a bold local and localising reform. The Minister has not accepted my offer to give way, so I take it that he accepts the case I made and is not able to sustain the impression that he gave the House earlier.

The problem faced by many of the poorest non-pensioners is that they will lose the most, as the Government tell councils to protect pensioners and make everybody else worse off—in other words, penalise everybody else and protect pensioners. That cannot be done without causing significant pain for many non-pensioners because the overall sum available, irrespective of need or entitlement under the current system, will be cut by £500 million next April.

[Mr Leech]

Does the right hon. Gentleman endorse the proposal made by the hon. Member for North Durham, who seems to think that there should be an impact on pensioners as well?

[John Healey]

The hon. Gentleman must not have been listening carefully, because that is not the case my hon. Friend was making. His point was that providing special protection for pensioners when £500 million is being cut overnight from the available fund means that those people who are not pensioners but who are currently entitled to council tax benefit or council tax support will inevitably be hit harder. Local authorities and charities are making the same case, as did Barnsley Advice Network to me last week when we discussed the potential challenges and problems that people will be forced to face.

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

I apologise for coming late to the debate. I had a meeting elsewhere in the Palace.

My right hon. Friend is making a pertinent point. Is he aware of the work done by the House of Commons Scrutiny Unit, which has estimated the impact of a 10% cut to council tax benefit, with protection for the over-65s, using DWP figures? It calculates that non-pensioners will face an average cut of 16% in their council tax support.

[John Healey]

I am glad to see my hon. Friend in his place. He has been an active participant in all debates on the Bill, including on Second Reading and in Committee. I have seen that work by the House of Commons Scrutiny Unit, which I think is useful and supports the point I am making to the hon. Member for Manchester, Withington (Mr Leech). If anything, the 16% figure is probably on the conservative side. My local authority in Rotherham calculates that non-protected, non-pensioner claimants of council tax benefit are likely to lose, on average, 19% of their support.

[Mr Kevan Jones]

To clarify my earlier point for the hon. Member for Manchester, Withington, who is obviously having problems with earwax tonight, I was not suggesting that pensioners should be taken out of that protection; I was making exactly the same point as my right hon. Friend is making. The fact of the matter is that the hon. Gentleman will go into the Lobby tonight to vote for some swingeing cuts to the lowest paid, including some of his constituents in Manchester, who no doubt will have their revenge at the next general election.

[John Healey]

My hon. Friend makes clearly and succinctly the points he made earlier.

I am concerned about the percentages, whether 16% or 19%, and the averages, such as the LGA’s calculation that non-pensioners are likely to lose, on average, £6 a week from the support they currently receive to help pay council tax. Percentages and averages are one thing, but the family, household or individual—the one in eight people currently entitled to council tax benefit who are in work but do not earn enough to cover their council tax bills without help—will face a reduction of perhaps £10, £12 or £15 a week, at a time when other costs are being loaded on them and they are struggling to make ends meet. They will find such a difference really hard to deal with. I hope that we do not lose sight of the sort of pressure that the Bill and the changes the Government are making will put on many households, including many that are working hard and have an entitlement that they simply will not have under the new system.

[Nic Dakin]

My right hon. Friend, as ever, speaks with great clarity and integrity. The core of the issue, as he is showing, is that it appears that there will be unintended consequences that create a disincentive to work for those very people.

18:14

[John Healey]

I wonder—are they unintended consequences? If they are, the degree of negligence in the legislation is unforgivable. If they were foreseen and have been calculated as part of the legislation, that speaks volumes about the “doublethink” and “doublespeak” that my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), quoting Orwell, talked about earlier.

The Government are making a pious claim to be on the side of those who are struggling but who are trying to do the right thing by staying in work in order to support themselves and their families, but those people will find it much harder from next year as a result of the changes that are going ahead. In Rotherham, just over 2,600 people are in that position, in Barnsley, just over 2,200, and across South Yorkshire there are more than 13,500 people in work who earn so little that they are entitled to support from us and others to help cover their council tax bills.

[Mr Raynsford]

I wholly concur with my right hon. Friend’s argument. Does not he, like me, think it extraordinary that the Government, when they first announced the proposals, said specifically that they intended the reduction not to create any work disincentives? That has now disappeared from the rhetoric—they appear to have forgotten that objective entirely. Given their overall approach and the rhetoric they are adopting in relation to other benefit changes, such as saying that they are on the side of people in work, is it not extraordinary that they are now explicitly accepting the fact that this measure will create serious work disincentives?

[John Healey]

I hesitate to disagree with my right hon. Friend, but I am not sure that they have forgotten it, because earlier the Minister said from the Dispatch Box that the scheme will somehow preserve work incentives. The whole design of the proposal, the framing of the legislation and everything the Government have published do not match the claims he has made from the Dispatch Box. They are hollow words that will hurt many people who are working at the moment and others who are not pensioners but who rely on the council tax benefit to help make ends meet, week to week and month to month.

[Andrew Stunell]

rose—

[John Healey]

The Minister wants to intervene. Perhaps he will give the House the straight account of the figures for Rotherham, on which I challenged him five minutes ago.

[Andrew Stunell]

I was going to intervene on the right hon. Gentleman’s last point, but I am happy to respond to the other one as well. On the last point, it is absolutely not the case that the Government have made explicit anything relating to disadvantaging working recipients. On the contrary, the statement of intent—I appreciate that he might not have got to this section—makes it clear that it is important for schemes devised by local authorities to link with universal credit and preserve exactly that protection.

On the other point, Rotherham council, according to the figures it submitted to the Department, will lose approximately £1.8 million of funding, but the discounts and exemptions that it will be able to recover in future will amount to £1.9 million. That is all in the Bill before the House today. Whether the council chooses to join those two things together is a matter for it, but it is absolutely the case that, taking the Bill as a whole, the council will in fact have a greater capacity to meet the needs of the people it serves.

[John Healey]

The Minister has just told the House and me that, to run the new scheme from April next year, Rotherham will have available no less funding than it has during this financial year. I will look very carefully at the facts, and, if they match the Minister’s words, I will welcome them; if they do not, I shall demand that he puts the House straight and offers an apology.

On work incentives, will not the Secretary of State therefore use his powers under schedule 4 to specify that people in work must, and work incentives will, be protected as he proposes, and has pledged, to use them for pensioners? If that is the case, the Minister’s actions will match his words. If that is not the case, exhortations on the importance of local government schemes reflecting needs and not damaging work incentives will not be worth the paper of the circular on which they are sent out, because there will be no protections guaranteeing the preservation of work incentives until and unless the Secretary of State chooses to use his powers as he has pledged to use them for pensioners.

Until that point, it is reasonable for Opposition Members, who are concerned about the future of this support for council tax payments, to continue to press the Minister and to be concerned that non-pensioners are likely to bear a heavy cut in their current support. Those on low incomes who are not pensioners, but who would get the full council tax benefit under the current system, will, as the Barnsley advice network has told me, have to find 20% of their council tax bill from their basic income, whatever they earn, as councils try to make less go further.

The Minister is old enough, experienced enough and has been involved in local government long enough for this measure to sound a warning to him and his colleagues. This is the return of the poll tax—[Interruption.] There are a few groans from Tory Members, but let us remember that a 20% minimum payment expected of all people, whatever their means, was part of the flaw in, and at the heart of the unfairness of, the community charge a couple of decades ago. In practice, that is what we are building in for non-pensioners: a requirement to cover for themselves, whatever their income, about 20% of the council tax costs in their local area.

Given the way in which the measure will work for many, it is a return of the poll tax: rushed into law and rushed into practice, with a deaf ear to local government, to charities, to experts and to Members, who warn the Government, “You’re pushing too far, too fast with these changes.” I will return in a moment to the amendments on the legislation’s commencement tabled by my right hon. Friend the Member for Greenwich and Woolwich, but first let me do my job and introduce new clause 2 and the amendments that stand in my name.

With new clause 2 and amendment 2, I seek to challenge the Secretary of State’s powers over, and prescription of, the new council tax support schemes. My purpose is this: I believe that the House and local government require a justification for the inclusion in this Bill of such powers of prescription from the centre over the local, otherwise their removal from the Bill is justified. None of the arguments that I have heard from Ministers, on Second Reading, in Committee or today, justifies the extent of the centralised powers vested in the Secretary of State to design and to enforce a particular manner of council tax support scheme.

The Government claim that the reform is a localising one. If it is, they should localise the decisions on the design of, and procedure for preparing, the scheme. They should localise the decisions and let the local authorities that will run the scheme devise them, in the Minister’s words, to suit local circumstances.

[Andrew Gwynne]

My right hon. Friend is absolutely right that any system has to be flexible enough to ensure that, if there are changes in demand locally, the system can catch up with the increase, but is not the concern that the Government’s proposals are completely inflexible, and that any increase in demand will impact on local services?

[John Healey]

My hon. Friend is absolutely right. Any increase in need, demand and, as a consequence, cost will all have to be borne by the local authority—borne by switching funding from other budgets that perhaps support important local services, or borne by cutting back within the council tax support scheme the support that is paid to those who remain eligible.

However, I want to exemplify the challenge that the Minister faces to justify the powers that the Secretary of State is taking in the Bill in order to prescribe from the centre. In paragraph 3(4) of schedule 4, the Secretary of State may make regulations on the procedure for preparing the scheme, including in paragraph 3(5) regulations to

“require the authority to produce documents of a particular description”;

regulations to

“include requirements as to the form and content of documents produced in connection with the preparation of the scheme”;

regulations on the

“requirements…about the manner in which such documents must be published”;

regulations to

“require the authority to make copies of such documents available”

in certain ways, and “to supply” copies of such documents to certain people; and even regulations to prescribe the charges that local councils should make for those documents.

In all honesty, that is the sort of prescription we expect to find in a memorandum from a publications manager to a graphic designer and a press officer, not from central Government to elected local government officials throughout England. If the Minister and the Secretary of State are to have any credibility on the claim that this is a localising move and a localising measure, they should back off and guarantee what they say. If the schemes should be under local control, as the Minister and Secretary of State claim, the Government should give local authorities the powers to control them, not take those powers and exercise them from the centre.

Amendment 1, which is also in my name, is in the same vein although more moderate, because it seeks simply to require the Secretary of State to consult before making any changes to the requirements that he chooses to impose nationally on local schemes. As the Bill stands, there is not even any obligation to consult local government on the requirements that central Government impose.

Paragraphs (8) and (9) of schedule 4 make it clear that the Secretary of State may make regulations to require any matter to be included in the design of a local scheme; may prescribe any class of person to be included in the scheme; may prescribe the reductions that cover any class in any area; and, to reinforce my earlier point, may prescribe the way in which the provisions are made. That completely undermines not only the constant mantra of Ministers across the range of their departmental responsibilities but the specific pledge that they made in their response to the consultation, where, on page 2, they said that this is

“a policy of decentralisation that will give local authorities increased financial freedoms”.

18:29

[Mr Kevan Jones]

Is not this yet another example of the Secretary of State’s schizophrenic approach to local authorities? His previous edicts have given advice on everything from pot plants to levels of chief executives’ pay to publications. He wants to give the impression that he is giving up powers, but in fact he is retaining them.

[John Healey]

To be honest, no Minister of any Government is immune to that temptation. I am sure that it would be possible for the Minister to find one or two examples where I myself might have made such moves as a Local Government Minister. However, we in this House have a right to challenge the Government on what they claim is the underpinning principle of the Bill and to point out how the principles they claim are not matched in their legislation. There is a strong, principled case for the Secretary of State to back off, loosen the reins, and let those in local government devise the schemes that they will be obliged and required to run.

There is a principled case and a practical case for the amendments. If the Government are able to set the key constraints and parameters of any scheme, and to do so at any time, it is entirely possible not only that local flexibility—the ability to tailor to local circumstances—will be undermined, but that local authorities will devise their schemes, set about implementing them, and then find that they have to revise them because the Secretary of State has decided to step in and make regulations under the many regulation-making powers that he has available to him in this primary legislation. If it is pensioners today, could it be carers tomorrow and ex-service personnel the day after?

[Mr Jones]

It could be cat lovers.

[John Healey]

Perhaps that is not as serious a case to put to the Government as ex-service personnel and carers, but my hon. Friend makes the point. If the Secretary of State had a particular concern about cat lovers, he could indeed use these regulations to make special provision for council tax support for them.

[Mr Jones]

I am sure that my right hon. Friend agrees that given their desperate state after the drubbing they got in the local elections, Ministers would do anything if it got them votes.

[John Healey]

Perhaps, Mr Deputy Speaker, I had better not pursue that. However, it is certainly true that given their drubbing a couple of weeks ago, the Liberal Democrats will have to chase votes wherever they can find them.

Amendment 1 is designed to challenge the Government to concede, and to give a commitment to this House, that should they use their powers under the Bill and make stipulations about the schemes that local authorities will run, they will at least consult local government before doing so.

Amendment 3, which also stands in my name, exemplifies my belief that, as my right hon. Friend the Member for Greenwich and Woolwich argued, this is a rushed reform that has been introduced without an ear to proper consultation or a thought to the consequences. The amendment attempts to flush out whether the Government have properly considered the impact of the Bill in relation to the provisions of the Localism Act 2011, which allows a local authority, in setting its budget and its council tax, to put to the vote in a referendum a level of council tax that it might want to propose for its area, and allows local residents to veto what they may regard as excessive council tax rises. Under those powers, a local authority must hold a referendum no later than the first Thursday in May of the financial year to which the council tax would relate. In practice, that means that a local authority will have to run contingency spending plans, budgets and council tax levels until the result of the referendum is known, and if it is unsuccessful, those contingency budgets will need to be put in place and new council tax bills issued. That process must take place around the turn of the financial year, and by early May at the latest, yet the Bill requires that the council tax support scheme must be designed and in place by January—before most local authorities finalise and agree their budgets and council tax levels, and certainly before the level in any referendum might be established.

That mismatch indicates that this reform is ill thought out, rushed and likely to be wrong, and it reinforces the arguments that my right hon. Friend made about his amendments 6, 7, 10 and 13, to which my name has been added. There are good reasons for making this part of the benefits system local, but there is no justification for doing it by making harsh cuts to the national and local totals of spend available, by capping the totals against any future rise in needs or costs, by requiring local councils to carry all the risk of any increases in claims, or by forcing very big cuts in council tax support for many of those who need it most.

When we last debated this in Committee in January, my right hon. Friend and I noted that councils were faced with an extraordinarily tight timetable of 12 months until the point at which they would have to have these new schemes in place. That period is now eight months. There is no time to consult local residents, to design the computer software systems necessary to run these schemes or to test them and put them into practice, to work out how the tapers to the new universal credit system will have to work with the council tax support system, or to plan for the new local scheme in the context of next year’s budget planning by local authorities.

This is a disaster waiting to happen. The Government have not done the work needed for local government to do the work that it needs to do. I say this to Ministers: take a leaf out of the Health Secretary’s book, pause, listen, and be prepared to put back the start of this scheme from April next year to April 2014.

[Helen Jones]

It is a pleasure to follow my right hon. Friend the Member for Wentworth and Dearne (John Healey), whose speech was not only very passionate but extremely well informed.

Nothing could illustrate better what a shambles of a Bill this is than the seriousness of the new clauses and amendments that the Government have tabled at this late stage. It is, frankly, a gross discourtesy to the House to bring these issues before us with little notification and little opportunity to discuss them. Because we have not been allowed to take evidence on the Bill, we have had no evidence on the new clauses. We would have benefited from evidence on them, particularly from legal experts. Although the Minister assures us that the new clauses replicate powers that are already in existence, that is debatable. He could not answer a number of the questions that were put to him about how inaccuracy in data records could be challenged, which electronic records could be accessed under the powers, and how the powers would relate to a person’s personal electronic data that are held on their own PC.

Every council will, of course, need the right system in place to tackle fraud—nobody would argue otherwise. However, it is interesting that we have heard nothing from the Government in this debate about the reductions in council staff, which are making it much more difficult to tackle fraud, or their desire to abolish the Audit Commission, which is the very body that searches out fraud and assists local councils in tackling it.

I am concerned about some of the measures in the new clauses. Some of them do indeed replicate those in the Social Security Administration Act 1992. However, the Minister cannot explain how one can commit an offence other than dishonestly and he cannot explain the offence of

“allowing a person to fail to notify”

something. What on earth does that mean? Does one have to be under duress, or not? What is the definition of the word “allowing”? What kind of proof is required? Above all, what will the defence against those offences be? That is not clear from what is before us. I want to see dishonest people banged up in prison or fined, but I want people who have made an honest mistake to have a proper defence for any charges that are brought against them. It is a great shame that we were not allowed to discuss the new clauses in Committee.

I want to concentrate on new clause 5, which I tabled with my right hon. and hon. Friends. The Government’s plans for council tax and what we have heard from them today clearly demonstrate how remote they are from the realities of life for many people in this country. They propose to take money away from some of the poorest people, including, as my right hon. and hon. Friends have said, people who go to work every day to earn their poverty. People with disabilities and families with children will pay the price for the incompetence of the Government. Many of them will already have lost tax credits or disability living allowance, which is being cut by £2.7 billion. It is estimated that about 400,000 disabled people will lose employment and support allowance when it is time-limited to one year for people who have paid national insurance contributions. Those very people will be hit again by the Government’s plans.

The Government consultation document said that they would

“seek to ensure that the most vulnerable in society, in particular low income pensioners, are protected”.

Pensioners are indeed protected from the cuts, and we do not disagree with that. However, coupled with the 10% cut in the amount that is available, that means that other people, many of whom are equally vulnerable, will face council tax increases. That is something that the Liberal Democrats do not seem to understand, but it is simple mathematics.

The Government’s default scheme in their so-called statement of intent replicates the current scheme and gives protection to many more vulnerable groups. The intent, I suppose, is to penalise councils financially. However, it is difficult to argue that we should protect vulnerable groups in the default scheme, but not legislate for that protection elsewhere.

There is no protection for people with disabilities—not even for those who are placed in the support group for ESA. Those people are, by definition, unable to seek work, even if it was available, which is not likely given the current flatlining economy. There is no protection for people placed in the work-related activity group, who are not expected to

“seek paid employment to increase their income”.

They are asked to take steps to increase their employability, but they are not yet expected to seek work. That shows how spurious is the Government’s claim that they are doing this to spur on local councils to get people into work. That is nonsense.

18:45

There is no protection for carers, as defined in the regulations on national insurance credits. That means people who provide care for at least 20 hours a week to one or more disabled person who is in receipt of certain benefits. Those people carry burdens that most of us cannot manage, and yet they do it every day. They save this country millions of pounds that would otherwise be spent on residential care.

[Mr Raynsford]

My hon. Friend is making an extremely important point. The Government are introducing this Bill at the same time as they are making a number of other changes. That will have a large cumulative impact on certain households. What is deeply shocking is that the Government are not aware of what that cumulative impact will be, nor of the extent to which what they propose this evening will aggravate an already disastrous situation for people who are suffering other losses of the sort that she has identified.

[Helen Jones]

I could not agree with my right hon. Friend more. The Government simply have no idea of the pressures on people on very low incomes.

The Prime Minister said that carers were the

“unsung heroes of our society”.

He went on to say:

“We should all support, recognize and celebrate the incredible work that carers do”.

That was in 2010, and times have changed. Now he wants not to support them, but to increase their council tax—another broken promise.

The Government also do not want us to talk about those who are receiving council tax benefit and are in work. The Minister for Housing and Local Government, who is not here this evening, likes to pretend that those people do not exist. He told the Communities and Local Government Committee that

“if somebody is in work they will not be receiving the benefit because they will not need to.”

That is another example of why he is tipped for promotion: it shows his incisive grasp of complex issues. Only someone as wilfully blind as him could come out with that, and only someone with no experience of what it is like to live on a low wage.

[Andrew Gwynne]

My hon. Friend is coming to the crunch. A substantial number of people in receipt of council tax benefit are in work. It is an in-work benefit, not just an out-of-work benefit as some Government Members would like to portray it. Given that the Government’s statement of intent states:

“Local schemes should support work incentives, and in particular avoid disincentives to move into work”,

can my hon. Friend fathom the thought processes of those who are bringing in this scheme, which will clobber the working poor?

[Helen Jones]

My hon. Friend is correct and I will come on to some examples of what he says in a moment.

I received a parliamentary answer from the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), which said that in 2010-11, the last year for which we have the figures, 743,660 non-passported council tax benefit recipients were in work. There were 2,860 such people in Stockport, which is the area that the Under-Secretary of State for Communities and Local Government, the hon. Member for Hazel Grove (Andrew Stunell) represents. That is more than 743,000 people who the Minister for Housing and Local Government does not think exist. They do not go to Tory fundraisers, I suppose, or attend the black and white ball. All the time, his implication has been that council tax benefit goes only to those not in work. The further implication, of course, is that they are deliberately not in work, which is what underlies most of what he says. Coming from a Government who preside over unemployment of 2.6 million, that is breathtaking arrogance.

[Mr Kevan Jones]

Does my hon. Friend agree that the people who will be affected are the same group who will be affected by the crazy bedroom tax? If they have an unoccupied bedroom in their house they will lose housing benefit, which is another in-work benefit.

[Helen Jones]

My hon. Friend is right. The same group of people is being hit again and again. Whatever the Government tell us, we are not all in it together.

[Andrew Gwynne]

My hon. Friend mentioned in passing the borough of Stockport. I will leave the Minister to speak for the people of Hazel Grove, but I assure her that I am acutely aware that a substantial number of my constituents in the Reddish part of Stockport are in work and qualify for council tax benefit.

[Helen Jones]

My hon. Friend is quite right. We can go through every local authority in England and find a number of such people.

It is not just people in work and on low wages who will be affected but disabled people deemed unable to seek work, carers, and part-time workers who do not even show up in the figures. An increasing number of people are being forced to seek part-time employment, and they will pay the price of the Government’s cuts.

As my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) said, there is a form of “doublethink”. The Minister for Housing and Local Government told the Select Committee that people could be protected by

“getting economic activity going so there are jobs.”

The Government are prone to lecturing everybody on getting economic activity going. They lecture councils and the European Union, but the one set of people they do not seem to lecture is themselves. They have no plan for growth at all.

Many people in receipt of council tax benefit are in work or not expected to seek work because of their circumstances. For them, the cut will depend not on their individual circumstances but on where they live and, crucially, how many pensioners there are in their local authority area. That varies hugely from one area to another. Claimants of non-working age make up 34% of the total in East Dorset. In Tower Hamlets, the figure is 68%.

The benefit cut that people receive could vary between 13% and 25%. The worst thing about it is that it is entirely arbitrary, with no pretence of fairness whatever. In fact, in their recently published statements the Government have explicitly rejected the idea of taking into account the number of pensioners in a local authority area when setting the funding level. Many Government Members will have cause to regret that in future years.

As some of the Opposition amendments point out, the new system will hit not only those in work or unable to work but those seeking work. The Government have been in such a rush to bring it in that they have failed to align it with universal credit, to which the Minister referred earlier. If they are so keen to have universal credit, they should have waited to align council tax benefit with it. Their own consultation document acknowledged the problem, stating:

“There is a risk, however, that some of the advantages from the single Universal Credit taper…could be lost if there is a separate and overlapping withdrawal of council tax support through localised schemes. This would produce a marginal deduction rate higher than 76%”.

If millionaires were having to put up with that, the Government would be rushing in to rescue them. What sort of Government include those warnings in the consultation and then ignore them? They are either incompetent or vicious—one or the other. [Interruption.] Both, somebody says, and I am beginning to think so.

As we have seen with business rates, the areas in greatest need will be hit hardest. Let us take the impact on people in work as an example. In Liverpool, there are 6,570 people in work and receiving council tax benefit. In Durham, there are 5,810, in Birmingham a whopping 16,780 and in Hackney 7,910. Just down the road in the City of London, there are precisely 40. In Purbeck there are 580, in Runnymede there are 610 and in Wokingham—I could not pass up another chance to mention Wokingham —there are 780.

This change is a triple whammy for the poorest areas. First, it will mean that local authorities with more people in work and receiving council tax benefit face a much bigger risk of default in their council tax collection. Secondly, it will make it much harder for them to mitigate the effect of the cut on people of working age. Thirdly, there will be a bigger impact on their local economy, because money will be taken from people who would otherwise go out and spend it. It will come as no surprise to my right hon. and hon. Friends to hear that the New Policy Institute estimates that five of the 10 hardest-hit local authorities will be among the top 10 most deprived in the country—Hackney, Newham, Liverpool, Islington and Knowsley.

In the Liverpool city region, it is estimated that the Government’s proposals will result in cuts of 17.23% for those who are not pensioners. In Halton, a single person will have to find at least £179 more each year. In Sefton, which has a higher than average number of pensioners, a couple in a band A property will have to find an extra £226 a year. That is probably small change to Government Members, but to people who struggle to keep their heads above water—those who have to count every penny to get to the end of the week without getting into debt, and without being driven into the arms of the loan sharks who are on many of our estates and ready to batten on vulnerable people—it is the difference between surviving and not surviving.

I sometimes wonder what Ministers know of that world. Have they ever stood in a supermarket watching people put things back because they cannot afford to pay for everything in the basket? Do they understand the struggle that some families have if a child needs a new pair of shoes? They know nothing of it, and they have no wish to understand it.

[Mr Raynsford]

Is it not telling that not a single Government Back Bencher has contributed to this debate in support of the Government’s measures? Does that not indicate that they know deep down that these measures are deeply flawed, deeply unfair and deeply wrong?

[Helen Jones]

My right hon. Friend is entirely right. [Interruption.] The Under-Secretary says that it is because they think the measures are right. Well, if I cannot appeal to their moral sense, let me try appealing to their economic sense. The poorest areas will have the biggest hit to their local economies. The 2010-11 figures show that a 10% cut will mean £10 million being taken out of Birmingham, £6.1 million out of Liverpool, £3 million out of Newham, £2.7 million out of Newcastle and £2.9 million out of Gateshead. By contrast, the prosperous local economies lose less. Runnymede will lose £454,000; Wokingham £518,000; Melton more than £246,000; and Hart £293,000; but—as we might expect with this Government, this is a big “but”—that is not the whole story.

19:00

The figures I gave were calculated on payments made in 2010-11, as given in a parliamentary answer by the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate. The total paid to councils in Great Britain in that year in council tax benefit was £4.8 billion. In their consultation on funding, the Government promised to give 90% of the forecast council tax expenditure for 2013-14, but they expect council tax benefit to have miraculously decreased by then to a total of £4.2 billion.

How did the Government arrive at that assumption? Considering unemployment levels and what is happening to the economy, we might expect council tax claims to go up rather than down. Perhaps that figure was calculated on the earlier optimistic forecasts that the Government gave us, but they have had to be adjusted. Councils should be warned, however, that they might face more than the cut they are expecting. Even with the so-called minor adjustments the Government want to introduce to the distribution of funding, and the creation of ceilings and floors, we do not expect too much difference. We have heard those promises before in local government finance settlements, and the measures still ended up hitting the poorest most.

Moreover if, as the Under-Secretary appeared to suggest, vulnerable people ought to have more protection—I assume he was referring to those on passported benefits—why could the working poor be facing cuts of up to 40% in their benefits, which would wipe out any gains from the increase in personal allowances that he trumpets? In face, those gains have been wiped out already by rising VAT, the loss of tax credit, changes to housing benefits and so on.

I know the Minister is anxious for good news—if the Labour party had lost to Professor Pingu the penguin, I would be looking for some good news—but his proposal will not run, because like most Lib Dem policies it is little more than a headline for the latest hocus-pocus. Indeed, far from councils being given more freedom, they will bear all the financial risks and most of the public anger for the policy. The Government have carefully ensured that the increased bills dropping through doors will bear the imprint of the local council, not that of the Secretary of State. Councils will pay the price if it goes wrong. The Select Committee on Communities and Local Government called it

“an illusion of delegation with a minimum of real discretion”.

We know, for instance, that only between 57% and 66% of pensioners claim their benefit. The likelihood is that the number claiming the benefit will increase when it is shown as a discount on a bill rather than as a benefit. That is a good thing, but councils must bear the burden of the extra cost. Increased unemployment in a council area, especially from the closure of a large company, will mean that council tax benefit claims increase. What will happen then?

The Government want to include council tax support in their business rate retention scheme, but what is the consequence of that? According to the Government’s consultation, a local authority will come into the safety net category only if its revenues fall by between 7.5% and 10% below the baseline, which is a massive fall before getting any support.

This is the crux of the matter. The Government have said that the measure will inspire councils to create employment and get more people into jobs, but how do councils do that in a double-dip recession? The Government have an in-built belief that local authorities do not want to encourage economic growth, but I challenge the Minister to name one, as I have throughout debates on the Bill. I am willing to give way to him if he wants to name one, but he cannot do so. Local councils have not caused the double-dip recession; the Government have. It is not local authorities that are causing firms to go into administration, but the economic failure of the Chancellor, who seems to have been too busy entertaining Rebekah Brooks at Dorneywood to notice what is happening to the economy.

The poorest areas are likely to face the greatest rise in claims and have already had their budgets cut. There is no slack in the system and no money to be transferred from elsewhere. The Opposition’s greatest fear is that some local authorities will try to manage the system by driving down claims and deterring people from claiming. I have confidence that Labour authorities will not do that—thankfully, there are many more Labour authorities than there were when debates on the Bill began—but I have little confidence in Tory and Lib Dem authorities. Equally, setting up an appeals system and dealing with what is likely to be a higher level of default will incur costs for local authorities.

New clause 5 is designed to ensure that the Government cannot ignore those impacts. It is no good the Minister telling us that there will be reviews, because those reviews do not include people in work and in poverty or those looking for work and in poverty.

[Graham Jones (Hyndburn) (Lab)]

My hon. Friend makes excellent points, but on the confusion in the appeals process it is not yet clear whether council tax benefit staff will be employed in future by the Department for Work and Pensions under the universal credit or within local authorities. That changeover adds to the complexity and confusion.

[Helen Jones]

My hon. Friend is entirely right. Even if we supported the Government’s changes in the Bill, their failure to align the changes with universal credit will cause chaos throughout the system, including for staff.

Many Government amendments relate to Wales, which the Government forgot about when they drafted the Bill—to lose a county is unfortunate; to lose a whole country is rather careless—but the Welsh Government have said they are profoundly concerned by the plan. Some 327,000 people in Wales will be affected, whom the Government also seem to have forgotten about—they have developed a habit of absent-mindedly mislaying citizens, such as those in work or those who happen to live in Wales.

The Government have tabled a series of amendments on council tax reduction schemes and default schemes, which could have been discussed properly had draft regulations been brought before the House, as the Minister promised us on 31 January. Instead, we are once again being asked to grant wide powers to the Secretary of State without any idea how they will be exercised, which is extremely worrying and a poor way to make legislation.

My right hon. Friend the Member for Greenwich and Woolwich raised the rushed implementation of the proposals, an important problem we raised in Committee. Last week, we received statements of intent, but not the draft regulations we were promised. I get the feeling the Government are simply not ready to implement the proposals. It is as if someone, somewhere in the Department for Communities and Local Government—I suspect the Minister for Housing and Local Government—had a wizard wheeze and said, “I know. Let’s cut council tax benefit,” but did not work out the details. The Government, following the example set by the Prime Minister, do not seem to do detail. They just wave a languid hand and say, “Detail will follow.” But, in government, details matter. They affect the lives of the people whom we represent. The Bill will result in enormous changes for local authorities, which are being asked to cope with changes to non-domestic rates and with the localisation of council tax benefit, all at the same time.

By next year, local authorities will have to be ready to run their own local schemes, yet the Bill was rushed with indecent haste through the Committee—because the Government did not appear to understand the rules for carrying over a Bill—then kept hanging about like some kind of slow-cooking stew until after the Queen’s Speech. It will not have a Second Reading in the other place until, I believe, 12 June, and its first Committee sitting there is scheduled for 3 July. If, as I am told, the other place will not be sitting in September, who knows when the Bill will complete its passage?

Amendments will have to come back here, and if they are not agreed to—[Interruption.] The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) talks about the recess, but he has perhaps forgotten that this House is sitting in September, although the other place does not appear to be doing so. That is the kind of detail that matters when we are trying to get legislation through. There could well be ping-pong between the two Houses. Regulations will also have to be set and passed by both Houses. In the meantime, councils are being expected to draw up a scheme without knowing the precise rules that they will need to follow, and with no certainty about their funding. That is not sensible government—it is pass-the-buck government.

We have also heard about the difficulty of producing the software required to implement the changes. Councils will need to be very clear about what they want from the firms that are designing that software, but they do not have the necessary information at the moment. Why are the Government so determined to meet the 2013 date that they will not listen either to local authorities or to the experts who design the system? I would call them pig-headed, but that would probably be unfair to pigs. Why are they so keen to impose cuts on the poorest people and chaos on local authorities? We know the answer: it is simply that they are out of touch.

The people who will suffer are the poorest people. Councils are in a no-win situation. If they protect vulnerable groups other than pensioners, those in work or seeking work will face even larger reductions in their income. This Government believe that the poor must pay for the poor, while tax cuts are given to the rich. They believe that the living standards of those who have very little have to be cut, while bankers in partly state-owned banks swan off for courses on executive nutrition at a spa. I am sure that many of the poorest people in this country would love to have to worry about the type of nutrition that they got; most of them have to settle for what they can afford.

The Government do not call the money given to bankers a handout, but that is what they call the money given to local councils. They do not call their tax cuts for millionaires a handout, but that is the term they use for the money they give to local councils to run essential services. This is a Government without a proper sense of direction and without a proper sense of right and wrong. We will continue to monitor the effects of the Bill. We will press our amendments to the vote, and we will ensure that the plight of the poorest people who are being hit by these provisions is not forgotten. It is for that reason that I urge my hon. Friends to vote in support of new clause 5.

[Andrew Stunell]

I should like to remind the House that, contrary to some of the wild assertions from the Opposition, the Bill represents a major step towards bringing power back to local government and local communities. The business rates retention scheme, the localisation of the council tax benefit system and the return of the power to set discounts and reductions in council tax for empty homes and second homes are all measures that the previous Government failed to introduce, notwithstanding a lot of hot air about what they might have done or would not do, as the case may be—

19:15

[Mr Raynsford]

rose—

[Andrew Stunell]

No, I am not going to give way.

[Mr Raynsford]

On a point of order, Mr Deputy Speaker. The Minister has made a factually incorrect statement that I would not want to remain on the record without giving him the opportunity to reconsider it. I hope that he will therefore take an intervention.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

The right hon. Gentleman has pointed out that he believes the Minister’s statement to be incorrect. It is up to the Minister to decide whether he wishes to give way. I do not think that he is willing to do so at this stage, but I am sure that the right hon. Gentleman will try again.

[Andrew Stunell]

Thank you, Mr Deputy Speaker. I am sure that the opportunity to give way will arise, and I shall certainly do so in due course to those who think that there is anything to be said against our view that the Bill represents a significant localisation for local government and local communities. The return of business rates to local authorities, the capacity to set council tax without having capping limits set by the Secretary of State, and the transfer of the benefits system to local authorities are all significant measures.

I want to restate my point about the return to local authorities of the ability to set council tax discounts. If every local authority chose to exercise the changes that are being passed into their hands, that would generate for English local authorities a total of more than £400 million. There is no direct connection in the Bill, but I want to make it clear that, whatever might be said about the proposals in the Bill, that discount change will be of significant benefit to local authorities.

I shall deal with some of the points raised in the debate. The right hon. Member for Greenwich and Woolwich (Mr Raynsford) suggested that we ought to accept at least some of his amendments, simply because they were already in the Government’s plans. Well, it is because they are already in the Government’s plans that we do not need to accept them. Some of his other amendments were intended to dismantle the Bill and its provisions, but I made it clear that this is not just a localism measure but a component part of putting our finances right. At no point have we disguised the fact that localisation and deficit reduction are both involved in the proposals.

[Graham Jones]

rose—

[Andrew Stunell]

I am happy to give way to the hon. Gentleman, even though he could not find the time to be present earlier.

[Graham Jones]

I am very grateful to the Minister for giving way. He keeps using the word “localisation”, but it is obvious that what he is doing is localising cuts. He has spoken about raising £400 million and about the empty homes premium and the council tax discounts. Why are central Government being prescriptive about such measures? Why are they stating that homes must have been empty for two years? Why will they not give local authorities the power to decide how long a home needs to have been empty in order to qualify for the empty homes premium?

[Andrew Stunell]

The flexibility on discounts will apply to all empty homes from day one, not just to those that have been empty for two years. The two-year condition relates to the empty homes premium, which is a separate provision that is being put in the hands of councils by the Bill.

The hon. Member for North Durham (Mr Jones) made some interesting points, but he did not seem to be aware that, whereas Wokingham has the capacity to generate £700,000 extra income, Wigan, which he mentioned specifically, has the capacity to generate £2.2 million from the discounts. If Wigan chose to implement those measures, that would completely offset the funding gap he talked about.

To be clear, much of the shroud-waving from the Opposition is completely misplaced. It was strange that the hon. Member for North Durham argued—although he tried to back out of it—for additional cuts in council tax benefit for pensioners, because he wants councils to have the flexibility to switch their spending on pensioners to others whom he thinks are more worthy of protection. That is a point of view, but it is not one that the Government share.

I have a lot of time for the right hon. Member for Wentworth and Dearne (John Healey). He served time in the Treasury, during which I believe he was party to the introduction of the 10p tax rate—[Interruption.] We all have skeletons we wish we could keep in the cupboard. When it comes to protecting the low-paid, it is this Government who have raised tax thresholds for low-paid people, many of whom are women, of course, and will take 2 million people out of tax over the next three years.

The right hon. Gentleman did get round to welcoming the localism measure, but—not for the first time—he wants localism, but not yet. The Opposition do not have a strong track record on localism, but they have realised just how important it is to the people we represent. They now pay lip service to it at every opportunity, but I see no sign that it goes beyond lip service to their agreeing to implement localism in practice. At every turn, they try to delay, dismantle and divert the successful attempts of the Government to localise decision making and give local communities the power to take decisions about their services.

I answered the right hon. Gentleman regarding Rotherham’s figures. He mentioned Barnsley, and its figures are an almost exactly equal balance, just slightly in favour of Barnsley, with £1.6 million in each direction. He also waxed lyrical about the new clause 2 single person discount. Some 29% of households are single person, and another 7% are single-parent households. I do not believe that he would want to put those people under additional pressure. The Government do not accept that new clause 2 is the way forward.

The right hon. Gentleman also made an interesting point, of the kind that only a former Secretary of State might make, about what would happen if a council tax referendum failed and the impact that would have on the scheme. The scheme that a local authority sets up by 31 January each year will have statutory force and cannot be changed for the following 12 months, so it would be required to be considered in any reduced budget. Of course, when a local council sets up its scheme, it will be with the full knowledge of its intended settlement. As I say, the right hon. Gentleman welcomes localism, but he does not want it yet.

I draw to the attention of the hon. Member for Warrington North (Helen Jones) one of the documents we published last week, “Localising Support for Council Tax: Vulnerable people—key local authority duties”, which sets out clearly the factors that a local authority needs to have in mind when it exercises its discretion and introduces a scheme. When she studies that, she will find that many of the questions that she raised are answered and her concerns are dealt with.

The hon. Lady commented on the introduction of the Welsh Assembly clauses. She will know from what the Government said previously that we took the time to consult with our colleagues in the Welsh Administration, and it is at their behest that the clauses take their present form. That is an example of the Government taking a measured approach, consulting with the relevant bodies and introducing proposals entirely in accordance with the Welsh Administration’s views.

The hon. Lady also drew attention to an amendment on consulting with those affected. There is a requirement on local authorities, when they have drawn up their scheme, to consult with those whom they believe will be affected. That clearly will involve a consultation with all the groups the hon. Lady mentioned.

[Mr Clive Betts (Sheffield South East) (Lab)]

I apologise for not being here earlier, but I was at a Select Committee meeting.

My right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) apparently raised the point about the time local authorities will have to propose a scheme, consult on it—as the Minister has just described—and then get their providers of services, such as Capita, to design the schemes and implement them. In January, Capita raised concerns about the time constraints that it would face and its real worry that it would have inadequate time to do that. Is the Minister convinced that local authorities will have adequate time and that there will be no problems with the delivery of services to constituents?

[Andrew Stunell]

That is exactly why we produced the statements of intent—to give local authorities and their providers the longest possible time to understand how they might best design and develop a scheme. That is also why we have provided a significant sum of money to assist them in doing that.

The hon. Member for Warrington North also asked about criminal offences being created by the Bill. The Social Security Administration Act 1992 creates several criminal offences in relation to council tax benefit, including an offence of dishonestly making a false statement and one of knowingly making a false statement for the purpose of obtaining council tax benefit. There is a different standard of proof for each offence, as I suspect that the hon. Lady knows better than I do. Greater penalties apply if it can be shown that a person has acted dishonestly.

[Helen Jones]

Can the Minister explain what the position is when a person has not acted dishonestly? We have asked him several times. He has referred to acting knowingly and to acting dishonestly, but the proposed provisions refer to offences that can be committed other than dishonestly.

[Andrew Stunell]

I am surrounded by lawyers, and the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), is giving me helpful advice, but let me say that there are two separate categories, which I think the hon. Lady has just restated: dishonestly making a false statement and knowingly making a false statement for the purpose of obtaining council tax benefit. To underline a point I made when introducing the debate, those provisions mirror and replicate the existing situation as far as the council tax benefit fraud prevention scheme is concerned. Another relevant point I made earlier is that we are conducting a full review to ensure that what is put into the new scheme is wholly proportionate to the new situation.

19:30

These proposals are designed to localise council tax benefit and the council tax reduction scheme, are part of a much broader package of localisation to local government and are consistent with the Government’s deficit reduction plan. I commend new clause 9 and the other Government amendments and new clauses to the House.

Question put and agreed to.

New clause 9 accordingly read a Second time, and added to the Bill.

New Clause 10

Power for HMRC to supply information for purposes of council tax

‘(1) Schedule 2 to the LGFA 1992 (administration) is amended as follows.

(2) After paragraph 15 insert—

15A (1) A Revenue and Customs official may supply information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs to a qualifying person for prescribed purposes relating to council tax.

(2) The following are qualifying persons for the purpose of this paragraph—

(a) a billing authority in England;

(b) a person authorised to exercise any function of such an authority relating to council tax;

(c) a person providing services to such an authority relating to council tax.

(3) Information supplied under this paragraph may be used for another prescribed purpose relating to council tax.

(4) Information supplied under this paragraph may be supplied to another qualifying person for a prescribed purpose relating to council tax (whether or not that is a purpose for which it was supplied).

(5) In this paragraph—

(a)

“Revenue and Customs official”,

“the Revenue and Customs”, and

“function of the Revenue and Customs”,

have the same meaning as in section 18 of the Commissioners for Revenue and Customs Act 2005.

15B (1) A Revenue and Customs official may supply information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs to a qualifying person for prescribed purposes relating to council tax.

(2) The following are qualifying persons for the purpose of this paragraph—

(a) a billing authority in Wales;

(b) a person authorised to exercise any function of such an authority relating to council tax;

(c) a person providing services to such an authority relating to council tax.

(3) Information supplied under this paragraph may be used for another prescribed purpose relating to council tax.

(4) Information supplied under this paragraph may be supplied to another qualifying person for a prescribed purpose relating to council tax (whether or not that is a purpose for which it was supplied).

(5) In this paragraph—

“Revenue and Customs official”, “the Revenue and Customs” and “function of the Revenue and Customs” have the same meaning as in section 18 of the Commissioners for Revenue and Customs Act 2005;

“prescribed” means prescribed by regulations made by the Welsh Ministers.

(6) Regulations under this paragraph must not be made except with the consent of the Commissioners for Her Majesty’s Revenue and Customs.

(7) A statutory instrument containing regulations under this paragraph is subject to annulment in pursuance of a resolution of the National Assembly for Wales.

15C (1) A Revenue and Customs official may supply information which is held by the Revenue and Customs in connection with a function of the Revenue and Customs to a qualifying person for prescribed purposes relating to council tax.

(2) The following are qualifying persons for the purpose of this paragraph—

(a) a local authority;

(b) a person authorised to exercise any function of such an authority relating to council tax;

(c) a person providing services to such an authority relating to council tax.

(3) Information supplied under this paragraph may be used for another prescribed purpose relating to council tax.

(4) Information supplied under this paragraph may be supplied to another qualifying person for a prescribed purpose relating to council tax (whether or not that is a purpose for which it was supplied).

(5) In this paragraph—

“Revenue and Customs official”, “the Revenue and Customs” and “function of the Revenue and Customs” have the same meaning as in section 18 of the Commissioners for Revenue and Customs Act 2005;

“prescribed” means prescribed by regulations made by the Scottish Ministers.

(6) Regulations under this paragraph must not be made except with the consent of the Commissioners for Her Majesty’s Revenue and Customs.

(7) Regulations under this paragraph—

(a) are subject to the negative procedure; and

(b) may make—

(i) different provision for different purposes, including different provision for different areas or for different authorities, and

(ii) such incidental, consequential, transitional or supplementary provision as the Scottish Ministers think necessary or expedient.

15D (1) A person to whom sub-paragraph (2) applies is guilty of an offence if the person discloses without lawful authority any information—

(a) which comes to the person by virtue of paragraph 15A, 15B or 15C, and

(b) which relates to a particular person.

(2) This sub-paragraph applies to—

(a) a qualifying person for the purpose of paragraph 15A, 15B or 15C;

(b) a person who is or has been a director, member of the committee of management, manager, secretary or other similar officer of a person within paragraph (a);

(c) a person who is or has been an employee of such a person.

(3) A person guilty of an offence under this paragraph is liable—

(a) on conviction on indictment, to imprisonment for a term not exceeding 2 years or a fine, or both;

(b) on summary conviction, to imprisonment for a term not exceeding 12 months or a fine not exceeding the statutory maximum, or both.

(4) It is not an offence under this paragraph—

(a) to disclose information in the form of a summary or collection of information so framed as not to enable information relating to any particular person to be identified from it;

(b) to disclose information which has previously been disclosed to the public with lawful authority.

(5) It is a defence for a person (“D”) charged with an offence under this paragraph to prove that at the time of the alleged offence—

(a) D believed that D was making the disclosure in question with lawful authority and had no reasonable cause to believe otherwise, or

(b) D believed that the information in question had previously been disclosed to the public with lawful authority and had no reasonable cause to believe otherwise.

(6) For the purposes of this paragraph, “lawful authority” has the meaning given by section 123 of the Social Security Administration Act 1992.

(7) In relation to an offence under this paragraph committed in England and Wales before the commencement of section 154(1) of the Criminal Justice Act 2003 (increase in maximum term that may be imposed on summary conviction of offence triable either way) the reference in sub-paragraph (3)(b) to 12 months is to be taken as a reference to 6 months.”

(3) In paragraph 11 (supply of information to authorities: England and Wales), after sub-paragraph (1) insert—

“(1A) Information may be prescribed under sub-paragraph (1)(d) by reference to—

(a) how the person concerned came to be in possession or control of the information;

(b) the purpose for which it is requested by the authority.”

(4) In paragraph 12 (supply of information to authorities: Scotland), after sub-paragraph (1) insert—

“(1A) Information may be prescribed under sub-paragraph (1)(d) by reference to—

(a) how the person concerned came to be in possession or control of the information;

(b) the purpose for which it is requested by the authority.”

(5) In paragraph 16 (supply of information by authorities), after sub-paragraph (2) insert—

“(3) Information may be prescribed under sub-paragraph (2)(c) by reference to—

(a) how the first-mentioned authority obtained the information;

(b) the purpose for which the first-mentioned authority believes that the information would be useful to the other authority.”

(6) This section comes into force at the end of the period of 2 months beginning with the day on which this Act is passed.’. —(Andrew Stunell.)

Brought up, read the First and Second time, and added to the Bill.

New Clause 5

Report on effects of provisions

‘At a date no later than three years from the implementation of this Act the Secretary of State shall prepare a report detailing the effects of these provisions on—

(a) the number of people receiving council tax support in each local authority including the number in employment, the number actively seeking work, and the number of pensionable age, and

(b) the costs incurred by each authority in running the scheme, including the cost of appeals.’.—(Helen Jones.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

19:31

Division 5

Ayes: 201

---

Labour: 196
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Alliance: 1
Independent: 1
Democratic Unionist Party: 1

Noes: 271

---

Conservative: 229
Liberal Democrat: 41

Clause 8

Council Tax

Amendments made: 42, page 5, line 2, at end insert—

‘(aa) in the case of a dwelling situated in the area of a billing authority in Wales, is to be reduced to the extent, if any, required by any council tax reduction scheme made under regulations under subsection (2B) which applies to that dwelling;’.

Amendment 43, page 5, line 4, after ‘paragraph (a)’ insert ‘or (aa)’.

Amendment 44, page 5, line 12, at end insert—

“(2A) Schedule 1A (which contains provisions about schemes under subsection (2)) has effect.

(2B) The Welsh Ministers may by regulations—

(a) require a person or body specified in the regulations to make a scheme specifying the reductions which are to apply to amounts of council tax payable, in respect of dwellings to which the scheme applies, by persons to whom the scheme applies,

(b) impose requirements on that person or body regarding the matters which must be included in that scheme, and

(c) make other provision for and in connection with such schemes.

(2C) Schedule 1B (which contains further provisions about regulations under subsection (2B) and about schemes under those regulations) has effect.’.

Amendment 45, page 5, leave out lines 18 and 19 and insert—

“( ) No regulations under subsection (2B) are to be made unless a draft of the statutory instrument containing them has been laid before, and approved by a resolution of, the National Assembly for Wales.’.

Amendment 46, page 5, line 21, at end insert

‘or regulations under subsection (2B)’.

Amendment 47, page 5, line 24, leave out ‘Schedule to be inserted as Schedule 1A’ and insert

‘Schedules to be inserted as Schedules 1A and 1B’.

Amendment 48, page 5, line 27, at end insert

‘under section 13A(2) of the LGFA 1992’.—(Robert Neill.)

Schedule 4

Amendments relating to council tax reduction schemes

Amendments made: 49, page 47, line 32, after ‘schemes’ insert ‘: England’.

Amendment 50, page 47, line 35, after second ‘scheme’ insert ‘under section 13A(2)’.

Amendment 51, page 49, line 7, at end insert—

‘(10) Regulations under sub-paragraph (8) may in particular set out provision to be included in a scheme that is equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the Secretary of State thinks fit.

(11) Subject to compliance with regulations under sub-paragraph (8), a scheme may make provision that is equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the authority thinks fit.

(12) For the purposes of sub-paragraphs (10) and (11), each of the following enactments as it had effect on the day on which the Local Government Finance Act 2012 was passed is a “relevant enactment”—

(a) sections 131 to 133 of the Social Security Contributions and Benefits Act 1992 (council tax benefit);

(b) sections 134 to 137 of that Act (general provisions about income-related benefits) so far as applying in relation to council tax benefit;

(c) section 1 of the Social Security Administration Act 1992 (entitlement to benefit dependent on claim) so far as applying in relation to council tax benefit;

(d) section 6 of that Act (regulations about council tax benefit administration).’.

Amendment 52, page 49, line 16, leave out ‘consultation under sub-paragraph (1)(a) took place’ and insert

‘any step described in sub-paragraph (1) was taken’.

Amendment 53, page 49, line 44, at end insert

‘(or such other year as is specified in section8(4) of the Local Government Finance Act 2012)’.

Amendment 54, page 50, line 2, at end insert—

‘(3A) The default scheme may in particular make provision that is equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the Secretary of State thinks fit.

(3B) For the purposes of sub-paragraph (3A), each of the following enactments as it had effect on the day on which the Local Government Finance Act 2012 was passed is a “relevant enactment”—

(a) sections 131 to 133 of the Social Security Contributions and Benefits Act 1992 (council tax benefit);

(b) sections 134 to 137 of that Act (general provisions about income-related benefits) so far as applying in relation to council tax benefit;

(c) section 1 of the Social Security Administration Act 1992 (entitlement to benefit dependent on claim) so far as applying in relation to council tax benefit;

(d) section 6 of that Act (regulations about council tax benefit administration).’.

Amendment 55, page 51, line 30, after ‘benefit’ insert

‘, or who makes or has made a claim for that benefit,’.

Amendment 56, page 51, line 31, at end insert—

‘Schedule 1B

Section 13A

Council tax reductions schemes: Wales

Interpretation

1 In this Schedule—

(a) “the regulations” means regulations under section 13A(2B);

(b) “scheme” means council tax reduction scheme under the regulations;

(c) “specified” means specified in the regulations;

(d) “specified authority” means a person or body required by the regulations to make a scheme (and, in relation to a particular scheme, means the authority which made the scheme or is under a duty to make it).

Application of schemes

2 (1) The regulations may—

(a) prescribe, for each scheme that is to be made, the dwellings to which that scheme is to apply;

(b) require each scheme to state the dwellings to which it is to apply.

(2) The regulations may prescribe—

(a) the date by which each scheme is to be made, and

(b) the first financial year to which it must relate.

Persons entitled to reductions

3 (1) The regulations may prescribe—

(a) classes of person who are to be entitled to a reduction under schemes;

(b) classes of person who must not be entitled to a reduction under schemes.

(2) The regulations may—

(a) allow specified authorities to determine (subject to regulations under sub-paragraph (1)) classes of person who are to be entitled to a reduction under schemes, or

(b) provide that specified authorities may not determine such classes.

(3) The regulations may require each scheme to state the classes of person (prescribed under sub-paragraph (1)(a) or determined under sub-paragraph (2)(a)) who are to be entitled to a reduction under the scheme.

(4) Any class of person prescribed under sub-paragraph (1)(a) may be determined by reference to, in particular, the matters listed in sub-paragraph (7).

(5) The regulations may require any class of person determined under sub-paragraph (2)(a) to be determined by reference to specified matters (which may include those listed in sub-paragraph (7)).

(6) If the regulations do not require a class a person to be determined as mentioned in sub-paragraph (5), the specified authority may determine that class by reference to, in particular, the matters listed in sub-paragraph (7).

(7) Those matters are—

(a) whether the Welsh Ministers consider, or the specified authority considers, any person to be in financial need;

(b) the income of any person liable to pay council tax in respect of any dwelling to which a scheme is to apply;

(c) the capital of any such person;

(d) whether any such person is in receipt of any specified benefit;

(e) the income and capital of any other person who is a resident of the dwelling, or whether any such person is in receipt of any specified benefit;

(f) the number of dependants of any person within paragraph (b) or (e);

(g) whether the person has made an application for the reduction.

Reductions

4 (1) The regulations may prescribe reductions, including minimum and maximum reductions, to which persons in each class (whether prescribed under paragraph 3(1)(a) or determined under paragraph 3(2)(a)) are to be entitled under schemes.

(2) The regulations may—

(a) allow specified authorities to determine (subject to regulations under sub-paragraph (1)) reductions to which persons in each class set out in the scheme are to be entitled, or

(b) provide that specified authorities may not determine such reductions.

(3) The regulations may require each scheme to set out the reductions (whether prescribed under sub-paragraph (1) or determined under sub-paragraph (2)(a)) to which persons in each class set out in the scheme are to be entitled.

(4) Different reductions may be set out for different classes.

(5) A reduction under a scheme may be—

(a) a discount calculated as a percentage of the amount which would be payable apart from the scheme,

(b) a discount of an amount set out in the scheme or to be calculated in accordance with the scheme,

(c) expressed as an amount of council tax to be paid (lower than the amount which would be payable apart from the scheme) which is set out in the scheme or is to be calculated in accordance with it, or

(d) the whole amount of council tax (so that the amount payable is nil).

Other matters

5 (1) The regulations may require each scheme to state—

(a) the procedure by which a person may apply for a reduction under the scheme;

(b) the procedure by which a person can make an appeal under section 16 against any decision which affects the person’s entitlement to a reduction under the scheme or the amount of any reduction to which the person is entitled;

(c) the procedure by which a person can apply to the relevant billing authority for a reduction under section 13A(1)(b).

(2) In sub-paragraph (1)(c), the relevant billing authority for any dwelling to which the scheme applies is the billing authority in whose area the dwelling is situated.

(3) The regulations may prescribe requirements which must be met by the procedure mentioned in sub-paragraph (1)(a) or (b).

6 (1) The regulations may—

(a) require other matters to be included in schemes;

(b) allow schemes to make provision that is equivalent to provision made by a relevant enactment, or provision that is capable of being made under a relevant enactment, with such modifications as specified authorities think fit;

(c) prescribe the procedure which a specified authority must follow when making a scheme (including requirements regarding consultation and other steps to be taken before and after making the scheme);

(d) require or allow functions conferred by the regulations to be exercised by specified authorities jointly with other authorities;

(e) prescribe a default scheme which is to take effect, if a specified authority fails to make a scheme in accordance with the regulations, in respect of dwellings to which that scheme would have applied;

(f) impose requirements on specified authorities relating to the review, revision or replacement of schemes;

(g) enable specified authorities to make reasonable charges for the supply of copies of documents relating to schemes;

(h) require specified authorities to provide to the Welsh Ministers information about schemes.

(2) In particular, the regulations may under sub-paragraph (1)(a) set out provision to be included in schemes, and a default scheme prescribed under sub-paragraph (1)(d) may make provision, that is equivalent to—

(a) provision made by a relevant enactment, or

(b) provision that is capable of being made under a relevant enactment,

with such modifications as the Welsh Ministers think fit.

(3) For the purposes of sub-paragraphs (1)(b) and (2), each of the following enactments as it had effect on the day on which the Local Government Finance Act 2012 was passed is a “relevant enactment”—

(a) sections 131 to 133 of the Social Security Contributions and Benefits Act 1992 (council tax benefit);

(b) sections 134 to 137 of that Act (general provisions about income-related benefits) so far as applying in relation to council tax benefit;

(c) section 1 of the Social Security Administration Act 1992 (entitlement to benefit dependent on claim) so far as applying in relation to council tax benefit;

(d) section 6 of that Act (regulations about council tax benefit administration).

Transitional provision

7 (1) The regulations may make such transitional provision regarding the commencement of schemes as the Welsh Ministers think fit.

(2) Such provision may include, in particular, provision for and in connection with treating a person who is or was in receipt of council tax benefit, or who makes or has made a claim for that benefit, as having made an application for a reduction under a scheme.

Guidance

8 In exercising any function relating to schemes, a specified authority must have regard to any guidance issued by the Welsh Ministers.”’.

Amendment 57, page 52, line 7, after ‘scheme’ insert ‘under section 13A(2)’.

Amendment 58, page 52, line 11, leave out ‘a billing authority’.

Amendment 59, page 52, line 12, at beginning insert

‘a billing authority in England or a specified authority (within the meaning of Schedule 1B) in Wales’.

Amendment 60, page 52, line 13, at beginning insert ‘a billing authority’.—(Robert Neill.)

New Clause 1

Tax increment financing schemes

‘(1) The Secretary of State may provide in regulations under paragraphs 20, 23 or 26 of Schedule 1 (levy payments, safety net payments and safety net payments on account) for the calculated amount for an area in which a tax increment financing scheme is in place to disregard the levy and any re-set.

(2) Regulations under subsection (1) shall be made by statutory instrument and may not be made unless a draft has been laid before and approved by resolution of each House of Parliament.’.—(John Healey.)

Brought up, and read the First time.

[John Healey]

I beg to move, That the clause be read a Second time.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss the following:

New clause 6—Determination of central and local shares—

‘(1) In determining the central share and the local share for any relevant authority, the Secretary of State must have regard to—

(a) the level of need in that authority, and

(b) the likely capacity of the authority to benefit from business rate growth.

(2) Any assessment of the level of need shall include—

(a) the ranking of the local authority in the Index of Multiple Deprivation,

(b) the level of unemployment within the authority’s area,

(c) the proportion of adults within the authority’s area who have a limiting long-term illness,

(d) the number of adults within the area who are in receipt of social care,

(e) the number of looked-after children within the authority, and

(f) the level of child poverty within the authority’s area.

(3) The Secretary of State must lay his assessment before the House at the same time as the Local Government Finance Report.’.

New clause 11—National business rate policy changes: consultation—

‘The Secretary of State may not make any changes to national business rate policy which impact on local business rate yields without first consulting with all interested parties.’.

Government amendments 15 to 17.

Amendment 62, page 12, line 13, schedule 1, leave out ‘each year’ and insert—

‘each financial year until the end of the financial year beginning 1 April 2014’.

Government amendments 18 and 19.

Amendment 63, page 23, line 40, at end insert—

‘(ca) by reference to the volatility caused by rating appeals following a revaluation;’.

Government amendments 20 to 41.

Government new clause 8—Payments to and from authorities.

[John Healey]

I rise to speak to new clauses 1 and 11, and amendments 62 and 63.

My purpose with new clause 1 is to encourage the Minister to confirm, on behalf of the Government, that the necessary powers exist in legislation to make tax increment financing work in future, and also to confirm Ministers’ intent and commitment to using those powers. The case for TIFs—tax increment financing schemes—is unarguable. I myself have been arguing it for a number of years, first in the Treasury and then in the Department for Communities and Local Government. There are local government regulations in Scotland to allow six TIF pilots to go ahead. The use of TIFs is widespread in Canada and the US, particularly in areas where regeneration is required; indeed, only one state in the US—Arizona—does not have TIF legislation. TIFs build on the commitment that Labour made in government, in the Budget 2010, a commitment that was backed by a capital down payment of £120 million.

However, if the TIFs system is to work—that is, if local authorities are to borrow money for up-front infrastructure investment against the anticipated increase in business rate income as a result of the new infrastructure —there must above all be certainty for those long-term investments to be made. There needs to be certainty for a clear business plan and then an investment plan to be put in place; otherwise TIFs will not get off the ground and will not work. That certainty is required over a 20 to 30-year time scale, which is why it is needed in legislation. As the Centre for Cities said in response to the Government’s consultation:

“When the Government introduces Tax Increment Financing…it should be based on ‘Option 2’—a ringfenced TIF which is best suited for local investment finance within the proposed business rate retention system.”

That point was echoed by the British Property Federation, which said:

“Failing to ring-fence the income stream for that length of time”—

its submission referred to a 25 to 30-year period—

“would generally render the upfront investment unbankable, because the risks associated with it become too difficult to model, understand and price. TIF will only work with the sort of total ring-fencing proposed under Option 2”.

The Government made the commitment to ring-fencing, stating in the White Paper of October 2010:

“We will introduce new borrowing powers to enable authorities to carry out Tax Increment Financing”.

In response to the consultation, the Government also made a commitment to

“allow a limited number of Tax Increment Financing Projects to be exempted from any levy and reset for 25 years.”

That is the crucial commitment that I want to test against the content of the Bill before us. I expressed my concern about the freedom of the ring-fencing from any effects of reset to the Secretary of State on Second Reading on 10 January. He had no answer: either he did not know, or he did not want to say.

Let me therefore point the Minister to the source of my concern, which relates to paragraph 37(1)(d) of schedule 1 on page 32. This deals with the regulation-making powers of the Secretary of State, referring to regulations that can

“provide for that amount or that proportion to be disregarded for the purposes of calculations under any of the following provisions”—

in other words, regulation-making powers that can lead to the disregard of a proportion of business rates in specified areas, namely TIF areas, for particular payments that would otherwise be due. The provision goes on to identify payments to the central share, payments by billing to precepting local authorities, levy payments, safety net payments, payments on account and payments that follow from changes either to the local government finance report or to an amending report of a local government financing report. There is no power, however, to make regulations to exempt payments as a result of changes through a reset.

If I am mistaken, I would like the Minister to indicate where that power lies. If no such provision exists in the legislation, will he confirm that the Government will honour the commitment they made in their response to the consultation and will amend the Bill so that any payments resulting from a reset can be disregarded—and disregarded in full—for the purpose of the TIF areas? The Minister would be welcome to accept my new clause if he needs to do so.

[Mark Field (Cities of London and Westminster) (Con)]

The right hon. Gentleman has made admirably clear his concerns about the potential lack of commercial certainty. One of the advantages of going down the route of tax increment financing is that there would be ring fence over the 25 to 30-year period. Does he not see, however, that in very uncertain economic times, that is a very long period, so it might be unwise, where a major change required a major reset in a particular area, perhaps where new towns were being built, not to allow the Government a certain amount of leeway? Is that not more important than the exclusion of a reset from the ring fence?

[John Healey]

I would have thought the hon. Gentleman, who represents the Cities of London and Westminster, would recognise more than anyone else that for the sort of commercial investment required to get TIFs off the ground in circumscribed and specific areas, certainty is a premium. If the 25 or 30-year commitment required to make this work could be periodically completely set to one side in a reset process, I put it to him that the inherent risk created by that and the inherent lack of certainty entailed by it would undermine the ability to raise the finance necessary to get the TIFs off the ground.

As to the hon. Gentleman’s point about new towns, the regulations allow the disregard in the specified areas that are designated as TIF areas only. The disregard on business rate payments, a proportion of which would otherwise become payable by the local authority, would be allowed under various headings, but this would not apply to the reset. Fundamentally, that is the biggest upset factor of all, so the case for disregarding that is probably stronger than it is for the smaller-beer measures for which regulations can be designed to protect.

[Mark Field]

I accept what the right hon. Gentleman says and he is absolutely right about commercial certainty, which is of great importance to any would-be investor. Instead of the notion of absolute certainty embodied in new clause 1, would the right hon. Gentleman not be satisfied, particularly in view of the important effect of building a new town or a huge new industrial estate for which the notion of a reset would apply, by reassurances from the Minister that the Government do not intend to make the changes he has in mind? Would that not be better than going down the route of absolutely certainty, which provides little flexibility either to central or local government, for an incredibly long period of 25 or 30 years? We need go back only two and a half or three decades to recognise the great changes that have taken place in many of the industrial areas that we represent and to understand that absolute certainty of the sort that he—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. [Interruption.] Order—the hon. Gentleman must not test my patience even more. Interventions are welcome, and I am prepared to give a little leeway, but the hon. Gentleman is almost making a speech.

[John Healey]

Thank you, Mr Deputy Speaker. I got the gist. I welcome this Bill and I want it to work. My fear is that without the certainty around potential resets—we do not know when or how often they might happen; we do not know whether they will happen every 10 years; we do not know how they will work in future—there will be huge risk and uncertainty in the system. It is not a question of whether I am satisfied by the provision; it is a question of whether the potential investors, who will determine whether the TIFs work or not, are satisfied. I am trying to convey the sentiment that I have picked up from my discussions with banks, commercial organisations, the British Property Federation and some of the City’s policy experts, who all say, “Look, we require a ring fence; it must be total”. Thus leaving out the reset, which the Government promised they would not do, does not make sense if we want the provisions to work. I hope the Minister will be able to provide the confirmation we need and be able to build it into the Bill. This issue will certainly need to be confirmed at later stages of the Bill.

Amendment 62 is designed to get to the heart of the relative share of the business rate take as between central and local government. The figures for projected resource spending on local government under the current spending review demonstrate a significant reduction for next year and the year after that—of nearly half a billion between this year and the next, and of more than £1.5 billion between next year and the year after that in nominal terms. Alongside that, the projected yield from business rates is set to go up by nearly £1 billion next year and by more than half a billion the year after that. That means that the gap between the projected business rates yield and central Government’s commitment to resource spending on local government is more than £2 billion for next year, and £4 billion for the year after that. There is a significant and growing gap between the business rates yield and spending on local government.

20:00

I accept, as do my colleagues on the Opposition Front Bench, the need for the business rates retention system not to undermine the Chancellor’s announced plans for deficit reduction during the current spending review period. However, I do not want central Government to keep helping themselves to a growing yield from business rates after 2014-15, given that the system is designed to return that yield to local government as an incentive for it to support economic development.

[Andrew Gwynne]

It is not yet clear how local authorities’ needs will be assessed for the purpose of determining the proportion of the business rate that they will retain. We need to see the bigger picture, not least because services and needs vary widely, as does the ability to generate income locally.

[John Healey]

My hon. Friend, who has experience of local government, has put his finger on the button. What worries me is that the Bill gives the Secretary of State power to set the central and local shares—in other words, to determine the division of the business rates take—in each and every year, indefinitely. I am not talking just about what will happen next year and the year after that, or about what will happen until the end of the current spending review period. From year to year, local government simply will not know where it stands until the Secretary of State makes the decision. The central and local shares could vary, and central Government could decide to take a greater share.

The Government’s top-slicing of at least 50% of the business rates revenue and 50% of the business rates growth above the baseline will reduce the incentives for local authorities to support growth, which were meant to be part of the design of the system. It will also reduce the certainty that would enable authorities to plan their finances on more than a year-by-year basis, and reduce the Government’s own ability to claim that this is a localising reform. I am sure that we will hear from the Minister—and I have heard this before—that the Government have declared their intention of returning the revenues in the central share to local government; but, as has been pointed out by my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), we have been given no details, and we do not know what purposes or constraints that may entail.

[Mr Betts]

My right hon. Friend has raised an important point about what the Government may choose to do with the extra money from the business rates that will accrue each year. The suspicion has been expressed that they will use it to ensure that local authorities must fund more and more council tax benefits. That would be a simple way of transferring responsibility for benefits to local authorities.

[John Healey]

My hon. Friend may well be right, and his Select Committee will doubtless keep a close eye on the matter. I hope that the Minister will give us some answers tonight, but I am sure that, if he does not, Ministers in the other place will be pressed on the point.

The other gaping hole in the Bill is the absence of any specific measure that would tell us when and how the Government would deal with the reset in the future. The two options that they presented in their statement of intent last week could lead to fundamentally different outcomes. There could be a full reset, whereby all the business rate growth up to the point of the reset was redistributed—meaning, in effect, that the baseline of the whole system would be reset by means of the new, and total, business rates pot—or there could be a partial reset, meaning that business growth would be retained at local level, and just the initial baseline would be reset. That represents a very wide range of possibilities for local authorities. If the Minister wants authorities to be able to plan for the future on the basis of the new system, he must provide them with some of the answers to such questions, sooner rather than later.

[Andrew Gwynne]

Getting the reset procedure right is important not least because the initial baseline is so unfair. It locks in unfair local government settlements and in-year cuts. It is crucially important for local government to be certain that the reset procedure will work in the future, because otherwise the gaps will continue to widen.

[John Healey]

Indeed. I have my misgivings about whether any approach to the reset procedure can make the system fair after more than a few years. Indeed, I am still to be convinced that the system can be reset in a fair and proper way. But, Mr Deputy Speaker, I digress beyond the scope of the amendments that I tabled.

Let me now turn to amendment 63. During earlier debates on the Bill in the Chamber, I argued that this was an unsuitable system for long-term Government funding. Ultimately, business rates yield is too volatile, and it is too volatile on a year-by-year basis. Let me give three examples, a couple of which will be close to home for those on both Front Benches.

In Warrington the business rates yield has dropped by £10 million over the last 10 years, from £53 million to just £43 million. In Sunderland there was a £17 million drop between 2010 and 2011, and in the year before that there had been a £12 million rise. I can tell the Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill), that in the middle of 2005-06, the business rates income in his borough of Bromley halved. In two of the last four years, the changes—up and down, and up and down again—have amounted to more than 10%. The funding stream is inherently volatile, and, in my view, is inherently unsuitable as a basis for the funding of essential local government services.

The main purpose of amendment 63, however, is to draw attention to concern about the volatility caused by appeals. I believe that areas in which there is a particular concentration of a single or consistent business type are particularly vulnerable to a big impact from them. The hon. Member for Cities of London and Westminster (Mark Field), who has just left the Chamber, may recall that in 2007-08 a full 20% of the business rates yield of the City of London was lost as a result of successful backdated appeals. So the appeals add another important, volatile element to the system of business rates.

Those appeals are made against decisions by the Valuation Office Agency, not local authorities. The system is managed by the VOA and tribunals, not the local authority, and it brings benefits to the companies that are successful, not the local authorities. We must ensure that the impacts of appeals do not affect the funding base of the local authorities; we must not expose authorities to vagaries in the system and to the impact of appeals, when they cannot predict them, control the risk of them or benefit from them. Actually, neither can they benefit from business rate increases through revaluation, at least while the Government put in place transition relief.

I tabled amendment 63 because the Government are creating a one-way bet, in which the Chancellor wins each way and the councils lose each time. If the appeals are won by the company, the local authority has to manage the volatility and has to bear the loss up to the level of the safety net threshold—which, according to the statement of intent in the Government’s publications of Thursday last week, is likely to be somewhere between 7.5% and 10%. Amendment 63 is an attempt to make sure that once the calculations and the thresholds are determined, safety net payments take full account of rating appeals. Linked to that, I hope the Government will accept the case for fully compensating local authorities from the levy pot for the impact of any successful business appeals—over which they have no control, and which they cannot predict.

New clause 11 is relatively modest, and I hope the Minister will accept it in principle, if not in practice at this stage. The power for setting and changing business rates policy—business rate reliefs, which are mandatory, as well as the payment schedules for business rates and the transition periods for business rate increases—will continue to rest with the Secretary of State and the national Government. Currently, any national business rate policy changes have no direct impact on local authority finances or local authority budgets. In future they will, however. They will not be local government decisions, but they will create consequences that local government will have to deal with. If the Government decide to change the rate or the type of mandatory rate reliefs, or to allow the deferral of part of the change in business rate bills, that will have a direct impact on that year’s yield in the area concerned, and therefore on the local authority’s funding. Local authorities will be hit by the consequences of decisions that they did not make and that they cannot control. That is unfair and unreasonable.

It may surprise some Members to learn that the Federation of Small Businesses has also made that argument. It said in response to the consultation of October 2011 that

“the FSB is concerned that the incentive system could actually deter local authorities from promoting and utilising the reliefs available to small businesses such as small business rate relief, rural rate relief and hardship relief…It would mean that a local authority would lose out on income if it increased the proportion of businesses that received rate relief or would make money if the number of businesses able to get reliefs fell.”

I am sure the Minister does not want to design into the new system perverse incentives that will hit small firms in that way.

As currently proposed, the new system will be bad for local authorities, and could be bad for local small and medium-sized firms. My new clause requires that, at the very least, the Secretary of State must consult the parties that would be affected by changes in national business rates policy before making such decisions. Under the new system, the stakes for councils will be higher, so the guarantee to consult them before any changes are made is the minimum that Ministers should promise.

20:15

[Helen Jones]

Once again, I am very pleased to follow an interesting, passionate and well-informed speech from my right hon. Friend the Member for Wentworth and Dearne (John Healey). I can add little to the case he made for his amendments, so, given the time constraints, I shall focus on new clause 6, which stands in my name and that of other right hon. and hon. Friends.

We make no apologies for returning to the issue of need and the different levels of need within local authorities —the elephant in the room that the Government want to ignore. This issue has been raised time and again in our debates on the Bill by hon. Friends, many of whom represent some of the most deprived communities in this country and have seen at first hand the impact of the Government’s policies on those communities.

Why are the Government so wilfully blind to the effects of their policies? They have already hit local authorities with cuts that are larger than those inflicted on any Government Department, and we have heard from Opposition Members about the real and serious impact the cuts are having on front-line services—the cuts in school food provision, increases in home care charges, library closures in the poorest communities. However, none of this has any influence on Ministers, so out of touch are they with most people’s lives, and it now appears that they are going to make things worse.

First, they entrench unfairness in the system by basing it on the current local government finance settlement, so the inequalities and unfairness of the current scheme will form the basis of the settlement for years to come. We have heard many times during our debates on this Bill about cities that are losing spending power: Manchester is losing spending power of £186 per person, Birmingham £155 and Nottingham £147. Those are the cities that the Government think will drive the economic recovery; there is no linked-up policy here. Wokingham, of course, gains, however. Basingstoke and Deane gains £6.30 per person. East Dorset gains £3 per person.

According to the Government’s statement of intent—it is one of many, so I am unsure how much weight we can place on any of their statements of intent—each authority will keep 50% of its business rates and the Government will provide a revenue support grant to make up the difference between the local share of business rates at the outset of the scheme and the spending controls for local government. However, they will, it seems, have top-sliced that for the new homes bonus first, which already benefits most those authorities with a high tax base, and it appears that many other grants will also be included, as listed in the statement of intent.

We already know how the grant system has been used to penalise the poorest authorities with communities that are most in need, and there has been a significant reduction in resource equalisation. Under this scheme, the gap between richer and poorer authorities will widen. First, as the Yorkshire and Humberside councils have said,

“a baseline may not reflect the actual levels of funding councils need to deliver services from April 2013.”

They were right about that. Secondly, as we have discussed during the passage of this Bill, some authorities will find it easier to grow their business rates than others. It has been estimated that even if the top-ups and tariffs increased in line with the retail prices index, the gap between the richest and the poorest authorities, and between the north and the south, will widen. Cash growth in the City of London could be 139% over four years and the figure for Westminster could be 90%, whereas the estimate for Liverpool and Knowsley is 21.9% and that for South Tyneside is 22.7%.

When we add into that this Government’s abject failure to take into account the differing tax bases of local authorities, the situation becomes even worse. That failure means that local authorities do not start on the level playing field that the Deputy Prime Minister kept telling us about—although he was the man who said he was not going to raise tuition fees, so I am not sure that anyone takes much notice of him. In the long term, fortunate local councils might reduce or even get rid of council tax, whereas others whose tax base is low and where it is harder to attract investment will be unable to do so. When we also take into account the amount that some councils will lose through changes in council tax benefit, it is clear that they could be heading for the perfect storm.

[Andrew Gwynne]

May I use the example of my constituency to illustrate precisely the issue that my hon. Friend is raising? My constituency covers two metropolitan boroughs that lie side by side; Tameside predominantly contains band A and band B properties, so its ability to increase its income from council tax is less than that of neighbouring Stockport, which contains a much larger amount of properties in a wider range of bands. Is that not the fundamental unfairness of all this?

[Helen Jones]

It is the fundamental thing that the Government fail to understand: councils are not starting from the same baseline. Those who pay the price for these inequalities, which will increase, are those most in need. Need is the thing that the Government do not want to talk about. That is why our new clause 6 seeks to require the Government to take into account both the likely capacity of an authority to benefit from business rate growth and the authority’s level of need.

When the Secretary of State issued all these statements of intent last week, he sought to dismiss the whole concept of need. He talked of grants as a

“system of Government handouts to local authorities”.

He said that this

“encourages a begging bowl mentality, with each council vying to be more deprived than its neighbour.”—[Official Report, 17 May 2012; Vol. 545, c. 39WS.]

I have never heard such an appalling slur on local councils or such an arrogant dismissal of the needs of many of the poorest people in this country, and he should apologise for that. Is he really suggesting that councils are pretending to represent areas that are poorer than they actually are, simply to get Government grants? That is nonsense. So why is it that under this Government the needs of people who are out of work, of people who have long-term illnesses and of people in poverty can be treated as if they do not exist? These people do not have loud voices, because most of them are just trying to get by from week to week. They do not share mulled wine and mince pies with the Prime Minister or get invited to dinner at Dorneywood. By contrast, those who pay 50% tax—millionaires, who are apparently squeezed beyond endurance—must be relieved of their burdens. [Interruption.] The Under-Secretary of State for Communities and Local Government, the hon. Member for Bromley and Chislehurst (Robert Neill) says that that is a cliché. It is not a cliché; it points out the moral laxity of this Government, who cannot see that treating poor people unfairly while giving handouts to rich people is exactly what most of the country finds wrong.

[Andrew Gwynne]

My hon. Friend is making precisely the point that needs to be made in these debates, which is that the demands on local services vary widely and that it is often the poorest communities that have the greatest demands. I am very pleased that her proposal recognises children in care, because they are a big issue for local authorities in need. That argument needs to be made in this debate.

[Helen Jones]

My hon. Friend is right about that, and I shall discuss the number of people in care later. It is important that we recognise that many of the things we are discussing are statutory services, which the local authority has to provide.

Let us examine some of the differences between areas. In Knowsley, whose case was put forcefully in Committee by my right hon. Friend the Member for Knowsley (Mr Howarth), 58,000 people—more than one third—live in areas that are among the top five most deprived in the country. In the north-east, 32.7% of people live in the most deprived 20% of areas. Those are the areas that will struggle as the gap between needs and resources widens. Such authorities are often the same ones that are having to cope with the biggest increases in unemployment. That both reduces the finance available to local councils, because more people are claiming benefit, and increases the demand for their services.

The Secretary of State seems to think that authorities are competing to be the most deprived, so let me ask him something—I would if he were here, but he seems to take these debates so lightly that he has not even bothered to turn up for most of this one. So let me ask this Minister: is unemployment in Birmingham, Ladywood higher or lower than in Henley? In Birmingham, Ladywood, it stands at 11.2%, whereas in Henley it is 1.1%.

Does Middlesbrough have a higher or lower unemployment rate than North East Hampshire? Middlesbrough’s rate is 9.7%, whereas that for North East Hampshire is 1.1%. Is the figure for Liverpool, Walton higher or lower than that for Wokingham? The figure for Liverpool, Walton is 8.5%, whereas that for Wokingham is 1.3%. Does he think that councils are making this up and deliberately causing unemployment to get Government grants? Not even he could get up to argue that. It is not local councils that have caused this recession, yet still we hear from Government Members that councils are “reluctant” to promote economic growth. Coming from this Government that is a bit like King Herod accusing someone of child cruelty. Local authorities are still having to cope with the long-term legacy of heavy industry, followed by de-industrialisation.

[Stephen Pound (Ealing North) (Lab)]

I am loth to interrupt my hon. Friend, who is making a powerful and passionate case that I have no doubt will sway even those stern Gradgrinds on the Government Benches. Does she accept that constituencies such as mine have islands of deprivation in a sea of affluence and that we have a post-industrial working class in parts of west London? Is it coincidence that the royal borough of Kensington and Chelsea has the longest life expectancy of anywhere in the United Kingdom, whereas places such as her constituency and mine are at the other end, not through any fault, but because of industrial history? What can be done to address this cruelty?

[Helen Jones]

My hon. Friend is quite right. In the first place, we could ensure that we address those legacies of ill health and poverty, which create a greater demand for services and mean that fewer people are able to contribute to them. For example, why does Durham council need to spend more on older people than a similarly sized council such as Surrey? It is not because it is profligate, but because it has higher deprivation and ill health, which lead to greater demand for home care services but mean that fewer people are able to finance that care. Fifteen times as many people receive a community service in Durham as in Surrey and two and a half times more receive a home care service. That demonstrates the huge variation in need across the country.

Those levels do not bear any relation to an authority’s ability to generate income. In Surrey, for example, 75% of the properties are in band D or above. Surrey can generate more income from band D council tax than a similarly sized authority, which is a point that was made earlier. Unless those factors are taken into account in any financial settlement, there is a huge risk to services for those in need.

20:30

A similar combination of need and a more difficult local economic situation can be seen in Halton, my neighbouring authority. One in five people in Halton has a limiting long-term illness, yet its ability to benefit from increased economic growth is more limited than that of other authorities for one simple reason: 22.3% of its business property already has an empty rating assessment, and even if it were all brought back into use it would generate little by way of extra income. The same is true of Liverpool and other big cities, where so much spare capacity exists that even if an extra 15,000 jobs were created, they would get no additional business rate income. When the Government insist that councils concentrate on increasing commercial floor space, the problem is that those who have surplus capacity find things increasingly difficult.

[Andrew Gwynne]

The question of developing local economies also does not take into account the relationship between city regions. Often the drivers for economic growth might be outside a borough’s boundaries, or in a neighbouring local authority to which people will travel for work.

[Helen Jones]

My hon. Friend is quite right and that is true in many conurbations, such as Manchester and London, for example.

Let us also consider the need for children’s services. Levels of child poverty, and thus the demand for services, vary hugely between authorities. In Hartlepool, 29% of children are in poverty. In Newcastle, the figure is 27%, as it is in Liverpool. That is 91,000 children. I could not resist looking at that often mentioned authority, Wokingham, where the level of child poverty is 7%. Which area has the most need for services, yet which is benefiting most and is likely to benefit more from this Government’s plans?

Such high levels of child poverty mean a higher demand for children’s services. In Liverpool, for example, 77% of the children in poverty are in single-parent families, meaning there is an even greater need for child care and support for families to help parents go to work, as well as for other support. Children in those areas need better service, not worse, and they need more help. There is no point in the Deputy Prime Minister’s banging on about the need to address inequalities in education unless the Government recognise that to make a real difference those inequalities must be tackled before children get to school.

So, we have places such as Middlesbrough—the hon. Member for St Austell and Newquay (Stephen Gilbert) is shaking his head, but anyone in education knows that to make a real difference to educational attainment we need to tackle the inequalities before the children reach the age of five. By the time they get to school, those inequalities are entrenched and, if he does not think that that is true, I suggest he asks some teachers.

Middlesbrough is the ninth most deprived local authority in England and has seven times as many children receiving free school meals as Wokingham does. It clearly needs greater investment in children’s services. Poverty also drives the number of children being taken into care. We spoke earlier in the passage of the Bill about the huge increase in the number of referrals and children taken into care following the case of baby Peter, but the differences between authorities are stark. There was a 10% increase nationally in safeguarding referrals in the period around 2009-10, but in Liverpool the increase was 60%. Those are the differences that we are dealing with. The same applies to the numbers of looked-after children—children for whom the authority has a legal obligation to be the corporate parent and to provide. It cannot cut those services, it cannot trim them and it cannot decide how great the demand is.

[Andrew Gwynne]

I ought to declare an interest, as my wife, Councillor Allison Gwynne, is the cabinet member for children’s services in Tameside council. My hon. Friend’s point about children’s services and the cost of those services is absolutely correct, not least because children’s services, particularly for looked-after children, is such a resource-intensive service and cannot easily be cut, nor should it be. It is those councils that often have the least ability to raise business rates that are likely to be penalised the most.

[Helen Jones]

I could not have put it better than did my hon. Friend. These services are demand-led; they are not within the control of the local authority, and they are, as he said, very expensive to provide, as they must be. We are dealing with some extremely damaged and vulnerable children in local authority care. Surrey has 32 looked-after children per 10,000 of population, and Wokingham has 22, compared with 104 per 10,000 in Middlesbrough and 100 per 10,000 in Newcastle. That is a stark example of the differing levels of need in local authorities, and the idea that those services should be left to the vagaries of the market is breathtaking.

My right hon. Friend the Member for Wentworth and Dearne, who is no longer in his place, gave some good examples of how business rates can vary from year to year. It is entirely unpredictable, yet this Government still refuse to recognise those different levels of need within local authorities.

[Mr Betts]

Am I being a little cynical when I say that the Government have devised a scheme that is now so complicated—top-ups, tariffs, set-asides, then revaluations, and on top of that the fact that only 50% of business rates will be returned to local authorities, and a rate support grant element as well—that when they achieve what they are trying to do, the transfer of money from deprived communities to more affluent communities, it will be virtually impossible to explain to anybody what they have done?

[Helen Jones]

I do not think my hon. Friend is at all cynical. He is exactly right. The whole point of the Bill, as we have said throughout, is to centralise power and devolve the blame. We saw it earlier when we were debating council tax. We are seeing it now in the Government’s plans for business rates. I believe their aims are simple. They go about it in a complicated way, but the basic aim is very simple: to ensure that whoever gets the blame for cuts in local services, it is not them. It is also to ensure that the voices of those who are most in need are excluded from this debate.

We believe that the views of those people ought to be heard. Let us think about who they are. They are elderly men and women who have contributed all their lives and who are not getting the home care that they need in their old age, or are paying too much. It is a child in a family who may not be well-off but is dependent on local libraries for his or her education. It is the most vulnerable children in need of care and protection. These are the people to whom this Government pay no heed. We have moved the new clause because we do not intend their needs to be forgotten. I urge my hon. Friends to support it in the Lobby. It might help if I indicate that we will press it to a vote.

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

Perhaps it is a sign of the complexity of the subject and the fact that we have not exactly taken the nation with us that there are so few Members in the Chamber tonight to discuss local government funding. We ought to remember that local government funding underpins local authority services, which support our most vulnerable people—the elderly and the disabled—and that it is women who are the heaviest users of local authority services and who are hardest hit when services are cut or funding is changed. Any changes to local authority funding need to be considered carefully and time must be taken to ensure that all intended and unintended consequences are known before those changes are made, not after, but adequate time and proper consideration are precisely what the Government’s proposals are lacking.

We heard only this morning that nine of the 10 poorest areas in the country are in the north-west, and the 10th is in the north-east. We know that Government cuts to local authority funding have already led to every person in the average north-west local authority losing £133. Every person in my local authority has lost £70, yet every person in deepest deprived Surrey has gained £2.

Because of the complexities of local government funding, even slight changes in one area often have major impacts elsewhere. We are beginning to see clear evidence that the pupil premium, although well intended, is responsible for a shift in funding from the poorest areas to the most affluent, and from schools with high concentrations of children on free school meals to schools with lower concentrations of those children. The Government have already signalled their intention to shift health funding away from need and deprivation and towards the elderly population. That will have an impact on areas such as mine that have high concentrations of people who, because of our industrial heritage, are in need of health provision and live in deprivation, because the funding will be transferred to areas in the south where the more affluent and the elderly live.

Now the Government propose changing business rates, which will simply carry on their work of siphoning funding from the poorest areas to the most affluent. Those policies on business rates are not new or untried; they were used in the USA in the 1990s and resulted in cities such as Detroit and New Orleans becoming derelict, because everyone who could move out did so and left the cities to the poorest and most vulnerable. The Government’s proposals on business rates take absolutely no account of the ability of individual local authorities to raise rates without the support of the Government.

The Government’s proposals also take no account of geography. Any area that is not within the golden triangle of south-east England, northern France and Germany needs the support of Government infrastructure to attract businesses and business rates. We have heard tonight how, as a result of these proposals, the City of London will see cash growth of almost 140% over four years, yet places such as Liverpool, Knowsley, Bury, Wirral and south Tyneside will see cash growth over the same period of about 20%.

The Government’s proposals take no account of the number of children living in poverty in a local authority or the number in need of local authority care and protection. They take no account of the number of elderly poor, the quality of housing or the number of people living in substandard housing or with chronic ill health. They do not take account of what local authorities need to spend; only of what they can raise.

I am asking the Government to agree to carry out and publish an independent assessment of the needs of different local authorities before deciding how much of their business rate they can keep. Local authority funding formulae are complex and any review must be properly handled and carefully considered. I know that the Government do not do detail, but that is what local authority funding formulae are all about. If they get the detail wrong, they will cause chaos for our most vulnerable people.

I remember that some years ago the previous Government were levering additional funding for schools, but the schools were saying that they were not getting it. Treasury civil servants initially pointed the finger at local authorities and said that they were creaming off the money. There was naming and shaming of local authorities, which came out very firmly and screamed that they were not creaming off the money. The civil servants looked again and then pointed the finger at special educational needs, saying that the growth in the SEN sector and its increasing cost was draining money that had been meant for the schools. A proper review found that it was not special educational needs, but a Treasury anorak—[Interruption.] I am sorry, but Ministers should listen to this, because it is important. It was a Treasury anorak who tweaked the system in one area and caused a Mexican wave in another. Local authority funding is complex. If the Government do not take the time to consider it properly, the most vulnerable people in our society will be the most affected.

20:44

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

I agree with the point that the hon. Member for North West Durham (Pat Glass) makes: local authority funding is complex. I spent 16 years in a local authority and another eight on the Greater London authority dealing with funding issues, so I say to her gently, because I recognise the sincerity of her point, that the instance to which she refers occurred on the previous Government’s watch. Despite her indication that it was a risk in the system, it was a risk because of the opacity and complication of the funding system and the operation of the formula grant, which this Government inherited and are changing. I understand that there is a problem, but this Government are fixing it.

[Mr Betts]

Will the Minister give way?

[Robert Neill]

I am going to make some progress if the hon. Gentleman will forgive me—[Interruption.] Very well, I will give way on that point, but I may not again.

[Mr Betts]

The Minister says that the system is being reformed because of the complications of the current system. The Secretary of State, in his initial statement to the House, said that the Government’s objective was to create a new and simpler system. Does the Minister think that the Government have achieved that objective?

[Robert Neill]

Compared with formula grant that the Labour Government left behind, yes I do. That view was shared by the Lyons inquiry, which the previous Government very conveniently buried because it did not suit their purposes.

Might I now turn, Mr Deputy Speaker, specifically to the two sets of amendments and new clauses before us? I am sorry that the right hon. Member for Wentworth and Dearne (John Healey) is not in his place, because he made a thoughtful and well considered speech. I had the pleasure of shadowing him for a time and I respect his concern about the matter, so in fairness to his arguments, I will deal with the points he made.

New clause 1 relates to the operation of set-aside and the position of tax increment financing schemes—TIFs. The Government are committed to making TIFs option 2, which is what we are talking about, successful. I am glad to learn that when he was in government the right hon. Gentleman was an advocate of TIFs. He was not, unfortunately, able to persuade those further up the governmental pay scale to introduce them, but I do not doubt that he tried hard. This Government are doing what everybody asked and succeeding in introducing them. He is quite right that for TIFs to operate properly there has to be a degree of certainty, but the change he proposes is not necessary because the provisions in the Bill already enable that to happen.

The Government’s intention, as indicated in the White Paper, is that a ring fence exempts TIFs from the calculations of the levy, the set-aside and any reset, and the Bill already permits that. We also intend that, under the system, the additional uplift in rates retained be disregarded when setting tariffs and top-ups, not only in relation to the option 2 TIF scheme, but in respect of enterprise zones. That is why “proportion” is used in the regulations about which the right hon. Gentleman is concerned. The intention for TIFs is 100% ring-fencing, but in relation to enterprise zones, as hon. Members will know, the uplift in rates is retained from a starting point, so there is a proportion. The wording is used simply to cover both types of scheme and to enable both to be ring-fenced.

[Mr Raynsford]

Given the Minister’s response to the Chair of the Communities and Local Government Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), insisting that the new system is simpler, will he now explain how that mechanism, involving not only the set-aside and the levy but the reset and the differential arrangements in enterprise zones, will work in practice to achieve the objective, which my right hon. Friend the Member for Wentworth and Dearne (John Healey) rightly stressed, of giving investors the certainty that there will be a ring fence?

[Robert Neill]

I think that the right hon. Gentleman will have to make do with a potted version, given that I have only 10 minutes left and want to deal with other points as well. Suffice it to say that if he casts his eye over paragraph 37(1)(d)(iv) and (vi) of part 10 of new schedule 7B to the Local Government Finance Act 1988 —I know that he will want to do detail as we wish to do detail—he will see that the regulations permit those uplifts to be disregarded.

Those provisions have the same effect as the new clause tabled by the right hon. Member for Wentworth and Dearne would have. The Government have said that it is not our intention to reset the system until 2020, save in exceptional circumstances. I accept that for option 2 TIFs it may well be desirable to have a longer period than that, and the regulations will permit that. Enterprise zones and option 2 TIFs will be disregarded at the reset and could be disregarded for subsequent periods. It will therefore be convenient to align future resets with the revaluation period from 2015 onwards. The system will work perfectly well in practice.

In amendments 62 and 63, the right hon. Member for Wentworth and Dearne fairly recognises that central Government have, and always will have, an interest in public spending. It is unrealistic to think that central Government would not have a macro-economic view on the overall level of control over local government, and that is why we could not accept his amendment and constrain ourselves in the way that is intended. However, we have always made it clear that, over time and particularly once we have the public finances back on track, we hope to increase the proportion of business rates that are part of the rates retention scheme. We are starting at 50%, which is a considerable step forward in giving local authorities greater financial autonomy, and the provisions in the Bill allow the figure to be increased if circumstances permit. Equally, however, one has to be realistic and recognise that in an economically difficult world it would be imprudent to presuppose that the central share could be removed altogether. I do not think that any Government would envisage that. It is conceivable that in dire circumstances the share could be increased, but that is certainly not the Government’s intention; we intend to reduce it as soon as economic circumstances permit. It is therefore appropriate to maintain the existing provisions, which enable the alterations in shares between local and central Government to be considered alongside the need to maintain affordability and to protect the interests of the taxpayer and the wider economy. Whatever the proportion, be it 50% or higher, I repeat the assurance that, as is consistent with the 1988 Act, it remains the case that business rates paid to central Government through the central share will be returned to local government through other grants.

On amendment 63, we are alive to the point that the right hon. Member for Wentworth and Dearne makes, and we will take it on board when drafting final regulations. We are conscious of the potential interaction of the incentive with loss of revenue at appeals, and we have said that we will consult further on that during the summer. We have already scheduled meetings between officials and local authority officials. Against that background, I hope that the he will feel able, albeit in absentia, to withdraw his amendment.

Let me turn to new clause 6 and the related proposals from Opposition Front Benchers. I could not help but note a slightly different tone in the debate when we discussed them. I think that earlier the hon. Member for North Durham (Mr Jones) alluded to one-tune records. With respect to the hon. Member for Warrington North (Helen Jones), a one-tune record is still a one-tune record however long you play it, and I am afraid that that is what we heard from the Opposition Front Bench. It is also, I am sorry to say, a rather inaccurate one-tune record, because when one analyses the hon. Lady’s argument, one sees that it is not only a serious indictment of the system that we inherited from the Labour Government but it does not accurately portray what we are seeking to do. It is a serious indictment of the Labour Government’s record because the list of undoubted differences and inequalities between regions in the UK that she set out is in some measure, if she will forgive my saying so, the legacy of the failed, highly centralist policies of the Labour Government. It is pretty scandalous that after 13 years of regional policy and of a highly centralised local government finance system, the inequalities to which she referred exist. That is what Labour left behind.

The coalition has sought to address that legacy, even within the existing system. First, we have increased the weighting given to the needs element of the formula grant, which precisely reflects those issues, from 73% to 83%—something that no previous Government have done. Secondly, we have introduced transitional grant to deal with authorities in the greatest difficulty.

It is worth bearing in mind that need is built into the calculations in the business rate retention system. Need is part of the calculation of the baseline because the needs element is part of the formula grant, and we have indicated that we will take the 2012-13 formula grant as the baseline. The hon. Lady’s examples of the undoubted cost pressures in social services, child care and so on are, therefore, reflected in the social services element of the formula grant that we have maintained, as well as in the uplift of the needs element that we have maintained. We have placed such authorities in a better position for the starting line.

There are undoubtedly significant and sensitive services that are under pressure. Reference has been made to some of the child care cases that we know about. Those are really tough areas with real cost pressures, but under our system top-tier authorities in two-tier areas, which make up the majority of the authorities that are responsible for adult social care and children’s services, will be designated as top-up authorities. That means that they will be protected from volatility more than any other authorities in the system. They know that their top-up will be fixed for the reset period and index-linked thereafter to the retail prices index. There is particular protection in our system for authorities with the greatest need. The thrust of the Opposition proposals therefore falls at the first point.

We have said that we will share the proceeds and the risks through the 50:50 split between local and central Government. We have said that the baseline will take into account the issues that we have taken on board. We have said that baseline funding will remain fixed and that growth in budgets will be linked to local business rates growth thereafter, but with protections in place. Opposition Front Benchers have shown a schizophrenic attitude to the Bill from start to finish. They have paid lip service to a degree of localism, and they have given examples of over-centralisation that, on analysis, turn out to be the legacy of their own system. They have been in denial throughout about the need to link reform of the local government system with a realistic appraisal of the need to reduce the deficit. They have produced a set of arguments about as dysfunctional as one could find, making them the Simpson family of British politics. We have heard no credible alternatives. They have played the same record time and time again, and they do not have much credibility. I hope that the House will resist the Opposition proposals if they are pressed.

[John Healey]

Members of another place will study the Minister’s remarks this evening very carefully and return to a number of points. I am grateful to him for his comments about TIF funding, and I was pleased by most, if not all of them. I, too, will study the Hansard record of his comments very carefully indeed. I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

21:00

Proceedings interrupted (Programme Orders, 10 January and this day).

The Deputy Speaker put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83E).

New Clause 6

Determination of central and local shares

‘(1) In determining the central share and the local share for any relevant authority, the Secretary of State must have regard to—

(a) the level of need in that authority, and

(b) the likely capacity of the authority to benefit from business rate growth.

(2) Any assessment of the level of need shall include—

(a) the ranking of the local authority in the Index of Multiple Deprivation,

(b) the level of unemployment within the authority’s area,

(c) the proportion of adults within the authority’s area who have a limiting long-term illness,

(d) the number of adults within the area who are in receipt of social care,

(e) the number of looked-after children within the authority, and

(f) the level of child poverty within the authority’s area.

(3) The Secretary of State must lay his assessment before the House at the same time as the Local Government Finance Report.’.—(Helen Jones.)

Brought up, and read the First time.

Question put, That the clause be added to the Bill.

21:00

Division 6

Ayes: 202

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Labour: 197
Plaid Cymru: 2
Democratic Unionist Party: 2
Social Democratic & Labour Party: 1
Alliance: 1

Noes: 275

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Conservative: 232
Liberal Democrat: 42

Clause 1

Local retention of non-domestic rates

Amendment made: 15, page 2, line 4, at end insert—

‘;

(d) paragraph 28 (regulations about distribution of remaining balance).’.—(Robert Neill.)

Clause 3

Additional grant

Amendment made: 16, page 2, line 30, leave out from ‘(7),’ to end of line and insert ‘omit “and 86”.’.—(Robert Neill.)

Schedule 1

Local retention of non-domestic rates

Amendments made: 17, page 11, line 35, at end insert—

‘(5) The reference in sub-paragraph (3) to use for the purposes of local government in England includes the making of payments under an Act or an instrument made under an Act (whenever passed or made) to—

(a) billing authorities in England,

(b) precepting authorities in England,

(c) levying bodies in England (and for this purpose “levying body” has the meaning given by section 74(1)), or

(d) bodies to which section 75(1) applies.’.

Amendment 18, page 20, leave out lines 31 to 33.

Amendment 19, page 21, line 14, at end insert—

‘(1A) If a local government finance report for a year has been approved by resolution of the House of Commons, and that report provides for an amount to be credited to the levy account kept for the year, that amount may be credited (as an item of account) to that account.’.

Amendment 20, page 25, line 41, leave out ‘this paragraph has effect’ and insert—

‘the levy account is kept’.

Amendment 21, page 25, line 42, at end insert—

‘in accordance with subsections (2) to (4).’.

Amendment 22, page 26, line 3, at end insert—

‘, and

(c) all of the calculations required by regulations under paragraph 26 (calculations of safety net payments on account) have been made for the year.’.

Amendment 23, page 26, line 13, at end insert—

‘Step 2A

Add to the amount found under steps 1 and 2 any amount credited to the levy account for the year in accordance with paragraph 18(1A) (credit in accordance with local government finance report).’.

Amendment 24, page 26, line 15, leave out ‘and 2’ and insert ‘to 2A’.

Amendment 25, page 26, leave out lines 19 to 21 and insert—

‘Subtract from the amount found under steps 1 to 3 the aggregate of all the payments to be made by the Secretary of State under regulations under paragraph 26(4)(b) (adjustments following safety net payment on account).

Step 5

Add to the amount found under steps 1 to 4 the aggregate of all the payments to be made to the Secretary of State under regulations under paragraph 26(4)(b).

Step 6

Subtract from the amount found under steps 1 to 5 the aggregate of all the payments on account to be made in the year under regulations under paragraph 26.’.

Amendment 26, page 26, line 22, leave out ‘4’ and insert ‘6’.

Amendment 27, page 26, line 24, at end insert—

‘(5) Sub-paragraph (6) applies if, in the first year for which the levy account is kept—

(a) an amount is credited to the levy account for the year in accordance with paragraph 18(1A), and

(b) that amount exceeds the aggregate of all the payments on account to be made in the year under regulations under paragraph 26.

(6) The amount of the excess is to be treated as the remaining balance on the levy account for the year.’.

Amendment 28, page 26, leave out lines 30 to 41 and insert—

‘(2) The Secretary of State may by regulations make provision about the basis (“the basis of distribution”) on which an amount referred to in sub-paragraph (1) is to be distributed.’.

Amendment 29, page 26, line 42, leave out from ‘If’ to ‘, the’ in line 43 and insert—

‘the Secretary of State makes a determination under sub-paragraph (1)’.

Amendment 30, page 26, line 45, leave out ‘sub-paragraph (1)’ and insert ‘that sub-paragraph’.

Amendment 31, page 27, line 1, leave out ‘report is approved’ and insert ‘determination is made’.

Amendment 32, page 27, line 4, leave out ‘report’ and insert ‘regulations’.

Amendment 33, page 27, line 19, at end insert—

‘; but any such time must fall within the year to which the remaining balance relates.’.

Amendment 34, page 29, line 42, at end insert—

‘, unless sub-paragraph (5A) applies.

‘(5A) A revocation made after the Secretary of State has given that notification has effect for the year for which the notification was given if—

(a) it is made in response to a request under sub-paragraph (3)(b) made within the period of 28 days beginning with the date on which the notification was given, and

(b) it is made before the local government finance report for that year is laid before the House of Commons.’.

Amendment 35, page 29, line 43, leave out ‘or revoking a designation’ and insert—

‘a designation, or revoking a designation otherwise than in response to a request under sub-paragraph (3)(b)’.

Amendment 36, page 30, line 4, after ‘persons’ insert ‘(if any)’.

Amendment 37, page 30, line 8, at end insert—

‘, unless sub-paragraph (9) applies.

‘(9) A notification under sub-paragraph (7) of a revocation made in the circumstances described in sub-paragraph (5A) must be given as soon as is reasonably practicable after it is made.’.

Amendment 38, page 31, leave out lines 36 to 38 and insert—

‘(6) Regulations under paragraph 28 may provide for a pool of authorities to be treated as a relevant authority for the purposes of the regulations.’.

Amendment 39, page 31, line 40, leave out from ‘23’ to ‘from’ in line 42 and insert ‘, 26 or 28’.

Amendment 40, page 31, line 45, leave out ‘or 24’ and insert ‘, 24 or 28(4)’.

Amendment 41, page 31, line 46, leave out from ‘regulations’ to end of line 2 on page 32.—(Robert Neill.)

New Clause 8

Payments to and from authorities

‘(1) Section 141 of the LGFA 1988 (power to make regulations about set off of payments to and from receiving authorities) is amended as follows.

(2) In subsection (5)(b) (power to require provisions of the Act to be read subject to regulations), after “79(2)” insert “, 84H(2) and 86B(2)”.

(3) In subsection (7) (payments to receiving authorities to which regulations may apply)—

(a) after “84C” insert “, 84K, 84N and 86B”, and

(b) for the words from “paragraphs 12 and 15 of that Schedule” to the end substitute “and paragraphs 12 and 15 of that Schedule.”

(4) In subsection (8) (payments from receiving authorities to which regulations may apply), for “and 84C” substitute “, 84C, 84K and 84N”.

(5) The amendments made by this section have effect in relation to the financial year beginning with 1 April 2013 and subsequent financial years.’.—(Robert Neill.)

Brought up, and added to the Bill.

Clause 16

Extent and short title

Amendment made: 61, page 9, line 14, at end insert

‘, subject to subsection (1A).

(1A) Sections (Power for HMRC to supply information for purposes of council tax) and 14 extend also to Scotland.’.—(Robert Neill.)

Third Reading

Queen’s consent signified.

21:14

[Robert Neill]

I beg to move, That the Bill be now read the Third time.

This is a bit like coming out in the play-off final after the brief half-time break at Wembley on Saturday. We just need a little bit more to close the deal as far as this Bill is concerned—[Interruption.] It did not have to go to penalties.

We have had a lengthy and sometimes constructive debate during the Bill’s progress through the House, and it is worth taking stock now. The House has the opportunity to make a considerable game shift in the relationship between central and local government. We are now in a position to move away from what has been, on any independent view—as consistently endorsed by independent experts, going back to Layfield, the Lyons inquiry and the resource review—the unhealthy level of dependence of local government on central Government for income that has accrued over the years. As part of the Government’s localism agenda, we intend to hand back power to local people and the authorities that represent them. I hope that that principle will be recognised by hon. Members on both sides of the House.

I shall set out what the Bill does and its wider context as part of the coalition’s localism agenda. It is recognised that giving greater local control over expenditure and revenue raising is desirable. The principle of business rates retention is therefore supported across the House. Once we drill under some of the rhetoric, there is also a general recognition that welfare spending needs to be brought under control, and that it is right that local authorities should have control over council tax support.

The Bill incentivises local authorities to go for growth, because that is the other part of the agenda that the coalition regards as critical. We need to encourage sustainable growth and the Bill incentivises local authorities to grow their tax base by directly linking financial benefit to the decisions that they take on, for example, planning permissions that lead to more commercial floor space and economic activity, and in the design of their council tax support schemes that incentivise them to get claimants back into work, which is where we all want to see them wherever possible. It enables councils to decide how best to manage their contribution to reducing the deficit. All thoughtful commentators accept that a contribution must be made and that it is more likely to be nuanced and effectively delivered if there is local input into the design of that contribution.

Local authorities will also be given the freedom to decide how to help provide for the most vulnerable in their communities. I hope that no one seriously thinks that any party has a monopoly on concern for vulnerable people in their communities. The Government regard the vulnerable as a top priority, and that is why we have increased the weighting given to the needs element of the formula grant in our financial settlements; why we have maintained that in the baseline; why we introduced transition grants; and why we will ensure that local authorities that deal with some of those areas of greatest cost pressure in relation to adult social care and children’s care will be designated as top-up authorities and will have a degree of certainty about their funding by index-linking and protection from volatility. That is a practical commitment to helping to protect the most vulnerable in society.

The reforms are also part of our wider approach to supporting growth, which is our best hope of having the money that we need to support services for the vulnerable in a sustainable way; to get more people back into work; and to enable us to pay down the deficit, which at the moment ties the hands of central Government in seeking to deliver the services that we all want for our communities. We have made real progress on this front over the past two years. The Bill sets important incentives for business rate retention and helping people back into work through council tax support, but that is linked to other parts of the agenda. We are encouraging local authorities to build new homes, through the new homes bonus, an incentive for both commercial activity and domestic building. Homes as well as jobs are central to the incentives we are putting in place.

The local enterprise partnerships are bringing together businesses and civic leaders to provide strong local leadership and to drive growth. My right hon. Friend the Secretary of State, I and all the Ministers involved in the legislation very much hope that the Bill will not only make technical changes but bring about an attitude change in the relationship between local government and their business communities. Many of our competitors have a much closer relationship between their local authorities and the big economic drivers, but that has not always been incentivised in the UK. The Bill will enable it to happen and—I hope—help that mindset to develop. The LEPs will play a part in that by setting up the structure to enable it to happen.

We have put in place 24 enterprise zones offering discounted business rates and simplified planning to attract new local business and investment. The regional growth fund, the Growing Places fund and the Get Britain Building fund are providing a £3.3 billion boost to local economies and supporting tens of thousands of jobs, and through our welfare reforms we are seeking to bring welfare spending back under control and to target support. The 2010 spending review focused on reducing welfare costs through savings of about £7 billion a year.

Localising council tax support will help to deliver savings of £500 million across Great Britain—this in an area of activity where expenditure more than doubled under the Labour Government. It is not a sign of a healthy economy that expenditure on council tax benefit should have doubled between 1997 and 2009-10. Instead, we are providing strong incentives for local authorities to support growth and improve employment opportunities, helping to reduce poverty and reliance on support, as well as hold down costs in the long term. Speaking as someone whose grandfather clawed his way out of poverty in the east end, I, like plenty of other Government Members, have as much personal experience of such things as anyone else who has spoken.

The Bill has received extensive scrutiny. Its core principles were set out in the coalition agenda; we then proceeded with the local government resource review in early 2011; there was a consultation, along with eight detailed, technical papers to explain the thinking behind the reforms; and we have discussed the detail of the scheme through our local government finance working group and several sub-working groups. We have by no means ignored the views of local authorities; on the contrary, we have sought to engage with them, and will continue to do so, at every stage in the process. Those groups have been meeting frequently since January.

Localising council tax is a pragmatic approach to balancing the need for reform with ensuring a sensible level of deficit reduction, and builds on the welfare reform White Paper, published in autumn 2010, setting out our broad intentions. We undertook pre-consultation engagement with local authorities and other groups to help them to understand the issues, and held delivery partner engagement events last August and September, as well as a full three-month consultation from August to October that generated about 400 responses.

Against that background of consultation, nobody can say that the Government have not sought to engage with people over our reforms. Against that background of consultation and information sharing, last Thursday we published a series of statements of intent to provide clarity and assurance to the House and councils about how the reforms, including our proposal to fund localised support for council tax, will work in practice.

I shall tell the House what we have published so far and how much we have sought to set out the agenda. We have announced that business rates will be split 50:50 between central and local government and confirmed that central Government will return their share of business rates, in its entirety, to local government, and we have confirmed that the system will not be reset until 2020 at the earliest to give sufficient reward and long-term certainty while ensuring that the scheme will be fiscally sustainable, thus protecting the interests of taxpayers and the wider economy.

Our economic analysis, which has been independently verified, suggests that a 50% local share over a seven-year reset could create an additional £10 billion of gross domestic product. That figure is based on the multiplication of additional commercial floor space created through our incentive effect and, then, the additional gross GDP that stems from the economic activity in that commercial floor space.

We have set out the statements of intent indicating what will be in the secondary legislation, including—as was noted in the previous debate—the safety net threshold, to be set at between 7.5% and 10%, to protect against volatility.

On the localisation of council tax support, we have been clear that we will seek to provide as much detail as possible as early as possible. We continue to work with local authorities and service providers on the design of the scheme. [Laughter.] I know that the right hon. Member for Greenwich and Woolwich (Mr Raynsford) does not believe that any proposal that he did not make could be taken seriously, but that perhaps says rather more about him than about the Government.

[Mr Raynsford]

Perhaps the Minister will now tell the House how he believes that publishing everything that is required to enable early implementation as soon as possible is compatible or consistent with the current situation, where, eight months before local authorities have to finalise the scheme, they do not yet know what the legal requirements are.

[Robert Neill]

If the right hon. Gentleman deigns to read the statements of intent, he will find what is effectively an executive summary of the regulations, which will deal with how the default scheme operates, including for pensioners, who we have indicated should be protected. We are having regular meetings with our local government working group, which includes representatives of local authority treasurers, and we are also in regular contact with the principal software provider and other service providers. We are therefore doing exactly what the right hon. Gentleman would want us to do, although I doubt whether it will satisfy him, because it is not him doing it.

We have announced £30 million of initial funding to help meet the costs of planning and analysing draft schemes for both billing and precepting authorities, so we are supporting local authorities. The statements of intent are, in fact, very detailed. We have also provided a free online calculator to help local authorities to analyse the potential impacts of their proposed schemes.

[Helen Jones]

Wow!

[Robert Neill]

I notice that the hon. Lady is in what some might uncharitably term “sneering mode” this evening. I think that says something about the attitude of Labour Members towards a reform that they know needs to be undertaken, but which they never had the courage to undertake, which rather undermines their argument.

We have also taken steps in the Bill to make things easier for local authorities—for example, by clarifying that billing authorities can consult with precepting authorities, produce a draft scheme and consult more widely, all before the Bill receives Royal Assent. It is a fair point to say that the time frame is challenging, but doing those sensible things in parallel makes the scheme perfectly capable of being delivered. That is an important practical step that we have taken. We are determined to put local authorities into the best possible position to develop and consult on their local schemes. I stress that local authorities have real choices about how they develop their schemes for working-age council tax payers, what protection they choose to offer and how they choose to fund that protection.

The reality is that, under the circumstances, “one size fits all” will not work. Different areas face different challenges, and they have to make different choices. That is localism. I hope the Opposition will reflect on the fact that if they talk about being in favour of localism, it ill behoves them to seek to obstruct a Bill that, together with the Localism Act 2011, presents local authorities with the most significant practical step towards localism that we have seen in many a long day. I hope that, rather than repeating the mantra that we have heard so far—a mantra on, frankly, rather narrow ideological grounds—the Opposition will use their influence with their representatives in local government to step up to the plate, help to design the schemes that we all need to have in place and drive forward what is a real opportunity for local government in the years ahead. I commend the Bill to the House.

21:24

[Hilary Benn]

I know that the Minister is an enthusiast, but those watching could be forgiven for thinking that the Bill was the answer to all the nation’s ills—at one count it was, with one thing and another, solving poverty and dealing with the deficit. Also, although I have a high regard for the Secretary of State, I am surprised that he did not make that speech, because after all, this is his flagship Bill. I know that we have a part-time Chancellor; I just hope that it is not proving contagious in the Cabinet. [Interruption.] I say that genuinely, as it would have been nice to hear from the Secretary of State, who has spoken only once on the Bill—on Second Reading. The House will recall that he claimed great things for the Bill, no doubt because the coalition agreement promised

“a radical devolution of power and greater financial autonomy to local government”.

The truth is, however, that as the Bill has progressed, it has failed to live up to that promise. I shall respond directly to the Minister’s point here.

As we were reminded earlier today, it pays to try to get these things right. I say that because, with one exception, those sitting on the Government Front Bench have form. People remember that the last time wonderful words were said about a reform of local government finance, it was called the poll tax and the consequences included riots on the streets. The people would not have it and the Prime Minister lost her job. The Secretary of State argued that the current system gives central Government too much power and that he wanted to change that. We would take him at face value if that is what the Bill did, but it does not.

What the Bill does and what the Secretary of State has created is a system that gives all the power to himself—the power to determine the central top-slice; the power to set the baseline; and the power to decide the extent of the tariff for the top-up and when the safety-net should kick in. It is a whole list of powers. If this really is localism—the argument that the Minister tried to advance—why are there all these central powers? It does not sound much like localisation to me, and it does not feel much like that to local government.

That matters because when local authorities look at the way in which this Government have chosen to exercise the powers they already have, particularly in relation to spending, they have found, as we know, a pattern of cuts that is utterly unfair and the very opposite of “We are all in this together”. It also matters because, as the Minister will know, although he did not refer to it, one of the real concerns about the Bill that we have heard from colleagues in local government is that it will end up accentuating the gap between more prosperous and less well-off local authorities. That is a real concern. The Government’s only reply has been to say, “Don’t worry about it, because at least you will not be worse off in year one.”

That is why the arrangements surrounding the safety net are so important. As the House knows, some authorities are very heavily dependent on the business rate income they get from a particular factory or a big employer. At the moment, it does not matter because it all goes into the central pot and is then divided and comes back, but under this Bill, it really will matter, and the consequences of losing that income—if the business were to close or relocate elsewhere, for instance—would be devastating. In those circumstances, what those local authorities want to know is whether the Government will be there to help. What we find when we look at the papers published last Thursday is that the safety net will kick in only when authorities meet a threshold for the decline in their business rate income, and we are advised that the threshold will be set between 7.5% and 10%. That is hardly reassuring, because it means that local authorities could lose a lot of money under this Bill before help arrives. To put it another way, councils are going to have to fall quite a long way before they hit the net.

The Bill was also supposed to be about trying to get rid of a complex system for funding local government—we heard the argument a few moments ago. Frankly, however, all the Bill does is to replace one version of complexity with, in the words of London Councils, another “fiendishly complex system”. If anything, on the basis of the documents produced last week, the Bill has grown even more complex during its passage through the House.

As for enabling local authorities to receive the benefits of business rate income and its growth, what do we discover? We discover that the Government like the idea of business rate income growth so much that they are going to take half of it for themselves. That is what was announced last week. It is no wonder that the Local Government Association has described this as a “tax on local authorities”, which it strongly opposes. What is more, the Government seem to intend that set-aside will continue beyond 2015. Why? Because they want to be able to continue to impose cuts on local government after the end of the current spending review period. Having heard the Minister’s argument that this was the be-all and end-all of localism, the Local Government Association said that it was

“not a localising policy and goes against the Government's stated commitment to localism.”

That deals with the first part of the Bill. What about council tax benefit? Rank inconsistency is plain for all to see. Only a few weeks ago, the Secretary of State was touring the country denouncing those who were planning a modest increase in council tax, including a number of Tory-controlled authorities. He said that he was

“determined to protect hard-working families”,

but here we have a Bill that will end up doing exactly what he was denouncing. We have legislation that will, from next year, impose council tax increases on many unsuspecting people. And whom has the Secretary of State chosen as his target for those higher council tax bills? In keeping with the Government’s philosophy, he has chosen people on low incomes—people who do not have a lot of money—because that is why they get council tax benefit in the first place; and on that, he is strangely silent.

As if to flaunt just how out of touch they are, the Government had the nerve to say, in one of the documents published last week, that the aims of the council tax benefit cut included “reducing poverty”. This is a strange way of going about it. The Government are saying to people with not a lot of money, “You know what? We are going to cut your income to make you work harder”, which is the precise opposite of the policy that they have pursued when it comes to millionaires and the tax cut that was announced in the Budget. They also claim that they do not want to affect work incentives, but, as my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) pointed out, that is nonsense.

I pay tribute to my hon. Friend the Member for Warrington North (Helen Jones) for the forensic analysis to which she has subjected the Bill during its passage through this House. I am sure that her cogent arguments will be considered very carefully by those in the other place. I also pay tribute to other colleagues, including my right hon. Friend the Member for Greenwich and Woolwich—who chairs the Select Committee—and my right hon. Friend the Member for Wentworth and Dearne (John Healey).

I am genuinely surprised that so few coalition Back Benchers have twigged what is going on in the Bill in relation to council tax. They do not seem to know what they are about to troop through the Lobbies to vote for. As we pointed out on Second Reading, and as has been said today, cutting council tax benefit by 10% while—rightly—protecting pensioners means an average 16% cut for everyone else, but the impact will not be felt evenly.

In one of the other documents that were published last week, the Government said, “We considered whether we should even things out to take account of the different proportions of pensioners in different local authority areas, but we rejected the idea.” As I have said, the impact will not be felt evenly, because some areas contain much higher percentages of pensioners than others. The list is like a roll call of seats represented by Government Members, but it seems that Government Members—with, I think, only two honourable exceptions during Second Reading and Committee—are either completely unaware that their constituents who are currently receiving council tax benefit will face higher council tax bills than elsewhere, because their areas contain a higher proportion of protected pensioners than others, or are not too bothered about it.

Let me say this, very gently, to Back-Bench members of the coalition parties. When their constituents turn up at their surgeries in a year’s time, waving a bit of paper and saying, “Why have you done this to me?”, they will be very, very bothered about what the Bill actually does. Indeed, all our constituents are likely to face additional cuts, because the forecast baseline for council tax benefit expenditure that is being used for the Bill is expected, miraculously—from my point of view and that of my hon. Friend the Member for Warrington North—to fall. Do Members really believe that demand for council tax benefit will decline in the next two years, in the light of the current state of the economy and the fact that we are now back in recession thanks to the Chancellor’s economic policy?

When we come to the default scheme to be applied if local authorities do not come up with their own scheme, what do we find? We find that the Government’s courage fails completely in following through the 10% reduction, because the default scheme in effect replicates the current scheme. Instead of Ministers having the courage of their convictions and applying the 10% cut across the board, they have ducked that, and are expecting everyone else to show the courage they themselves have refused to demonstrate.

In conclusion, whichever way we look at it, this part of the Bill is unfair and wrong, and no amount of trying to describe it as something else is going to alter what the changes in council tax benefit will do to our constituents on low incomes who need that support. We urge other Members to join us and vote against the Bill on Third Reading because it fails to meet the test on business rates that the Secretary of State set out when moving it on Second Reading and, as we have discovered in our discussions, it is even harsher in respect of cutting council tax benefit than appeared to be the case at first sight. In both those respects, the Bill reminds us of what this coalition Government are all about: they are unfair, out of touch and do not work—and nor, I fear, will the Bill.

21:41

[Mr Raynsford]

The Government are having great difficulty in convincing anyone that the Bill does what they claim. They claim it is a localising measure, but, as we have heard, there is an extraordinary lack of support for it on their own Back Benches. Indeed, so far not a single one of their Back Benchers has spoken in support of it.

Local authorities are the supposed beneficiaries, but they, too, are profoundly unconvinced. Let us listen to what they say. London Councils says:

“London Councils supports the principle of business rate retention, but has grave concerns about the proposed changes set out in the Bill regarding the way in which the system will function.”

It adds:

“London Councils is strongly opposed to the introduction of local council tax reduction schemes, as set out in Clause 8 and Schedule 4 of the Bill.”

The Local Government Association says:

“In principle we support the localisation of National Non-Domestic Rates…The principle of full business rate localisation, which also ensures fair treatment of councils in areas with weak economies, would be a powerful move towards localism…However, the government proposes to keep a top slice amounting to 50 per cent of business rates for the Treasury, taking taxes paid by local businesses for local services and using them for local services based on national priorities instead. That is not a localising policy and goes against the Government’s stated commitment to localism.”

If the Government cannot convince the people who are supposedly the beneficiaries of their reforms that they are acting in their favour, I am afraid they are in serious difficulty. The Government are, indeed, clearly in deep difficulty in this regard.

Incidentally, in the earlier debate I sought to intervene on one of the Ministers, the hon. Member for Hazel Grove (Andrew Stunell), as he had inaccurately claimed that the previous Government had done nothing to allow greater local discretion over discounts on second homes. I hope he will use this opportunity to put the record straight, because, as he will know, that is simply not correct. I am sure it was an unintentional error, however. The previous Government legislated to give local councils discretion to reduce the discount on second homes from 50% to just 10%. The Minister may wish to argue about the 10% figure, but there was good reason for deciding on it, and that was a clear extension of discretion to local government. It is therefore simply wrong to suggest that we did nothing in that regard. I hope the record will be put straight.

[Andrew Stunell]

If it helps the proceedings, let me say I am happy to acknowledge the factual account the right hon. Gentleman has given, and I am sorry if I gave a misleading impression earlier.

[Mr Raynsford]

I am very grateful indeed to the Minister for that gracious apology.

The first part of this Bill is a wasted opportunity, as it fails to deliver what people want in terms of a truly localist objective. The second part, which deals with the council tax benefit changes, is deeply flawed. The changes are damaging and will either cause serious hardship to recipients of council tax benefit or will put pressure on local authority budgets. It is not just the initial £500 million that will be a problem; increased costs may come later on as a result of further claims for council tax benefit, which may result from closures of local businesses or a further period of recession. That will be an extra risk for local government, which will get no support for central Government.

Finally, on the issue of administration, the Government are acting recklessly by rushing ahead without giving adequate time for proper preparation. It has been said repeatedly by those in the know, be they people in local authorities or their IT advisers, that the timetable is too tight to allow proper implementation. I will not go through the details, as we did so in the earlier debate, but it is reckless of the Government to ignore that and to claim that local authorities and others are happy with the timetable that the Government have set—they are not.

I shall end by quoting what local government has said on this. The LGA says:

“The tight timeframe for implementing this places an even greater burden on councils and we urge the Government to give councils the necessary time to do this”.

London Councils says that

“even under best-case scenario planning, the proposed implementation timetable may well be unachievable if council tax bills are to be sent out on time”.

That is not the action of a prudent Government; it is reckless and, I am afraid, it is typical of this Bill.

Question put, That the Bill be now read the Third time.

21:46

Division 7

Ayes: 276

---

Conservative: 229
Liberal Democrat: 44
Democratic Unionist Party: 2

Noes: 204

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Labour: 201
Social Democratic & Labour Party: 1
Alliance: 1
Green Party: 1
Independent: 1

Bill read the Third time and passed.

Budget (Coventry)

Monday 21st May 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Bill Wiggin.)

14:30

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

Thank you, Mr Speaker, for granting this Adjournment debate, which I very much appreciate. I wish to speak about the impact of the Budget and the Government’s policies on Coventry, and I might touch on issues that affect the west midlands. My purpose in doing so is twofold.

First, many issues arising from the Budget will have a significant impact on the people of Coventry and should be debated properly. My constituents’ serious concerns regarding the effect of Government policies deserve to be raised. It is easy to discuss Budget policies in abstract terms, but we would do well to take the time to consider what they will mean for the regions and for people.

Secondly, there is a distinct pattern to the Government’s policies and rhetoric: they are far too London-centric, as some people would say. Therefore, it is vital that we hold debates that focus on the regions and cities across this country in order to draw attention to their concerns, which the Government frequently ignore. I am sure that much of what will be discussed tonight applies to other regions and cities hit by the Budget. The Government show not nearly enough understanding of regional issues or appreciation of just how much places such as Coventry are hit by their policies.

With that in mind, I want to outline why the Government’s optimism is misplaced, certainly as far as Coventry is concerned. We must not underplay the high level of unemployment currently being suffered. On Wednesday the Prime Minister assured us that overall unemployment was down and that the number of claimants of jobseeker’s allowance had decreased. Figures from the Office for National Statistics, which were published last week, reveal that there are 10,321 unemployed jobseekers in Coventry—three fewer than were counted in March.

The Prime Minister’s complacency about the employment crisis shows an unrealistic approach to the stagnation we are witnessing in Coventry, where 4.9% of 16 to 24-year-olds are out of work. That is similar to the figure for the west midlands overall but significantly higher than that for Great Britain, which is 4%. That is particularly clear when we look at the percentage of male jobseeker’s allowance claimants. Nationally, the figure is 5.3%, which is already shockingly high, but Coventry is suffering from having 6.7% of the male population claiming jobseeker’s allowance. It is clear that the slight improvements the Government are celebrating simply do not apply to Coventry.

Against the background of high unemployment, I wish to highlight the crucial role of the public sector in the growth of Coventry’s economy. Since the millennium, Coventry has benefited from significant redevelopment and regeneration, and the public sector has been crucial in that process. The concern now is that the Government’s public sector cuts will return Coventry to the hard times of the late ’70s, and certainly the ’80s, that many of us remember. It was a ruinous time in Coventry’s history and led to a whole generation struggling to reach their potential for decades after.

Every public sector employee who loses their job through the Government’s public policy cuts is simply one more person without an income to spend on the local economy—one more person who will stop spending on businesses that in places such as Coventry are essential for stimulating growth in the local and national economies. Our public sector workers are a crucial part of our society and economy, and they do essential work for communities. It is ludicrous and poorly substantiated to claim that their work can be swiftly replaced by the private sector. There is certainly little evidence of that in Coventry.

The Government have said that they intend to rebalance the economy, and they aim to do so by cutting the public sector and replacing it with the private sector. They have certainly achieved the former, but there is little evidence visible in Coventry of the necessary investment in the private sector. The Chancellor needs a clear and vigorous industrial strategy to encourage the private sector growth that he hopes will replace the public sector.

That should be combined with a full jobs strategy, working on aligning the money going into the city with the people out of work, and targeting it at getting people back into work. That is particularly true of Coventry’s young people. Coventry saw an 87% increase in long-term youth unemployment last year, but there was nothing in the Budget to encourage any hope that this would be reversed.

The Chancellor promised that the Budget would deliver a great deal for businesses such as those in Coventry, but the Coventry and Warwickshire chamber of commerce was greatly disappointed. The chamber’s chief executive, noting that the Budget’s rhetoric on the promise for business was not matched by any content, said:

“If we’re honest, it was quite London-centric in many regards and that obviously wasn’t particularly welcomed. There were lots of small announcements that picked away around the edges but many of the things that weren’t mentioned caused most angst, such as empty property rate relief and the fact that business rates are going up.”

People throughout the country were hopeful about the prospect of a Budget that would offer real support to local businesses to allow them to grow, but they were generally disappointed by the reality, which gave little practical encouragement to allow Coventry businesses to expand, and that is likely to get a lot worse as the year progresses.

Coventry is famous for car making, but public sector workers drive much of the local economy. As we know, Becta and the Qualifications and Curriculum Development Agency are being abolished. It might seem an easy option to get rid of those education quangos, which employ a combined total of almost 800 people, many of whom are former teachers, but the relocation of the QCDA cost the Government more than £44million and came at a personal cost to many staff who relocated from London.

We cannot, furthermore, ignore the strain that these cuts put on the private sector. Friends Life, previously Friends Provident, announced that it plans to close its offices in Coventry by the end of the first half of 2012, and 428 staff are employed there. Owing to those cuts, Coventry city council will be forced by the Tory-led Government to cut more than 500 posts, possibly, over the next 18 months. The amount that the council spends in the local economy will also be reduced dramatically, and that will impact on council staff.

The front-loading of cuts means that staff losses will be required at an early stage of the spending cuts, and that will affect families throughout Coventry. This is the overall impact: Coventry city council is expected to lose about £45 million over the next two or three years; and all of that will have a significant knock-on impact on local businesses and employment in the region

We can see what is happening in other sectors as the cuts and reforms begin to bite. For example, there are cuts of more than 20% in West Midlands police, equating to 2,500 jobs, and there are two parts to the Department for Communities and Local Government’s cuts for Coventry city council: formula grant, losing over £19 million; and specific grants, losing over £17 million. The council will not be able to continue to provide services at the same level. There will be far fewer grants, with a lower overall value, and the great concern is that many grant streams will end.

In the light of these destructive cuts, many people are extremely concerned about the proposed cuts to regional pay in the public sector. I cannot condemn this policy strongly enough. We in Coventry accept that living costs are far higher in London than they are in Coventry, but that is the reason for the London allowance and London stipend made available to many employees working in London. This is far removed from the idea that public sector workers should earn less for the same work because they live in places such as Coventry.

The Treasury says that public sector pay is 18% higher than in the private sector in some parts of the UK, but that argument demonstrates a flawed approach by which the Office of National Statistics continues to compare private and public sector workers on a like-for-like basis. They are not directly comparable, and it is wilfully blind and evasive to pretend that they are. Two thirds of public sector workers are women, compared with about 40% of those in the private sector. Public sector workers tend to be older and more highly qualified. Professions such as nursing and teaching entail workers remaining in their profession for a long time, building up skills and salaries. None of those are characteristics that the public sector should be ashamed of. The private sector, by comparison, includes workers at the other end of the economy such as those in retail, catering and leisure. Industries in the private sector often pay their workers very low wages, and that skews any fair comparison of the sectors.

The public sector makes up roughly 20% of the work force, while the financial sector makes up 20% of the economy. More meaningfully, public sector wages are far from high by comparison with those in the private sector. I have always believed in lifting people up rather than lowering them down. Public sector workers are already being hit very hard with frozen salaries, higher pension contributions, and higher living costs. We cannot overestimate the negative impact on Coventry’s economy that would result from local public sector workers earning lower salaries. That would take money out of the regional economy, and the stunting effect on growth would outweigh any benefits to the Treasury. I therefore call strongly on the Government to allay the fears of those in Coventry who are worried about the prospect of regional pay cuts.

Against those fears for the regional economy, let me touch on the impact of the Government’s policies on the vulnerable people of Coventry, who will be hit from many directions by their deficit reduction plan. Pensioners have been dealt a blow by the Government as the winter fuel payment has been slashed by up to £100. According to the BBC, family fuel costs have risen by about £1,250 over the past two years, and mortgage interest rates are starting to creep up, which will affect many families. Disabled and ill people are suffering from the removal of the mobility component of the disability living allowance. Coventry’s poorest residents are being undermined in the justice system by the removal of face-to-face legal advice in favour of a cheaper phone line. These are but a few of the policies that are having a huge negative impact on vulnerable individuals, who are now having opportunities to turn to public services taken away.

I am deeply concerned about the local provisions for our young people. In June, £335 million was taken from the council through the abolition of Building Schools for the Future, which has yet to be replaced despite many promises about announcements. The Government cannot simply remove this vital investment from Coventry without even suggesting an alternative, let alone funding one. The Budget bore no reference to allocations of funding for school buildings. Aside from the obvious implications for Coventry schools, the Government are missing a great opportunity to stimulate the construction industry. I understand that the Government’s private building scheme is expected to rebuild between 100 and 300 schools nationally, but they have been dragging their feet on this issue for 20 months. Coventry city council has made it clear that some schools are in dire straits and urgently in need of investment. Without details of the Government’s plans, the council is unable to make its own plans.

As of April, the Connexions careers service has been operating on a budget more than 70% smaller than in April 2010. That service gives young people the skills and confidence they need to get in to the workplace, and its downsizing will no doubt contribute to the high youth unemployment that we experience as a city and as a region.

The children, learning and young people’s directorate has announced the loss of a further £1.2 million as a result of the 5% cut to the standards fund. The council had been relying on those crucial retention funds, but they will not be transferred to the next financial year.

On that note, the Friargate development, which will revitalise and transform Coventry city centre, was going ahead on the expectation that Coventry would be one of the eight core cities to benefit from the tax incremental financing scheme. The Deputy Prime Minister told the local authority in 2010 that Coventry would be a recipient of that scheme. Not only is Coventry excluded, but the pot of money has been reduced to £150 million. The council was relying on that money, which was to be paid back on a tax basis, to allow the development to go ahead.

The abolition of the funding from regional development agencies means that there is little funding to lever in private sector investment for large-scale redevelopment projects. Some colleagues will remember that Coventry and Warwickshire were led to believe that they would get an enterprise zone. Once again, they lost out. I therefore call on the Minister to reconsider the use of tax incremental financing to allow the city to grow. I understand that the council is also looking to take part in the city deals initiative. The city’s project is urgently in need of that money.

All of that will have an irreversible effect on the economic growth of the region and of Coventry. The leader of Coventry city council estimates that up to £25 million will be taken out of the local economy. The public and private sectors will not be able to invest in regeneration and infrastructure in the region. With the loss of the £355 million schools programme and the missed opportunity for the building industry, it is clear that the Government are wilfully blind to the devastating effect of their policies in Coventry. In addition, Coventry university hospital has to find an additional £28 million over the next year or two. The Government need to stop thinking only of London and think more about the other regions and cities that make up this country.

22:16

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

Thank you, Mr Speaker, for granting this debate, and I congratulate my hon. Friend the Member for Coventry South (Mr Cunningham) on securing it. There may not be many of us here this evening, but you are still in the Chair, Mr Speaker, and we will be able to speak directly, without a lot of interruptions, beyond this Chamber to the people of Coventry about the list of indictments, which my hon. Friend stated so powerfully, of the effects that the Government’s policies will have on our city, whether or not that is their intention.

My hon. Friend gave a long list of problems that the Government’s policies are creating for Coventry. I will start with Friargate. The inner city of Coventry is pretty well known. During the war, it was the most bombed city in the country, starting with the November raids right back in 1941. Afterwards, everybody thought that they owed a particular debt to Coventry, which was wonderful—I was not there at that time, of course—and the cathedral and the city centre were rebuilt. City planning was such at that time that good money, planning and thinking were put into it. A ring road was put around the city, and to this day traffic flows around Coventry and in and out of it marvellously well.

The trouble is that the city centre has become derelict. People do not eat there socially, congregate there or spend time there. It is desolate, which leads to all those activities that we do not want to see in any of our city centres. We need a revision of the original city planning more than 50 years ago, which is long enough.

Early on, the Government thought of an imaginative and good scheme called the tax incremental financing scheme, which was to be partly funded by incremental taxes from the locality, region or city, but would have Government encouragement and power behind it. No less a person than the Deputy Prime Minister promised that we would be beneficiaries of it. Sadly, however, we are used to his broken promises,. I say this as an admirer of his, but he has made and broken many promises, including on tuition fees. Despite being given a specific promise that we would be included in the eight cities that could contribute to their own rehabilitation, which we desperately needed, we have not been.

I understand that all is not lost. A new initiative—an initiative rather than a scheme this time—has been put forward in which Coventry has been invited to take part, and our council has responded positively. I hope that Coventry can usefully and profitably participate in the city deal initiative. I regret to say that the city centre is a blot on the copybook of our huge post-war efforts to rebuild the country and its cities. We did not succeed with it, and we need to do so in the near future.

Another area of great disappointment has been Coventry’s schools. The cancellation of the Building Schools for the Future programme has been a great setback. We were on the point of signing contracts, but as a responsible council, Coventry held back, and the Government applauded it for doing so. We urged it to sign the damn things and get the contracts signed, but no, it held back.

Two schools in my constituency were affected. One, Woodlands, is an exemplary comprehensive built after the, war with the usual ’50s and ’60s concrete construction. The other, President Kennedy school—the name tells the date—was constructed on similar principles. Those schools are now in urgent need of replacement, but because the council did not want to behave even slightly irresponsibly and would not sign the contracts, we lost out by a total of £335 million, as my hon. Friend mentioned. I visit those two schools regularly and work with them. The attitude of the Secretary of State for Education towards them is very off-hand. It is not that I mind personally, because it does not hurt me, but he seems to ignore the fact that those schools had a good and reasonable case for making a demand on the public purse.

The Secretary of State wrote in similar terms to Becta and to the Qualifications and Curriculum Development Agency. In fairness, the Conservatives said before the election that they would get rid of the QCDA—typically, they said that without hearing the case, but at least they had said that that was what they were going to do. The letter to the QCDA was, if I may say so, peremptory and impolite; it was unworthy of him, but at least they had said what they would do. Becta, though, was suddenly closed without anybody knowing anything about it. It seemed as though Coventry was being targeted again—I do not intend to make the obvious military historical reference here—as the centre that had to be hit.

My hon. Friend the Member for Coventry South mentioned what the chief executive of the Coventry and Warwickshire chamber of commerce had said. I promise that she is no supporter of mine or of the Labour party. I am pleased to see the Economic Secretary on the Treasury Bench, because I would like her to listen to what the chief executive said. The best that she could find to say was, “If we’re honest”—that is very difficult for Governments to do, as I appreciate—the Budget

“was quite London-centric in many regards and that obviously wasn’t particularly welcomed.”

That is the final judgment of a chamber of commerce chief executive, a representative of the very people the whole Budget was meant to be about supporting.

I put it to the Economic Secretary, who is to respond to the debate, that we desperately need help. We do not want handouts, we want help up. That is what we are after. If only she would meet us halfway, we could still do great things in Coventry, but we need a Government who are capable of responding to the need that exists.

22:25

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

I shall do my best in the six minutes remaining to cover a selection of the points raised by the hon. Members for Coventry South (Mr Cunningham) and for Coventry North West (Mr Robinson). I thank both for the passion with which they have spoken about their city in this interesting debate.

The Government made clear in Budget 2012 that our priorities are threefold: to create a stable economy; to create a fairer, more efficient and simpler tax system; and to introduce reforms to support growth. The Budget and the national infrastructure plan published the preceding autumn set out the Government’s latest steps towards achieving those priorities, based on a new model of sustainable and balanced growth, including in Coventry and more widely.

As the hon. Gentlemen made clear, the west midlands is not without its challenges, but the region remains a significant contributor to the national economy. The reforms set out in the Budget will give businesses and individuals in the region a further boost by cutting corporation tax by an additional 1% on top of the rate cuts announced last year. From April this year, the rate will be reduced from 26% to 24%—it will eventually fall to 22% in 2014.

The reforms also provide a boost by increasing the personal allowance by £1,100, taking 75,000 people in the west midlands out of tax altogether, and by increasing the Growing Places fund to provide additional funding for the infrastructure needed to unlock developments that will lead to jobs and growth. Local enterprise partnerships in Coventry and Warwickshire will receive a further £4.1 million. We confirm that Birmingham has been selected to become a super-connected city, and we are investing almost £60 million in stalled development projects within the west midlands. Furthermore, we will support individuals and families to buy new build property with just a 5% deposit through the NewBuy scheme, and increase the maximum right-to-buy discount to £75,000, which is £49,000 more than the current west midlands limit of £26,000.

The hon. Member for Coventry South spoke of youth unemployment, which I agree is a vital issue for our country. He will be aware of the answer given to him by the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), on 13 December 2011. He directed the hon. Gentleman

“to the new programme recently announced to make it easier and simpler for SMEs to take on apprenticeships”,

and said that the Government

“are providing funding to the tune of up to £1,500 per apprentice.”—[Official Report, 13 December 2012; Vol. 537, c. 254WH.]

That scheme is to be welcomed.

The challenge laid down by the hon. Gentlemen, which the Government have taken up, was to return the UK economy to sustainable economic growth that is more balanced across the country. We have established local enterprise partnerships and enterprise zones.

[Mr Robinson]

Will the Minister give way?

[Miss Smith]

I have only three minutes left, but if the hon. Gentleman wishes to intervene, I will give way.

[Mr Robinson]

The Minister mentioned the west midlands, but could she not say something about Coventry? She even mentioned Birmingham. I made some unfortunate remarks about Birmingham not so long ago—I will not repeat them—but we are talking about Coventry tonight.

[Miss Smith]

The hon. Gentleman pre-empts my next paragraph. I should like to draw his attention to the successful bids in the Coventry and Warwickshire LEP area, including the Elonex advanced engineering supply chain and Alamo Manufacturing bids, which I am sure he welcomes, because they and others will create many thousands of jobs in the west midlands.

The hon. Member for Coventry South said there was little evidence of private sector growth. I simply dispute that statement. The core city deal for Birmingham, which was mentioned by both hon. Gentlemen, will have spillover effects for the wider west midlands region, although I hear the call for me to speak about Coventry in its own right.

The hon. Member for Coventry South raised concerns about the impact of regional pay—those were his words—across the country. I reassure him that the Government are not setting out detailed proposals at this stage, but simply asking the experts how public sector pay might better reflect local markets. He will be aware that the Institute for Fiscal Studies made an estimate of the public sector pay premium—he quoted off-hand some figures in that respect. In principle, the premium has the potential to hurt private sector businesses, which need to compete with higher public sector wages. A premium could prevent them from expanding and lead to unfair variation in the quality of public services.

On public spending, the previous Government left an appalling financial mess behind, which this Government have a moral obligation to sort out. We have delivered a challenging but fair settlement for local government, including for Coventry. The formula grant in Coventry will be £493 per person in 2012-13. The average per person across England is far lower, and it is £200 to £300 per person in some southern areas. That reflects the higher level of need in Coventry.

I thank the hon. Gentlemen for speaking in the debate. I believe the approach set out in the Budget is a strong one and am confident that it will benefit all areas of the country, including Coventry and its environs.

22:30

House adjourned without Question put (Standing Order No. 9(7)).

Ministerial Correction

Monday 21st May 2012 Ministerial Corrections

Monday 21 May 2012

Corporation Tax

Monday 21st May 2012 Ministerial Corrections

The following is the answer given by the Secretary of State for Northern Ireland, the right hon. Member for North Shropshire (Mr Paterson), to a question from the hon. Member for Shipley (Philip Davies) during Northern Ireland Question Time on 16 May 2012.

[Philip Davies (Shipley) (Con)]

I know that the Secretary of State is, like me, a great believer in low taxes to stimulate the economy. What discussions has he had with the devolved Administration in Northern Ireland, and with the Treasury, to try to lower the corporation tax rate in Northern Ireland?

[Mr Paterson]

My hon. Friend will be pleased to hear—and the Leader of the Opposition will be delighted to hear—that, thanks to the reductions in corporation tax introduced by my right hon. Friend the Chancellor, 57,000 more people are in jobs in Northern Ireland than were in jobs before the election. The ministerial group is working closely with Ministers in the devolved Administration, the Northern Ireland Office and the Treasury to establish whether further steps could be taken to reduce corporation tax and devolve it to Northern Ireland, and we will report later in the summer.

[Official Report, 16 May 2012, Vol. 545, c. 538.]

Letter of correction from Owen Paterson:

An error has been identified in the oral answer given on 16 May 2012 to the hon. Member for Shipley (Philip Davies).

The correct answer should have been:

[Mr Paterson]

My hon. Friend will be pleased to hear—and the Leader of the Opposition will be delighted to hear—that, thanks to the reductions in corporation tax introduced by my right hon. Friend the Chancellor, 27,000 more people are in jobs in Northern Ireland than were in jobs before the election. The ministerial group is working closely with Ministers in the devolved Administration, the Northern Ireland Office and the Treasury to establish whether further steps could be taken to reduce corporation tax and devolve it to Northern Ireland, and we will report later in the summer.

Written Ministerial Statements

Monday 21st May 2012 Written Statements

Monday 21 May 2012

Student Loan (Repayment)

Monday 21st May 2012 Written Statements

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

Today I have laid amending regulations which make provision for the repayment of student loans.

The new student loan repayment system is designed to be sustainable, affordable and progressive. Repayments will be income-contingent, ensuring that repayments match ability to pay. By raising the repayment threshold to £21,000 and introducing a progressive rate of interest, there will be a greater protection to the lowest-paid graduates. After 30 years outstanding balances will be written off.

The changes to the repayment system to be implemented by these amending regulations will apply to new students who commence their studies in September 2012 or later. Certain students transferring courses or taking higher-level courses starting after September 2012, but immediately after completing a previous higher education qualification, will remain under the existing arrangements.

The main changes are as follows:

Real and variable interest rates on student loans for students starting courses on or after 1 September 2012 are to be introduced. New students starting a higher education course from September 2012 onwards will be charged interest at RPI (retail prices index) + 3% while studying. This rate will apply until the borrower is liable to make repayments. Once a borrower has reached their repayment due date, the rate of interest charged will depend upon the borrower’s income. Borrowers earning £21,000 or less will be charged a rate equivalent to RPI. Interest will then be charged on a sliding scale up to £41,000 where the interest rate will be RPI + 3%.

The repayment threshold will be £21,000: Setting the contribution at £21,000 is a core part of making the system more progressive. It will mean that low-earning graduates are not required to make payments and those that earn above £21,000 will contribute less each month than borrowers would under the current system. Raising the threshold for new graduates is part of the overall package of reforms to make the system more progressive and protect those that do not go on to enjoy high earnings—while asking those that do to contribute more.

After April 2016, those earning above the threshold who are due to repay will repay 9% of their income above £21,000. Full-time students will be due to repay from the 6 April after they complete or leave their course. Part-time students will be due to start repaying on the 6 April which falls after the fourth anniversary of the start date of the course or the 6 April which falls after the student leaves their course—whichever is sooner.

Write-off of loan—The outstanding balance of a loan will be cancelled 30 years after the repayment due date. The loan will also be cancelled if the borrower dies or the borrower receives a disability-related benefit and, because of the disability, is permanently unfit for work.

Credit balance-Interest Rate—We will implement new interest rate provisions for both new and existing borrowers who have a student loan balance in credit due to over-repayment. This change will apply from 6 April 2016, and will mean that the Student Loans Company will not, after a period of 60 days notice to the borrower, apply interest to credit balances

Health and Social Care (Information Strategy)

Monday 21st May 2012 Written Statements

[The Secretary of State for Health (Mr Andrew Lansley)]

Today I am publishing “The Power of Information: Putting all of us in control of the health and care information we need”. This information strategy for health and social care in England is our response to “Liberating the NHS: An Information Revolution— A consultation on proposals” which sought views on proposals to transform the way information is collected, analysed, controlled and used in NHS and social care across England and is underpinned by provisions in the Health and Social Care Act 2012.

I am grateful to the many people who provided valuable input into this consultation and to the NHS Future Forum for the excellent work it undertook throughout its listening exercise. Building on the wealth of experience, viewpoints and insights gained through the consultation and the NHS Future Forum’s work, this document sets out the overall ambition and early actions to transform our health and our care services to meet our needs and expectations, for now and the future.



For citizens, patients and users of care services, this strategy sets out how a new approach to information and IT across health and care can lead to more joined up, safer, better care for all. The strategy spans information for patients, service users, carers, clinicians and other care professionals, managers, commissioners, councillors, researchers, and many others.

Unlike previous information strategies, this new information strategy does not reinvent large-scale information systems or set down detailed mechanisms for delivery on a national template. Rather, it provides a 10-year framework and a route map to lead a transformation in the way information is collected and used. It starts from the purposes for which information is required, and the opportunities it offers for quality improvement. It aims to harness information and new technologies to achieve higher quality care and improve outcomes for patients and service users. It enables local leadership and innovation alongside national standards.

There are three key themes in the strategy:

modern, convenient information access—new online services such as booking general practitioner appointments, access to records online, a new integrated national website and 111 phone number;

modern information and technology for professionals—improving safety and quality. Standards ensuring systems can talk to each other, consistent use of the NHS “number”, work to allow new technologies in maternity services, piloting new barcode technology in care homes to improve medication safety and encouraging “clinical portals” for professionals to view records; and

patient and citizen rights—information support as a service, and potential changes to the NHS constitution around right to feedback online, access to records online and support for understanding information.

In summary, this strategy sets out the overall ambition and the early actions that will enable information to transform our health and our care services to meet our needs and expectations, for now and the future.

“The Power of Information: Putting all of us in control of the health and care information we need” has been placed in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.

Migrant Tuberculosis Screening

Monday 21st May 2012 Written Statements

[The Minister for Immigration (Damian Green)]

I wish to inform the House of the outcome of a review that has been conducted by the UK Border Agency with support from the Department of Health and the Health Protection Agency (HPA) of our arrangements for screening migrants from high incidence countries for active pulmonary tuberculosis (TB), and of our intention to make changes to longstanding policy in this area both to better protect UK public health and use public resources more effectively.

TB is a global public health issue. While TB rates in this country are stable, HPA data indicate higher rates of infection concentrated in particular metropolitan areas, and overall the UK’s TB rate compares unfavourably with other developed nations. Much of the UK’s TB burden is attributable to international migration. Around three quarters of TB cases in the UK occur in those born outside of the UK, and screening of migrants from high incidence countries for active TB forms part of the range of measures to prevent and control TB in the UK. The existing policy is that people subject to immigration control arriving in the United Kingdom from high incidence TB countries and intending to stay for over six months are screened at Heathrow and Gatwick airports for the active disease. This screening entails an examination of arriving passengers through the use of X-rays.

The Government have decided that this policy should now be changed on medical and financial grounds. The weight of medical opinion is that screening for TB in this manner can no longer be considered to make any real contribution to the detection and management of the disease. X-rays alone cannot provide a definite diagnosis, which requires laboratory testing that cannot be performed in the airport environment. Current screening arrangements at our airports detect very few active cases. Changes in the travel industry over the past few decades now means that an increased number of people arrive at other UK ports where screening facilities are not available.

The UK Border Agency has been piloting the pre-migration screening of persons applying for long-term visas and entry clearance from high incidence TB countries on a model routinely employed by the USA, Australia and Canada. Screening overseas in advance of the visa application process enables the use of laboratory tests where X-rays or clinical judgment suggests the possible presence of TB. It also increases the possibility of detecting and intercepting drug and multi-drug resistant forms of the disease. Where individuals are found to have active pulmonary TB, they must successfully undergo treatment before their application to come to the UK can be considered. This approach is already sanctioned by existing powers in the immigration rules. The experience of our international partners is that pre-migration screening can assist in reducing the rate of imported infection.

The current UK pre-migration TB screening programme covers 15 countries considered high incidence for TB by the World Health Organisation, and has demonstrated clear potential to detect active TB and achieve savings for the NHS. We therefore intend to expand this programme to those visa applicants applying to stay in the UK for longer than six months from the over 80 countries with a high incidence of TB, beginning the roll-out this summer (list attached). On-entry X-ray checks at Heathrow and Gatwick airports will be phased out.

The complex nature of the disease means that TB screening of migrants as part of immigration clearance can only make a limited contribution to TB control in the UK. One third of the world’s population is estimated to have latent TB. A minority will develop the disease in its active form at some point in their lives, but it is currently impossible to establish through screening if this is likely to occur in any individual case. Most foreign-born TB patients only develop the disease in its active form years after arrival in the UK. We will therefore explore ways to improve the sharing of information between the UK Border Agency and the HPA about individuals coming to live in the UK for more than six months from high incidence countries. This will complement the systems that are already in place at a local level for connecting individuals with healthcare services.

Tuberculosis high incidence countries:

Afghanistan

Angola

Bhutan

Bolivia

Botswana

Burma

Burundi

Cameroon

Cape Verde

Central African Rep

Chad

China

China, Hong Kong SAR

China, Macau

Congo

Congo Dem Rep Zaire

Djibouti

Ecuador

Equatorial Guinea

Ethiopia

Gabon

Gambia

Guinea

Guinea-Bissau

Guyana

Haiti

India

Indonesia

Kazakhstan

Kiribati

Korea Dem People

Korea Rep of

Kyrgyzstan

Lesotho

Liberia

Madagascar

Malawi

Malaysia

Mali

Mauritania

Micronesia

Moldova

Mongolia

Morocco

Mozambique

Namibia

Nepal

Nigeria

Papua New Guinea

Peru

Philippines

Russian Fed

Rwanda

Sao Tome & Prince

Senegal

Sierra Leone

Solomon Islands

South Africa

Suriname

Swaziland

Tajikistan

Timorleste

Tuvalu

Uganda

Ukraine

Uzbekistan

Vietnam

Zambia

Zimbabwe

Countries currently coveted by pre-screening pilot:

Bangladesh, Burkina Faso, Cambodia, Côte d’Ivoire, Eritrea, Ghana, Kenya, Laos, Niger, Pakistan, Somalia, Sudan, Tanzania, Thailand, Togo.

London Bombings (July 2005)

Monday 21st May 2012 Written Statements

[The Secretary of State for the Home Department (Mrs Theresa May)]

On 19 July 2011 the Government provided notification of the publication of their response to the recommendations contained in the coroner’s inquests report on the London bombings of 7 July 2005. In that document, the Government committed to review progress against the commitments they made by the end of March 2012.

This review of progress is now complete and is published today on the Home Office website. A copy of the report will be placed in the Libraries of both Houses.

Historic Vehicles MOT

Monday 21st May 2012 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Mike Penning)]

Today I am announcing the Government’s plan to exempt all vehicles of historic interest (vehicles manufactured prior to 1 January 1960) in Great Britain (GB) from statutory MOT test, as allowed under article 4(2) of the EU Directive 2009/40/EC. I am also publishing the outcome of the consultation (with Government response) on our proposal to exempt historic vehicles from the MOT test which closed on 26 January 2012.

The EU directive of the European Parliament and of the Council, chapter II, exceptions, article 4 states;

“Member states may, after consulting the Commission, exclude from the scope of this directive, or subject to special provisions, certain vehicles operated or used in exceptional conditions and vehicles which are never, or hardly ever, used on public highways, including vehicles of historic interest which were manufactured before 1 January I960 or which are temporarily withdrawn from circulation. Member states may, after consulting the Commission, set their own testing standards for vehicles considered to be of historic interest”.

While the pre-1960 manufactured vehicles made up 0.6% of the 35.2 million licensed vehicles in GB they were involved in just 0.03% of road casualties and accidents. Two-thirds of them are driven under 500 miles a year and their initial MOT test failure rate (10%) is only a third of that of post-1960 manufactured vehicles.

Following consultation, the Government have concluded that we should proceed with exempting all pre-1960 manufactured vehicles from the MOT test. The Government believe that the exemption will reduce regulatory burden on owners of historic vehicles, meet its reducing regulation agenda and the desire to remove unnecessary burdens. It will also bring the age of vehicles requiring the statutory MOT test in line with the Goods Vehicles (Plating and Testing) Regulations 1988, which already exempts unladen pre-1960 manufactured heavy goods vehicles from the roadworthiness test. Owners of pre-1960 manufactured vehicles will still retain the option to do voluntary MOT test on their vehicles.

The outcome of consultation with Government response can be found on the Department’s website.

An amendment will be made to regulation 6 of the Motor Vehicles (Tests) Regulations 1981 to enable the MOT exemption. It is my intention that the changes come into force by 18 November 2012.

National Assembly for Wales (Electoral Arrangements)

Monday 21st May 2012 Written Statements

[The Secretary of State for Wales (Mrs Cheryl Gillan)]

I wish to inform the House that I am today publishing a Green Paper on future electoral arrangements for the National Assembly for Wales.

The Government’s programme of political renewal impacts on all parts of the United Kingdom and, in Wales, has consequences for the Assembly. Currently the constituencies used to elect Assembly Members are the same as those used to elect Members of Parliament. But the move to a smaller House of Commons with more equally sized constituencies breaks that link, and will, subject to parliamentary approval, result in a reduction in the number of parliamentary constituencies in Wales from 40 to 30.

In the Green Paper we look at the effects of these changes on the National Assembly for Wales, and whether people would be better served by continuing to have 40 Assembly constituencies, but with modified boundaries to make them more equal in size, or to reinstate the link with parliamentary constituencies by changing to an Assembly of 30 constituencies. In each case the size of the 60-Member Assembly would not change, and so the number of regional Members would increase from 20 to 30 if the link with parliamentary constituencies is re-established.

Establishing five-year fixed-term Parliaments at Westminster also has implications for the Assembly, and in the Green Paper we seek views on whether the National Assembly for Wales should have four or five-year terms. We are also seeking views on removing the prohibition on standing as a candidate in an Assembly election in both a constituency and a region, and whether Assembly Members should be prohibited from sitting in Parliament.

The consultation closes on 13 August, and the Government will consider carefully the responses we receive before deciding how best to proceed.

The Green Paper will be laid today before both Houses, and is available on the Wales Office website at www.walesoffice.gov.uk.

House of Lords

Monday 21st May 2012 Lords Chamber

Monday, 21 May 2012.

14:30

Prayers—read by the Lord Bishop of St Edmundsbury and Ipswich.

Israel and Palestine: West Bank

Monday 21st May 2012 Lords Chamber

Question

14:36

Asked By

[Baroness Brinton]

To ask Her Majesty’s Government what representations they have made to the Government of Israel following the recent order to Palestinian farmers in the West Bank to uproot their olive trees.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, the Government are aware of the recent order by Israeli authorities to Palestinian farmers in the West Bank village of Deir Istiya to uproot 1,400 newly planted olive trees. On 8 May, our embassy in Tel Aviv raised our concerns with the Israeli authorities responsible for the Occupied Palestinian Territories. We encourage and expect Israel to adhere to its obligations under international law.

[Baroness Brinton]

I thank the Minister for his reply. Given that the Israeli Government seem to be changing the rules about land ownership on the West Bank at whim, what further pressure can the UK Government bring to bear on the Israelis to cease this illegal activity immediately and to allow the farmers to continue the cultivation of their trees, which is also their principal economic activity?

[Lord Howell of Guildford]

I understand the concerns of my noble friend, who has direct personal experience of the situation in this area. There are difficulties in that there all kinds of different rules governing the ownership of land—layer after layer of them arising from the different status of this area over several decades. This causes confusion and difficulty, and my noble friend is right to identify it. These are the problems. We keep raising them with the Israeli authorities. Obviously, if the trees were mature and established, it would be even worse, as ancient olive trees are of great value, but even with these newly planted trees, there remains a constant dispute about whether the area is a nature reserve, as the authorities suggest, or an area where planting can properly take place. We shall keep monitoring the situation very closely indeed.

[Lord Turnberg]

Is it not the case that Battir village, one of the villages in which the olive trees are slated to be removed, is the still the subject of a legal battle and no final decision has been taken on it? Is it not also the case that the economy of the West Bank is growing quite markedly—at the rate of 6% to 7% per annum—productivity is going right up, towns that used to be the centres of terrorism are now centres of economic development and large numbers of the barriers and checkpoints have been removed?

[Lord Howell of Guildford]

The noble Lord is quite right to bring forward the good news to balance the bad news. Unfortunately, there is a slice of both. He is right that in Ramallah and related areas industrial activity has increased and major orders are fulfilled, not least for the British market, thanks to the efforts of the noble Lord, Lord Stone, and others in this House. That is a very encouraging side of the West Bank, but there is a discouraging side, of which I am afraid this constant friction about what the Palestinian farmers may do and—if I may raise an even more controversial point—what the settlers are allowed to do, is the negative aspect of an otherwise potentially good story.

[Lord Hussain]

My Lords, in addition to the problem of trees being uprooted, many Palestinian communities on the West Bank are finding their water sources being diverted to illegal settlements. What are the Government doing to persuade the Israeli Government to take action against illegal settlers, especially when essential resources, such as water, are being diverted?

[Lord Howell of Guildford]

I think my noble friend is well aware, because I have said it many times in your Lordships’ House, that the British Government regard the settlements policy and the expansion of settlements as illegal. We also deplore the recent tendency, which seems to be going against previous trends, of legalising previously illegal settlement outposts. These are again matters that we raise again and again with our opposite numbers in the Israeli Government. We believe that the policy of settlements is one of the barriers to the higher purpose we all want to achieve of reopening negotiations and getting a long and lasting settlement of the Israeli/Palestinian situation.

[Lord Grocott]

My Lords, I am sure that the House will fully understand and sympathise with the difficulty that the noble Lord, Lord Howell, has in answering Questions of this sort. It has been the case for many Ministers from both major political parties over the years. Basically, they have to express concern about what is happening, which is the profound and fundamental illegality of one country occupying another country’s land. It seems to everyone who looks closely at these things that all we seem able to do is express our concern and raise the matters with the Israeli authorities. Surely, the question should be: at what point do the Government of Israel face any disadvantage whatever—at the moment, there seems to be none—from continuing with the illegal settlement activities?

[Lord Howell of Guildford]

I am grateful for the sympathy of a former Chief Whip for a Minister when there are two sides to these questions and an element of balance is essential in assessing the realities and prospects. There is more that this country can do and seeks to do, collectively with our allies such as United Nations colleagues, within the EU and bilaterally. We can press on the various points that may yield some progress towards reconciliation and settlement. Israel’s security has to be considered. The noble Lord says that there is nothing to lose but always at the back of people’s minds are questions of Israel’s security. At the same time, these are occupied territories. We want to see an end to that process and a two-state solution that is not undermined by the settlements. These are all aspirations towards which we can and do work, beyond being concerned day-to-day about specific issues such as the one we are discussing now.

[Lord Selsdon]

My Lords, I declare an interest as a producer of olive trees. I have only 200 but I assure your Lordships that an olive tree takes a long time to grow. It has much significance, not least because of Gethsemane and the Mount of Olives. There is politics in this as well. Will my noble friend tell me what the economic deficit is here? What cost is being incurred by uprooting these olive trees and what is their value?

[Lord Howell of Guildford]

As we are dealing with newly planted trees, their value is all in the future. However, I am grateful to my noble friend for his reminder of the significance of the olive tree. I am full of admiration for his growing them because I was told that you could not grow olive trees with decent olives north of Valence in France.

Arms Trade Treaty

Monday 21st May 2012 Lords Chamber

Question

14:43

Asked By

[Lord Hannay of Chiswick]

To ask Her Majesty’s Government what their principal objectives will be in the negotiations for an arms trade treaty at the United Nations in July.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, the United Kingdom is firmly committed to securing a robust and legally binding arms trade treaty to regulate effectively the international trade in conventional arms. The final treaty should have a demonstrable humanitarian, security and development impact, and be capable of implementation in practice to ensure the broadest participation of states, including major arms exporters. This should be achieved without creating an undue additional burden for the legitimate defence industry.

[Lord Hannay of Chiswick]

I thank the Minister for that helpful reply. I am sure he agrees with his right honourable friend the Minister for Overseas Development, who, when speaking to the International Institute for Strategic Studies last week, said that the Government’s principal objective between now and the negotiations in July is to “raise the profile” of the arms trade treaty. Does the Minister not agree that the two steps that the Government could best take to do that would be, first, to announce immediately that the Foreign Secretary will attend the opening of negotiations at the UN in July; and, secondly, for the Prime Minister to give his full support in a speech between now and the opening of the conference? Will the Minister lend his support to those two measures?

[Lord Howell of Guildford]

To be fair, I say to the noble Lord, who obviously has been very much at the centre of these things, that the full support is most certainly there. All along, from the time that this initiative began in 2008, the British Government, under the previous Labour Administration and under this Administration, have given very full support to this and we want it brought to the point where we can get a draft treaty. However, as he knows, it is no use being too starry-eyed about overcoming all the difficulties. As to ministerial attendance or ministerial speeches, we will have to look at that. I know that this is a high priority. Of course, my right honourable friend the Foreign Secretary has many high priorities and this most certainly is one of them, so we will have to take a decision on attendance in due course.

[Lord Judd]

My Lords, does the Minister accept that the Government and civil servants should be warmly congratulated on their hard work and consistent commitment to achieving this treaty? Does he agree that it would be better to have no treaty than an inadequate, weak treaty? In that context, does he further agree that talk of taking into account the criteria, such as human rights, end-use and the rest, is simply not enough? There must be an absolute refusal of permission where these matters are in any kind of doubt.

[Lord Howell of Guildford]

The noble Lord is on to something, which he has been on to before. He has been second to none in arguing the case for a robust treaty. Indeed, it is the Government’s view that this treaty should be robust and that a weak treaty which would have the effect of legitimising lower standards of arms control, arms export, arms import, arms trade and arms transport would be no addition at all. He is entirely correct that this needs to be a robust treaty. We have aimed for that. We believe that certain things are in reach. Countries which appeared to be extremely negative to start with are now taking a more positive and constructive attitude, and we aim to make substantial progress on a robust treaty.

[Baroness Williams of Crosby]

Perhaps I may say how very welcome the reply of the Minister has been, as was the speech by the Minister for International Development in the past few days. Given that 153 of the 193 member states of the United Nations have strongly supported the arms trade treaty, will the Minister say whether in the last analysis we would be prepared to walk away from an agreement based on a weak consensus?

[Lord Howell of Guildford]

I am not totally clear of my noble friend’s question. She supports what has been achieved and, as she rightly says, a considerable number of countries have signed up. However, countries which we thought might be much more reluctant have not done so. Certainly, there are key issues yet to be finalised on weapons to be covered and export criteria. These are difficulties. If my noble friend’s question was whether we would walk away if it looked like too weak a treaty, I say that we do not intend that to happen. We intend the treaty to be at least where it is now, with broad agreement discussed on many crucial issues and out of which we can produce a robust treaty.

[The Lord Bishop of St Edmundsbury and Ipswich]

My Lords, we have long been supportive of a robust attitude to such a treaty. Can the Minister offer any advice as to whether the Government are able to help and support some of those fragile nations which are emerging from conflict or are still in conflict to be able to take part fully in these negotiations? They have so much to gain from a robust treaty.

[Lord Howell of Guildford]

These fragile nations certainly have much to gain and we want to see their participation. Like all nations, they have a legitimate desire to defend themselves. One must be realistic: if one wants to protect people and nations, some hard-power defence—in other words, weaponry—is needed. There has to be support for sensible, non-repressive arms supplies across international barriers, which can support the proper protection of young nations as they struggle to establish themselves and achieve stability against incursions from outside.

[Lord Howarth of Newport]

My Lords, in their vision for Britain’s economic future, do coalition Ministers foresee us earning our living to a diminishing extent by contributing to the saturation of unstable areas of the world with weapons? In the process, we tie ourselves into long-term relationships with unsavoury regimes while committing disproportionate amounts of resources that would otherwise be used to construct a more balanced and responsible economy.

[Lord Howell of Guildford]

The noble Lord paints a bad picture of the international arms trade, and it is bad—largely because of illegal arms trading, with blind eyes being turned by Governments. In our case, we have one of the most rigid supervisions of criteria applications for arms export in the world. We operate on a very close case-by-case basis, and it is generally agreed looking back over the last two tumultuous years in the Arab spring that very rigid controls have broadly operated. Certainly, we have received no evidence to the contrary. But his broader picture of a world awash in arms is precisely the one that must cease and to which this arms trade treaty, if we can get it in the form we want, will make some contribution. It will not cure all the problems but it will make some contribution.

[Lord Trefgarne]

Will my noble friend make available the current draft of this important document so that we can all express our views on it?

[Lord Howell of Guildford]

I will have to see whether there is a draft at this stage. The next stage of conferring in July is aimed at creating a draft, upon which thereafter a treaty could be built. If there are documents that can be usefully circulated, I will certainly look and see what can be done.

Bangladesh

Monday 21st May 2012 Lords Chamber

Question

14:52

Asked By

[Lord Harris of Haringey]

To ask Her Majesty’s Government what diplomatic representations they have made to the Government of Bangladesh about the disappearance and alleged kidnapping of Mr Ilias Ali and other opposition politicians.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, I am not going to have much time for any chillaxing today.

We are concerned about the disappearance of Mr Ilias Ali. On 9 May, our High Commissioner to Bangladesh and ambassadors of eight other European countries called on the Bangladesh authorities to conduct thorough investigations into disappearances, including that of Mr Ali. In meetings with the Prime Minister’s Office and senior officials in the Ministry of Foreign Affairs, we have urged the Government to do all that they can to locate Mr Ali and investigate the circumstances of his disappearance.

[Lord Harris of Haringey]

I am grateful to the noble Lord for that reply and for the expressions of concern by the British Government, but is he aware that there are a series of similar cases, including that of Mr Nazmul Islam, a local leader of the Bangladesh Nationalist Party, who was abducted and murdered last December, and that according to the BBC 30 people have disappeared in that way in the past year? There are allegations, too, that the police’s Rapid Action Battalion is involved. In those circumstances, do Her Majesty’s Government accept that this reflects very badly on Bangladesh and its obviously fairly fragile democracy? What support can be given to ensure that the individuals concerned are rescued and restored to their families and that this sort of occurrence stops?

[Lord Howell of Guildford]

The noble Lord is right that this kind of development reflects badly on the political culture of any society in which opposition leaders are arrested or worse. He asked what can be done. The EU had a heads of mission visit in February to Bangladesh and stated its concerns very clearly. We are fully behind that. In addition, our senior Ministers, including my right honourable friend the Foreign Secretary, have been in direct personal contact with senior officials, including the Foreign Minister of Bangladesh, and we take every opportunity to express our worries. It is a concern for us. People may ask why we are worried about Bangladesh. It is an important nation and the destination of one of DfID’s largest programmes, with £1 billion due to go to support Bangladesh development from this country over the next four years. It is a nation that we want to see stable and prosperous and to build on its economic achievements, which are beginning to show dividends. That is the rather encouraging side of an otherwise bad story.

[Lord Hussain]

My Lords, I had the opportunity to meet Mr Ilias Ali in Luton when he visited the United Kingdom a few months ago and raised human rights issues in Bangladesh with him, as I have with the Minister concerned. Sadly, we hear that Mr Ali has disappeared, along with his driver. However, this is not an isolated case. The New York-based Human Rights Watch has expressed concern over the disappearance of at least 22 people this year. A Dhaka-based organisation says that more than 50 people have disappeared since 2010. Security agencies, including the—

[Noble Lords]

Question!

[Lord Hussain]

Can these cases be investigated by an international human rights organisation, and can we pressurise the Bangladeshi Government to put an end to such human rights abuses? Finally, can the British Government ask—

[Noble Lords]

No!

[Lord Hussain]

Fair enough; those two will do.

[Lord Howell of Guildford]

A whole range of concerns have been expressed by my noble friend. I understand his feelings. This is not a good story at all. He asks whether we will press for impartial and transparent investigations into these disappearances. We do so, have done so, and will continue to do so. In some cases, we will be pressing at an open door and there will be investigations, but in other cases we may not be so successful. However, one has to accept that the drive for ending this dark atmosphere over Bangladeshi politics must come from within that nation. We support Bangladesh in its efforts to stabilise its politics, to move towards the best kind of elections at the next appropriate time and to develop and lift its people out of poverty and the appalling environmental challenges that they also face and with which, sadly, we are all too familiar.

[Lord Avebury]

My Lords, will my noble friend ask the Bangladesh Government whether they will issue an invitation to the United Nations working group on disappearances, which is the proper body to investigate not just the recent disappearances mentioned in the Question but those going back a long way, most of which are attributed to the RAB?

[Lord Howell of Guildford]

That sounds like a very positive thought. I will certainly consider it and discuss it with my colleagues.

Malawi

Monday 21st May 2012 Lords Chamber

Question

14:57

Asked by

[Lord McConnell of Glenscorrodale]

To ask Her Majesty’s Government when general budget support for the Government of Malawi will be restored following the changes recently announced in that Government.

[Baroness Northover]

My Lords, it is too soon to say if and when general budget support will be restored. However, the UK Government have already agreed to release £10 million in urgent health sector support and a further £20 million in previously agreed funding. The Secretary of State for International Development will discuss Malawi’s further requirements when he visits shortly.

[Lord McConnell of Glenscorrodale]

I thank the Minister for that Answer and welcome the support that has already been given by the UK Government to the new Government in Malawi. President Banda has graciously praised the early successes of her predecessor but has taken swift action to rectify some of his mistakes. The new president is very firmly focused on economic management, building better international relations and improving governance in the country. On his forthcoming visit, will the Secretary of State for International Development raise the issue of general budget support from the UK and from the European Union as both sums would make a considerable difference if they were reintroduced before the end of this financial year?

[Baroness Northover]

The noble Lord’s involvement in and support for Malawi is well known, as is that of the Scottish Government. We very much welcome the peaceful and constitutional transition following the previous president’s death in April. Early discussions with President Banda, who is the second female head of state in sub-Saharan Africa, have been very encouraging and we look forward to working with her to resolve many of these problems. The noble Lord is absolutely right: she has shown a lot of initiative in moving various areas forward. I am sure that the Government of Malawi will raise with the Secretary of State the issues that the noble Lord has mentioned. The Secretary of State is looking carefully at how best to support Malawi. However, it is one thing to say things; it is another to make sure that certain changes are delivered.

[Lord Chidgey]

My noble friend will be aware that a step change in economic management and governance standards in Malawi is critical, not just to bring immediate relief to its people through the NGOs on the ground but to secure the release of some $750 million in grant aid, which is currently blocked and is clearly needed in the general budget and elsewhere. Importantly, securing investment to interconnect Malawi and Mozambique’s national grids, for example, which are essential to stabilising Malawi’s industry, must also be considered. What action is DfID taking with resident NGOs, such as World Vision and others, to ramp up financial accountability and good-governance standards in Malawi to ensure that inward investment such as that will start to flow?

[Baroness Northover]

My noble friend is quite right to say that these issues need to be addressed, and poor governance is of course the root cause of much poverty. DfID is putting a considerable amount into seeking to address that issue, so that the Government of Malawi can be held to account—not least in the way that they manage their public finances, to which he referred. We are pleased that the new president is now talking to Mozambique about restarting discussions on the energy interconnector, which is encouraging and is important to industry in the area. However, first and foremost, it is important to try to address the economic problems in Malawi. DfID is in constant contact with Malawi, which is also in constant contact with the IMF. An IMF team is there right now.

[Lord Hughes of Woodside]

Is there not common agreement in all quarters of the House that it is essential that our overseas development money is spent efficiently and without corruption? Does the Minister accept that good governance is essential in order for that to be done? Will she therefore make sure that budget support, which is a very important part of good governance, is restored as soon as possible?

[Baroness Northover]

The noble Lord is absolutely right that aid money must be used well, and that is why the general budget support was removed. Until we can be certain that the protections are there, it would not make sense to restore budget support. However, money is going in, meanwhile, in terms of development, and the contribution from DfID to Malawi is as great as ever but is channelled through other routes.

Lord West of Spithead: My Lords, I declare an interest as patron of the Chauncy Maples Trust, which is renovating a British-built ship, built in the 19th century, on Lake Malawi to provide healthcare to 120,000 people around the lake who currently receive no healthcare. Malawi is, of course, one of the 10 poorest nations in the world. Half the population earns less than a dollar a day, and this aid is very important. Do we now have a full high commission there to ensure that we are able to monitor things correctly, including money going down the wrong channels, to make sure that money is applied properly to help this country in the way that it needs?

[Baroness Northover]

It is indeed extremely important to make sure that that kind of support is in place, and DfID has been supporting healthcare in Malawi very strongly. The noble Lord will be aware that the previous high commissioner was expelled by the former president, but the UK has decided to appoint a new high commissioner—a process that is going through at the moment. Meanwhile, the new president has decided to appoint a new high commissioner to the United Kingdom—and that, we hope, will help.

[Baroness Kinnock of Holyhead]

My Lords, I join the Minister in welcoming the leadership in Malawi of Africa’s second woman president, Her Excellency Joyce Banda. Is it not clear that if economic catastrophe is to be averted in Malawi—a country in which 39% of the population lives on less than a dollar a day—she will need a lot of sustained assistance? In those conditions, will the Government seek not only to encourage donors to release funds for Malawi but to discourage the current IMF mission from any recommendation that would further devalue the currency and therefore inflict potentially ruinous extra inflation on the economy of Malawi?

[Baroness Northover]

The noble Baroness is quite right. With these encouraging signs, it is extremely important that President Banda is supported in seeking to deliver these changes. I note that the Bank of England has, for example, sent technical support, as Malawi has just devalued its currency. Therefore, it is in a better situation in some ways but in a very volatile situation in others. International donors and the IMF are acutely aware of the need to provide support in these circumstances and to make sure that the funding is there so that some of the adjustments to the economy can be brought forward and the changes that President Banda has suggested can then be better delivered.

Canterbury City Council Bill

Monday 21st May 2012 Lords Chamber

Leeds City Council Bill

Nottingham City Council Bill

Reading Borough Council Bill

City of London (Various Powers) Bill [HL]

City of Westminster Bill [HL]

Transport for London Bill [HL]

Motions to Resolve

15:05

Moved By

[The Chairman of Committees]

Canterbury City Council Bill

That this House resolves that the promoters of the Canterbury City Council Bill, which was originally introduced in the House of Commons in Session 2007-08 on 22 January 2008, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).

Leeds City Council Bill

That this House resolves that the promoters of the Leeds City Council Bill, which was originally introduced in the House of Commons in Session 2007-08 on 22 January 2008, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).

Nottingham City Council Bill

That this House resolves that the promoters of the Nottingham City Council Bill, which was originally introduced in the House of Commons in Session 2007-08 on 22 January 2008, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).

Reading Borough Council Bill

That this House resolves that the promoters of the Reading Borough Council Bill, which was originally introduced in the House of Commons in Session 2007-08 on 22 January 2008, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).

City of London (Various Powers) Bill [HL]

That this House resolves that the promoters of the City of London (Various Powers) Bill [HL], which was originally introduced in this House in Session 2010-12 on 24 January 2011, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).

City of Westminster Bill [HL]

That this House resolves that the promoters of the City of Westminster Bill [HL], which was originally introduced in this House in Session 2008-09 on 22 January 2009, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).

Transport for London Bill [HL]

That this House resolves that the promoters of the Transport for London Bill [HL], which was originally introduced in this House in Session 2010-12 on 24 January 2011, should have leave to proceed with the Bill in the current Session in accordance with the provisions of Private Business Standing Order 150B (Revival of bills).

Motions agreed.

Small and Medium-sized Enterprises

Monday 21st May 2012 Lords Chamber

Motion to Approve

15:06

Moved By

[Lord Strathclyde]

That it is desirable that a Select Committee be appointed to consider Her Majesty’s Government’s assistance and promotion of the export of products and services by small and medium-sized enterprises, and to make recommendations, and that the committee do report by 28 February 2013.

Motion agreed.

Public Service Provision

Monday 21st May 2012 Lords Chamber

Motion to Approve

15:06

Moved By

[Lord Strathclyde]

That it is desirable that a Select Committee be appointed to consider public service provision in the light of demographic change, and to make recommendations, and that the committee do report by 28 February 2013.

Motion Agreed.

Adoption

Monday 21st May 2012 Lords Chamber

Motion to Approve

15:06

Moved By

[Lord Strathclyde]

That it is desirable that a Select Committee be appointed to consider the statute law about adoption, and to make recommendations, and that the committee do report by 28 February 2013.

Motion agreed.

Olympic and Paralympic Games 2012

Monday 21st May 2012 Lords Chamber

Motion to Take Note

15:07

Moved By

[Baroness Garden of Frognal]

That this House takes note of the 2012 Olympic and Paralympic Games.

[Baroness Garden of Frognal]

My Lords, 2012 is a very special year for Britain with three historic events to look forward to: first, the Diamond Jubilee, bringing the nation together to celebrate the 60-year reign of Her Majesty the Queen, the second-longest-serving monarch in British history; secondly, the London 2012 Festival, the UK’s largest ever festival of arts, culture and creativity, which will run throughout the summer with artists joining us from all over the world; and, thirdly, the Olympic and Paralympic Games. The greatest show on earth is coming to the UK. London is making history by becoming the first city ever to host the modern Games for a third time—1908, 1948 and 2012. With the arrival of the Olympic flame over the weekend, the countdown to an extraordinary period for the country has well and truly begun.

We want London 2012 to be an outstanding Games that enhances our global reputation. We also want it to be a Games for everyone, with opportunities for people to join in the spirit of celebrations wherever they live, whatever their age and whatever their interests. Nowhere is this better reflected than in the torch relay, which will visit more than a thousand cities, towns and villages across all four nations. The Olympic flame will come within 10 miles of 95% of the population, while giving us a chance to showcase the people and places that make Britain great. The coming weeks will provide an extraordinary advertisement for the different regions and nations of the UK, and we want to maximise the tourism benefits as much as possible.

Of course, the arrival of the torch also focuses our minds on how close the Games themselves are. With fewer than 70 days until the opening ceremony of the Olympic Games and with exactly 100 days until the Paralympics begin, I am pleased to say that our preparations for the Games are in a very good place.

I should like to give your Lordships an update on four key areas of preparation. The first is around the construction and planning of the event. Anyone who has visited east London cannot fail to see the transformation of the skyline across the Lee valley. A series of iconic new sporting venues is complete, such as the Olympic stadium, the striking aquatic centre, the velodrome, the Copper Box, Eton Manor and the Lee Valley White Water Canoe Centre which have already successfully hosted world-class test events. The quality and timeliness of our preparations have been recognised by the International Olympic Committee which has praised our efforts on each of a succession of inspection visits. The Olympic and Paralympic programme remains on time and on budget. Of the original £9.3 billion, around £500 million remains as uncommitted contingency. The big build has been finished and the Olympic delivery authority has delivered more than £900 million-worth of savings. These savings have allowed us to meet other essential Games needs without breaking the overall £9.3 billion envelope.

The ODA’s efforts represent a great advertisement for the British construction industry which is now winning other major contracts. It’s excellent health and safety record has set new standards for the industry and its recruitment and training initiatives, such as the Women into Construction project have broken new ground. LOCOG has been very successful in raising the money it needs from the private sector despite the difficult economic conditions. LOCOG has secured in excess of £1 billion from international sponsors, broadcast rights holders and domestic sponsors and has generated unprecedented ticket demand both for the Olympics and Paralympics. More than 7 million tickets have been sold so far, setting the scene for full venues at Games time and a wonderful atmosphere for the competing athletes.

The second area is safety and security. Our priority is to deliver a safe and secure Games for all and we have adopted a no-compromise approach to safety and security. The UK has an excellent record of policing major events, and the Games will be no exception. However, the Olympics and Paralympics are first and foremost a celebration of sport. While the Government will ensure that this celebration is safe and secure for participants and visitors, the security response will be proportionate and in keeping with the culture and spirit of the Games. We are keen to strike the right balance between the celebration of the Games and the need to keep everyone safe.

The third area is transport. The £6.5 billion transport infrastructure improvements leveraged by the Games will be of long-term benefit to everybody. The key elements have been delivered before the Games have begun, including major infrastructure improvements to build capacity across rail and London Underground. Examples are: £125 million upgrade to Stratford regional station which has trebled the station’s capacity. We are expecting some 120,000 people to be using the station at peak times. There is also the extension of the North London Line and improvements to the Docklands Light Railway. There is a new high speed domestic rail service from Kent to Stratford International station, which opened in December 2009 and the enhancement of 75 kilometres of east London’s cycle routes as a result of £10 million investment by the ODA.

Fourthly, I turn to the legacy of Games. This above all, as the IOC has recognised, marks London 2012 as different from previous Games. The physical legacy is impressive. The athletes’ village will provide more than 2,800 homes, 35% of which will be affordable housing. The new £1.43 billion privately funded Westfield shopping centre opened in Stratford in September 2011, providing 10,000 jobs. It had more than 1 million visitors in the first fortnight after opening. Six out of eight permanent venues on the park have had their future secured beyond the Games. No previous host city has come close to this. Legacy operators for the other two permanent venues—the Olympic stadium and the international broadcast centre and main press centre—are being actively sought. Plans for the future of the park, led by the London Legacy Development Corporation under the stewardship of the mayor, are going well, and we look forward to hearing from the noble Baroness, Lady Ford, on these matters.

Five world-class permanent sporting venues—the Olympic stadium, the aquatics centre, the velodrome, the Copper Box, and Eton Manor—will provide community facilities as well as being used for elite sport. There will be a wider economic legacy for the entire UK. The Olympic Delivery Authority alone has awarded £6 billion-worth of contracts to build and supply the Games to over 1,500 suppliers. Over 98% are UK-based companies, half of them based outside London. Many more companies have won work in the supply chains of the ODA.

Hosting the Olympic and Paralympic Games will provide a unique opportunity for the UK to showcase the best of its manufacturing sector, innovation and creativity, and to attract new visitors, investment and export. The British Business Embassy at Lancaster House will showcase the UK as an outstanding global investment destination and a springboard for global growth. The programme of events which they are hosting includes a Global Investment Conference and a series of sector-specific days, aimed at elite overseas businesses, along with UK businesses with innovative products and services to export, on an invitation-only basis. The Embassy includes the “Imagine: Great Ideas Made Real” digital showcase to challenge perceptions of the UK and demonstrate its creative and innovative strengths.

This year also presents a once-in-a-lifetime opportunity for the tourism industry in the UK. The “GREAT” campaign seeks to stress the excellence of our culture, heritage, sport, and shopping and of the holiday experience in Britain. We want to reinvigorate our appeal in important markets where we have seen decline, such as the United States, and to build our brand image in vital emerging markets like Brazil, India and China.

We want to ensure our tourism industry remains one of the largest in the world. In addition to attracting inward tourism, we want to encourage our domestic tourism offer to thrive and to promote the staycation effect. VisitEngland is asking tourism businesses to give visitors another reason to stay in the UK by encouraging them to offer 20.12% off and other great offers. This means 20.12% off accommodation stays, meals, and other experiences. Offers and deals could include three nights for the price of two, or two-for-one entry at attractions. I fear the mathematicians among us will realise that those particular discounts do not entirely reflect a 20.12% discount, but they will understand the spirit of these offers.

[Lord Cormack]

I am sure everybody would welcome the discounts, but would it not also be a good thing to discourage selling of the torch flames?

[Baroness Garden of Frognal]

My Lords, that may well be the case, but the torches are actually the property of the people running, and I do not think the Government could get directly involved in that.

As part of the 2012 legacy, we also wish to reverse the decline in sports participation. The Government launched a new youth sport strategy on 10 January with £1 billion of lottery and Exchequer funding. This will mean a much greater focus on young people, particularly 14 to 25 year-olds, and this strategy aims to deliver: consistent growth in sports participation in the 14 to 25 age range and across the adult population; an excellent sporting experience to keep people playing sport; high quality talent development to create a better talent pool and help those with real potential to make the grade; and a growth in participation by people who have disabilities, including the most talented.

The School Games is the Government’s new framework for competitive school sport. It is a key strategy for creating a meaningful sporting legacy from the 2012 Olympic and Paralympic Games and to increase the number of pupils participating in competitive sport. More than half the schools in England—around 13,000—have signed up, including primary, secondary, special and independent schools. The UK and Brazil, which will host the next summer Olympic and Paralympic Games in 2016, have jointly written to the IOC and to the International Paralympic Committee to ask them to encourage future bidders for the Olympic and Paralympic Games and Youth Olympic Games to have in place a competition structure similar to that of the School Games.

The International Inspiration initiative is delivering on the promise made by my noble friend Lord Coe in Singapore in 2005 to,

“reach young people all over the world and connect them to the inspirational power of the Games, so they are inspired to choose sport”.

The programme develops a series of activities tailored to each country’s needs, to introduce a more systematic approach to delivering sport in school and community settings for all age groups, based on practices that have been successful in the UK. To date, more than 12 million young people in 20 countries have been reached through the International Inspiration programme. Since 2007, the programme has helped train 100,000 teachers, coaches and young leaders. Thanks to the phenomenal efforts of my noble friend Lord Bates, the Olympic Truce has a much higher profile than in previous Games. We look forward to hearing more from him about support for the Truce.

We are not complacent and recognise that challenges still lie ahead in 2012. For example, during the course of the Games we will be hosting 26 simultaneous world championships; converting for the Paralympics and then hosting another 20 events; and coping with millions of extra journeys on our transport systems. However, the omens are good for us to deliver a safe, successful and memorable Olympic and Paralympic Games, with legacy benefits for the whole country.

Before I close, I should note that the noble Baroness, Lady Grey-Thompson, withdrew her name from the speakers list out of courtesy to the House because, with 100 days to go to the Paralympics, she was unable to stay for the whole debate. On behalf of the House, I thank her for observing that courtesy and express appreciation for all her achievements and for her work on the Paralympics, and assure her that she will always be welcome to raise any matter, either inside or outside the Chamber.

The Government acknowledge the work of the previous Administration in the planning and organisation of the Games. We are grateful for the cross-party support in the work that has still to be done, and for the healthy scrutiny from your Lordships, particularly given the levels of Olympic and Paralympic expertise that we have in the House. I look forward to hearing all contributions in the debate, and to the UK delivering a Games of which we can all be proud.

15:22

[Lord Haskel]

My Lords, I add my congratulations to the Olympic Delivery Authority on delivering the Olympic park to LOCOG on time and, as the Minister said, on budget. We should congratulate not only the main contractors but the subcontractors—the suppliers of the products and the materials that have gone into creating the Olympic park. It looks wonderful and is a tribute to the companies that have worked so hard.

I agree with Hugh Robertson MP, who wrote in the February Olympic Quarterly Report:

“One of the greatest adverts for the UK from the London 2012 Games is the Olympic Park itself, which showcases the best of British architecture, engineering and construction”.

The Minister repeated this. It is indeed a wonderful showcase for our companies, which supplied not only the innovative products about which the Minister spoke but also the recyclable materials—products that make this a green Olympics. The floor coverings, waste bins and much of the pipework are all recyclable. The new road surfaces use waste material. The energy centre burns waste material. New materials were developed for the roofing membranes, for the 80,000 seats in the main stadium and for the 6,000 seats in the velodrome. The water and sewerage services are most ingenious. As the Minister said, it is a showcase for the best of British industry. What a good story we have to tell—a story that British companies should tell out loud. They can supply these materials and their products to construction companies in all parts of the world.

However, they cannot tell it. Why? In order to get the business, companies had to sign an agreement that they would not publicise their products without permission from LOCOG. Despite many applications, none of the companies that supplied the products and materials that I have mentioned was given permission. A few others have. What is more, companies are not even going to get permission after the Games finish. Why? LOCOG says that it is because, quite rightly, it is protecting the rights of the generous sponsors. However, no one is asking to use the logo, not even the phrase “London Olympics 2012”. They are not allowed to show any association with the Olympic Games. Even using the word “Olympics” or the number “2012” is banned. Permission to publicise this information has been turned down.

The Minister spoke of the torch relay. To give her a flavour of what is going on, I refer noble Lords to a report in this morning’s Guardian. When the Olympic torch started out from Plymouth, LOCOG officials confiscated leaflets advertising an Olympic breakfast at a local café. The officials said—wait for it—that “flaming torch bacon and egg baguettes”, which were on the menu, contravened branding guidelines. Does the Minister really think that firms such as McDonald’s and Coca-Cola are concerned about calling a bacon and egg baguette “flaming torch”? Are the Government really going to defend the ridiculous?

One indignant subcontractor got his trade association to write to the Prime Minister. It asked him to justify his claim that:

“We expect these events to generate at least £1 billion for British businesses and they are vital to secure our long-term return to sustainable growth”.

How much easier it would be to make this happen if companies could tell potential customers about their products and demonstrate how well they work. A tie manufacturer wrote to me last week saying that his company had produced a fabric which showed the three Olympic Games that have taken place in Britain, and they wanted to produce a tie with it. However, LOCOG would not let the company call it an “Olympic tie”, or anything of that name, and so it has had to call it a sporting tie. Yes, we do still produce fabrics and ties in this country. The Minister said that the Olympic park should be a showcase. Should it not also be a shop window?

The response to the letter came from Mark Prisk at BIS. He agrees that the Olympics should be a showcase for British business and points out that some of these products have been included in the Beyond 2012 legacy document and the suppliers directory. He considers this to be proportionate. Proportionate to what? The proportionate fact is that the taxpayers paid 90% of the cost and the sponsors 10%. I will not labour the party political points that can be drawn from this; I just await the Minister’s reply.

This matter was drawn to my attention in my capacity as the honorary president of the Materials Knowledge Transfer Network, a commercial and technological organisation of some 4,500 businesses, universities and research organisations, all working to improve the materials in our lives—and they are angry. Why are they angry? If the Government really cared about this, they would have cleared it up months ago. I am angry because, instead, someone like me has to try to shame Ministers into doing something about it at the last minute.

There are 68 days left until the opening of the Games. Will the Government make good their rhetoric and take steps to allow British businesses to use the Olympics as a shop window for all the wonderful materials and products they have supplied—and also allow cafés to serve celebratory breakfasts?

15:30

[Lord Addington]

My Lords, I thought I would hear nothing new about the Olympics during this debate. The noble Lord, Lord Haskel, has surprised me with the idea of flame-grilled breakfasts not complying with the rules. However, I remember when we first discussed the use of the Olympic symbol in this House—it was a good few years ago and I think the noble Lord was part of the Government of the time. Protection of the Olympic symbol is very entrenched in the Olympic movement. I will say no more because the noble Lord, Lord Moynihan, is in the Chamber. We have possibly the greatest expert on this subject on the government Back Benches—or at least a far greater expert than me. Defending the Olympic symbol and gaining the best revenue from it is an interesting subject and there has been a great deal of movement on it.

When we look back at preparations for the Olympics we have to look back at the process we have gone through. Nobody expected us to get the Games or at least nobody admitted that they expected us to get them. When we did we were surprised. I thought we had done something very good in preparing the bid as it made us address planning and structural changes and to look seriously at them. It came on the back of a successful Commonwealth Games and unsuccessful bids. It was the first soft legacy from the unsuccessful bids. The real question is how we carry on the things we gained from this, especially the soft legacy and the planning.

The noble Baroness, Lady Ford, will undoubtedly be able to tell us more about the bricks-and-mortar approach. However, the thing of great interest we can take away from the Games and which will give a long-lasting legacy is the cultural change about how we use big events and learn from them for the smaller events that follow, which are still of world significance. For instance, the Cultural Olympiad, the Olympic festival, will provide months of entertainment and value—how do we learn to piggyback events successfully to get the best out of them? How do we learn to use advertising over and over again to reinforce a message? We must take this into account.

We have been greatly successful in making sure that everybody has bought into the idea that this is an important event—even if you hate it. Even if you cannot stand the idea of the Olympics it will change your life in certain ways. Everybody expects to gain some positives—that is the real thing that has come out of it. As for the process of the bid itself, apparently the noble Lord, Lord Coe, congratulated me on coming out with the most unusual compliment he had ever heard when I said, “Thank you for making the Olympic project dull”. Nothing has gone very badly wrong. The noble Baroness, Lady Ford, has an expression on her face, in which case problems have been kept quiet. We gone through the process of making sure the Games have been delivered on time and on budget. Whatever bumps and bangs there have been, that is how you will ultimately be judged. If we have done that, what else can we do?

We have annoyed a lot of journalists who had doom and gloom stories on budgets ready to be printed or sent to various people, but what else are we going to get out of this in the long term? One of the real benefits we have already taken, and it is very appropriate we raise it today because we are only 100 days away from the start of the Paralympic Games, is that the Paralympics have come to be seen as a partner on even terms, or at least close to it. That is something I did not expect to see in my lifetime. The “Does he take sugar?” attitude towards the Paralympics was certainly there at first. The attitude of, “Isn’t it jolly good we are doing something we are quite good at?” and “You mean people in wheelchairs can do that?”. People now appreciate that these are athletes trained to the peak of their capacity striving on even terms with people from all around the world to achieve something extraordinary. That is taken as read in other forms of sporting activity at the elite level. It has transformed our perception and process. If we can take that and go on, we will have done something very good.

On the subject of sponsors, I spoke to people from Sainsbury’s the other day at a reception and asked them what they get out of this—not what they give. After a little bit of nagging, I got a very honest answer: “Yes, it helps in marketing. Yes, it helps to make people in our stores feel better about themselves, which makes them better employees. Ultimately it is about something that is bigger than us, that makes us part of the community—that is what we get out of it. And it improves sales”. I may get told off by one or two people but I think that is worth a few tickets to the event, so I say thank you to the sponsors and everybody who has been involved throughout the process. They have done something which has benefited us.

Probably the only real grumble about the Olympic process has been about tickets. If you are struggling to make a story out of this, it shows how well things have gone. There was a problem with the ticket allocation because it was not designed for a total sell-out within seconds of it opening: too high a demand crashing systems; the fact that people like myself who thought we had registered in time and would get the tickets we wanted have not got them—I am available for any returns. Now the Olympics organisers are saying if you have not got them or you have only a few in the sports that probably were not your first choice, you are not eligible for the next round. They are spreading it out. There is something good coming from this. Are we going to learn how to manage demand better in future? Maybe there will be never be another demand like the Olympics but learning to manage expectation of demand is something else that has come from this.

The Olympics are now a real thing. The torch relay has started. The planning has stopped; we are now in the delivery phase. The important thing about the Olympics now is that we relax and enjoy it but also remember that we are going to take on these lessons that we have learnt and prove that, over two successive Governments of different political persuasions, as a nation we can carry something through. That is probably the biggest legacy going—that we have that capacity as a nation.

[Lord Grade of Yarmouth]

I declare an interest: I was in Singapore as part of the bid team. One of the most important lessons that I learnt from that was in conversation with a senior Minister who was part of the bid team. I asked him how he had managed to persuade the Treasury to give its consent to the bid and he said, “We managed to persuade Gordon that we could not possibly win”.

[Lord Addington]

My Lords, the management of politicians, particularly those in the Treasury, is an art form that everybody else in government tries to embrace. I think that emphasises my point rather than takes away from it.

I look forward to seeing how we learn and carry on with this. Are we going to manage to keep the initiative going? Are we going to keep the interest in sport and sporting activity going? Can the Government give us examples of how they plan to take this on board? How can people who are not in government at the moment guarantee to support this progress? How can we guarantee that we all talk to each other about what we do next? We came together around a good project; we did not think we would but we were going to have a go at it. Can we guarantee to do something else with it? That is the next big challenge.

15:39

[Lord Higgins]

My Lords, this is a very well timed debate. The torch relay is now well under way and it seems to be received extremely well as it tours the country. A mere take note Motion may sound a little unenthusiastic, but I do not think that can be said of my noble friend the Minister’s opening remarks, which reflect the growing level of excitement as the opening of the Games approaches.

Flying in to London City Airport today, it was very noticeable that there really has been regeneration in the very desolate part of the East End where the Olympic site was very sensibly located. As my noble friend said, the major architectural features—namely, the aquatics stadium, the velodrome and the main stadium—are all very different and have been well received. Will my noble friend update us on the stadium itself? Athletics has been something of a Cinderella sport compared with some others in the country and we desperately need a national athletics stadium. The stadium’s design seems very good, but it is important that, whoever eventually takes it over, it should be used not merely for track but for field events. If we are going to have a football operation there as well—my noble friend encouraged me to say this—putting shot puts and so on in the middle of the football pitch during the weekend may not be a terribly good way of generating a suitable environment.

I certainly look forward to the Games. My noble friend stressed the commercial rather than the sporting aspects. I hope that our team does extremely well and we should give it every possible support, but we must recognise that medals are not easy to get and the degree of competition is perhaps far greater now than ever before. Perhaps I may be nostalgic for a moment and say that the environment is very different from that in 1948, when we had no legislation whatever on the subject and no sponsors. One must stress that the Games were entirely amateur; they did not have the degree of professionalism which they have now. That is a considerable transformation which brings with it some problems. The 1948 Games took place at a time of extreme austerity. I think that the amount of meat provided for one day for a member of the American visiting athletic team was roughly the same as that rationed to a family for a month. In preparing for those Games, I remember not having a proper vest because we had run out of clothing coupons. It was a very different atmosphere and the organisers did a remarkable job in all the circumstances.

One of the effects of the change from amateurism to professionalism is a real problem with drugs. There was no point in taking drugs in 1948 because one saw little value in finding that one had won because one had cheated, whereas once the Games are professionalised, there is a growing danger of people being tempted to take drugs. In that context—my noble friend Lord Moynihan may care to say something about this—the British Olympic Association has been absolutely right to say that we should have a complete ban. If someone is guilty of a serious drug offence, having been properly investigated and so on, the only way to deter to them is to have a complete ban. It is absurd to give them a second chance. All that does is encourage them to have a first chance and hope that they are not found out. I strongly support what the BOA has said, and I hope that we can get international agreement on it. It is quite absurd that we should not seek to ban the use of drugs. If people who have been found to contravene the rules are in the Olympics, I hope that we do not end up with a 100-metres race where half the competitors have been guilty of previous drug offences. We do not know what the long-term effects of taking drugs are, but it is extremely unlikely that the muscles that one has built up with steroids disappear very quickly. I hope that we can take a tougher line on this, and I welcome the line that my noble friend and his colleagues have been taking.

In the course of our previous debates—we have spent a while debating these issues—the question arose of what happens if people arrive at the stadium with tickets which they cannot use. At an earlier stage, my noble friend Lord Coe said that the committee was considering whether it would be possible to hand in tickets officially, rather as one does with Wimbledon tickets if one is leaving after a particular match, so that they could then be resold at face value. I am not clear where we are on that; we have been left rather in the dark.

Our debate in Committee on the Bill was also rather cut short on the question of protesters. Given the problems that we have had in Parliament Square, we do not want to find a whole stack of people camping outside the stadium protesting about issues which may well be entirely irrelevant. Are we satisfied that the rules for dealing with protesters—particularly the establishment of any form of permanent operation for protest during the course of the Games—are under control?

We must certainly hope that the overall effect of the Games—I declare an interest as a patron of my club, Herne Hill Harriers—will be greatly to encourage participation in sport. The Games authorities have been very good in seeking to ensure that people come along, watch and are encouraged to take up sport in various shapes and forms. That should be the best legacy from the Games. It means that we will have to provide the facilities. In that context, the proposals to change planning laws, and so on, should make it clear that if planning permission is given which eliminates a sporting facility it is replaced with something of equal value.

All those are issues for the future. Meanwhile, we must hope that our team does well. We must encourage them in every way possible. Finally, we should congratulate, not least, those in this House who have been actively involved in the whole operation—in the same way that Lord Burghley and others were back in 1948. That is a good tradition. I think that they have done a very good job and I hope that the fruits of their success give us a major national event of which we can all be proud.

15:48

[Baroness Ford]

My Lords, I thought, when the Minister opened the debate and was talking about the great events of this summer, that she might have mentioned that Chelsea had won the Champions League on Saturday night. This Peer certainly had a very happy husband—icing on the cake of a great sporting summer.

More seriously, this is the last time we will debate the London 2012 Olympic Games in your Lordships’ House before the opening ceremony on 27 July. As we know, many Members of your Lordships’ House have played important roles in securing, planning and delivering the platform for the Games. In the next few weeks, those roles will extend to staging the Games and to delivering Team GB’s performance. We all hope for a fantastic Games and a once-in-a-lifetime experience for so many people across the UK who will be participating in many different ways in this phenomenal event.

For many people, that will be the culmination of their Olympic experience, the end of a great adventure, but for an important group of people it is only the end of the beginning. Those are the people who will carry on, assuring the legacy of the London Olympics. It will be no surprise to your Lordships that it is the legacy that I wish to dwell on this afternoon, and in particular the legacy promised to the people of east London. It is a legacy of homes, jobs, aspirations and improved life chances, for all these things were embodied in the promise made in Singapore in 2005, when the UK bravely asserted that these Games would become completely embedded in the regeneration of east London. That incredibly bold and ambitious claim had never been attempted before.

Seven years later, what progress has been made? No other Olympic city has ever taken on the level of transformation that has occurred in east London. Stratford now arguably has the best connected public transport in London. As the Minister mentioned, the £1.5 billion investment made by Westfield is complete and trading way beyond its wildest expectations. It is a phenomenal success. The 500-acre Olympic park has been utterly transformed from the industrial wasteland that characterised that site, which I knew from way back, long before the bid. I did not even know that there was water on that site; now there are 7.5 kilometres of beautifully reclaimed waterways. The site is a beautiful new park—a royal park, of course, to be named in this great Jubilee year as the Queen Elizabeth Olympic park. That phenomenally well designed green space and those reclaimed waterways and reinstated natural habitats all frame some of the best sporting venues that the world has to offer. In due course, beginning this autumn, they will be surrounded by some of the best family housing that London has to offer. It is quite a phenomenal achievement and has never been done before.

The IOC president, Jacques Rogge—not always an easy man to please, as the noble Lord, Lord Moynihan, would testify—confirmed London’s achievement at the last IOC session when he said:

“London has raised the bar on how to deliver a lasting legacy. We can already see tangible results in the … regeneration of East London. This great historical city has created a legacy blueprint for future Games hosts”.

Praise indeed, and none of this has occurred by accident. London learnt the lessons of other host cities that left the thinking about legacy until after the Games. Generally, that was much too late, so in 2009 the Government and the Mayor of London set up their legacy organisation, which I have had the most enormous privilege to chair from its inception. Our role was simply to focus on delivering on the promises made in respect of the Olympic park. As the noble Lords, Lord Higgins and Lord Addington, have mentioned, there is a much wider legacy—a sporting and participation legacy—but our brief was the legacy from the park.

Those promises were in two parts. First, we had to deal with securing viable futures for the permanent venues designed for the Games, which is not always an easy task. It has been very important that these venues, which in other countries have often had very mixed fortunes after the Games, were viable in a way that made them commercially successful. I do not imagine that the taxpayer would have appreciated having to subsidise these venues after the Games when so much public money had been already spent on them, so securing commercially viable futures, as we have been able to do with six out of the eight venues, has been a great success. Yet this would not be a success if, in so doing, we had priced local people out of these venues.

Here I pay tribute to the noble Baroness, Lady Doocey, whose committee at the London Assembly really challenged and encouraged us. It was especially important to us to secure a pricing structure that pegged entry and participation at these venues to the local market. In other words, the cost of a swim in the Olympic aquatics centre is pegged at the same price as at the surrounding local authority pools, so there is no question that access to these venues will somehow be for visitors or elite groups. They are absolutely affordable for local kids and local families.

The Olympic village, likewise—now completely presold, unbelievably, in the current banking and property market—will have a high proportion of affordable homes, delivering the promise made on housing in 2005. Pulling off this balance has often been challenging but frankly hugely important for the credibility of the promise to local people. Of the 7,500 jobs already created at Westfield, the vast majority have gone to local people, demonstrating again, as the Minister mentioned, that the legacy is bearing fruit even before the Games begin. That was the first part of our job.

It will take longer to know whether the second part of our job—the legacy—has worked because the real success of the Games will not be fully clear for some years to come. That is because it will take some time to see the investment in Stratford fully bear fruit in the wider regeneration of that part of east London. To track progress in a methodical and highly visible way, the Olympic host boroughs and the Mayor of London have adopted the simple concept of convergence: the idea that, if the Games achieve what they set out to do, over a 20-year period all the social indicators that currently lag the rest of London will improve to converge with the London average. Targets such as educational attainment, public health outcomes, employment and income levels have been set to measure progress over that period. Watching Stratford visibly improve, as I have every week for four years, suggests to me that things are on the march, and I have enormous faith that change will happen in the way that we all hope.

An interesting point is that when London was beset by the appalling riots last summer, it was noticeable that one of the few boroughs that experienced virtually no trouble was Newham. I am sure that people in Newham have real pride in and appreciation of the work and investment that has gone into the area, and I do not believe that it was a coincidence that this borough, one of the poorest in London and the most ethnically diverse, did not get caught up in the madness that afflicted other parts of the capital last year. That is a point worth reflecting on.

In this last debate, we should pay sincere tribute, as others, particularly the noble Lord, Lord Haskel, have done, to the work of Sir David Higgins and his successor Dennis Hone and their teams at the ODA. The completion of the park ahead of time and under budget has been the most incredible achievement, as others have said, and a great testimony to the UK construction industry. All professions, especially the chartered surveyors, of which I am an honorary member, have played their part in making this project a world-class success. I am particularly proud that so many of my former colleagues at English Partnerships formed the backbone of the ODA team, bringing all the skills they developed over a number of years on large, complex sites across England. We really understand how to do this kind of transformation in England, and the remediation and regeneration of this site are now regarded as a genuinely world-class exemplar.

My finishing line has hoved into view a little earlier than I had expected. I had planned to step down after the Games as this phase of the legacy finishes and a new phase of construction begins. The park will close for one year to allow significant construction works to take place to remove the Olympic overlay, to build the network of bridges, new roads and pathways in the park, to complete the landscaping of the parkland and to resize the venues for legacy use. This is a sizeable construction project in its own right and will take a year to complete before the north part of the park reopens exactly one year after the Games on 27 July 2013. The south part of the park, with the more complicated reconfiguration of the stadium and the aquatics centre, will open quite quickly thereafter at Easter 2014. I let the Mayor of London know last year that I felt that this phase should be overseen by a new chairman who would be able to devote significant time to this still-considerable task. After the election, the mayor immediately appointed my successor, so I shall hand over after my board meeting tomorrow.

The stadium and the broadcast centre remain to be finalised. As the noble Lord, Lord Higgins, hinted, it was always intended that the stadium would be the new home of UK athletics, the new Crystal Palace. Its future has been cemented by the UK winning the right to host the 2017 world athletics championships. That is a phenomenal legacy from a sporting point of view. My desire from the start was always to see whether there were compatible uses, which the noble Lord, Lord Higgins, hinted at, that could sit alongside athletics to bring life and revenue to the stadium all year round. In the past week, that commercial process has been extended by some eight weeks, but it will come to a close in a couple of months and I look forward to welcoming its very successful outcome.

It has been a pleasure and a privilege to be a part of this great project and to be part of assuring the legacy and of delivering one of the most ambitious promises that any Government and city have ever made. I have had the pleasure of working with an outstanding team of people at the Olympic Park Legacy Company and of working with two amazing Ministers: Hugh Robertson, the Olympics Minister, and, of course, the incomparable force of nature that is the right honourable Tessa Jowell, who everyone on all sides of the House understands has done more than anyone in government over 10 years to ensure that these Games are a truly outstanding success.

As the Games finish, the legacy work continues apace, and we must not forget the promises made to the communities in east London. I know that the host boroughs will keep up that pressure, and I look forward to watching the London Legacy Development Corporation get on and finish the job.

16:00

[Lord Bates]

My Lords, it is a privilege to follow the noble Baroness, Lady Ford. I pay tribute to her and all the work that she has done in making the legacy of the London Games something of which we can all be proud, which will live on in the lives of the people of east London for generations to come. She has made an amazing contribution, as have many Members of this House, including my noble friend Lord Coe; the noble Baroness, Lady Grey-Thompson, in the Paralympics; my noble friend Lord Moynihan in the British Olympic Association; and the noble Baroness, Lady Doocey, on the GLA’s Olympic committee. As well as showcasing all that is good about Britain, it also showcases all that is good about this House, which we ought to find encouraging.

Before I encourage my noble friend and the Government to go, in the sporting tradition, further, faster and higher on the Olympic Truce, I place my remarks firmly in the context of my noble friend’s opening speech. She absolutely set out the stall for what has been achieved, which is quite phenomenal. We are all very proud of the way that this has been delivered on the sporting, commercial and construction sides. They are all things in which we can take a great deal of pride.

I first raised the Olympic Truce in your Lordships’ House in another “take note” debate on 14 June 2010. I did so for three reasons. First, the Olympic Truce is not just part of the ancient Olympic Games; it was the entire point of the ancient Olympic Games. They were not about sporting competition and they certainly were not about legacy or commercial activity. They were about putting a brake on the constant fighting in the Peloponnese. That was the purpose of the Games. It was expressed through the Olympic Truce, which at that point was a sacred truce. I want to make sure that we remember what the Games were about and what their inspiration was.

Secondly, the Olympic Truce today is not just some general “motherhood and apple pie” notion that surrounds the Games. It is something more than that. It is a resolution of the United Nations General Assembly. It is a resolution that is proposed by the Government who host the Games. Therefore, as this was the first resolution that the coalition Government presented to the United Nations General Assembly, it should be taken seriously. In ancient times the truce was sacred; in modern times it has become rather symbolic. This is a great opportunity for us to remember what it is about.

Thirdly and finally, particularly since the torch has now arrived in the UK, I take slight issue with our having broken the tradition of allowing it to be carried through different countries on an international relay for the first time. The torch heralds the Olympic Truce. When you are heralding an international truce, it is helpful if you visit other countries on the way. I feel that it was a missed opportunity to run the torch relay up through the Balkans—which have known great pain and sadnesses and still have great tensions—across the battlefields of the First World War and the Second World War, and the front line of the Cold War, and then bring it to London so that we can remember. I realise that these decisions were taken many years ago. None the less, I wanted to say that.

I want to reflect a little on what has happened in the intervening two years. There has been some movement and I pay tribute to people for that. Just 10 days ago, my noble friend Lord Moynihan and I had the great privilege to be in Olympia when the Olympic flame was lit. As it was lit, the president of the International Olympic Committee said:

“We have come to the ancestral home of the Olympic Movement to light a flame that will soon cast its glow over the entire world … It is a beacon for the Olympic values of friendship, excellence and respect. It is a symbol of fellowship and peace. In recognition of those values, the United Nations has unanimously approved a resolution calling on nations to build a peaceful and better world through sport and the Olympic ideal”.

That is what the president of the IOC set out as the purpose of this flame and these Games. I fully understand the reasons why those decisions had to be taken after the disruption of the torch relay for the Beijing Games. However, I do not think that sporting prowess is demonstrated by anything other than courage. Someone setting out to disrupt the proceedings should not cause us to drop the relay—it should cause us to reaffirm its purposes.

This campaign on the Olympic Truce took a little while to get going. However, I was delighted when my right honourable friend the Prime Minister said:

“We wish to make the most of that historic opportunity, we are considering other international initiatives to promote the spirit of the truce … the Foreign and Commonwealth Office is engaging with our embassies worldwide”.—[Official Report, Commons, 29/6/11; col. 953.]

It has been truly fantastic to see that going into operation.

The Foreign and Commonwealth Office and embassies around the world have embraced the ideal of the Olympic Truce for London 2012 in a way which is quite inspirational and absolutely consistent with its values. That is due to the leadership of the Minister, Henry Bellingham, who has responsibility for the matter. We hear a lot about the Minister for the Olympics. The Olympic Truce is an important element of this role and Henry Bellingham has done an outstanding job of promoting it.

The UK mission to the United Nations also managed to pull off one of the all-time records in international relations. Not only did it promote the Olympic Truce resolution, it also managed to get all 193 member states of the United Nations to sign up to it before presenting it on 17 October 2011. The UK mission even went one better and got everyone to cosponsor it, which was a phenomenal achievement. In terms of international relations and the Olympics, it is at least on a par with some of the other wonderful things that we have seen about legacy, construction and sport.

We need to hear more about the Olympic Truce, because it has been achieved in such a fantastic way. Resolution A/66/L.3 represents a mandate and an international consensus. Its long preamble runs on for three pages. Bless the Foreign Office for ensuring that every line is there and every interest is represented. Essentially, however, the preamble comes down to two things. First, it urges the member states which have signed up to the truce to observe it individually and collectively for the period of the 30th Olympic and 14th Paralympic Games. Secondly, it calls on the member states that signed up to it to use sport as a tool to promote peace, dialogue and reconciliation in areas of conflict during and beyond the Olympic Games.

Those statements are unambiguous. No one can say, “We didn’t know what we were signing up to. We don’t know whether we can implement it”. They have signed up to it. What is more, Her Majesty’s Government have proposed it to the United Nations General Assembly. That places on us a particular responsibility to ensure that it is implemented. Not surprisingly, after the news that it had been fully supported by all 193 member states, my noble friend Lord Coe, who was presenting the truce resolution on behalf of Her Majesty's Government, said:

“It has never been more important to support this General Assembly resolution by actions, not just through words”.

That was what my noble friend the Prime Minister was saying when he said that this represented a “historic opportunity”.

There are still two months to go before the Olympic Games actually start. Where do we stand now? Well, we perhaps stand a little bit too much on the words, which have been excellent and encouraging and are coming in every day, with various statements of how much the resolution is welcome and how much people believe in the Olympic Truce and the Olympic ideal. We are just a little short on the actions. Not that there have not been any. A cross-departmental Olympic Truce committee is now operating, which is taking advice from our excellent NGOs working in conflict areas around the world to see what can be done. There is even an Olympic Truce officer in the Foreign and Commonwealth Office—and, as the Foreign Secretary said, have you any idea how difficult it is to get additional headcount into the Foreign Office for an initiative? That is something else to be welcomed.

About 32 countries have registered particular schemes relating to the Olympic Truce, from Sudan to Sarajevo, Costa Rica and the Philippines. However, there is still much more that can be done to build on this extraordinary and unique historic opportunity and international consensus. If we achieve this and for the first time in the modern era the Olympic Truce is taken seriously, that will be a legacy to hand on to Rio. We can say, “Listen, you go further, faster and higher in implementing the ancient ideal that is the entire purpose of the Games”.

16:11

[Lord Davies of Oldham]

My Lords, the noble Lord, Lord Bates, brings a unique contribution to this debate in relation to the Olympic Truce. Most of us just have the expectation that all member countries of the United Nations will actually participate in the Olympic Games. We are all too aware that in the past politics has intruded in a particularly dramatic way upon certain Games. But we seem to be past that problem with regard to these Games. That is why I congratulated the Minister on the bullish way in which she introduced a report on progress regarding the Games.

Something has been missing among the general congratulations on how much has been achieved so far. I hope that this House reflects the optimism that we will do exceptionally well in the London Games. There is no doubt that greater efforts have been made for the preparation of our athletes—I have no doubt that the noble Lord, Lord Moynihan, is going to make a contribution on this later, but I am first in the batting order on this occasion—and we look forward to a performance that will cheer the hearts of all of us who follow British sport and from time to time have to sustain disappointment. We have great expectations with regard to these Games.

I had the great privilege of introducing the legislation in this House on the Olympic Games, and answered innumerable questions on the progress of the preparation for them. There is one question on which I have been challenged. I am glad that the noble Lord, Lord James of Blackheath, is in his place, because he asked me about opportunities for religious worship during the Games. He is uncertain about the answer I gave, which was one of great reassurance that provision will be made for multi-faith observance during the Games. We should recognise how much in certain cultures this is of the greatest importance; after all, we all remember the 1924 Olympic Games when Liddell was not prepared to run on a Sunday. That dimension of those participating in the Games deserves proper recognition. I hope that the Minister will give a reassurance that we have fulfilled the expectations of the International Olympic Committee with regards to this provision.



I congratulate my noble friend Lady Ford on the work that she has done. We look forward to some outstandingly dramatic weeks in the Olympic Games. However, all along—this was true when the bid was first presented—we have all recognised that the Olympic Games, and the vast resources committed to them, must have a lasting legacy. My noble friend Lady Ford chaired the committee that fulfilled the expectation of that legacy. These are not marginal issues: big forces come into play when international, or even national, sport is at stake. The commitment that the Olympic stadium should remain a stadium for our future athletics competitions was threatened by the mighty forces of Premier League clubs, which were eager only to deploy their staggering resources to transform the stadium into one used for football alone. I am delighted that my noble friend and her committee withstood those pressures and safeguarded the interests of athletics.

However, I have one or two anxieties, which I bring to the Minister’s attention simply because they are felt by the whole country, but particularly by Londoners. I hope that she will give reassurance on these matters. The anxieties revolve predominantly round transport. Central London will have a vast influx of people making demands on our transport system. We should remember that the Olympic Park is only a few short miles from the centre of London. What is more, as far as possible all the other centres are concentrated in the immediate environs of London. That is very much to the credit of all those who have organised the Olympic Games but puts the most enormous pressure on our transport system, which at times creaks under present usage. I draw to the Minister’s attention the obvious anxiety that all our Tube lines, with the exception of the Jubilee Line, have shown improved performances this year compared with last. However, the Jubilee Line has a greater number of stoppages and delays than it did last year, and it is one of the crucial lines going through the centre of London straight to the terminus at Stratford. It is important that we are given reassurance on that front.

Secondly, there is anxiety about Heathrow. Any of us who have travelled to other countries where delays occur at airports know that that colours one’s perspective on the experience that one enjoys when visiting the country concerned. We all know that if you enter as an alien at certain airports in the United States you can be subject to the most inordinate delays. During the Games, we cannot afford to face the level of delays that we have had at Heathrow in recent months. This would cast a shadow over our visitors that would detract severely from their experience of the Games. Therefore, I hope that the Minister will clearly identify how we intend to solve those issues at Heathrow consistent, of course, with the need to sustain our security arrangements while ensuring that people and young children do not have too pernicious an experience when entering the country.

Finally, there has been significant investment in transport in recent years, which is paying off magnificently well in certain areas. The fact that the Javelin train will hurtle at high speed from St Pancras to Stratford is an indication of that. However, something about transport worries me: does it put the customer first? Can anyone explain why families travelling with young children on the Jubilee Line, who take between 30 and 35 minutes to arrive at Stratford, will find that that station, in common with nearly all our major termini in London and across the country, no longer provides public lavatories? The last one at Stratford was closed only a matter of months ago. What on earth is going on as regards such a basic requirement for people who are travelling particularly on the Tube, which by definition can have no facilities? The terminus has no facilities at all. That seems to represent a lack of basic concern for the traveller, and I hope that that attitude does not permeate our transport system during the period of the Games, when it must serve the people to the best of its ability.

16:21

[Baroness Doocey]

My Lords, I have been involved in scrutinising the delivery of the Games and their legacy since London won the bid. I have also been the mayor’s representative on the Olympic Security Board, which scrutinises the security of the Games.

There is no question that there is much to celebrate—the fact that venues have been delivered on time and under budget; the fact that the new sporting facilities are a triumph of British design and engineering; and the fact that a large number of British companies have benefited from the £6 billion-worth of contracts. The creation of the Olympic Park, together with the transport upgrades, has given the area all the ingredients to attract visitors, tourists and new businesses for many years to come.

I entirely agree with the comments of my noble friend Lord Addington about the Paralympics, and great credit must go to LOCOG, which was determined that this time the Paralympics would not be the poor relation to the Olympics. LOCOG has done some excellent work to take the needs of disabled people on board, and schemes such as Ticketcare, where disabled people who are unable to attend the Games without a carer can now bring a companion, free of charge, will make a very great difference to the needs of large numbers of disabled people.

Another achievement is the planning for Olympic security. I have been extremely impressed by the calibre of the people from all government departments, the police and the military who serve on the Olympic Security Board. We can never be complacent about security, but I have absolutely no doubt that the safety of London is in the best possible hands.

There remain, however, some areas of concern. The sporting legacy is a mixture of success and failure. The good news is that Kate Hoey, as the mayor’s Commissioner for Sport, has raised £40 million to provide training for coaches and investment in sporting facilities. Some exceptionally good work is being done on the ground by organisations such as the London Youth Games, which has helped 2,000 disabled young people get into sport and enabled other young people to qualify as sports officials. On the other hand, the Government have been forced to abandon their target of using the Games to inspire 1 million people to play more sport—a target that was never realistic.

The promised legacy of jobs and training opportunities for local unemployed people is also questionable. Although the targets have been met, they were set far too low to be meaningful. Likewise, while many of the Olympic buildings have their long-term future use assured—I pay great tribute to the inspirational leadership and vision of the noble Baroness, Lady Ford, in all that she has done in this regard—the future of the main Olympic stadium and media centre nevertheless remains undecided. They must not be allowed to be a drain on taxpayers for many years to come.

There are also concerns about the long-term use of the Olympic park. After the Games, it will become a highly desirable place to live, and thousands of new homes and communities will be built. However, my concern is that no public money is allocated to fund this transformation Without this investment, private developers will be free to determine the fate of a site, and I believe that it runs the risk of becoming another Canary Wharf—a brilliant success commercially that benefits only wealthy newcomers and foreign investors at the expense of long-standing residents and local communities. This outcome would completely negate the original concept and vision, which was to provide mixed communities and facilities, with a substantial proportion of the homes and jobs going to local people.

There are also some lessons that we must learn for the future. The first concerns the allocation of tickets to the public. A ballot was undoubtedly the fairest way to sell them but, given that demand was bound to outstrip supply, there should have been a ceiling on the number of tickets each person was allowed to purchase.

It is also unjustifiable for 14,000 tickets to have been set aside for central and local government officials, while huge numbers of the public failed to get any tickets at all for the Games. If a ballot was the fairest way of selling tickets to the public, the same system should have been used for government officials.

LOCOG promised that a significant number of tickets would be affordable but has so far refused to publish details of the number of tickets sold at each price point for each event. This has resulted in widespread suspicion that too many tickets for key events have been allocated to VIPs at the expense of the public.

The final lesson we must learn concerns the behaviour of the International Olympic Committee. The IOC’s demands increase with each successive Games, yet, given the keen competition to host the Games, no one dares to challenge it. But how can “Zil lanes” for chauffeur-driven limousines, and traffic lights that automatically turn green as they approach, be justified when they result in gridlock for the rest of London? Sooner or later, some host city must have the courage to stand up to the IOC and say, “Enough is enough. We will happily treat you like honoured guests but we are not prepared to treat you like gods”.

The fact that the management of the Games has gone so well is due in no small measure to the exceptionally talented team of people who have been in charge right from the beginning. I have sometimes vehemently disagreed with some of their policies, but I have absolutely no doubt that they will produce the greatest Olympic and Paralympic Games ever staged.

So let us celebrate the extraordinary achievements of the past seven years. Let us rejoice that Britain has demonstrated to the world that it can deliver major construction projects successfully, on time and within budget—a powerful message at any time but especially in the current economic climate—but let us never forget the promised long-term legacy and let us do everything in our power to ensure that the legacy is honoured.

16:28

[Lord Moynihan]

My Lords, I start where my noble friend Lady Doocey finished by recognising London 2012 as a story of great achievement, great British creativity and great British involvement. The fact that the Olympic park was completed on time and on budget is to a great extent thanks to the skill and professionalism of more than 1,000 British businesses. The Olympic Delivery Authority’s contract for the construction of the Olympic stadium resulted in work for 240 UK companies, with many more subcontractors. This included the supply of steel from Bolton, turf grown in Scunthorpe and seats from Luton. More than 40 UK companies won contracts to work on the velodrome, including supplying the timber for the cycling track from Sheffield and seating structures from Barnsley.

The Olympic and Paralympic Games have been a catalyst for delivering this urban regeneration of the East End in six years rather than 26. My noble friend in sport, the noble Baroness, Lady Ford, has been the torch bearer in the project to steer that area of London into a vibrant urban legacy for future generations—I emphasise that to my noble friend Lady Doocey—of the local communities. That has been at the heart of everything she has done, for which she deserves the congratulations and support of us all.

We are now ready for 15,000 athletes from more than 200 countries to come to both the Olympic and Paralympic Games. They will be competing for 4,400 medals. More than 3,000 officials will preside over the world’s fiercest competition and—would you believe it?—20,000 accredited media will carry the action to billions of people around the world. We are holding the equivalent of 26 world championships at the same time over 19 days, transitioning the city and then holding another 20 world championships for the Paralympic Games over 12 days. More than £700-million worth of goods will be procured for the Games, including 900,000 pieces of sports equipment—every one to perfection. For example, there are 8,400 badminton shuttlecocks, 6,000 paper archery target faces and 510 hurdles for the athletes. We expect around 8 million spectators, with 800,000 people expected to use public transport to travel to the Games on the busiest day. I say to my noble friend Lord Davies that, of course, transport is a concern and security has also been expressed as a concern. However, to have an investment because of the Games of some £6.5 billion, not least in upgrading and extending transport links to get people to and from the Games, to ensure that London keeps moving, is surely beneficial both for the Games and as a legacy project.

I shall refer to the comments made by the noble Lord, Lord Haskel; I was going to say my noble friend, as he frequently is on the subject of sport. He raised an important issue. I am not here to defend the definition of a breakfast menu; nor, I am sure he would accept, am I here to argue over the margins of the legal definition of ambush marketing. I hope that I can give him some comfort by saying this from the London organising committee perspective. It raised some £2 billion from the private sector to put into the Games. That has come not least from TV rights and, of course, ticket sales. Above all, it has come from sponsorship rights. Protecting those sponsorship rights is inherently important in retaining the value of that essential contribution to a £2 billion package which has not resorted to government funding.

I think that the noble Lord was focusing more on the future. In that context maybe I can give him some comfort as I have a good degree of sympathy with his point. At the end of this year, the rights will return from the London organising committee to the British Olympic Association. We are in discussion at this time—well in advance of the end of the year—to see how we can showcase British expertise among the contractors and subcontractors who have been involved with the project, to ensure that they get some recognition moving forward, without losing the right of those commercial advantages that the British Olympic Association will have to support the young athletes of the future once the Games have moved on from London 2012. The noble Lord makes a very important point but I give him the assurance that we are already in discussion with those contractors, such as Sir John Armitt—he has been critical in this, as the noble Lord knows—and with the Government to see whether we can find a solution to recognise and showcase the outstanding work that has been done for these Games, and to work with those companies to make sure that not only they succeed but that young athletes in the future are given the support they so richly deserve when it comes to moving on to future Olympic and Paralympic Games.

[Lord Haskel]

I thank the noble Lord for that reassurance, but the point that is being continuously made to me is that the Olympic city itself is a wonderful shop window and it is not allowed to use the Olympics as such.

[Lord Moynihan]

I have made a distinction, I hope, in trying to assist the noble Lord about what happens when those rights return to the British Olympic Association. He made a very important point about the future benefit to those companies being showcased for the work that they have done and what is happening today. What is happening today is clearly a matter for the legal department and, as I say, I am not here to defend a legal department that is looking in detail at the definition of a breakfast menu. However, I am very concerned as chairman of the British Olympic Association that companies that have done a huge amount of work for these Games should be able to showcase in the future and win further contracts in the future. Sports facilities around the world are a multimillion-pound business, and it does not end with the Games in London. For them, it is the beginning of a long road, and we should be there to support them on that road. We need to get the balance right between ensuring their recognition—which is important to their business—on the one hand, and on the other the return of the rights of the British Olympic Association, which for over one hundred years had to rely purely on private sector funding; there was not a pound from government in those hundred years. The only way to do this is through the sale of the rights through sponsorship. I believe that we can achieve that balance.

I will move on to the work of the Government. The House should have nothing but praise for the Minister for Sport and the Olympics, Hugh Robertson. He fought for our athletes in maintaining funding for our Olympic and Paralympic teams after London 2012, going into the Rio cycle. He has boosted the credentials of this country to make sure that we have a decade of sport, by supporting our successful bids—and I emphasise that all these have been successful—to host the Rugby League World Cup in 2013; the Commonwealth Games, of course, in 2014; the Rugby Union World Cup in 2015; the World Athletics Championships in the Olympic stadium in 2017, and what a magnificent achievement it was to win that bid; and, not least after our great victory today, the Cricket World Cup in 2019. This will be a decade of sport for the United Kingdom.

However, Hugh Robertson will not be short of future challenges when the curtain falls on the Olympic and Paralympic Games. There is a need to restructure British sport. It is still a myriad of too many quangos and of public sector-driven and overlapping bureaucracy. I have always believed that the role of government in sport is to empower, not to micromanage. Where sport is at its best, it is driven from the athletes up, with the support and enthusiasm of their parents, families, friends, clubs and schools. It provides the ideal opportunity to implement the Prime Minister’s earlier objective of “big society, not big government”. The months after the Games will provide the best chance in a generation for fundamental reform. A leader like Hugh Robertson, who has won respect across the sporting world, has the ability to take on the forces of the past and deliver a true sporting legacy for the future. However, delivery of that sporting legacy will be our biggest challenge.

Against this background, the British Olympic Association will continue to perform its role as an independent voice for sport. When the Government, the mayor’s office’s attention and the Olympic movement move on and LOCOG is disbanded, we will still be there for the athletes. It is my view that sport holds a mirror to society. The values of sport reflect the values of society. Many of the principles and ideals inherent in sport have a broader application to our lives as a whole. The standards of probity and integrity in sport should mirror the highest standards of behaviour in society. The corresponding forms of sanction and discipline should apply if that behaviour is flouted. Keenly contested though it is, winning at any cost is inimical to the very essence of sport and to its philosophy of team spirit, honesty and loyalty.

The concept of fair play is one of sport’s most cherished tenets. Cheating, by whatever means, from overt fouling to match fixing to doping, is not fair play and has no place in sport. On 7 November last year, the greatest living Olympian, Sir Steve Redgrave, stated, with reference to the World Anti-Doping Agency:

“A two-year ban for doping is almost saying that it’s acceptable”.

He was speaking for clean athletes across the globe. Yet last month was marked by a deeply disappointing development. The Court of Arbitration of Sport formally declared the British Olympic Association’s lifetime ban for serious drugs cheats unenforceable. That effectively denied the British Olympic Association the autonomy to select Team GB athletes. We held a special meeting of all the governing bodies of sport to consider the effect of the ruling. There was a universal condemnation of the World Anti-Doping Agency’s decision to reduce to two years the bans for first-time offences. Let us hope that it is not tantamount—as postulated by my noble friend Lord Higgins—to giving a green light to the use of drugs in sport. If this proves to be the case, and nothing is done to stem the tide, we will drift inexorably towards a sporting world in which competition between athletes is equally competition between chemists’ laboratories. At the British Olympic Association and in the corridors of the IOC, national Olympic committees and international federations, we may have lost the battle. However, on behalf of the athletes whose interests we represent, we must win the war.

My noble friend Lord Higgins suggested that the benefits of performance-enhancing drugs may pass and go away during a period of two years. That may be a seriously wrong observation. If I had taken growth hormones throughout my teens and had ended up six feet tall like my noble friend Lord Bates, I guarantee that I would not have shrunk back to my present height in my 20s. That was a light-hearted way of making a serious point. If one takes a cocktail of drugs to enhance one’s performance in training and can do eight, nine or 10 times more circuit training in the winter than one would otherwise have done without those drugs, even when one comes off the drugs one can attain high performance levels with the muscular structure one has now acquired illegally by taking the performance-enhancing drugs, sometimes for a very long time. The case of growth hormones is extremely important, especially for people in their teens.

[Lord Higgins]

I entirely agree with what my noble friend said; perhaps he misheard me.

[Lord Moynihan]

I am delighted that I did mishear—and if I did, I may have done so slightly mischievously in order to make my point. I am more than grateful to my noble friend for raising the subject.

I turn briefly to the Paralympic movement. There is no doubt that the Paralympic Games this summer will be one of the highlights of 2012. When I was Minister for Sport, I went to see my then Secretary of State, Nick Ridley. He was not the greatest fan of sport. I recall a packed House of Commons for the Second Reading of the Football Spectators Bill. I was a nervous Minister for Sport and he, kindly as ever, offered to do the most difficult task, which was to take on the Second Reading speech in a packed House. The former Minister for Sport, Denis Howell, leant across the Dispatch Box. I had been going to football matches regularly for the previous couple of years in order to be able to answer questions. Denis Howell asked: “So, Secretary of State, when was the last time you were at a football match?”—to which Nick Ridley replied, “At Eton, under duress”. It was a classic example that contrasted with how many days I had spent at football matches, watching 18 First Division games and 14 from the rest of the divisions. He was a great Secretary of State.

I went to see him that Wednesday morning. My headline requests were that we should have £1 million to set up the British Paralympic Association; that we should establish a ministerial review of disabled sport; and that we should request support from government to encourage the IOC to make it a requirement that any city bidding to host the Olympic Games also hosted the Paralympic Games thereafter. Nick looked at me and simply said, “Fine”. I did not stay for further discussion, but said thank you and exited to a broad smile from his private office.

True early heroes of the Paralympic association such as Bernard Atha and Dr Adrian Whiteson in particular—the latter has gone on to mastermind the Teenage Cancer Trust—should be celebrated this summer. Since that time, many Paralympians have inspired us, showing a generation that it is the ability of athletes that we should focus on rather than their disabilities. The seeds of this transformation in society were to be found in Headley Court, Stoke Mandeville and the work of Jack Ashley and the others in Parliament who steered through much-needed legislation on behalf of the disabled. This year’s Paralympic Games will be the culmination of all their work.

The British Olympic Association has been transformed over the past four or five years. It has listened to the voice of athletes as never before. The voice of athletes has been heard in the meetings of the advisory board, on which my noble friend Lady Wheatcroft and the noble Lord, Lord Paul, continue to sit and give their guidance and wise advice. When I walk in to meetings of the National Olympic Committee, I am proud to see in front of me one of the most expert boards in British sport, which is why the BOA will continue to play a central role in the centre of sports policy.

However, what we will focus on now, above all, is giving maximum performance support to our athletes, all 550 of them who will be selected for Team GB this summer. One hundred and one have already been selected. Why should we give them that support? One example gives the answer. If you were fortunate enough to watch the Games in Athens, you would have seen the great gold medals that Britain won in the coxless four, Kelly Holmes’s 800 and 1,500 metres, the men’s 4 x 100 and Chris Hoy’s first gold medal in the 1 kilometre time trial. The final times of those five gold medals added together were 12 minutes and six seconds, but the difference between all five being gold and all five being silver was 0.545 of one second. That is why it is so tough to win gold medals at the Olympic Games, and that is why the work of the British Olympic Association should be devoted—every minute, every hour, every day—to supporting every one of our athletes on Team GB to deliver their best performance on the day. If we do that, we have the talent to match the success that we had in Beijing.

Our aspirational target remains fourth place in the medal table. It will be tough, incredibly tough. We will not beat the Chinese, Russians or the Americans, and the Germans and the Australians will be very much on our heels, but if we can continue to support our athletes, along with their families, their coaches and their governing bodies, we will see remarkable feats of sporting success this summer. I have every confidence that our Olympic and Paralympic teams will deliver, and I wish them well.

16:47

[Lord Graham of Edmonton]

My Lords, it is a joy and a pleasure for me to follow the noble Lord, as I have done more than once during these debates. It is great that we have this opportunity so near the event to remind ourselves, and those who care to listen, what it is all about.

What it is all about came to me this morning when I went to see my doctor. I spoke to the nurse and said, “Was it not great this weekend?”. She said, “What do you mean this weekend?”. I said, “Chelsea winning the cup”. She said, “Oh!”. I said, “You have got two daughters; surely they are interested”. She said, “Oh, they are mildly interested but they are waiting for the Olympics. They are in their teens and they are keen and excited”.

This reminded me about the theme which ought to be running through this debate. What we are about to enjoy and participate in is a chance in a lifetime; it is something that many of us have thought about and wanted to take part in. One of the joys of being in this House is recognising the quality of people from different spheres of activity. One knows the various people I am talking about. When the noble Lord, Lord Higgins, entertained us with his wisdom, I remembered him when he ran for England or Britain and I was behind him. I was the shadow; I was behind him all the way.

I have jotted down some names—the noble Baroness, Lady Grey-Thompson, the noble Lord, Lord Coe and the noble Lord, Lord Moynihan, and in the other place Kate Hoey and Tessa Jowell, have been towers of strength in getting us to where we are. I can remember the excitement when Tony Blair was able to put to the top of his list of achievements getting and persuading the world that Britain was ready and ripe for what is going to happen in the next three months.

I recall the manner in which people can have their enthusiasm bought. I remember the 1948 Games, when I was working for the Newcastle Co-op. We had a sports field and after the Games the runners McDonald Bailey and Arthur Wint came to us and performed; before that I saw Sidney Woodison there. I saw all of them and remember the names and the people but not the events themselves; I was proud to have seen them perform. They left a deep impression of their capability.

I have been staggered at the extent to which all the mistakes that have been made in other parts of the world seem to have been taken into account by the various bodies responsible for getting us this far. When I went to the Library and asked for something on the Olympic Games they gave me a compendium. It is here next to me. The scope and complexity of the matters and the manner in which they have had to be dealt with is fantastic. I have enjoyed listening to debates in this place and on the radio and elsewhere. The noble Baroness, Lady Ford, has had a major part to play in managing the event. I congratulate her and her committee. It seems to me that all of the lessons that could be learnt from the past have been learnt. We will wait and see.

Some of my friends have asked me what I am going to do during the Olympics. I said that I am going to sit at home and enjoy it. When I asked them what they were doing they said they were going on holiday because they did not want to be here. I am amazed. This is a once-in-a-lifetime event. The sight of the supporters of Chelsea and Manchester City going daft in front of their neighbours and friends was hilarious. As someone who takes an interest in sport I can appreciate it. We want to see the same reaction from the people of this country when a British Olympian takes part. Even if they do not win, if they do well or do not disgrace themselves, we should be proud of the fact that they are there.

I am a prominent member of London Councils, together with the noble Lords, Lord Jenkin and Lord Tope, and others. It has done a fantastic job in co-ordinating the activity of councils. I was the leader of a London borough council, more than 50 years ago now. I know the pressures that are on my colleagues on the council now. Despite that, London Councils has a magnificent record of responding to what is going to happen.

I wish the event well. I can remember the excitement of 1948. My wife Margaret and I would go to dinner parties and inevitably people would say how marvellous the Olympic Games had been and mention all the names, and my wife would sit there and smile. They would finally say, “Come on, Margaret, you remember it”, and she would say, “I was there”, and she was able to tell them what she had seen and heard: Fanny Blankers-Koen and people like that. My wife played netball for Essex and enjoyed it. My claim to fame is that I once had a trial for Newcastle Boys—that is as far as I can go. We lost 5-0, and the fact that I happened to be in goal had nothing to do with it.

You are either with the Olympics or you are not; you are either excited or you are not. The media have done a great job, especially through television, of introducing me to sports that I had heard of but had not seen. Everyone who participates on our behalf should have the feeling that the country is behind them. Never mind politics, never mind north or south, never mind the problems—we are all behind them in this great adventure. I congratulate those who are going to represent us and I wish them well.

16:57

[Baroness Billingham]

My Lords, today’s debate has been truly outstanding, with so many experts sharing their expertise with us. It has been a privilege to be in the Chamber today.

We are on our way. The torch bearers carrying the Olympic flame are the Pied Pipers who will ignite the enthusiasm for everyone around them. Travelling 8,000 miles to more than 1,000 communities, the torch relay will link up the whole nation in preparation for the Olympic Games, the greatest show on earth.

The Games will be a showcase for Britain, a chance to shine in a gloomy world, proving to the world that we can plan and produce the Games and ensure that they will be exciting, successful and, above all, peaceful. The mantra that the Games are on time and on budget is in itself cause for celebration. It is a huge achievement and those involved with the outcome are to be warmly applauded. It is a model for teamwork and dedication.

There are many reasons to welcome the successful bid for the Games, not least the magnificent injection today of additional funds from the legacy budget and Sport England into disabled sport. The Paralympics have achieved unparalleled enthusiasm with our Games; ticket sales, media coverage and sport in the community all reflect that. The Paralympics go from strength to strength and make sport for all the reality that it ought to be.

Regeneration of one of the poorest boroughs in the UK comes high on the list of successes: 75% of every £1 spent on the park has gone into the regeneration project. Without the Games, none of that would have happened. It is a huge boost for the area and will benefit people for generations to come. After the Games, there will be five world-class sporting venues, which are much welcomed and indeed needed. Up to 8,000 new homes will be built and the accommodation of the Olympic village will become part of the housing legacy. Again, none of this would have happened or been possible without the Games.

At the very heart of the Olympic project has been the emphasis, highlighted during the successful bid, on the creation of a genuine sporting legacy. A cornerstone of the bid was to inspire a generation of young people through sport. During the latter years of the Labour Government, investment in school and community sport, which laid the foundation for the sporting legacy, was remarkable. The commitment to make available at least five hours of sport for almost every child was a huge breakthrough. Those of us involved in sport, whether in schools or the community, knew that this was the key to a fitter, happier sporting nation. There appeared to be a political consensus; indeed, we had as tremendous role models political leaders who not only paid lip service to the place of sport in their lives but realised that others could benefit. I know to my personal advantage the enthusiasm with which our Prime Minister plays tennis. We have an excellent record playing together for the Lords and Commons tennis club. His fiery enthusiasm and commitment are a joy to behold. Both being left-handers, we argued only over who should take the left court for the return of serve and, needless to say, he gave way very gracefully.

All appeared positive, with new sporting opportunities and help for schools to provide them. That is why I say today that the greatest threat to the hoped-for sporting legacy has come from Michael Gove’s disastrous plan to demolish the school sport programme in his reorganisation of curricula in state schools. Those schools may become sport-free areas. Heads who are driven by school league tables may decide to transfer funds from sport to their academic programme. It is sporting vandalism. Yet the 7% of students attending fee-paying schools still enjoy two afternoons a week of sport and still achieve good academic results, all within the same school week and with extracurricular activities thrown in for good measure.

Many weasel words have been uttered to justify the scrapping of the school sport programme. “It did not always work” is just one feeble excuse. The reality is that it was a stunning success. Michael Gove has dealt a devastating blow to the fundamental way in the majority of young people get started in sport. Of course, parents, clubs and national governing bodies can and do play an important part, but for the vast majority of young people it is the physical education programme in schools which gives them their first taste and love of sport in many guises.

Everyone who signed up to the sporting legacy notion has a duty to return to the Gove decision. It must be reversed, or all our aspirations as to a sporting legacy for all will come to nothing. Will the Minister undertake today to deliver this message to the Secretary of State for Education and to the Minister for Sport? They bear full responsibility for the future.

Already, Sport England’s Active People survey is producing disappointing results, showing that, of the 30 sports measured, only four have seen an increase and 19 have shown a decrease. The implication that the destruction of sport in state schools will have no impact on the Olympic legacy aspiration seems extraordinary to me and others. Does the right hand of the Government have no idea what the left hand is doing? It will undoubtedly negate all the good work that has been done.

As the Games move nearer, practical problems emerge. People see that they may be affected personally, sometimes negatively. Every day, we see new issues highlighted in the media, creating questions and some unease which have to have to be addressed. In this, I echo some of the points made earlier by my noble friend Lord Davies.

I put to the Minister a series of those issues in the hope that, in her usual highly competent way, she can give us reassurances to allay those fears. Security has become even more high profile; the years between the bid and today make it even more so. Against the background of deep cuts to police funding, can she reassure us that there will be no relaxation of security, to ensure the safety of everyone attending the Games? Allied to that, with the potentially damaging cuts, can she reassure us that access to Britain via our airports will not become a nightmare, with visitors standing in line for hours on end? The world will be watching and making judgments. That experience could deeply damage our tourism trade. Again, can the Minister reassure us that adequate measures are being taken?

What about ticketing, which has already been mentioned? It has been a thorny issue from the outset. Are too many tickets being ring-fenced for sponsors and dignitaries? Is the balance towards the favoured group outweighing the competitors and the general public? More transparency is needed. It appears that large sums of money can still secure tickets on the internet. Is that fair?

Travel around London is a difficult issue. Those who have to travel to work, such as nurses, cleaners, public workers, et cetera, face chaos during the Games. Is the balance between sponsors’ limousines and ordinary people’s lives right? Not everyone can be given the luxury, recently given to civil servants, of staying at home. That does not work for care workers attending patients in a care home, does it?

Much has been made of sustainability. At the time of the bid, it was a huge and important issue, but following economic pressure, the Government have taken a less green approach. Can it be right to weaken our commitment to sustainability, ditched by cuts in expenditure? The very notion of a physical legacy—the stadia, the sporting facilities of all kinds—has been at the heart of the project. Bear in mind that the public purse has provided about 98% of the Olympic budget, but almost all the infrastructure will fall into private hands after the Games. Is that the outcome that the Minister envisaged? It appears that the deal on the major stadium has yet to be clinched. Does that fill the Minister with as much foreboding as it does me? Has the process been botched? Has the eye been taken off the proverbial ball?

Those are just some of the questions swirling around today. Then there are the views being discussed in the Slug and Lettuce, to say nothing of the Cumberland tennis club. I know that the Minister will do her best to answer those questions. She always responds so sensibly and knowledgeably, but I fear that her bat may have been broken by her captain even before she got to the wicket. Where have we heard that before?

Finally, there can be no doubt in anyone’s mind that the outstanding contributions to today’s debate have emphasised that we are all united in our hopes and aspirations for all the British teams’ success. We will celebrate all their successes and look to them to be the role models for the future.

17:08

[Baroness Garden of Frognal]

My Lords, I thank noble Lords very much for their contributions to this debate. One of the wonders of a debate such as this in your Lordships’ House is that many, if not all, of the questions that Members have asked seemed to have been answered by those with far more expertise in the various subjects than I have, but I will do my best to pick up the questions as they came up.

The noble Lord, Lord Haskel, asked about suppliers. The answer from my noble friend Lord Moynihan has gone some way to respond to his queries, if not to satisfy him. The contracts for suppliers permit specific mention of their involvement with the Olympic and Paralympic Games in particular cases, but it is for the major sponsors to have exclusivity over rights, because without those we would not be able to put on the Games as we wished. I acknowledge that his story about a flaming torch breakfast seems to be taking these things somewhat to extremes. However, who are we to say what the context is and where you draw the line on these? We feel that sponsors’ rights have to be protected, which is of course an obligation under the terms of the agreement with the International Olympic Committee, both because of that and against ambush marketing. That is quite a comprehensive sector, which we debated when it came through earlier in your Lordships’ House and when we passed the instrument to say that it should go through.

My noble friend Lord Addington talked about the protection of the Olympic brand and the real importance of learning lessons from what has gone right and what has not gone quite so smoothly in these Games, from which we will quite certainly take away a number of lessons. It is not that we are likely to host the Olympics and Paralympics in the UK again for a great many years to come, but all these lessons go back to the Olympic family as a whole to make sure that all Games learn from previous ones.

One or two noble Lords mentioned the matter of tickets. There was an unprecedented demand for tickets, which had never happened in previous Games. The systems that LOCOG set up would have coped if the interest had been as the media predicted in fairly cynical terms. It has obviously been a disappointment for those who did not get tickets, although they have been coming back on sale. I have already heard a number of stories of people who were not successful the first time around but who now have tickets. We hope that that position continues to improve. I enjoyed the intervention by my noble friend Lord Grade. I suppose we can only be grateful that the Prime Minister of the day was convinced that the bid should go ahead.

My noble friend Lord Higgins spoke of his Olympic experiences, and my goodness it seems a different day. I noticed that “Chariots of Fire” is currently on my local theatre and I am about to go for a nostalgic review of that. However, the Olympics of the 1940s were run and competed in a very different mode from the Olympics of today. The big change from amateur to professional has been one key difference. He raised the matter of drugs, a matter which my noble friend Lord Moynihan also took up. We should confirm the very tough line that is being taken on drugs here, because undoubtedly sports and sportspeople suffer tremendously if drugs become permitted, whatever the sport.

My noble friend asked what happens if people arrived with tickets that they cannot use. I do not currently have an answer to that scenario. I know that we have already discussed whether people could use tickets if their names were not on them. The response was that the person who bought the tickets has overall responsibility for them, but obviously they may be used by those who do not appear on the named tickets.

As for protestors, everyone has the right to protest and nothing that is being planned for the Games will curtail the right to legitimate peaceful protest, but that does not extend to disrupting the Games or their preparations. We certainly do not want to undermine years of dedicated training by those competing, or ruin the enjoyment of fans who have paid to see their sporting heroes in action, so we expect that the response to protests will be proportionate.

My noble friend Lord Higgins also mentioned the legacy of the athletics stadium. We are of course encouraged to know that the athletics legacy will certainly continue until 2017, because the stadium will be used when we host the world athletics championships there.

The noble Baroness, Lady Ford, spoke about the legacy. I join other noble Lords in paying warm tribute to the work that she has done to ensure that the Olympic park is indeed a real credit to the country once it has completed its sporting time during the Olympic and Paralympics. She mentioned the importance of not pricing local people out of access or homes. My noble friend Lady Doocey also brought up concerns about local people being excluded from those. Considerable steps are being taken to ensure that the number of affordable homes in the Olympic park remains high. We hope that it will not become the preserve of the rich, because assurances are in place that local people will have their say. We congratulate the noble Baroness on what she has done and are sure that we have not seen the last of her in connection with Olympic matters, but she may act in a more personal capacity in future. We welcome Daniel Moylan, who will be carrying the torch in the post that the noble Baroness has vacated.

My noble friend Lord Bates lived up to expectations by talking warmly about the Olympic Truce being the point of the ancient Games and the torch relay heralding the fellowship and peace of the truce. The Foreign and Commonwealth Office is leading on this and we will certainly seek to work with parliamentarians and bodies such as the Inter-Parliamentary Union, the Westminster Foundation for Democracy, the Commonwealth and others to ensure that through an active public diplomacy programme we have an opportunity to increase international public interest and involvement in conflict prevention and peacebuilding and to raise the level of ambition for future Olympic Truces. My noble friend has done an enormous amount to put the Olympic Truce high on the agenda of the Games.

I compliment the noble Lord, Lord Davies of Oldham, on all the work that he did in the previous Administration to ensure the success of the Olympics and Paralympics, and I was pleased to see him reflecting optimism in his speech. He raised concerns about faith issues, which I know my noble friend Lord James shares. Four years ago, LOCOG set up a faith reference group that includes the nine faiths recognised by the IOC: Muslim, Christian, Jewish, Buddhist, Jain, Sikh, Hindu, Baha’i and Zoroastrian. This group has looked at all aspects of the plans, including the multifaith centres, prayer spaces, food provision, uniform design, quiet areas and accommodation, not only for athletes but for the workforce, volunteers, media and spectators, where appropriate.

We are conscious that with the Games taking place during Ramadan and on the 40th anniversary of the Munich attacks this multifaith approach has been crucial. LOCOG’s faith adviser, the Reverend Canon Duncan Green, who was appointed by the Archbishop of Canterbury, has led this work, but LOCOG has also worked closely with the Muslim Council of Britain and its general-secretary Dr Muhammad Bari, so I hope noble Lords are reassured on this issue. It has been taken extremely seriously, and I assure the noble Lord, Lord Davies, and other noble Lords that considerable efforts have been made by LOCOG to ensure that the needs of faith communities have been addressed appropriately and respectfully.

The noble Lord, Lord Davies, and the noble Baroness, Lady Billingham, mentioned Heathrow, which has been overmuch in the news recently with its possible inability to cope. The UK Border Force, BAA, LOCOG and other partners are working very closely together to ensure that visitors have a good experience at the airport and a warm welcome to the UK. We recognise that there is some way to go in ensuring that that is the case for everyone who comes here. Additional resources will be deployed by the UK Border Force to reduce queues to a minimum. BAA is providing a temporary terminal for the athletes’ departure, which will be one of Heathrow’s busiest days, and putting improved services in place to help Paralympic teams, which should provide a real legacy for disabled visitors afterwards. We are conscious of the need for cross-departmental conversations and discussions on this. The Home Office is quite naturally concerned that levels of security should be high for the period of the Olympic and Paralympic Games but is also conscious that visitors must be given a warm welcome to our country.

My noble friend Lady Doocey has done an enormous amount to contribute to the Games. I think particularly of the work that she has done on carers and on ensuring that people who need someone to come with them to the Games should be accompanied. She paid tribute to the security staff. I agree that we are in the best possible hands. The people working on security for us have worked enormously hard to try to ensure that all goes well.

My noble friend Lady Doocey mentioned transport, as did other noble Lords. We certainly hope that our lanes do not become Zil lanes. We are keeping the lanes that are reserved for the Olympic family to a minimum, and taking every possible care so that London can go about its normal business as far as possible.

My noble friend also raised concerns about tickets for officials. I was interested to hear the noble Lord, Lord Graham, talk about the hard work of local councils around the Games. I am conscious that there are allocated tickets for officials. However, the Government have kept their allocation to fewer tickets than they were entitled to. On affordability, 2.5 million tickets were priced at £20 or less. There were special prices for tickets for more than 220 sessions. Getting the balance right between having the right level of hosting and people to support the Games and making sure that the vast majority of the tickets were on sale to the general public has been striven for. By and large, LOCOG has got the appropriate balance. I think 8.8 million tickets were on sale. It is an enormous number. The proportion going to the Government and officials is relatively small.

My noble friend Lord Moynihan talked about the British businesses that would benefit from the Games. I accept that there is a difference of opinion between him and the noble Lord, Lord Haskel, on this.

[Lord Haskel]

There is absolutely no difference between the noble Lord, Lord Moynihan, and me. He spoke about the benefit that those businesses will get in the future, when the rights return to the British Olympic committee. I was asking about allowing British companies to use the Olympic Games as a shop window today. It is not about bread tomorrow; I was talking about bread today.

[Baroness Garden of Frognal]

I hear what the noble Lord says. It is important to the International Olympic Committee and the Olympic family that they should be very protective of the branding of Olympic and Paralympic goods and services. Part of the contract that businesses signed set out in some detail where they could refer to their involvement in the Olympics. However, one of the other aspects is that officials in BIS and businesspeople throughout the country will use the Olympics as a showcase for British business. Therefore, even if they cannot stick an Olympic brand on their goods, there will be plenty of opportunities for them to meet the international community and build their businesses. We will certainly look for results from that.

My noble friend Lord Moynihan referred to doping, which I have already mentioned. We all agree with him about how tough it is to compete. The figures that he gave about the microscopic differences between those who won gold and silver medals just shows us all how intense the competition is for the athletes.

When the noble Lord, Lord Graham, spoke, I could not help thinking that if the trial for Newcastle boys had only gone differently, we might not have had the benefit of his wisdom in this House over the years. Perhaps we should grateful for some things.

[Lord Grade of Yarmouth]

The preparation has clearly gone better than anyone could have expected, bit in the round of very well earned bouquets that have been dished out because of what we hope will be an enormous success, there is a slight omission. Through the National Lottery, Camelot has contributed more than £2 billion to the Games—and I declare an interest as a former chairman of Camelot. Even more importantly, the revenue that it has created, which has sustained many British sports men and women between the Games, has been transformational for the medal tables since it came on-stream. Will the Minister join me in congratulating Camelot?

[Baroness Garden of Frognal]

I am most grateful to my noble friend for that jog. I have no hesitation in joining him in thanking Camelot for its enormous contribution to the athletes and the Games. My noble friend Lady Heyhoe Flint was hoping to speak. Family circumstances meant that she was unable to be here for the opening speeches. Conscious of the rules and courtesies of the House, she took her name from the list. We appreciate her compliance in this matter. Her contributions are always most welcome and we look forward to hearing her speak on future occasions.

I was delighted to hear the noble Baroness, Lady Billingham, say what a cause for celebration the Games were and I warmly applaud the positive aspects of her speech. She mentioned her disappointment at the change in school sports policy when the coalition Government came in. I can only assure her that we have been working closely with schools to reverse the decline in sports participation. Under the new sports strategy, as I set out in my opening speech, there will be a particular focus on 14 to 25 year-olds. We are very aware that the interest and participation in sport of most young people severely declines when they leave school. We are working with clubs and schools to ensure continuity when young people move from school to adulthood. A great deal of effort is going on to talk to all parties to ensure that we have sport in all schools and not, as she said, just in independent schools, which would be of grave concern to us.

The noble Baroness, Lady Billingham, also mentioned sustainability. We are committed to setting new standards for sustainability in terms of the building and the staging of these events. The London Games are going further than most major events have ever gone in the commitment to reducing carbon emissions. We are confident that we will be able to deliver on an ambition of sustainability for these Games in modern times.

There are fewer than 70 days until the opening ceremony of the Olympic Games. London is on track for a great Games. The project is on time and on budget. Test events and readiness exercises are taking place. Our wonderful world-ranking athletes are in training and I think that we would all wish to pay tribute to the hours of dedication to their sport which they demonstrate. We may see just the final moments but behind that their effort is truly inspirational. Like my noble friend Lord Addington, the other day I was at a Sainsbury’s reception and I have been at other receptions meeting Paralympic athletes. If we think that our Olympic athletes are inspirational, we have to have the same view of our Paralympic athletes. They are quite unbelievable in their dedication and efforts to achieve world-ranking standards in their sports.

I make no apology for repeating the remark from Jacques Rogge and the IOC at their final inspection in March, already quoted by the noble Baroness, Lady Ford, which hailed London 2012 as “a legacy blueprint” for future host cities. This is a fantastic achievement of which we can rightly be proud. I also pay tribute to all those who have contributed. In your Lordships’ House, we have the noble Baroness, Lady Ford, and my noble friends Lord Coe and Lord Moynihan, who have been very instrumental, and others who have had an enormous impact on the building and delivery of the Games. We owe them all an enormous debt of gratitude.

The official broadcasters will be the BBC for the Olympic Games and Channel 4 for the Paralympic Games. I do not doubt that those of us who cannot be there will be glued to our sets. These Games are a once-in-a-generation opportunity to showcase the UK to a massive international audience. Along with Her Majesty’s Diamond Jubilee celebrations, this summer will show the world what we as a nation can do. The overriding message from what we have heard today is that we can all look forward to a tremendous summer of sport and celebration, and to a wonderful, lasting legacy for London and the rest of the UK. We all wish our athletes every possible success.

Motion agreed.

Employment Law

Monday 21st May 2012 Lords Chamber

Statement

17:29

[Lord De Mauley]

My Lords, I would like to repeat the Answer given to an Urgent Question asked in another place today. The Answer is as follows:

“The Beecroft report was commissioned by the Department for Business, Innovation and Skills as part of both the Red Tape Challenge and the employment law review. Mr Beecroft was asked to give his initial thoughts on areas of employment law that could be improved or simplified to help businesses and job creation. The report was intended to feed into the work that the business department is carrying out to review employment laws to ensure they maximise flexibility and reflect modern workplace practices. This is important both to employers and employees and is designed to strengthen our international competitiveness in difficult economic times. It is worth noting that the UK is considered to have the third most flexible labour market in the OECD, and this is an important strength.

Mr Beecroft was asked to take a candid look at a wide range of issues and he submitted his report in October of last year. Over the last few months, Ministers have been working through Red Tape Challenge and the employment law review, and I can tell the House that of the 23 topics he raised we have identified actions in 17 of them. As part of consideration of the Beecroft report, it was clear that further evidence was required, most notably on the issue of no-fault dismissal for micro-businesses. This was published on 15 March, and I can tell the House that it will conclude on 8 June. Given that this date falls when the House is not sitting, the Government decided to bring forward publication of the report to this week, so that it could inform the debate.

Last week, the Home Secretary announced the outcome of the Equalities Red Tape Challenge, which directly impinges on employment and workplace issues. Our intention was therefore to publish the report in time for this week’s business department oral parliamentary Questions. As you know, Mr Speaker, it was our intention to publish the report this week, but I have noticed from the press that an earlier draft of the report is now in circulation. Therefore, in the interests of accuracy, and so that the House has the correct information in front of it, I can confirm that the report will be published this afternoon, and copies will be placed in the Libraries”.

That concludes the Answer to today’s Urgent Question.

17:32

[Lord Young of Norwood Green]

My Lords, I have listened carefully to the Minister on Mr Beecroft’s proposals as we saw them last October. Is making millions of workers’ lives more insecure a price worth paying? That is a phrase that I cannot help remembering from a previous Conservative Administration. Beecroft himself said:

“The downside of the proposal is that some people would be dismissed simply because their employer did not like them. While this is sad I believe it is a price worth paying for all the benefits that would result from the change”.

That is Mr Beecroft for you—he clearly believes that it is a price worth paying. He is a major Conservative Party donor as well.

Why have the Government, given the situation that we are in, not put forward proposals to introduce a British investment bank to help get finance to business, but are prioritising making people less secure in work? Why have the Government not put forward a temporary national insurance contribution cut for small businesses to take on extra workers but are prioritising making people less secure in work? Why are they failing to do enough to accelerate infrastructure investment—which, after all, business organisations such as the CBI have called for, and could be threatened by Solvency II—but instead are prioritising making people less secure in work?

When there are 2.63 million unemployed, created by the double-dip recession made in Downing Street, does the Minister feel that making it easier to fire staff at will and causing even more insecurity will give hope to people who are desperately seeking a job? Does he think that firing at will will boost consumer confidence at a time when the economy has entered a recession caused by the policy of this Government? Does he agree with Dr John Philpott, the chief economic adviser at the Chartered Institute of Personnel and Development, who said:

“The vast weight of evidence on the effects of employment protection legislation suggests that … less job protection … results in increased firing during downturns. The overall effect is thus simply to make employment less stable over the economic cycle, with little significant impact one way or the other on structural rates of employment or unemployment”.

Does the Minister agree with Beecroft that small businesses have very limited administration skills and very few academic qualifications? Are not those problems that need to be addressed, rather than accepting the anecdotal evidence as a solution for creating more employment?

According to the OECD, the UK has the third least regulated labour market in the developed economies. That is one thing in the Statement with which I agree. Only in the USA and Canada is employment regulation less strict. As the Chartered Institute of Personnel and Development has said, some of the most severe restrictions on the employer’s right to dismiss staff can be found in countries such as the Netherlands, Norway and Austria, which all have unemployment rates lower than the UK’s. Even the Secretary of State has said:

“We don’t want to dent job security and consumer confidence”;

and:

“Our labour market is already one of the most flexible in the world”.

Why, therefore, are the Government ignoring this evidence? Why do they believe that making people less secure at work will be a positive contribution to creating jobs?

In the Chartered Institute of Personnel and Development’s Labour Market Outlook of summer 2011, far more employers cited access to finance—28%—and candidates lacking the right skills—50%—as obstacles to business growth than cited employment regulation. Those are areas where the Government could give positive assistance, rather than being diverted by the dubious recommendations of the Beecroft report. Is this another example of the Government’s failure to back business and to take the tough choices, such as setting up a British investment bank, and, instead, of their playing to the band of Back-Bench Conservative MPs who promote these job insecurity policies?

In February, David Blanchflower, a former Bank of England Monetary Policy Committee member, said:

“There is zero credible empirical evidence supporting … [the] contention that Britain’s economic problems would be fixed by slashing workers’ rights”.

So, what evidence do the Government have? Would not having a different employment regime for businesses with 10 or fewer employees, and those slightly larger, be a disincentive for growing small businesses to take on extra staff?

The Minister for Employment Relations, Consumer and Postal Affairs is quoted as saying in October last year:

“I think it would be madness to throw away all employment protection in the way that’s proposed, and it could be very damaging to consumer confidence”.

Has he now changed his mind? Interestingly, according to Hansard, the Secretary of State failed to vote on his department’s own legislation on changing the unfair dismissal qualification from one year to two. Today he is reported in the Sun as saying:

“Some people think that if labour rights were stripped down, employers would start hiring and the economy would soar again. This is complete nonsense. British workers are an asset, not just a cost. I am opposed to the ideological zealots who want firms to fire at will”.

Why has he allowed his department to help write and support the Beecroft review if these are the views in which he sincerely believes?

We face many challenges and businesses are giving the Government strong signals about the important things that will help them create more jobs—such as resolving the issue of finance and ensuring that we accelerate infrastructure investment. Those are the positive things that we need to do to inject growth into the economy. I look forward to the Minister’s response to my questions.

17:38

[Lord De Mauley]

I thank the noble Lord for his comments. The context of this is a review of employment law to make it easier to employ people and to improve the growth prospects of our businesses across the country. Surely all of us seek to achieve that. It was in the coalition agreement that employment law would be reviewed over the course of this Parliament. Mr Beecroft was asked to report as part of that review, to provide a candid view of the law from a businessman’s perspective. His recommendations are not formally adopted as government policy. The Government are pursuing a number of elements. Clearly, however, the report includes other proposals and any decision to take them forward will be based on evidence.

The noble Lord, Lord Young, used the expression “firing at will”. I think that he is referring to the element in the report that deals with no-fault dismissal. We currently have an open call for evidence on dealing with dismissal and compensated no-fault dismissal for micro-businesses. It is an exercise to shed light on the issue. It is right that we look at all the evidence before deciding on any change. We are examining existing dismissal processes as a whole, including awareness and understanding of the ACAS code of practice. We are also seeking views on the concept of compensated no-fault dismissal for micro-businesses, whereby the smallest employers would pay compensation as a means of ending a working relationship fairly. It is about getting the balance right. It is about giving business confidence to hire. That is why we have called for evidence, and we want to understand that evidence and make policy on the basis of it.

The noble Lord, Lord Young, raised a number of issues, one of which was the training of business management. We discussed that issue in the debate on the SIs to which he referred. He will know that we are looking carefully at this issue and that we are taking action to make improvements on the basis which the previous Government put in place. He is right to say that it is an issue.

The noble Lord also said that we should be focusing on access to finance for businesses. I agree with that, and, indeed, we are doing so. He will also know that we have a debate on that subject on Thursday, when we will discuss the issue at greater length.

17:41

[Baroness Randerson]

My Lords, I thank the Minister for his Statement. I am glad that the Statement recognises that the UK already has a flexible labour market, and that the Government acknowledge that that is a strength. Indeed, the Government have recently increased parental rights, and that is an important addition. I recognise that the enterprise and regulatory reform Bill already tackles some of the issues raised in the Beecroft report.

Does the Minister agree that any changes to employment law need to support and facilitate the positive and flexible behaviour exhibited recently by, for example, Vauxhall workers and their trade unions? There needs to be recognition that that sort of behaviour—the product of good employer-employee relations—is very important for the development of our industry. It is therefore important to avoid any reforms that might undermine that positive relationship whereby workers are regarded as an asset and not as a cost.

Given that the Government have had this report since 12 October 2011—some seven months—and their response to it is simply to continue the call for evidence and the consultation, they appear to be somewhat lukewarm about it. Perhaps the Minister can enlighten us on the depth of the Government’s enthusiasm for it. Finally, does he share my belief that, at this time of international economic crisis, it is important that all Governments throughout the world should be allowed to think outside the box, and of bold and imaginative ideas for the benefit of the economy and of all employees?

[Lord De Mauley]

I am extremely grateful to my noble friend for her comments. On the issue of co-operative behaviour between employers and employees and their representatives, I wholeheartedly agree that that must be the gold standard. She suggested that the Government might be somewhat lukewarm on the Beecroft proposals. I will not say that the Government are either enthusiastic or lukewarm. The fact is that they will consider each proposal on its merits. Some are being taken forward and some, no doubt, will not be, but we will do this in a balanced way. She invites the Government to think outside the box and be imaginative, and that is exactly what we seek to do.

[Lord Clinton-Davis]

Why do the Government not denounce the idea of firing at will at this stage? Is it not a complete affront to everything that the trade unions and responsible employers have fought for? Why has Vince Cable denounced this so emphatically? Do the Government think that he is right or wrong?

[Lord De Mauley]

My Lords, I explained in my answer to the noble Lord, Lord Young, that we have an open call for evidence, which closes on 8 June. I hear what the noble Lord says but it is important that we listen to all the evidence, and that is what we are doing. I should emphasise that this proposal does not extend beyond micro-businesses, so it will not apply to every single employer in the land. However, the Government are keeping an open mind.

[Lord Faulks]

My Lords, I am sure that many on this side would equally deprecate anything that could possibly be said to smack of firing at will, and I very much doubt that the Government’s proposals will involve anything that could be so pejoratively described. This report was perhaps commissioned before the recent downturn in financial circumstances, and many of the proposals will no doubt potentially be very expensive. Can the Minister assist me on the issue of parental leave? I know that the Government were understandably committed to improving that but I understand that the Beecroft report has costed it at approximately £150 million. Can the Minister assist the House on whether the Government have changed their mind or whether, considering that, they remain committed? Is it a matter on which they will generally be taking soundings and listening to representations?

[Lord De Mauley]

My Lords, the Government remain committed to the coalition commitment to introduce a system of shared parenting by 2015, and we are of the view that it will bring benefits to businesses. We have always said that we would introduce it from 2015 and we will shortly be publishing the government response, outlining the next steps. It is not something that we are rushing into. At the forefront of our minds is getting this right so that it does not impose additional burdens or costs on businesses.

[Baroness Turner of Camden]

My Lords, I am sure that the Minister will not be surprised to learn that many of us feel that the introduction of what one might call a “hire and fire society” is not likely to help either the economy or future productivity. Many workers, even in small businesses, will lose any sense of security, and that is surely very damaging for any workforce. Therefore, I hope that the Government will seriously reconsider this departure from existing practice. With regard to the Government’s point that it may involve more employment opportunities for people in small firms, one has to recollect that small firms are mostly low-paying employers, which the taxpayer already subsidises. To some extent, the welfare system, including the welfare reforms that the Government are introducing, already subsidises low-paying employers, so why do they need any extra so-called assistance? I do not think that it is assistance at all. It will simply undermine a workforce’s sense of security and that will not help the economy or, indeed, future workplace relations. Therefore, I hope that the Government will seriously reconsider their proposal.

[Lord De Mauley]

My Lords, I say to the noble Baroness, Lady Turner, that, although we will not go so far as to reconsider the whole thing, in the consultation we are taking account of comments such as the one she has made.

[Lord Martin of Springburn]

My Lords, the one thing that employers want is stability. I have noted that every time there is a change of Government, there has been a change in the employment laws. That cannot help. It should be borne in mind that in many of our cities, including my native city of Glasgow, unemployment is climbing. The Government are encouraging people who are out of work to move to other parts of the country. They will not do that if they feel insecure and there is a possibility that they will be sacked. It must be borne in mind that it is the small companies which we are depending on to get people into the Labour market. I understand that it is consultation and I hope that he bears that in mind. Apprentices who are taken on as trainees are employees like everyone else. It would be a sad day if a young apprentice were taken on to a job and lost out on not only the job but the apprenticeship. Will the Minister ensure that there are no further leaks from departments? That was a justified complaint when the Conservatives were in opposition. We should not have documents leaked from government departments.

[Lord De Mauley]

My Lords, in response to the first point made by the noble Lord, Lord Martin, about the importance of stability for employers, I definitely agree with him. The question we are addressing is whether the scales have tipped too far against growth. That is what must matter to all of us, surely. With regard to the noble Lord’s comments on apprenticeships, I share his enthusiasm for them and agree with him on that point.

[Lord Teverson]

My Lords, I believe that there is a problem in how the current system works in that SMEs—I am involved with some—do not have their own HR staff. They go to professionals for help and the professional advice is inevitably always very conservative. Even when there is a good case that someone should be fired, which should happen only when they have been given the chance of training and have gone through the right appraisals, advice is often given to pay off employees rather than let the matter go to an industrial tribunal. The result is a psychology in this sector that that has to happen, when in fact it should go through to the end of the process and be resolved properly and equitably. It results in vexatious claims that wrongly scare SMEs when they do not fulfil the rights that they have when an employee should be dismissed. Will the Government consider that area of professional advisory conservatism to avoid the professionals being told, post event, that they were wrong?

[Lord De Mauley]

I thank my noble friend who is absolutely spot on. A number of measures will be coming forward that will contribute to that. One of those, which is perhaps not so relevant for smaller businesses, but which is indicative of what we are trying to do, is to involve ACAS at an earlier stage.

[Baroness Wall of New Barnet]

My Lords, I apologise for leaving shortly after the first two speakers; I nipped out to pick up the report. I agree completely with the noble Baroness on the Liberal Democrat Bench—I am sorry but I cannot remember her name—on the flexibility at Vauxhall that she reminded the House about. It is also important to remind the House not only about Vauxhall, but that over a period of real restraint, apprentices have been going to Jaguar Land Rover and many other organisations on their days off to have training. If that is not flexible, I am not sure what is. Red tape is possibly a good thing to look at, but I am anxious that the Government do so with the overall view of what modern workplaces look like. They are very different from perhaps the view that some noble Lords have of workforces. Flexibility is a way of life. That does not mean exploitation but co-operation and the way in which people work together. It may not be red tape but it certainly is a red ceiling. There is an opportunity to look at why women are not getting on further in their workplaces. I do not know whether it is red tape or how to describe it but it is a fact that women are still restrained in their grades and not allowed to go further. I welcome the opportunity for a comment from the Minister on that as well.

[Lord De Mauley]

I can find very little to disagree with in what the noble Baroness has said. I absolutely welcome the restraint that I know employees are exercising in this extremely difficult time. We really need and are grateful for their help where this is happening, and I agree with her that it is widespread. People are working beyond the call of duty, and that is a huge accolade for our workforce. We spoke earlier about the need for co-operation between workers and employees, and that must be for the good.

The noble Baroness asked about the Government’s aspirations for women in the workplace. She will know that there is a great deal of work going on and that the Government are very much focused on this as an important issue.

[Lord Ryder of Wensum]

Is my noble friend aware that unemployment in Germany has fallen by a significant margin over the last five years, largely as a result of supply-side measures that have been introduced by the German Government? Will my noble friend please draw these measures to the attention of the Business Secretary and ask him why he has not already followed the German example, if he really is serious about reducing youth unemployment?

[Lord De Mauley]

My Lords, of course I will draw that to the attention of my right honourable friend.

[Lord Layard]

Is the Minister aware of the great amount of academic research on the impact of employment protection legislation which has gone on over the last 15 years? The standard finding of this research is that employment protection legislation has no positive or negative effect on the level of employment. The reason is very simple: as is constantly said, of course, if it is easier to fire people, you are more likely to hire them; but you are also, believe it or not, more likely to fire them. The two balance out. Are the Government aware of this research?

[Lord De Mauley]

My Lords, I am aware of a considerable amount of research. I bow to the noble Lord’s greater knowledge of the academic research, of course. The Government are absolutely committed to flexibility for employers and employees. We have consulted and continue to consult widely on a number of issues and, as I have said before, we will not take action unless it is on the basis of evidence.

[Baroness Meacher]

Will the Minister explain to the House how the no-fault dismissal idea is compatible with the Government’s declared commitment to well-being? Will the Minister agree that job insecurity and unemployment are the greatest threats to mental well-being, and also that high morale in the workplace is the best assurance of high productivity and therefore growth? Will the Minister agree that any unsuitable member of staff can in fact be moved on by good supervision and management? Will he therefore assure the House that this Government will encourage good supervision and management, rather than heartless employers?

[Lord De Mauley]

I am sympathetic to what the noble Baroness says. As I have said, we are keeping an open mind on this issue of no-fault dismissal. It is a fact that the smallest businesses are less likely to have access to human resources and legal advice and are therefore less likely to feel confident in applying procedures. I think that is one of the key issues. We want to examine whether a no-fault dismissal system for microbusinesses would be helpful in dealing with this, particularly in increasing their confidence in employing people.

[Lord Morris of Handsworth]

My Lords, in repeating the Statement, the Minister said that,

“the UK is considered to have the third most flexible labour market in the OECD and this is an important strength”.

Will the Minister tell the House which other OECD countries operate a no-fault dismissal policy? In his Statement, the Minister also indicated that there is clear evidence that employers have dismissed people simply on the basis that they are not liked. If that is the case, is he not therefore proposing in this Statement and in the report a gateway for discrimination against a vast range of people in employment: women, people with disability, and others? The Minister indicated that the report was about the confidence to hire. Does he agree that it is also a blank cheque to fire?

[Lord De Mauley]

My Lords, the noble Lord asked whether any other countries had in effect a micro-exemption. Germany does. He was also concerned about discrimination. Broadening the question, I will say that the Government will not tolerate discrimination in the workplace.

[Lord Bates]

My Lords, will my noble friend confirm that the whole thrust and purpose of the review is to get people hiring again, not to get them firing, and that it is part of a growth assessment? Does he agree that it stands to reason that there must be one set of rules for large employers—the Vauxhalls, the Tescos—with huge HR departments? If one of their workers underperforms, they can provide them with the necessary supervision, training and reskilling. However, where a firm has only two or three employees, if one underperforms then up to 50% of the workforce is underperforming. The firm will not have an HR department or supervisory skills, and did not employ a firm of global headhunters to hire the person in the first place. Therefore, different rules need to be considered.

[Lord De Mauley]

My Lords, I could not have put it better myself.

[Lord Lea of Crondall]

My Lords, if the Government are interested in the totality of the German system, rather than cherry-picking bits of it, they should look at two-tiered boards and the involvement of the whole workforce through works councils and strong trade union collective bargaining. If the noble Lord is interested in the success of the German model, will he look very carefully at evidence of the whole of the German experience, because it seems that there is no evidence available from the way Mr Beecroft has gone about his business?

[Lord De Mauley]

My Lords, of course we looked very closely at countries we admire, such as Germany. However, we are a different country, we have a different history and we are in a different position. Therefore, we have to do things our way. I emphasise that we will do this in a careful, measured and flexible way.

Euro Area Crisis: EUC Report

Monday 21st May 2012 Lords Chamber

Motion to Take Note

18:02

Moved By

[Lord Harrison]

That this House takes note of the report of the European Union Committee on the euro area crisis (25th Report, Session 2010–12, HL Paper 260).

[Lord Harrison]

My Lords, I am delighted to have the opportunity to introduce the debate on this report. Sadly, I am rather less delighted by the circumstances that required the report to be written and that make today’s debate so urgent and topical. The report was a joint effort based on work undertaken by the Sub-committee on Economic and Financial Affairs, which I chair, and the main Select Committee, which was chaired by the noble Lord, Lord Roper, to whom I offer a fond farewell, and which is now chaired by the noble Lord, Lord Boswell of Aynho, to whom I extend a warm welcome. The sub-committee focused on the economic and financial aspects of the crisis, while the Select Committee focused on institutional aspects and was responsible in particular for the chapter on the proposed treaty. I thank all the witnesses who contributed to both elements of this complex inquiry.

The committee began its inquiry in October 2011 and the report was published in February 2012. Noble Lords will be well aware that the situation has become even more serious since then. One challenge that we faced, and continue to face, was the sheer speed of developments in the crisis. Even though events have moved on since our report was published, it may be useful if I briefly remind noble Lords of the political context in which the inquiry was undertaken. Many issues that we considered remain to be resolved by the EU’s leaders.

On 26 October, a key EU summit—already twice delayed because of the difficulties in reaching agreement—struck a three-pillar deal that included the exploration by private-sector banks of a haircut of at least 50% to Greece, an increase in the funding available to the EFSF rescue fund to €1 trillion, and a requirement on the European banks to raise €106 billion in new capital by June this year.

However, in November the crisis escalated dramatically. Amid mounting turbulence in the financial markets, both the Greek and Italian Prime Ministers were forced to resign and were replaced by non-party political figures—the former governor of the Bank of Greece, Lucas Papademos, and the former European Commissioner, Mario Monti. After a general election there was also a change of Government in Spain, whose own bond yields were coming under intolerable strain.

So pressure grew on European leaders for a more fundamental response. The ECB complemented its programme of purchasing sovereign debt in the secondary markets with a major operation to provide long-term loans to European banks. Then, at the Brussels summit on 8 and 9 December, euro area nations agreed to a new fiscal compact that moved towards a fiscal stability union, including the adoption by national Governments of a fiscal rule to achieve balanced budgets and stronger Brussels oversight of national budgets. EU leaders agreed that some of these changes should be achieved through a treaty, but the United Kingdom Government, later joined by the Czech Republic, would not agree to amending the EU treaties. This resulted in the adoption of a separate international agreement on stability, co-ordination and governance, which I shall refer to as the fiscal compact treaty.

Our report sought to reflect on each of these serious developments. In the economic and financial context, we expressed deep concern about the extent of uncertainty that remained in the crucial area of bank recapitalisation. How would it be achieved? How would banks be prevented from reducing their debt ratios by deleveraging and hence reducing lending? How much damage would a sustained restriction on credit do to an already struggling European economy?

We also concluded that because of the risk of contagion there was an urgent need to establish a credible and well financed system of rescue funding. We acknowledged that the primary responsibility for this must lie with the euro area countries, but given the global implications we stressed that it was also necessary for the international community, including the United Kingdom, to play its part, in particular through the IMF.

Although we highlighted the need for rapid progress on the Greek debt write-down, bank recapitalisation and the construction of a firewall, we recognised that such steps were unlikely to prove sufficient on their own. We noted the unprecedented steps already taken by the ECB and found that, although we could be cautious about regarding the ECB as a panacea, additional intervention was likely to prove essential. We also urged European leaders to consider the case for the introduction of so-called eurobonds.

We concluded by considering the longer-term issues, although we recognised that long-term planning will be irrelevant if the current crisis is not overcome. We concluded that improved budgetary discipline is necessary in order to make progress in resolving the crisis, but ultimately the resumption of sustainable economic growth holds the key, both in general terms across the European Union and in facilitating attempts to resolve the serious imbalances between different countries in the euro area. The committee argued that it was of great concern that the potential of the single market to enhance economic growth had faded from view during the crisis. We suggested that the focus of policymakers now needed to turn to policies to support economic growth that could be implemented effectively during a time of budgetary austerity.

Subsequent events have shown how relevant this analysis has been as the situation has deteriorated dramatically. Once again, we find ourselves in a phase of escalation and of deep uncertainty. Noble Lords will be only too aware of the significant recent political and economic turbulence in France, Spain, Germany, Ireland, the Netherlands, and above all Greece, where a second election in a month will shortly be held. Moreover, the parties most opposed to the austerity programme are expected to make further gains.

The financial markets are in renewed turmoil, with substantial falls on major stock markets. As recent developments in Spain have demonstrated, the European banking system is coming under severe strain. Economic growth in the euro area remains anaemic and would probably have been non-existent had it not been for Germany’s recent strong performance. Indeed, the contrast in economic outlook between Germany and the euro area members under most pressure, such as Spain, Portugal and Greece, grows ever more acute.

Nor is the United Kingdom immune from all this. Not only has the economy fallen back into recession, but last Wednesday the Bank of England cut its growth forecast for the current year from 1.2% to 0.8% and stressed that the biggest risk to recovery in the United Kingdom stems from the difficulties facing the euro area. The governor, Sir Mervyn King, has said, somewhat intemperately, that Europe is,

“tearing itself apart without any obvious solution”.

Last week, the Prime Minister stressed the importance of the very issues that this report highlighted, saying:

“Either Europe has a committed, stable, successful eurozone with an effective firewall, well-capitalised and regulated banks, a system of fiscal burden-sharing and supportive monetary policy across the eurozone. Or we are in uncharted territory which carries huge risks for everybody”,

including, one must conclude, the United Kingdom. The PM should explain why, if the euro area crisis is crucial to the United Kingdom, we remain so semi-detached in our engagement with our colleagues. In the midst of such a gloomy economic picture, the election of the new French President, François Hollande, on a platform of economic growth, has heightened debate on the fiscal compact treaty and the austerity agenda that it is perceived to entail, even before it has come into force.

On the new treaty itself, the Government said that they went into the December European Council thinking that the optimum outcome would be an agreement by all 27 EU member states, with the interests of the United Kingdom, particularly in relation to the financial services sector and the single market, being protected. As we all know, the Government did not get the safeguards that they say they wanted, so they refused to join the negotiations to draw up the treaty. The committee was strongly critical in its report of the Government’s failure to keep Parliament properly informed about a decision that may have huge long-term ramifications by sidestepping releasing the text of their prior negotiating position.

I hope that the Minister will be able to give the House a full account tonight of the Prime Minister’s intended approach to the informal gathering of EU leaders taking place this Wednesday. I also hope that the UK’s preparatory work, in building alliances with other member states, is rather more effective at this and future meetings than it was in December.

The key measures in the treaty are on budgetary discipline, and they must be translated into national law,

“through provisions of binding force and permanent character, preferably constitutional”.

It should be stressed that only the euro area countries will actually be bound by the key requirements of the treaty, although it appears that other signatory countries are eager to adopt these rules.

The committee considered that the euro area states must be free to take the steps they consider necessary to defend the euro, including the key area of fiscal integration. However, the committee emphasised that matters relating to the internal market must remain the preserve of all 27 EU member states.

The speed with which the treaty was negotiated, and the fact that it is outside the EU treaty framework, has left several important questions unanswered, including its relationship with the EU treaties and the laws made under the EU treaties, and the proper role of EU institutions such as the ECB in relation to the treaties. Some of the difficulties would be resolved if the proposed treaty was integrated into the main European Union treaty framework, once the review of experience with implementation suggested in Article 16 of the fiscal compact treaty has taken place.

I note that the Government’s response to the report, for which we are grateful, states that they are not opposed to the incorporation of the treaty into the main EU treaties in due course, provided that there are safeguards to protect the interests of all 27 member states. We hope that our own analysis of the treaty has been found to be valuable to other Parliaments. I was very pleased to be invited to Dublin in April to give evidence to an Oireachtas committee inquiry into the implications of the treaty in order to inform the decision to be taken by the Irish people on 31 May.

Given the speed of developments since the report was published in February, and the Government’s response in April, the committee looks forward, as I am sure the whole House does, to the Minister’s explanation of the Government’s current position. I ask the Minister to include the following points in his reply. In our report, we noted that national Governments and EU institutions have struggled to keep up with the pace of events. I think the point may have now come when Europe’s leaders have run out of road, and that hard decisions now need to be taken about whether the euro will continue to exist in its present form. I look forward to hearing from the noble Lord, Lord Sassoon, the Government’s assessment of the current situation. What do the Government think is the most likely scenario for Greece?

Shortly after our report was published on 20 February, the Prime Minister and 11 other Heads of State or Government sent a letter to President Barroso and President Van Rompuy setting out an agenda for growth. The European Council at the start of March came up with some sensible conclusions about developing the single market, and at the G8 summit at the weekend there were encouraging messages on growth. My next question is: what specific progress has been made on the implementation of the growth agenda set out by the EU at the start of March? What does the Minister expect to be on the table for the June European Council to agree, and what is his assessment of the impact of the election of President Hollande?

My final question concerns the status of the fiscal compact treaty. Do the Government still think it is likely that the treaty will be ratified by 1 January 2013? What contact have the Government had with the new Government in France, and would they support further discussions about the text of the treaty?

This is a hugely important issue. I am very pleased to have introduced it. I thank Stuart Stoner and Jake Vaughan, as well as Laura Bonacorsi-Macleod, who acted as policy adviser for this important piece of work.

18:18

[Baroness Noakes]

My Lords, the noble Lord, Lord Harrison, and his committee have produced an excellent report on the most critical issue facing the European economy since the start of the EU. They are to be congratulated on it.

Given all that has happened—and indeed has not happened—in the eurozone since the report was published in February, I am sure that the noble Lord, Lord Harrison, is not expecting all speakers to stick rigidly to the report and the Government’s response. I hope I may be forgiven for straying a little outside the narrow confines of the report.

However, I shall start with the report. The committee was rather exercised about the December 2012 European Council and the circumstances surrounding the Prime Minister’s use of the veto—it seems rather a long time ago now. Unlike the committee, I have never been curious about who said what to whom before the veto was deployed. The most important thing was that the UK demonstrated that we can—and will—use the veto to protect our national interests, and I was extremely proud of the Government that day.

I am well aware that some noble Lords have criticised the UK’s veto as an isolationist strategy which will harm our role in Europe. I am quite sure that some in Europe are extremely vexed by our stance on the crisis and the chatter in Brussels may well be negative. The European project has never liked independent thought or action. However, I have seen no evidence of extra harm since last December and would certainly trade some unpopularity within Europe for a clearer understanding that the UK’s own interests are paramount.

The Government’s position on the eurozone, which I completely support, is that it is for the eurozone countries to sort out their own mess. When the euro started life, we could see that our economy was so unlike those on mainland Europe that we were more likely than not to be damaged by being tied into policies not designed around our needs. We could also see that the countries which became eurozone economies were insufficiently convergent for the one-size-fits-all interest rate to be good for the whole euro area.

It is now plain that the low interest rates within the eurozone, which suited Germany’s economic strategy, have done massive harm in terms of inflation and asset price bubbles to other eurozone economies. The euro arrangements lacked any instruments or incentives to require economic reforms, so southern Europe remained unreformed. But entry was voluntary and those volunteers must now find their own solutions.

As noble Lords are well aware, I am a confirmed Eurosceptic—sceptical about the whole project and about the euro—but I take absolutely no pleasure in seeing the current problems in the eurozone. The UK’s economic success is still too closely bound to that of the rest of Europe for problems across the channel to be any source of joy. My great regret is that the UK has tied its economic fortunes so closely to Europe and hence is vulnerable to economic success or failure there. We depend on European markets for roughly 40% of our exports. Our history as great exporters is in the past. Somehow, we have let the emerging markets grow without us, and it is shameful that we export more to Belgium than to India and China combined. Lessening our trading exposure to the eurozone should be a government priority.

I turn to the position of Greece, which dominates the headlines. Greece lied and cheated about its economic affairs and, at one level, there is a certain satisfaction that it is now getting its comeuppance, but the medicine that has been forced down the throats of the Greek people by the German-led eurozone group is more than tough and more than painful for them. The imposition of an unelected Government was a particularly shocking development and it is no surprise that the Greeks now reject austerity and what is demanded of them. Greece needs devaluation, and it simply cannot get that within the euro. It seems to me obvious that Greece cannot survive within the euro and should be encouraged to take an orderly exit. The longer that the European core tries to hold Greece in while imposing impossible economic conditions, the more likely it is that an exit will be disorderly. The signs are not good.

In the past few months, there has been deposit flight from Greece. Corporates routinely sweep any cash out daily. Anecdotal evidence suggests that wealthy Greeks have been transferring large sums of money to other, safer eurozone territories—in particular, Germany—or beyond the eurozone. Now ordinary Greeks seem to think that keeping their money in the banks is not a clever thing to do, and a real bank run could bring the Greek problem to a head.

I am sure that a lot of work has been done throughout Europe to model the consequences of a Greek exit, with best, worst and intermediate cases. I know that my noble friend cannot give market-sensitive information, but I would be interested to hear what he feels that he can say about the impact on the UK of a Greek exit.

Of course, the bigger danger is contagion. Cyprus and Portugal might well be early casualties—the former because it is so intertwined with Greek banks and the latter because it is a weak economy. They, too, could probably exit with few repercussions. The real problems lie elsewhere, as the noble Lord, Lord Harrison, said. We have seen the cost of borrowing in Spain and Italy rise towards levels which could easily be unsustainable. The cost of credit default swaps are also, unsurprisingly, rising for those countries. Those are the judgments of markets. Financial markets have judged that the actions to date have failed to deliver a sustainable solution. For example, last week’s overdue recapitalisation of the Spanish banks was nothing like enough to deal with the underlying problems, which is why Spanish bank yields continue to rise.

Markets want comprehensive solutions. Common issuance eurobonds would probably be a popular solution with markets, because they would involve a common commitment to a long-term economic solution. The committee examined that. Markets need Germany’s financial commitment to the whole eurozone, not just to economic policies, but Germany cannot or will not deliver that at present. If eurozone leaders come up with more half-baked packages which depend on extraordinary feats of austerity or are based on wishful thinking about growth measures, markets will reach their judgments and other weak countries in the eurozone will be exposed.

The G8 summit last weekend failed to do anything to reassure markets that the euro crisis will be dealt with. If the position of Spain or Italy within the euro becomes untenable, the consequences would be severe for Europe as a whole, including the UK. That is why I support the efforts made by my right honourable friend the Chancellor to urge the eurozone countries towards fiscal union.

I certainly would not have started with fiscal union. Indeed, I would not have started with the euro at all, but there is no example of successful currency union without fiscal union, and if that leads eventually to greater political union—the dream of the European federalists—so be it. It is a fact of life that the euro exists, so breaking it up is going to be very painful and it is therefore in the British interest to push the euro to its logical conclusion. The Government’s first priority is to protect Britain’s interests, and Britain’s interests will be protected if the euro does not go into a disorderly break-up.

If there is closer fiscal and political union within the eurozone, that will at least lay to rest the question that seems never quite to go away about whether we should join the euro. It will at the same time throw into sharp relief the whole nature of our relationship with the rest of Europe. I am not optimistic that the distinction between the internal market, which we will want to participate in, and the economic governance of the eurozone, which we will not, will stand the test of time. It seems that the eurozone will be driven more closely together, and that that will drive the UK and the other “euro out” countries away. The EU as we know it almost certainly could not survive a break-up of the euro.

As we have had a trade deficit with the EU for a long time, we should not get paranoid about those problems. The eurozone countries need our markets more than we need theirs, so we should be able to achieve our trading aims without the need to conform to every directive or regulation designed by the eurozone countries.

Of more immediate concern is the direct financial exposure of the UK. I congratulate the Government on bringing to an end our liability to the European financial stability mechanism, which the party opposite committed us to after it had lost the general election but before it conceded defeat. It will be important to avoid any further commitment. My noble friend the Minister was only partly reassuring on this front when he answered a Question from the noble Lord, Lord Empey, last week. He refused to say in unequivocal terms that the Government had no intention of providing further funding for the euro bailout. I hope that he can be clearer today. The question is: will the Government rule out providing any further financing to bail out the eurozone? It is a simple question and requires only a simple yes or no answer.

18:30

[Lord Monks]

My Lords, one of the small pleasures of working in Brussels for eight years as general secretary of the European Trade Union Confederation was to be examined periodically by the House of Lords European Union Committee and to talk with others in the waiting room about just how serious and expert those sessions were, and how well respected the committee and this House is among those people on the inside who give evidence to it from across the Commission and the other European institutions. I thank the committee for a typically good piece of work. It is a balanced and sensible report on a very difficult situation. The tone of the report is about right as well; it is worried but friendly. It is constructive and trying to help, in a rather modest way—not in a kind of “Britain knows best” way, which is too often the tone of some of the critics of the euro and the way that it has developed.

As the crisis has been developing in the eurozone, there are more and more opportunities for those such as the noble Baroness, Lady Noakes, and others in this House who tend to say to the other side of the argument the four most annoying words in the English language: “I told you so”. The harsh fact is that this is the most difficult economic crisis in the West since the 1930s. It has probed and prised open the cracks in the design of the euro system—and the cracks, by the way, in the economic system which the UK developed over the past 30 years, with our overemphasis on financial services and our ignoring of the importance of manufacturing, and in some of the old-time truths which underpinned the rise of this country in the past. How do we get by? Let us be frank in this House about it. We get by through the devaluation of sterling, which is still 20% down against the euro, with all its troubles, and by quantitative easing, with our central bank printing money. These two ingredients are one reason—perhaps the main reason—why the UK recession is not a lot worse than it is, but those options are not available to our neighbours in the eurozone.

Perhaps we should think for a moment what would have happened without the euro and suppose that this crisis had happened and that all the national currencies were still in place. Their values would have been moving around as some Governments were forced, or chose, to devalue their currencies. Inevitably, had that happened accusations would be flying that the devaluations were a protectionist measure. That very powerful argument would have been going on in Europe at present. The single market would be under considerable challenge, as others considered taking retaliatory action against those who had devalued their currencies. Indeed, if our exports had been rather more impressive than our imports, and it was the other way round, we would have had a much harder time from our European partners than we have had since the devaluation of the pound took place. If the present situation is very difficult, and I certainly acknowledge that it is, the alternative would be difficult too.

British government policy is in the curious position of emphasising the virtues of austerity at home, in the UK economic and political scene, while loudly proclaiming the growth and expansionary path in the eurozone. That is particularly aimed at Chancellor Merkel. This leaves the UK wide open to a charge of, at best, inconsistency and, at worst, rank hypocrisy. After all, actions—not words—matter, and the shrinkage of the UK economy provides limited help to the economies of our neighbours in the present circumstances. Should we now not be asking ourselves how we can help the eurozone do what it must do if it is to survive? Could we, for instance, publicly and intelligently support the ideas of eurobonds and the mutualisation of some of the debt of the hardest hit economies? Could we not encourage making the European Central Bank a lender of last resort like national banks so that it could stand ready to rescue in the most difficult circumstances? Could we not take a fresh look at taxes on financial transactions both to check reckless speculation, of which we have seen far too much, and to act as a fresh and much needed source of public revenue? Can we support the creative use of the surpluses in the EU regional and social funds and a stronger financial base for the European Investment Bank? Can we take the lead on something? I believe it should be on a scheme on youth unemployment which would impact on those countries where that problem is particularly serious at present. The UK could take these positive initiatives from outside the eurozone. At present it is like a frustrated football fan sitting in the grandstand shouting plenty of advice that nobody takes any notice of.

The steps I suggest are not just gestures of help for the eurozone; they are self-help for the UK as well, just as the Marshall plan was not just American generosity but American self-interest. If the eurozone can resolve its contradictions and do something to deal with the cracks in its architecture, it will benefit itself, but it will benefit the UK as much as anyone.

18:34

[Lord Maclennan of Rogart]

My Lords, it has been a privilege to serve on the Select Committee and to participate in at least some of its deliberations on this subject. I thank the noble Lords, Lord Harrison and Lord Roper, for presiding over those deliberations at a time of great sensitivity and urgency to deal with these matters. The Select Committee’s report was published in the aftermath of the Prime Minister’s walk-out from the December seminar. Although that diplomatic mistake has had the lingering effect of diminishing Britain’s influence on decision-making by the European Union, I do not wish to rake over the failure to disclose to the committee the interests that the Prime Minister was allegedly seeking to protect. Suffice it to say that the reasons subsequently advanced by the Chancellor of the Exchequer in his letter to the chairman of the Treasury Committee of the House of Commons were wholly unconvincing. As that letter makes clear, significant levies on the financial sector,

“are subject to unanimity under the EU treaty”.

The Prime Minister was playing to a domestic gallery, not seeking to take forward the decisions that had been taken in principle by the October summit. It was a failure of the worst kind.

The Government’s response to the committee’s report has some positive proposals that I commend and welcome. In particular, the Government claim that they are “leading the growth agenda”. I think some of the remarks by the noble Lord, Lord Monks, about how we might lead it rather better should be taken on board by the Government. The answer to the report makes it clear that there are certain longer-term goals in respect of reforming the single market that could have a beneficial impact on our economy and some of those areas most under stress at this time. For example, in services there is huge overregulation in the domestic law of too many European Union countries, notably Germany. Digital union within the trade area is now likely to be achieved by 2015. That is a little way down the track, alas. The agenda also includes energy, which is a noticeably disrupted economy, with member countries taking very different views of it.

It is also good to notice in the Government’s reply support for a European research area and global openness via the EU free trade agreements with trading partners. These are positive. Although the December diversion from the urgent need to particularise and embed the principles agreed at the October meeting caused further delay in coming to grips with the euro area crisis, we are not alone in having been too tardy in responding. Indeed, the German and French attempt to water down the Basel III capital rules as they apply to Europe, even within the past month, must also be regretted. It seems clear that member countries of the Union have not faced up to the seriousness of the crisis in a coherent and constant way, with a direction set by their heads of government.

Major decisions are now required. One is on the Greek debt write-down. A second is on bank recapitalisation and the financing of the European Union rescue funds. These have been too long postponed. As the noble Lord, Lord Harrison, pointed out, the European Central Bank has been inventive in purchasing government bonds of euro area countries in financial distress from the secondary market; in coming together with the central banks from outside the area to help provide liquidity support; and in the long-term refinancing of operations—the LTRO—which provides 500 European banks with nearly €500 billion via three-year loans at very low interest rates. However, it is clear—particularly so because of the current Greek crisis—that this has not been enough.

It is worth noting in passing the evidence given to the committee by the former Prime Minister of Italy, Giuliano Amato, that although fully fledged Eurobonds were not part of Germany’s current thinking, mutually guaranteed project bonds for specific pan-EU projects, such as the development of the European power grid, should be given consideration. I should like to hear from the noble Lord, Lord Sassoon, when he winds up, whether the Government are giving serious consideration to that suggestion, which seems to be one that should be treated favourably.

Most commentators viewing the results of the Greek elections have considered that the Greek Government’s exit from the eurozone is now much more likely. The Greek opinion polls suggest that there is a growing recognition that the consequences for Greece would be disastrous. It is impossible to predict what may happen by 17 June. However, what is to be done now?

[Lord Radice]

My Lords, might the noble Lord also remark that well over 75% of Greeks who have been polled want Greece to stay in the eurozone?

[Lord Maclennan of Rogart]

I believe it is nearer 80%, which is an indication that the traditional parties might be worthy of greater support than Syriza, but it is not for us to comment on the internal politics that are leading up to the June elections in Greece.

I believe that it is not sensible to lecture Greece and still less sensible to lecture Germany from the sidelines about what they ought to do. Britain cannot take a holier-than-thou attitude. Some time ago, the Chancellor of the Exchequer spoke of the need for fiscal union, which we have heard repeated today even by the noble Baroness, Lady Noakes, to stimulate recovery and to make the eurozone a workable phenomenon. Others, including some German voices, have adumbrated steps towards banking and political union. But these, although sensible medium-term goals, will not be achievable in the amount of time available to set aside the crisis that faces us immediately.

Northern Europe is not ready to be tied to bailing out its southern neighbours, despite the probable adverse consequences, including slashed production in most European and many other countries. Nor could Germany take on the entire debts of the European region without calling into question its own credit worthiness. All EU Governments should be assembled in conference to work out an acceptable solution. Two-day meetings by heads of Government are not enough. Some 74% of the Greek Government debt is now held by Governments and the IMF, which poses a massive threat to taxpayers. There is no point in crying over spilt milk. Earlier restructuring would certainly have required more banks to be bailed out but that could have avoided the confidence-sapping sequence of crisis. Roughly €100 billion was paid to private creditors by the Greek Government before their bailout in February.

The European conference which I am proposing should aim further to write down Greek public sector debt, to fix a longer period in which to hit their fiscal target, to agree to second immediate expert personnel to work with the Greek Government and other Governments in difficulty, and to achieve delivery, including structural reform. There is also a need for liquidity support for solvent banks and Governments. The natural liquidity backstop is the ECB, which has been mentioned by speakers in this debate, including the noble Lord, Lord Monks. Lenders must be properly capitalised but that has been postponed time and again in the eurozone. The IMF considered that €200 billion was required last year but only €100 billion was agreed by the Governments.

The new European security mechanism would be a suitable institutional arrangement to sustain the illiquid Governments. The ESM could find itself short of funds, which might be overcome by allowing it to borrow from the ECB. That idea appears to be favoured by successive French Governments, including President Hollande. But insolvent Governments need to restructure their debts and illiquid Governments need credible plans to reduce theirs. There is also a need to introduce controlled resolution of undercapitalised banks. The stakes of shareholders have massively diminished in value. Bondholders could be bailed in to provide a buffer. Banks should be prepared to move to subscribing to such funds in due course.

It is expected that the EU Commission will produce its own proposals in June; they should be fed into the proposed standing conference of member states. Unless member countries of the European Union come together with appropriate expert support on a continuing basis, there is a grave danger that a Greek exit, leading to their Government’s default; contagious runs on banks in other countries; exchange controls being imposed; the new currency being devalued; and hyper-inflation being experienced in some countries and deflation in others, will be a highly predictable consequence. We know that Argentina and Iceland managed to turn themselves around, but such chaos as I have described in the euro area, the second largest economy in the world, with the largest banking system, needs to be treated as the paramount challenge to western democracies since the 1930s.

18:51

[Lord Marlesford]

My Lords, both the noble Lord, Lord Monks, and my noble friend Lord Maclennan have warned us against advising or criticising other countries in these matters. It always seems to me that one advantage of the privacy of your Lordships’ Chamber is that we can freely give advice to the Government without much danger of it leaking out.

As the only other member of Sub-Committee A speaking today, I congratulate my chairman, the noble Lord, Lord Harrison, on his lucid exposition of our findings. I also tell your Lordships that in the ever-changing kaleidoscope of events in the euro area that we faced during our inquiry, his skill as a chess master enabled him to guide us through and sometimes even interpret the irrational, usually contradictory and often ill conceived moves of the euro area.

I am neither a Eurosceptic nor a Europhile. If I presume to symbolise anything at all, I would try always to use a pragmatic approach and describe myself if anything as a Euro-challenger.

Never has it been clearer that the first commandment for a leader is to identify and then face reality. That applies in politics, economics and business; it applies especially to bankers and, above all, to central bankers. Do not let us forget that one of the main architects of our misery is that shrunken giant Alan Greenspan, with his failure as chairman of the Fed to face—and still less to act on—the reality that he had, in fact, identified in the three years that led up to the summer of 2007, when it became clear that everything would unravel.

The former name for economics was political economy, which underlines the crucial links between economics and politics. Even when the economic realities are revealed, political forces often conspire to frustrate the hope of solutions. I intend to devote my own brief comments to the situation in Greece and suggest a possible way forward for that country.

I should perhaps declare a rather remote interest in that my great-grandmother was Greek and her uncle was Capodistrias, who after he had represented the Russian tsar at the Congress of Vienna was, in 1827, persuaded to be president of Greece—and for his efforts was assassinated in 1831 within five years of taking office. It was ever thus.

It is perhaps relevant to remember that the British Foreign Office argued strongly against the liberation of Greece from the Turk on the grounds that it would undermine the Ottoman empire and thus destabilise the Balkans. The words of the noble Lord, Lord Monks, “I told you so”, may be echoed by diplomats of today. Of course, it was Lord Byron and his friends who ensured that the advice of the Foreign Office was not taken on that occasion.

Noble Lords will remember that it was Plato himself who argued against Athenian democracy of the fourth century BC on the grounds that demagogues could use it to prevent sound decisions. His analogy was a ship controlled by ignorant and quarrelsome sailors who refused to believe that there was any such skill as navigation and would write off a mere helmsman as a useless stargazer. His solution was, of course, the philosopher ruler. Whether either Mr Papademos or Mr Venizelos is up to such a role is not perhaps for me to judge. However, at paragraph 133 of our report we draw attention to the outburst of anger on the part of Greek politicians at the suggestion that there should be a budget overseer for that country. It seems to me that the danger now is that the second round of elections may again result in a preference for the rather destructive demagogues in the extreme right Golden Dawn and the hard-left factions forming the Syriza. There are rather frightening echoes in these economics and politics of how Hitler came to power 80 years ago.

It seems to me most unlikely that Greece can, or should be, bailed out yet again. I think, therefore, that it must leave the euro area, but I certainly hope that it remains inside the EU. Then what? There are two choices. The first is assumed, and that is the re-creation of the drachma as a new Greek currency. I believe that this would be a disaster for Greece. It would be a currency that no one would wish to lend or to borrow. The markets would ensure that it would be rapidly devalued and the Greek central bank would have to resort to the printing press.

[Lord Davies of Stamford]

I agree with the noble Lord’s analysis entirely up to now. However, does he agree with me that if the drachma collapsed, as it certainly would, everybody would want to borrow in it and have their liabilities in drachmas and their assets in euros, and that that would be part of the problem?

[Lord Marlesford]

My goodness, the noble Lord is certainly a speculator.

If Germany is prepared to pay not the cost of bailing out Greece but the cost of redeeming the Greek euro debt which already exists, we have to think of something better than going into a Mickey Mouse currency such as the drachma. The solution would be for Greece to leave the euro area but to continue to use the euro. There are plenty of examples from past economic crises, such as Latin America using the dollar and Yugoslavia using the deutschmark after Tito died. The whole point is that using the euro with a new central bank for Greece would impose a discipline on the central bank and on Greece. Like anyone else, it would be possible for it to use only the currency that it could afford. It would not have any relation or connection with the European Central Bank. It would be paddling its own canoe but it might well have to have some help from the IMF. However, it might well produce a remarkable resurgence. Indeed, a noble Lord talked about the possibility of financing certain projects with eurobonds. This might be very possible if people could see sound opportunities in Greece and they knew that the currency being used was a proper international currency. I think that that would be a real help.

[Lord Lea of Crondall]

The noble Lord has painted a fascinating scenario, but how does he get out from under the problem he referred to whereby, in a sense, the demagogues fail to acknowledge that the real fall in living standards would be a lot greater in the drachma devaluation scenario than in the internal devaluation of taking more medicine in the eurozone?

[Lord Marlesford]

When Sub-Committee A looked at the bailout, we saw again and again that the figures produced as necessary to prevent a catastrophe became ever greater by magnitudes. There is the old cliché about “A billion here and a billion there—you are talking serious money”; we almost reached the stage where it was “A trillion here and a trillion there”. If the prospects are for bailout, and that just continues, whatever happens and however much worse it gets, it has been fairly conclusively proved that people will take advantage of a bailout. It is human nature. It was the present governor of the Bank who said that if there is a run on the bank, the sensible thing is to join it. Therefore, if the bank is prepared to bail you out, the sensible thing is to accept the money.

My solution is that you impose a requirement to earn the euros—but with some help through the IMF, eurobonds, or eurobond investments—and you are thus able to rebuild your economy. I do not see, from the point of view of people living in Greece, that there is much difference between perhaps starting off with saying, “We are going to recreate the drachma; and the drachma is equal to a euro”, and then finding that the next day it is worth only half a euro, or, as the noble Lord, who likes speculating on these matters, might think, the drachma would soon be worth only a quarter of the euro. It would be a great deal better to recognise that the flexibility of having to have the euros with which to buy and pay for things would itself generate a reality that, I believe, is lacking.

[Lord Hamilton of Epsom]

I am rather uncertain as to how, if the Greeks basically default but stay with the euro, they would raise new debt in euros.

[Lord Marlesford]

I do not think that they could do so as such, except that, as I say, you might have a euro project in which people would invest. It would perhaps be somewhat similar to the private finance initiatives that have been used by the British Government—not entirely with success, maybe, but on balance they have been a useful source of making things actually happen. If people could see a good return, they would invest in it. That is a perfectly sensible way of doing it and, therefore, Greece would not be able to raise euro debt as such, unless the markets thought that that was viable. That is where the self-discipline is. The self-denial of recourse to the printing press would be a solution. I suppose I am really saying that if we get this form of self-discipline, which reality should require, and if this were to work in the case of Greece, it could be an example to other countries either not to follow suit and to grasp the nettle for themselves, or to recognise that this would be a viable way forward.

19:04

[Baroness Crawley]

My Lords, I add my congratulations to the noble Lord, Lord Harrison, on the work of his committee and on his contribution today. He is a friend and a colleague of many years’ standing—indeed, going all the way back to our years in the European Parliament, where he was especially renowned for his championing of small and medium-sized businesses. I know that he continues with that cause in your Lordships’ House.

This evening, my noble friend Lord Harrison has presented the House with a first-class, thorough and, I think, essentially pragmatic report on the most vital economic issue of the day—the euro area crisis. I had a first read of the report over the weekend. I know that it will repay further study and that it will be a guide to all of us in this time of extreme difficulty and uncertainty throughout Europe.

This is a time, if ever there was one, for stout-hearted men—and, in my case, just stout women—to rally to the European vision while holding our nerve, if both actions can be achieved together. This is certainly not the time for the rather startling questioning of the whole basis of our membership of the European Union, as some in our political parties, especially but not solely in UKIP, are engaging in currently, and this is where the bulk of my short remarks tonight will be concentrated. As the report before us says unequivocally:

“The EU, and the euro area in particular, face massive challenges and there is a need for effective and proactive leadership both from the EU institutions and Member States, in the interests of the wider Union”—

leadership, not carping, questioning and indecision. The importance of maintaining the euro cannot be overstated for our fiscal and economic health internationally.

As we know, these are perilous economic times, as the noble Baroness, Lady Noakes, said. The UK is running a trade deficit of £2.7 billion per month, unemployment is an extremely worrying 8% and our annualised rate of GDP growth is so small that it can be detected only inside the Hadron Collider. Meanwhile, we still sell around £15 billion-worth of exports to the EU27 alone each month. Around 30% of all imports to Ireland, for example, are from the UK.

So I say this to those in the political class who are raising the possibility of referendums: with the turmoil in the eurozone and seriously depleted growth prospects in Spain, Portugal, Greece, Italy and Ireland—although, as the report says, Ireland is giving us some hope for the future—are we seriously suggesting that it is in the best long-term interests of British companies and British workers to start the debate about EU membership all over again, to revitalise the politics of what I would call the very worst of provincial isolationism in Britain and to tolerate the possibility that we could start dismantling every piece of European legislation introduced in the UK since the 1970s? Do we think that it is in the long-term interests of British workers and British companies to send the signal to large global corporations and the Governments of the USA and China alike that, in our troubled but emphatically interdependent world, the British political class would prefer to give the British economy over to a kind of nervous breakdown just because some people, who probably wear Union Jack waistcoats when alone in their homes, want to go back to the days of Commonwealth preference, pounds, shillings and pence, black and white television, jumpers for goalposts and long queues at airports for anyone without that old black passport?

It is not a question of being pro- or anti-European these days; it is a question of pro- or anti-economic sanity. Withdrawing from Europe makes as much sense as the people of Hampstead declaring UDI from London, or trying to divert the flow of the Thames, or shifting the UK’s longitude. No major party represented in your Lordships’ House went into the general election campaign promising a referendum on the European Union and this is certainly not the time to start.

Instead, I respectfully suggest that we should steer our focus to what the report refers to as,

“ultimately the resumption of sustainable economic growth”,

across the European Union. We should also listen to people such as Mario Monti, the Prime Minister of Italy, or President Hollande, who are beginning to construct a serious debate about the bridge between austerity measures and the vital necessity for growth. As my noble friend Lord Monks said in his excellent contribution, this should be our sole focus in these difficult times.

Before resuming my seat, I shall, if I may, congratulate the noble Lord, Lord Boswell of Aynho, and welcome him to his new duties, and thank the noble Lord, Lord Roper, for his excellent work over many years.

19:11

[Lord Willoughby de Broke]

My Lords, like other speakers, I thank the noble Lord, Lord Harrison, for producing this useful report. I recognise, as the noble Lord, Lord Marlesford, said, that producing a report of this sort entails a lot of work: a lot of reading, many hours of listening to witnesses and probably a little bit of shut-eye, occasionally.

Having said that, I am slightly disappointed by the narrowness and rather blinkered focus of the report. I am disappointed but not entirely surprised because, as a paid-up anorak, when I knew that there would be an inquiry followed by a report, I wrote to the noble Lord, Lord Roper, who I congratulate on remaining in his place throughout this debate, suggesting that some of the witnesses were one-sided—what I call Europhile heavy. We had the foreign editor of the Economist, which is from the same stable as the FT, which has been wrong on just about everything for the past 20 years. We had Charles Grant of the Centre for European Reform, famously a Europhile think tank. We had Professor Willem Buiter, always pro-Euro, and Giuliano Amato.

They are all distinguished witnesses, but I wonder whether we should have had some more Euro-realistic views, which might have produced a greater balance to the report. Why not economics Professor Tim Congdon, Daniel Hannan MEP, Roger Bootle or Ambrose Evans-Pritchard? If they were too strong meat for the committee, perhaps it could have had Wolfgang Munchau from the FT. He has reinvented himself to what he would call a Euro-realist. We are left with a rather unbalanced and one-sided report, with statements of the blindingly obvious, as in paragraph 143, which states that,

“there remains an urgent need to establish a credible and well-financed system of rescue funding”.

Quite.

One point that I notice from reading through the report, which is symptomatic of the tone and why I am quoting it, is that right at the beginning in Chapter 2, Professor Buiter says:

“It is a sovereign liquidity crisis ... countries that one hopes and assumes are most likely solvent, as far as the sovereign is concerned … frozen out of the funding markets by markets panicking and refusing”,

credit. It is not the markets that are panicking; they are acting entirely rationally in refusing to lend to borrowers who they feel may not repay their loans. It is the eurozone Ministers, the European Central Bank and the European Commission that are panicking by using every sort of dodgy financial wheeze to keep the euro-zombie staggering along on ever-more expensive forms of life support.

The noble Lord, Lord Marlesford, mentioned the possible cost of this going forward, never mind the cost that has occurred so far. I have discovered a rather shocking fact, which I will share with the House: the bailout funds so far used to rescue the eurozone are larger in real terms than the reparation payments and reconstruction plans of the First and Second World Wars combined. The reference is David Marsh’s book, The Euro: The Politics of the New Global Currency. All that in the name of what? Solidarity, cohesion, European destiny, what the noble Baroness called vision. What a cruel joke that is.

How can anyone pretend any longer that the euro project is anything but a disastrous financial and social failure? Greece is in near revolt, Spain has 25% unemployment and over 50% youth unemployment, Ireland is in a double-dip recession, Italy is in turmoil, 11 Prime Ministers have been booted out since the euro crisis began—all this to keep the EU political bandwagon on the road and the euro delusion going, never mind the social and financial cost of doing so. I say to the noble Lord, Lord Davies, that if he is interested in a bet on the euro or the drachma, the biggest financial exchange dealers in the world—ICAP, at least—are all ready to deal in the drachma. He will be able to indulge his gambling whim with them any time now, I guess.

The best solution would surely be for Greece, and any other country that so wishes, to leave the eurozone. The noble Baroness, Lady Noakes, was absolutely right that that is their only chance of becoming competitive in a global economy. There is absolutely no hope for it at all in the eurozone. The report should have said that there is no hope for Greece and the other peripherals while Germany is master in the eurozone. The Greeks cannot become Germans. It occurred to me while reading the report that we could have had a monetary union of countries beginning with S, it would have been just as effective: Switzerland, Syria, Sweden, and Serbia. There is no reason why that should not have been as ineffective as the eurozone.

I agree with the noble Lord, Lord Monks, that Britain’s interest is in a Europe that is economically strong and vibrant. That is obvious. However, do the Government really believe that this can be achieved by propping up at ever greater expense the weapon of mass financial destruction that the euro has become? It is not the Government’s job and it is not in the country’s interests to encourage the EU elite any longer in its very damaging political illusion. I hope that the Minister and the Government will take with a heavy pinch of salt the blood-curdling threats that are already being issued by the Eurocrats should the eurozone break up. They should be heavily discounted.

After all, we have been here before. Twenty years ago, Britain went through precisely the same experience when it was stuck with an overvalued exchange rate in the exchange rate mechanism. As in Greece now, our leaders, all the main parties, the CBI, the TUC and the Bank of England assured us that leaving the ERM would be disastrous. On 11 September 1992, the Prime Minister John Major solemnly told us that withdrawal was:

“The soft option, the devaluer’s option, the inflationary option … a betrayal of our future”.

Four days later, we left the system. The noble Lord, Lord Lamont, who I am sorry is not here, was apparently singing in his bath at the time. Our recovery began immediately. Inflation, interest rates and unemployment started falling and we enjoyed 15 years of unbroken growth and prosperity.

That is what the Eurocrats really fear: that if Greece gets out it will be a success, and other countries will want to follow and also get out of the eurozone. Then the whole rotten house of cards will crumble. That is what they fear, and that is what will happen.

19:20

[Lord Giddens]

My Lords, I congratulate all noble Lords involved in writing the report, which is insightful, well reasoned and fairly non-partisan. The eurozone is on the edge of collapse into a precipice, and with it the world economy. However, it is important to recognise that the situation of the EU as a result of this has been completely transformed. There is no way that the EU can stay as it is. There is no way that the traditional cumulative method of building the European Union can be sustained in such circumstances. Federalism in some sense—including fiscal integration, as noted in the report—is the condition of the survival not only of eurozone but, in any essential sense, of the European Union.

The situation is dramatically affecting politics. I do not think that anyone has noted this, mainly because it is so blindingly obvious. Something extraordinary is going on politically across Europe. It is a Europeanisation of politics far beyond anything that has ever happened. This is true both where Governments have been replaced without elections, as in Greece initially and in Italy, and in countries that followed due electoral process, such as Spain and France. The same will certainly be true of Germany. The German election will be fought largely on European terrain. It is hard to overestimate what a massive transformation this is, although of course it occurs as a result of forces that are extremely difficult to manage.

It is possible that we will never go back to national politics in Europe. Of course, the eurozone could collapse, in which case there could be a reversion to the pre-existing system—but I think that that is very unlikely. Probably the whole scope of European politics has changed, and one could say that maybe national politics will never again hold the stage in Europe in the way that it did in the past. This is high drama by any reckoning.

The report rightly stressed that the fiscal compact and other planned budgetary disciplines would not be enough to resolve the crisis. My noble friend quoted the report, which stated that,

“ultimately the resumption of sustainable economic growth will hold the key”.

“Ultimately” at the moment is the wrong word because as we know, and as my noble friend mentioned, to some extent the report has been overtaken by events. The arrival of President Hollande and citizens’ revolts—if I may call them that—in Greece, Spain and elsewhere have already pushed growth back on the agenda, and President Obama nudged the eurozone in this direction at the G8 meeting.

The question of the hour concerns the relationship between austerity and growth—terms that I do not like very much. Rather than austerity we are talking about a version of economic sustainability; austerity is the wrong word. On growth, we have to ask what kind of growth, whom it will be for, who will receive the benefits and how it will be distributed in society. A resumption of growth that goes to only 0.05% of the population will not serve any social benefit.

While we talk about the relationship between these two elements, we should not offer facile solutions. At this juncture we need profound rethinking, mainly because there has been a generalised loss of competitiveness in the West which I would trace back for at least the past 25 years. This decline in competitiveness in relation to the large developing economies has been happening. In spite of everyone lauding the reforms that the Germans have made—I am happy with that because I was, in a marginal way, involved in some of them, especially Agenda 2010 and reform of labour markets—even Germany is not competitive in world markets; it is competitive because of the shelter of the euro. A very good paper has been written on what would happen if Germany withdrew from the euro, which is that large chunks of its industry would become uncompetitive overnight.

In contra-distinction to what the noble Lord, Lord Willoughby de Broke, said, this is not just a crisis of the eurozone. My noble friend Lord Monks put it well when he said that the generalised crisis of competitiveness in western economies has driven apart and revealed the frailties which were there in the euro project from the beginning. So the future of the euro, if I may put it this way, is not only a matter of the euro.

Let me make a few points about the relationship between austerity and growth. Although I said that I have strong reservations about the terms and would like them to be dropped, the Prime Minister was right to say that the two are not inconsistent with one another. The key difficult question economically is what is the relationship in the context of not only a national economy such as this one but in the context of the more generalised European economy.

My main objection to the Government’s programmes in this country is that they do not seem thought through. You cannot even say whether a cut is a cut unless you trace out the knock-on economic implications of whatever reductions have been made. This is quite close to home to me, working in the university sector, because the Government’s reforms of universities could produce a situation where there is less revenue coming in than there would have been if the reforms had been differently structured. This is partly because universities generate a lot of revenue anyway and partly because of the esteem with which they are invested on an international level. In many areas the Government have not thought through the knock-on implications of their programmes of cuts, and if you do not do that you cannot develop a sound plan for the future.

As has now come to the fore with the advent of President Hollande and Mario Monti in Italy, Keynesian-style infrastructure investment can make a difference if it is carried out on a European level, is funded by the European Investment Bank and is invested in sensible projects—not roads but, for example, the building of an integrated pan-European grid, with a fair chunk of renewable energy in it, would be a sensible and systematic project.

It is obvious that the debate at the moment is being carried on between, as it were, the neo-monetarists and the neo-Keynesians and I find it very inadequate. I do not think a Keynesian solution will generate the jobs and style of growth we need any more than a revamped neo-liberal position. We need something more basic and more innovative than that. In general, we have to think much more innovatively.

Even though one can talk about sustainable growth and growth in general and say that one is in favour of it, in current conditions it is extremely hard to achieve in any western economy. The US is finding it as difficult as the core European economies are, although this is disguised by the effects of the euro in the eurozone.

A good example of the difficulty is that one of the main arguments for generating new jobs produced in this country and in the European Union 2020 document is that the EU should be at the cutting edge of technological innovation. It could do this, for example, in the energy industry and keep ahead of competition from the large developing economies. However, this is not possible in any straightforward, facile way. You only have to look at the history of the German solar industry to see this. It is exactly the sort of industry one would expect to keep the German chunk of the European economy ahead of other parts of the world. However, the Chinese started constructing solar panels much more cheaply, with a higher level of technological sophistication than the Germans could manage, more or less undermining the German industry completely. The same thing has happened in the United States.

To me, this shows the scale of the task in front of us. In Europe we have a double task. We have to save the eurozone because, contrary to what has been said by some other speakers, flawed though it is, it is really the condition of some kind of stability, economic and otherwise, in the European Union. Therefore, it is imperative, but the task, if you link it through with a generalised loss of competitiveness, is truly formidable. As an academic, social scientist and economist, I think that we do not actually have the concepts and the ideas we need to break through the situation. Therefore, we are reduced to this rather stale confrontation of traditional economic orthodoxies.

19:32

[Lord Dobbs]

My Lords, I am also tempted to stray a little from the committee’s report this evening, although not before paying tribute to the excellent work of its members and also adding my welcome to my noble friend Lord Boswell of Aynho in his new position.

It has not been a very good week for political classes and elites, and I am told that it is only Monday. Over the weekend, NATO’s strategy on Afghanistan seemed to have been taken over by the Grand Old Duke of York—lost in confusion, trying to remember whether he was supposed to be marching up or down the hill. Then, of course, we had the summit discussions on Europe, where the only consensus seemed to be that Europe is in a terrible crisis. Europe is in chaos, and things will get worse.

I commend the committee for its report. I take to heart its opening lines about the need for leadership. As the noble Lord, Lord Harrison, himself has so ably set out, we have seen so little of that—so many of Europe’s leaders seem blind and bereft of ideas. You can hear the mantra falling from the lips yet again, “One last push and it will all be over,”. We in Europe seem to have learnt nothing for almost 100 years.

I listened in amazement over the weekend to President Barroso. I beg his pardon, because I mean him no personal discourtesy, but his statement was like tugging at the tulips to see if the roots were still intact. Your committee spoke of—I believe the noble Baroness, Lady Crawley, also quoted it, although that is as far as I will be going down the path with her this evening—a need for effective and proactive leadership from the EU institutions and member states. Where has that been?

Over the weekend Mr Barroso’s response to the need for leadership was to say that,

“there is only plan A”.

There is no plan A. It is a meaningless concept. There is nothing but a fog of indecision. Europe’s leaders talk about Greece, the euro and binding undertakings, but they refuse to address the key issue: the increasingly incoherent fiscal and political system that underlies and is undermining—indeed destroying—the euro.

I have always wondered why Europe should need three expensive Presidents—not just Mr Barroso, but two others as well—and of course two even more costly Parliaments. They can only come up with one bankrupt idea: plan A. But perhaps there is a plan A*. We heard it again over the weekend: a strategy for growth. Why did I not think of that? Where have I been? I must have been a stonkingly dull pupil all these years. If platitudes could come to our rescue we would have floated off the rocks long ago and would today be singing from the top of Mount Olympus.

Plan A, plan B—whatever plan has so far been devised—will not do. This cannot do. The people tell us that, which is why in country after country since this crisis began Governments have been swept from office—all of them thrown out, with one exception: Estonia, where a Eurosceptic centre-right Government somehow managed to increase their majority. I draw no general rule from a single example, as much as I am tempted to, but the evidence of every other election is surely compelling. Those who are responsible for the crisis have been called to account.

As I gaze across the battlefield of Europe, littered with corpse after political corpse, I have to wonder about Brussels, about the system and about Mr Barroso and his colleagues. Why is he—and the rest of them—still there? How many of them have been asked to resign or apologise or accept their share of responsibility for the chaos? Not a single one. They seem to inhabit a parallel universe of different rules, while Greece is condemned to paralysis, stagnation—and perhaps salvation, but those in Brussels demand still more, 7% more. Those whom the gods wish to make mad they first seem to send to Brussels.

The stakes are terrifyingly high. I was taken with the warnings of the Deputy Prime Minister, Mr Clegg, the other day. He is not a man whose insights I have regularly praised in the past, but he talked about his fear that economic failure could lead to political extremism and chaos in parts of Europe. That was echoed by my noble friend Lord Maclennan. He is surely right to give voice to those fears. There is so much at stake. Instead of prosperity, Europe will get bankruptcy. Instead of peace, Europe could be filled with burning barricades. Instead of parliamentary democracy, we could all too easily find tolerance being trashed in country after country.

It requires leadership to see a way through this tangle. I welcomed very warmly what the Prime Minister had to say over the weekend. His words were wise—perhaps not welcome in every quarter but sometimes it is necessary to shake the tree to get at the fruit. He said that the people will decide, and in Greece they will do that in the form of an election that will be seen as a referendum. The people must decide—not the political classes, who by and large have offered nothing but arrogance and indecision in heroic measure in recent years. It is the people who will suffer the consequences of failure, see their jobs taken from them, their pensions smashed and their hope and ambition for the future taken from their children. This is not a decision that can be left in the hands of politicians with gold-plated pensions, even gifted philosopher kings such as those praised by my noble friend Lord Marlesford; it is a decision for the people to make.

I therefore take to heart the Prime Minister’s words and the inexorable logic of his argument, which is that what is good for the Greeks must be even better for the British. I look forward to those Greek elections and hope that they will clarify some issues, just as I look forward with even greater anticipation to the referendum that must at some point surely follow in this country.

19:40

[Lord Judd]

My Lords, I join those who have thanked the noble Lord, Lord Harrison, and his committee and congratulated them on having had the courage to put their heads above the parapet and produce this report in the midst of all the challenges that face us. I also take the opportunity of joining others, including my noble friend Lady Crawley, in putting on record my admiration for the service given to this House by the noble Lord, Lord Roper, as Deputy Chairman of Committees. I have known him for 59 years and there has been a consistent theme from which he has never deviated in his life: a commitment to making a success of international institutions, which he sees as indispensable to the future of humanity. That conviction of his has enabled him to be such an effective operator.

It was interesting to contrast two trenchant speeches, that of the noble Baroness, Lady Noakes, and that of my noble friend Lady Crawley. The noble Baroness, Lady Noakes, finished by expressing her admiration for the Government and the Prime Minister for having made it absolutely clear that, whatever happens, the British national interest will be central to their considerations. The problem about that thesis is, as my noble friend pointed out, that we live in a totally interdependent world. It is a false analysis to suppose that you can look to the national interest without looking to the international interest, because our long-term well-being, survival and prosperity depend on the stability and well-being of the international community of which we are inseparably a part. That in an immediate sense starts in the European Community, of which we are in so many ways very much a part.

The difficulty is that we face a challenge. The challenge is not just all the financial nightmares with which we have been dealing; it is the dilemma with which people feel confronted. On the one hand, they are utterly dependent on effective solutions in an international context; but, on the other, they find globalisation and regionalisation quite threatening, because a large number of them feel that they are losing their sense of identity and purposeful significance. That was true of what we saw in the Arab spring. The Arab spring was not just about economic and social injustice; it was people asserting that they mattered and wanting that to be recognised. As we have the institutions today, they do not feel that. They see them as remote and impersonal; they see them as the preoccupation of a political elite of which they would regard us a part. That is the point that I make to my noble friend—my good friend—Lady Crawley.

Although of course we could argue that this is the very time not to start a major agonising debate, we can equally argue that it would be sheer obstinacy of the worst kind to pretend that there is not that crisis, to pretend that people are not disillusioned, that there is not a crisis of confidence among them, and that they are not feeling alienated—let us be prepared to use that word—from the processes in which we all participate. I do not separate myself from that. As someone who was fashioned and grew up during the Second World War, I put my commitment to the European project second to no one, but we have to face up to the seriousness of the human challenge, not just the economic challenge, that confronts us.

In a reflective moment, if we are looking for strong international regional institutions, confederalism may well produce them more successfully than federalism. People want to feel that they belong to something with which they can identify. The challenge is to enable people to see that that is not enough. We must reintroduce the whole concept of international co-operation, emphasise it and start giving it muscle.

As we look, more immediately, at the euro issue, there are those who say, “Of course we could not find a solution for our economic affairs in Europe while we had a euro without the fiscal discipline that should go with it”. It is about not simply fiscal disciplines but a cohesive social and economic agreed agenda; I do not see how we can have sustainable stability without one. When I was a Minister of State at the end of the Callaghan Government, we used to consider agonising issues. In my view, it is wrong to suggest that the urgency of the economic crisis means that economic and social priorities must wait. It is in times of economic stringency and hardship that economic and social priorities become more important than ever. If the remedies are to work, they must be in a context in which people feel confident that there is a prevailing ethos of social justice.

I find it very interesting that if you look at either end of the spectrum you get the same conclusion. Adam Smith did not write first, as a young academic, about liberal economics; he wrote first about ethics. He was a highly ethical man. He approached his economic theory in the context of a strong ethical commitment. The late Lord Soper, when the Berlin Wall collapsed, made the profound observation that it is not a matter of socialism having been tried and failed; it is a matter of socialism having demanded an ethic of which humankind has so far proved itself incapable.

Therefore, whether you are looking at it from a capitalist perspective or a more socialist perspective, the indispensability of the ethical priority cannot be overemphasised. We have to reassert in Europe, and in this country, the overriding importance of ethical discipline, not just fiscal discipline. If not, either system is doomed—I put it as strongly as that. What we have is a system in which greed has got out of control and in which, as has been often said of late, risk has been socialised and wealth and profit have been privatised. That is a recipe for tension and instability in society. It is the key issue that has to be tackled.

This is also a moment to pause and consider the issue of democracy itself and how it can work, which of course brings me back—I must be honest about it—to my own political orientation and attitudes. I have never understood how you can have a democracy if you have not got the accountability of economic power. What we are seeing is that we simply have not had the effective accountability of economic power where it matters. The noble Lord, Lord Marlesford, whom I have been fortunate to know as a friend as well, because we came into this House on the same day, was very right to remind us of what happened in Germany in the 1930s: of how the forces of Hitler and fascism gained momentum and what the social realities were around that.

I am sorry if I have said this before in this House—well, I am not sorry, but I recognise that I have said it before—but this is a juncture where I wish that we had more expression of some solidarity with the Greek people, because it was certainly not them who caused the crisis in which they find themselves. The noble Lord was right to say that the Greeks must make the decisions for themselves. We cannot make them for them and it is absolute madness to start lecturing them on their responsibilities. They have suffered enough. They have to weigh it up for themselves and see how they want the issue tackled. That of course has profound implications for us but we brought that on our own head.

It is absolutely clear in the midst of all this that the problem with the principle of unbridled market philosophy is that it emphasises the short term and squeezes out the longer-term perspective. One only has to think of the environmental issues as a good practical example of that. That is why we have to have balance and why an ideology of either left or right is not in itself enough. We have to have more pragmatism and more balance in the way we handle the issue.

I therefore conclude simply that what depresses me most about our predicament is that we are mesmerised by an almost neurotic search for some kind of structural, technical solution. If I have come to a conclusion about life, it is that no structure ever achieved anything of itself. Structures are inanimate; it is the objective against which the use of the structure must be judged that matters. It is the quality and values of the people operating the structures that matter. We have to regain a sense of vision, meaning: what kind of Europe do we want and need in the midst of this overriding reality of interdependence? How are we going to turn what is a massive crisis into an opportunity by asking the profound questions? I hope that my noble friend will forgive me for putting it as bluntly as this but, yes, I am asking profound questions. Where and why has it all gone wrong? Now what has to be done not just to patch it up but to find lasting solutions for the future?

19:54

[Baroness Williams of Crosby]

My Lords, that was a very eloquent speech by the noble Lord, Lord Judd. There are real concerns about what has happened to the moral framework underlying the market. For lack of time, I cannot go into that and will follow the noble Lord in only one respect: in paying tribute to the noble Lords, Lord Harrison and Lord Roper, for an insightful, thoughtful and brilliantly written report. I add my congratulations to the noble Lord, Lord Roper, on the way in which he has led the committee, which still produces work of the highest possible quality.

Let me say right away that the committee report calls for leadership. A necessity for leadership is adequate information, and that leads me to ask the Minister a direct question. Is there any prospect of the Prime Minister’s draft protocol and the safeguards that he called for at the December Council of Europe being made public—after all, it is now nearly six months later—so that this House and those who are concerned about the future of Europe can have the profound discussion that they are capable of, but which is made more difficult because they do not have the information they need to pursue that matter?

Signor Amato, the former and very good Prime Minister of Italy, said honestly, “We have made a great mistake”. The great mistake in the creation of the euro was the failure to recognise that not only was a technical outcome required but a profound institutional change as well. In its pursuit of democracy within Europe, the European Commission and the other European institutions specifically required that. Some Members of the House will remember the Copenhagen criteria, a brilliant set of requirements for creating a real democracy. They range from independent courts up to the necessity for free and safe elections. The Copenhagen criteria are still being discussed with Turkey. They create the kind of countries that become part of the kind of Europe for which the noble Lord, Lord Judd, called. In the case of the euro, no such provision was made. There was no period of transition and no requirement that the basic, fundamental institutions of the eurozone had to be laid down by nation states. One of those institutions is an honest and transparent fiscal system. It is not polite to say so, but the truth of the matter is that very few rich people in Greece, Italy or Portugal ever pay taxes. At most, they pay nominal taxes, and that is not a basis on which one can build a sound and lasting eurozone. Institutional reform is crucial.

For lack of time, I shall make only two other points. First, we should ask why the ESM, which is not yet with us, but will be within a few weeks, decided not to require there to be a general mutual agreement by stakeholders alongside taxpayers to share the pain of the changes that are required. That was a very profound mistake because one of the real challenges to democracy is that when there is pain and sacrifice, it must be shared among society. I agree with the noble Lord, Lord Judd, that it cannot be loaded on only a section of society while the other part goes untroubled and untainted by the need to meet the requirements that are laid down.

Finally, the president of the IMF, Christine Lagarde, made a terrifying, chilling remark: “We may be sliding into a 1930s moment”. I very much commend what noble Lords have said about the real dangers to democracy from what is happening now. We must recognise that none of us can bale out of those requirements. They are part of what it is to sustain democracy at a particularly hard time.

19:59

[Lord Davies of Oldham]

My Lords, this has been a fascinating debate. I am sure that when the noble Lord, Lord Harrison, began his work with the committee on this report he scarcely anticipated that we would have quite such a wide-ranging debate. It has ranged from practical solutions for how we might emerge from the difficulties to the cataclysmic perspective that the game is up and we may as well fold up our tents and go home.

There are two dimensions to this debate to which I have the greatest difficulty in responding. I have great difficulty in responding to my noble friend Lord Giddens, not because I do not respect his analysis but because I cannot cope with the situation. He says that we, as politicians, do not have the intellectual machinery or concepts to get ourselves out of these difficulties. That may be so but I assure my noble friend that that will not stop politicians trying.

[Lord Giddens]

I did not mention politicians once. I was talking about intellectuals, saying that we do not have the capability to resolve the issues that face us at the moment. Therefore, it is not surprising that politicians are struggling, too.

[Lord Davies of Oldham]

I was not going to be excessively critical of intellectuals. I accept what my noble friend said but I translated it to the political because that is what this House is here to do. We are not a debating Chamber; we are the second House of a very significant Parliament in a Europe that is faced with the most colossal difficulties. That is why we have to address ourselves to the issues.

I greatly applaud the work of my noble friend Lord Harrison. When the report was being drafted, things were not quite as critical as they have developed to be over the past two to three months. Nevertheless, my noble friend and his report clearly reflect the difficulties and tensions faced by the committee in producing a response to the great challenge of the crisis in the eurozone.

Let us get one thing absolutely clear. The reason we cannot walk away is that Britain has nowhere else to walk. Robert Chote is the chair of the OBR, in the work of which not just the Chancellor but the Minister in this House invest so much credence. What does he say? He says that we face a catastrophic situation if Greece moves out of the euro; we face catastrophe as far as the eurozone is concerned. The recession will go on for several more years. There will be deflation. Unemployment will rise from 8% to 11%. Therefore, we will be in a situation in which our own people will suffer severely because of this development. That is why the one thing that the British people will not accept—nor do I see any reason why other Europeans should accept it either—is politicians throwing up their hands and saying, “This is beyond us”. We may have limited intellectual concepts to get beyond Keynesianism or monetarism as an economic theory for the future, but we must put together some kind of strategy for improvement. Without that, we renege on our obligations to people.

The noble Lord, Lord Dobbs, says that the people will decide. Let me say that people who have lost trust in their politicians can reach some very dramatic decisions. We possibly see it in Greece at present. What if the British political community also began to reflect that we have no means of protecting our people in this crisis? A total calamity would be visited upon us and we would deserve it. Of course, I respect how difficult these issues are. I know that the Minister will be challenged in his response to this report. However, it is essential that we recognise that we must look for some steps forward.

[Lord Dobbs]

Is it now the policy of the noble Lord’s party to support a referendum at some point on Europe? The other day, I heard an interview with his noble friend Lord Mandelson who said that a referendum might be a good idea, although another of his colleagues said, “I wonder what he meant by that”. At the end of the day, does the noble Lord want the people to decide our fate and the direction of Europe, or should this still be simply a matter for the political elites?

[Lord Davies of Oldham]

I would say, not at the end of this day. We have so much to do before we could even begin to prepare a referendum and the question that that would represent in realistic and proper terms to the British people. I will not rule it out altogether. We are accustomed to referenda in certain circumstances. You cannot talk to the people in terms of “We are giving all power to you for you to take this decision because we as politicians have not got the faintest idea what the question should be or how it should be answered”. That is what I am arguing against.

I am confident of the fact that European politicians will take important steps to make progress out of this situation. What will they do first? Let me be clear, we should not visit upon the Greeks the well constructed animosity that infects all our right-wing press at the present time. The Greeks are such a small fraction of the European economy that they are not a threat to anyone. Their loss is marginal. It is certainly a marginal aspect as far as our exports are concerned. But the Greek withdrawal from the euro would represent not one country having left the euro, it would be a recasting of the nature of the euro. The euro would come rather more closely to some kind of a currency regime from which some could defect at a time. But as to the consequences, Greece would be just the first of the victims. Then the pressures would inevitably be presented on the next weakest currency. We have already got pretty well a checklist of how that succession of activity would take place. It is certainly the case that the Greeks did not create this situation. We should have some respect for a nation which has such a significance in its past for European society. But the Greek withdrawal from the eurozone would create enormous difficulties for all. The contagion would merely spread.

What is to be done in these circumstances? It is clear that we have to play our small part. Because we are not part of the eurozone, we are on the margins of this exercise. We are even more on the margins because the Prime Minister walks out in a huff or presents a veto whenever things do not go right. We are not quite sure what has gone wrong. As the noble Baroness, Lady Williams, indicated, we never got the facts of the basis of such a decision. But the Prime Minister is good at chiding nations from the sidelines, giving good advice and lecturing others while not being conspicuous by his success at home. If these countries are being told to pursue a strategy in which they have to improve their growth prospects, by heavens, the Prime Minister should examine more closely the growth position of the UK economy in its double-dip recession through his and his Chancellor’s actions since they have been in government.

So it is quite clear that we will look to others in Europe to present some dimension of the solution to this position. Does it mean that the Germans will have to make additional sacrifices, which it is quite clear that their chancellor is not prepared at present? That will happen only if the consequences of doing nothing are far worse. That is exactly how they are beginning to look. When this report was drafted only three months ago, this discussion could be conducted in fairly normal political language, but we are close to talking the language of cataclysm at present—and of course it changes the perspective of the Germans on this, not least because, after all, the Germans also need friends. In fact, they need the French, their direct allies who have helped to build the European project, who under Monsieur Hollande are taking a somewhat different view on the next stages.

It is quite clear that the eurozone has to take actions itself. We cannot play a major part. But it is the case that 40% of our exports go to Europe. It establishes the British economy in a weak position, because we are related to the euro countries in those terms; there is no ready alternative. If you ask any of our major companies or anyone else concerned with export trade, they do not turn round and say, “Because the eurozone’s in such trouble, we’re looking forward to such wonderful opportunities to challenge the Chinese and the Indians and others elsewhere in the world”. They do not say that at all. They say that we should do something about sustaining the most crucial market that we have—the eurozone countries.

I am quite sure that the Minister’s response to this debate will be expressed in very different terms to mine, but I hope that at least what I have done for him is to help to disperse the rhetoric so that we can concentrate on what practical politicians will have to do to get us out of this situation.

20:12

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, I welcome this opportunity to discuss the European Union Committee’s report on the euro area crisis. I first thank the noble Lord, Lord Harrison, and the committee for its thought-provoking analysis, and particularly my noble friend Lord Roper for not only this report but all the other truly excellent work that the committee has done in recent years, which I am fully confident will continue at that excellent level under the chairmanship of the noble Lord, Lord Boswell of Aynho.

The House is aware that these are difficult and dangerous times for the European and the global economy. The ongoing crisis in the euro area continues to undermine confidence and growth right around the world. We have kept the UK out of that storm by taking decisive and resolute action to tackle our deficit, but it is in our vital interest that the euro area reaches a lasting and sustainable resolution to the crisis, and it needs to do so quickly—a point firmly emphasised by my noble friend Lord Dobbs.

As the noble Lord, Lord Harrison, reminded us at the outset, the Governor of the Bank of England said only last week, the difficulties in the euro area represent,

“the biggest risk to recovery”,

in the UK. So it is in the UK’s national interests that we work to resolve these difficulties.

Resolution of the euro area crisis requires three things: resolving the ongoing uncertainty about Greece; ring-fencing other vulnerable euro area member states; and properly recapitalising Europe’s banks. We should recognise that some progress has been made. Greece was given a second programme of assistance and the face value of its debt written down. As the committee also notes, banks need to be sufficiently capitalised to withstand the instability. At home we have taken the necessary actions and as a result all UK banks passed the recent European Banking Authority capital adequacy tests. However, recent events remind us that significant risks remain and the IMF rightly warns us all that the global economy remains very fragile. That is why we agreed to increase our contribution to the IMF by £10 billion on condition that the IMF supports countries not currencies, that other IMF members also increase contributions, as they have done, and that the Euro area increases its own firewall, as it, too, has done.

Noble Lords will be aware that the Government are taking forward legislation to ratify the EU treaty change that provides the legal basis for the European stability mechanism, and we will start to debate that on Wednesday. That means that the position will, I trust, be clear to my noble friend Lady Noakes and to others in this House: the UK will not be making further contributions to eurozone bailout funds under the EU budget. Ultimately, high deficit, low competitiveness countries need to confront their own problems head on. They need to continue taking difficult steps to cut their spending, increase their revenues and undergo structural reforms to boost competitiveness. I agree with much of what the noble Lord, Lord Giddens, said. This is about economic sustainability, in his words—or fiscal sustainability, as I would put it. He did not find another word for growth so I will continue to call it growth. His analysis was very interesting, although, of course—

[Lord Giddens]

I prefer the term “wealth creation” to growth. You can find other words and you probably need to break them down into various component parts to make sense of what people mean when they use “growth” in a generalised sense, which is not terribly useful.

[Lord Sassoon]

I am grateful to the noble Lord for those comments. I disagree with some of the fundamental aspects of his analysis of the Government’s prescription for the UK economy but I think that goes a bit beyond the narrow topic of today’s debate.

As we have previously said, the euro area must also put in place governance arrangements to deliver the greater collective support and responsibility that the remorseless logic of monetary union demands. We want the fiscal compact to work in stabilising the euro and putting it on a firm foundation. We support the decision of euro area countries in the fiscal compact to commit to clear rules on fiscal discipline which the UK agrees are needed to make the single currency work effectively.

Questions were raised about the ratification of the fiscal compact. Although I will not comment on the likelihood of that happening, I can update the House and report that so far Greece, Portugal and Slovenia have ratified the compact. The compact will come into force once 12 euro area member states have deposited their instruments of ratification. The ratification processes are significantly different in different member states, but that is where things stand.

As the committee report notes, we agree that eurobonds are another issue that deserves further analysis and serious consideration. I agree with the noble Lord, Lord Monks, on that. Of course, any steps that are taken towards closer integration must not be prejudicial to the single market. We agree with the committee that matters relating to the internal market must remain the preserve of all 27 EU member states. This is why last December the Prime Minister did not agree to measures the euro area wanted to pursue on further fiscal integration being part of the EU treaties without adequate treaty-level safeguards for the single market.

I am sure that my noble friend Lady Williams of Crosby will not be surprised—she may be a little disappointed, but I am sure not too disappointed because we have discussed this before—that there is not a lot extra that I can add. My right honourable friend the Chancellor deposited an answer with the Treasury Committee, which is on its website, that goes as far as is appropriate and consistent with the need to keep the details of negotiations confidential. However, I draw noble Lords’ attention, if they have not read it, to that document.

We also agree wholeheartedly with the committee that we all need to address Europe’s low productivity and lack of economic dynamism. The UK has been leading that charge and has formed an alliance with 11 other EU leaders to set out an action plan for jobs and growth in Europe, including completing the single market in services and digital—a point to which my noble friend Lord Maclennan of Rogart drew attention. He was right to do so.

The Prime Minister’s focus at the next informal European Council this month, and at the June European Council, will be on ensuring that the focus in Europe remains on promoting growth. The UK’s specific growth agenda includes the digital single market and the services directive, but also, importantly, completing all the open bilateral EU trade deals, which themselves could add €90 billion to the EU economy. A deal with the US would be bigger than all the others put together, but they are each important. Of course, we want the Commission to commit to a new programme to reduce the overall regulatory burden, following on from the current administrative burden programme that concludes in 2012. The Government will be pursuing that agenda very vigorously with our European partners.

Some other aspects have been referred to in the debate. Again, the noble Lord, Lord Monks, referred to the possibility of an increase in lending capacity by the European Investment Bank. That could indeed have a part to play, although I of course disagree with the noble Lord on his views on a European financial transaction tax. That is not the way to go.

My noble friend Lord Maclennan of Rogart also referred to project bonds, which are another possible funding mechanism, which, if the funding comes out of existing EU resources and is carefully designed to be consistent with the need to minimise EU expenditure, is certainly another option that merits exploration.

I should address one or two of the specific questions that were raised on Greece. I take as my starting point the fact that we must respect the Greek people’s choice in their forthcoming elections. That point was expanded on by the noble Lord, Lord Judd, but I certainly take as a starting point the fact that we have to listen to what they decide they want to do. The important thing for all of us is for Greece to find a way out of economic crisis in co-operation with its creditors and for it to get back to sustainable growth and sustainable wealth generation. This Government hope that Greece can agree a way forward on this as soon as possible.

Notwithstanding the encouragement of the noble Lord, Lord Harrison, I am not going to speculate on what may or may not happen in Greece or in any other EU member state. Various scenarios were painted by some noble Lords—my noble friend Lord Marlesford, the noble Lord, Lord Willoughby de Broke, and others—but I shall not comment on those. All I will say is that the Government are undertaking extensive contingency planning to deal with all potential outcomes of the euro crisis. As the House will recognise, given the sensitivity of this work both to the markets and to international relations we will not deviate from the normal response, which is not to divulge specifics of the Government’s plans.

My noble friend Lady Noakes specifically asked about the exposure of the UK economy to Greece. The numbers relating to the relatively limited direct exposure of the UK banks and the UK economy generally to Greece are published, but clearly there is a need for a convincing firewall, as we all know the step change that there would be if contagion spread. Therefore, although I do not recognise the construction that the noble Lord, Lord Davies of Oldham, put on Robert Chote’s remarks, I think we all recognise the very serious implications if these issues are not dealt with speedily and in all their dimensions.

I was asked about one or two other issues. The noble Lord, Lord Harrison, asked about the impact of the French elections and what changes there will be with the new President. Of course, as he should have been, my right honourable friend the Prime Minister was very quick to congratulate Monsieur Hollande on his election victory. France is an important partner of the UK. We look forward to the close co-operation on foreign and defence policy, as well as on other areas, continuing with the new Government. The Prime Minister and the President had a warm exchange in their initial call and they subsequently met at the G20 meeting at Camp David. They are working together closely and are looking forward to building on the close relationship that exists. Therefore, based on the discussions in recent days, I think that the impact can only be positive.

The last point I raise nervously but I do so for completeness in tackling the issues that came up in the debate. The noble Baroness, Lady Crawley, said that this was not the time to speculate about a possible referendum—words which I am sure her noble friend Lord Mandelson and the shadow Chancellor will very much take to heart if they listen to this debate or read it afterwards. However, I shall not go further than that.

In conclusion, these are indeed dangerous times for the European economy. It is vital that euro area Governments pull together to deliver a sustainable resolution to the crisis, tackling their deficits, forging closer governance arrangements, and boosting competitiveness and growth. On all fronts, the UK will work as a strong and positive partner with our European neighbours to restore prosperity right across the European Union.

20:29

[Lord Harrison]

My Lords, it may have seemed at times that we were walking through a cloud of unknowing in the debate that we had on the euro area crisis, but I thank all colleagues who have contributed so well and so widely to what I hope and believe will be a beneficial debate. If I were creating an image of cloud computing and tried to find one word that might sum up the tenor of the debate and my own hopes and aspirations, it would be the reference to showing solidarity with others suggested by the noble Lord, Lord Judd. That is imperative and something that should help us to find and forge solutions to this tricky business in the next few months and years. I hope in that solidarity that the United Kingdom will play its proper and vital role. I thank noble Lords very much.

Motion agreed.

House adjourned at 8.31 pm.