Westminster Hall

Wednesday 4th July 2012 Westminster Hall

Wednesday 4 July 2012

[Jim Dobbin in the Chair]

Aviation

Wednesday 4th July 2012 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Greg Hands.)

09:30

[Mark Reckless (Rochester and Strood) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dobbin, and to have the Minister respond to the debate.

My interest in airports first came about because, at a time when many boys want to be train drivers, my younger brother had an ambition to be an airport manager. Consequently, whenever we went on holiday, my indulgent parents would take us to the airport four or five hours before we needed to be there, and my brother would go around and catalogue the catering outlets and investigate the cleaning rosters. I was delighted, a few years later, when he decided that he actually wanted to be a doctor.

As an economist, I worked for a short period on airline alliances, but my most significant involvement with aviation came 10 years ago when, following a leak in the Financial Times a few months earlier, the then Labour Government published the “South East and East of England Regional Air Services Study”—SERAS—which proposed an airport twice the size of Heathrow at a location it described as Cliffe, in the constituency I now represent. Then as now, many felt that that was a stalking horse to make airport expansion elsewhere seem more attractive by comparison.

Our first response was to look at that airport study, which we noted excluded any consideration of Gatwick expansion, on the basis that there was a planning agreement, and it looked no further at that idea at all. I was sort of blooded on that issue when I first asked whether that decision was perhaps irrational and something that would be questioned by the courts. Initially, a judicial review was proposed, which ultimately led to the Labour Government being forced to consider the case for a second runway at Gatwick, even though they had previously decided against it.

The debate that took place showed that an estuary airport would be environmentally devastating, and that the economics simply did not add up. I and many others were delighted to campaign with the Royal Society for the Protection of Birds, the Friends of North Kent Marshes, and many others who made the case that having a huge airport in the middle of Europe’s leading wetland landscape, with its millions of birds, was probably not a good idea.

The assumption by some that no people live in that area and that there would be no opposition was put paid to by more than 20,000 people who live on the broader Hoo peninsula, and who would suffer egregiously from such an airport. In addition, large numbers of people live on both sides of the estuary, and any flights taking off in a westerly direction would create new flight paths over heavily populated areas of London. The idea that such an airport would somehow be a problem-free solution that people would not complain about is, to coin a phrase, for the birds.

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

To follow on from that, one point made by advocates of the estuary solution is that the area is crying out for new jobs. Does my hon. Friend agree that that ignores the economic growth that is already happening, particularly in south Essex, with the expansion of the port? That is the future of the estuary—ports, not airports.

[Mark Reckless]

My hon. Friend makes a good point, and I congratulate her on her work in campaigning for economic development in her area. The fundamental point is that although jobs might be created—I do not deny that there would be a lot of jobs; perhaps 200,000, as some estimates suggest—they would come 10, 15 or 20 years from now, and would be almost entirely taken by a vast migration of people who would be forced to uproot themselves, perhaps from around Heathrow, and move to a new area. In terms of Government engineering, I cannot see the case for that in a free society.

[Tracey Crouch (Chatham and Aylesford) (Con)]

I congratulate my hon. Friend on securing this important debate. Has he seen the report issued by the South East local enterprise partnership, which states that if we allowed our existing airports to expand, we could increase the number of jobs by about 100,000? That would generate in excess of £4 billion per annum.

[Mark Reckless]

Yes, I have seen that report, and I have a copy with me. Indeed, I encouraged Medway council, and through it the local enterprise partnership, to commission that excellent study. My hon. Friend and neighbour is right, and I will draw significantly on the analysis in that paper during my speech.

As well as the environmental issues, there is a knock-down argument against the Thames estuary airport: it is vastly more expensive to build a new airport than to expand existing provision. Recently, some of those issues have been revisited with Boris’s pie-in-the-sky proposals, whether for Boris island, for a Foster monstrosity over the Isle of Grain, or even to look again at the Cliffe option that was so unambiguously rejected. Some newer issues have come to the fore. For instance, there is the London Array wind farm, and billions of pounds of investment have been put into a major liquefied natural gas terminal. There is the Richard Montgomery, a sunken vessel laden with high explosives, which this Government—unlike the previous one—tell us about, and provide reports on, to clarify the risk. Furthermore, issues of air traffic control have become even more significant than they were 10 years ago, partly because of the expansion of Schiphol airport over that period.

I note from the Parsons Brinckerhoff report mentioned by my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) that Richard Deakin, the chief executive of the National Air Traffic Services, said that the proposed site for the new airport was

“directly under the convergence of major arrival and departure flight paths for four of London's five airports.”

Pointing to the Thames estuary on a map, he said:

“The very worst spot you could put an airport is just about here…We’re a little surprised that none of the architects thought it worthwhile to have a little chat with the air traffic controllers.”

[Joseph Johnson (Orpington) (Con)]

I congratulate my hon. Friend on securing this debate, but I am a bit depressed by the combination of nimbyism and sticking-plaster solutions that he puts forward. Is he aware that the UK remains without any direct connection to 11 cities in mainland China that are expected to be among the 25 biggest cities in the world by 2025? Only a hub airport can deliver the sort of connectivity for which businesses in Orpington, and doubtless in my hon. Friend’s constituency, are crying out.

[Mark Reckless]

I encourage my hon. Friend to listen to the rest of my speech, and not merely to recycle briefings that I, too, have received. There are many arguments for a hub airport, and I do not deny that some are valid. Many, however, are recycled by industry players with strong vested interests that are not necessarily those of the country as a whole. However, I will address my hon. Friend’s point later in my remarks.

Finally, some estimates suggest that the cost of the proposal will be £40 billion, £50 billion or even £100 billion. The Parsons Brinckerhoff report, a substantive piece of work, argues that

“even the £70 billion being discussed is a conservative estimate.”

Boris tells us that that money will come from private investors. Yes, but they will want a return. Even if we are looking at a 5% interest rate over a 50-year period, a return on that sort of money will add at least £50 to the cost of every plane ticket from the airport. Why would airlines, passengers, the Government, indeed anyone, want to pay that sort of money when the cost of expanding existing airports—including some that Members present may be promoting—is so much smaller?

The coalition Government were right to reverse the policy that the previous Government decided on in 2003. To recap, the then Government’s recommendation was a second runway at Stansted by 2011-12, a third runway at Heathrow by 2015 to 2020 and, following our judicial review, a second runway at Gatwick from the mid-2020s. The strongest reason why we were right to overturn that is that the projections on which the Labour Government operated from 2003 were, as I and many others set out clearly at the time, wholly unrealistic. They were based on a low case of 400 million passenger movements for the UK by 2030, and a high case of 600 million.

[Kwasi Kwarteng (Spelthorne) (Con)]

I am listening with great attention and fascination to my hon. Friend’s speech, but he has not addressed a very pertinent point raised by my hon. Friend the Member for Orpington (Joseph Johnson): at present we do not have access, or cannot fly directly, to those cities in China. I know that my hon. Friend the Member for Rochester and Strood (Mark Reckless) will come to that in his speech, but I am conscious that it is probably one of the most important questions that he could address, and I would very much like to hear his thoughts on it.

[Mark Reckless]

In deference to my hon. Friend, I shall bring forward my remarks on that point.

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

Before my hon. Friend does so, will he say if he welcomes the fact that Heathrow delivers more flights to China than any of its continental rivals, meaning that we have excellent connectivity to important emerging markets such as China?

[Mark Reckless]

Yes, I hugely welcome that. From listening to the debate that is dominated by a small number of players with the strongest vested interests and the most public relations consultants, one would get almost the reverse impression. When we talk about flights to China, it is important to remember that the reason why we have relatively few different city destinations—that is separate from the overall number of flights, which the Minister was right to raise and I think is more important—is that it is for the convenience of British Airways, the dominant player at Heathrow, to use Hong Kong as a hub airport for China, in exactly the way that it uses Heathrow as a hub here, through the Oneworld alliance and Cathay Pacific.

[Joseph Johnson]

First, on a point of fact, according to BAA, London has only 31 flights a week to two destinations in mainland China, whereas there are 56 to three such cities from Paris Charles de Gaulle airport, and 51 to four such cities from Frankfurt. Furthermore, my hon. Friend references Hong Kong and Shanghai. Surely he is aware of the additional cost that comes from having to route products, goods and services through Shanghai and Hong Kong, as opposed to sending them directly to where the market is, in mainland China. Our businesses are crying out for connectivity. That is an obstacle.

[Mark Reckless]

I made no mention of Shanghai. The reason why there are only 31—

[Joseph Johnson]

Hong Kong is a transhipment point.

[Mark Reckless]

I mentioned Hong Kong, and the reason why Hong Kong is used so much is that that is hugely to the economic benefit of BA, Cathay Pacific and the Oneworld alliance. They use Hong Kong for exactly the same reasons why my hon. Friend promotes Heathrow—these great hub economics, which are certainly to the benefit of the airline providing a service. There are arguments for hub airports, but the arguments that my hon. Friend makes for point-to-point services to more cities are very strong ones. As for why we do not have them, I refer to a written answer from the Minister in March 2012. I do not know whether my hon. Friend the Member for Orpington (Joseph Johnson) has seen it. It states:

“China—restricted to six points in the UK and six points in China since 2004”—

according to a 2004 treaty—

“with a current limit of 31 passenger services per week by the airlines of each side allowed”.—[Official Report, 14 March 2012; Vol. 542, c. 239W.]

If my hon. Friend would like to see more flights to more Chinese cities, the way to do it is to rip up that treaty, and for the UK to move to a unilateral open-skies position that allows any Chinese airline to fly to any city in the UK.

[Kwasi Kwarteng]

I am trying to work through the maze of complicated arguments that my hon. Friend is presenting, but I have just a simple question. Does he believe that the United Kingdom as a whole needs more aviation capacity?

[Mark Reckless]

Yes.

[Tracey Crouch]

There is an argument about competitiveness, and that argument is for today. Our colleagues are arguing that businesses in their constituencies require the opportunities now. Therefore we should be making the most of our existing airports, rather than waiting two decades for a new airport to be built to maximise opportunities.

[Mark Reckless]

I agree. There is huge scope for what my hon. Friend describes. It would hugely benefit not just the Medway towns and the south-east region, but the country as a whole.

I want to talk about one other area where the lobbyists have a certain position. I received a document yesterday from the Mayor of London, who tells me that he is delighted that I am having this debate. He says:

“France’s hub airport, Paris Charles de Gaulle (56 departures per week), has better connections to Brazil than Heathrow (27 departures per week).”

The reason is that we have a bilateral treaty with Brazil, with a current limit of 35 passenger services a week between the two countries. Again, that is vastly to the benefit of BA, which routes flights to Latin America, including Brazil in particular, through the joint hub that it now has in Madrid, through Iberia following the merger. We do not get pressure from BA to change that, because it hugely benefits its profits, but BA’s market capitalisation is in the low billions. The idea that our whole airline policy and the network of treaties negotiated by the previous Government should restrict those flights and prevent Brazilian or Chinese airlines from flying into our large cities is a huge mistake.

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

Even if we were to rip up every treaty that my hon. Friend has identified as a block, does he seriously believe that there is sufficient capacity at our hub airport? Will a hub airport alone sustain newly developing point-to-point routes? Does he seriously argue that Heathrow could suddenly accommodate more routes to developing countries?

[Mark Reckless]

Yes, I do argue that. The limit on Heathrow’s routes to developing countries is largely because of the fact that those who have the slots find it most profitable to put on vast numbers of flights to New York and almost as large numbers to Hong Kong. It would benefit the country as a whole much more if there were a wider network of routes, rather than just what happens to benefit British Airways and maximise its profits. To get to what my hon. Friend suggests, the treaty we need to rip up is the treaty of Rome, because it is under European directives—[Interruption.] The reason why the slots are organised as they are is that they have been capitalised into property rights for the airlines that historically happen to have used them, and it is because of European legislation that that has been allowed to happen. If we want a more effective route network for our country as a whole, within the existing constraints of Heathrow—of course, others will argue that it needs to be bigger or we need a hub somewhere else and so on—European legislation prevents us from having that. Anyone who wants to set up a marginal route to an emerging market needs to buy out, at vast expense, one of the existing airlines, particularly BA, which has a near monopoly power. They have to give BA a huge amount of money to take the slots they need for those routes. The reason why they cannot do that is cost, yet we have treaties that restrict the amount of access that overseas airlines have into the UK. They could otherwise be flying into Gatwick, Stansted or Birmingham as city pairs, but the routes and slots are at Heathrow, and the regulation creates that monopoly power.

[Kwasi Kwarteng]

Is my hon. Friend seriously suggesting that the key to our aviation problems is ripping up the treaty of Rome?

[Mark Reckless]

It would certainly help. There are other ways in which the issue could be addressed; for instance, the air passenger duty regime. Many lobbyists are against the size of air passenger duty, but in operating conditions where there is an almost perfect monopoly at Heathrow and, at peak and to an extent shoulder periods, a monopoly at Gatwick, what happens through the increase in air passenger duty is that some of the monopolised value of those slots and the power of the grandfather rights are given instead to the public purse. It is not a situation of perfect competition in which costs are passed on. To the extent that costs rise, whether they are landing fees or APD, that will largely be absorbed into the price, giving greater public benefit, and possibly driving some of the marginal leisure stuff out of Heathrow and Gatwick.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

Would the hon. Gentleman mind running past me again how the treaty of Rome is an obstacle to more liberal air service agreements with other countries? When I was aviation Minister, we signed agreements with a variety of countries to allow more liberalised flight access to both countries, and the treaty of Rome was not an obstacle then. Given Gatwick’s recent expansion into five new routes, the treaty does not seem to be an obstacle. How will tearing up the treaty of Rome solve our aviation competitiveness questions?

[Mark Reckless]

There are two problems: first, the treaty of Rome gives property rights in-slot to airlines that have traditionally had them, which prevents new airlines from coming in with marginal routes to new emerging market countries, due to the cost of buying out the monopolist. Only more and more fights to New York or Hong Kong make such routes work. Secondly, the previous Government protected the monopolistic BA with restrictive agreements that prevent Brazilian airlines from flying here, saying that there should be no more than 35 passenger services a week and allowing only 31 a week to China. If we want more flights to emerging markets, we should just let Brazilian and Chinese airlines fly to any UK airport they want, without insisting on reciprocal rights for BA. That is what is holding the country back; the interests of Britain are not the interests of BA.

The final section of my speech is about our other airports. In 2010, we rightly said no to an estuary airport and to extra runways at Gatwick, Stansted and Heathrow. That was the right policy for this Parliament. I do not know the Liberal Democrat position on when or if there should be future runway capacity in the south-east, but it is right that the Conservatives at least look at the case for new runways as and when demand requires. A lot can be done with existing capacity. Gatwick is expanding strongly and setting up point-to-point routes in new emerging markets, which I welcome. That would be helped if Gatwick were allowed to invest in the A380 facilities by charging more and coming to its own arrangements with new airlines to build those facilities without existing suppliers having a veto. I would support greater deregulation of Gatwick in that regard.

I understand that the option now being promoted by the Mayor of London is Stansted. Since the previous White Paper and the Labour Government’s view, usage at Stansted has fallen off significantly and intercontinental flights there have stopped. The Mayor says that we should expand Crossrail to Stansted, and I am keen to discuss that. He may have ideas that I have not appreciated fully, and that are certainly a lot more constructive than his pie in the sky proposals for a Thames estuary airport.

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the hon. Gentleman on securing the debate. When I spoke to those at Stansted recently, they made it clear that, given that the airport was at only 50% capacity, they want no more discussion of a second runway—that just messes up their relationship with the local community. Stansted wants a better rail service. I hope that he will support that.

[Mark Reckless]

That is certainly the position in the short-term. I am keen to see better surface travel into Gatwick. The deterioration in the train service there is most unfortunate. Investment is strongly in the national interest.

The British Chambers of Commerce initially proposed a “Heathwick” arrangement. There are some issues with the economics of it, but the existing system is the reason why it could be attractive. If we allowed Gatwick to invest £5 billion in a super-fast railway to Heathrow—by the way, BA, it would take 15 minutes airside, rather than an hour to connect them—it would be regulated capital and would lead to higher slot prices at Gatwick, which is a good thing anyway. Our problem with aviation in this country has been that we have held down the cost of landing fees at Heathrow and Gatwick, which means that they are operating at near capacity with all the problems mentioned. If we allowed landing fees to rise and entirely deregulated Gatwick and Heathrow, there would be a big transfer of economic value from the airlines to BAA.

Another way to do it would be differential APD, particularly on short-haul flights at Heathrow. Because we could get the cost back from higher landing charges at Gatwick, Heathwick, although not ideal, might make sense within the existing system; it would press out some of the leisure point-to-point flights from Gatwick and allow intercontinental flights to come there.

From Heathrow’s promoters, we hear that it is a great hub, that we need just one hub and that Paris Charles de Gaulle has more destinations than us, but those destinations are in French west Africa—Mali, Bangoui and Ouagadougou. I do not think that there is any suggestion that that should happen from Heathrow. Most demand is leisure, not business. Heathrow still flies more people and planes than other airports, even those with four or six runways.

We do not necessarily need a hub that is ideal for those who happen to operate that hub. There is a suggestion that a dual-hub is not ideal. That is true, but it is an awful lot better than no expansion and forcing more and more people to use European airports. According to the constrained Department for Transport forecast, which I find questionable in a number of ways, if we do not allow expansion in the south-east, 25 million rather than 4 million people will fly from Belfast by 2050 and 12 million people rather than 700,000 will fly from Exeter by 2030.

I question the plausibility of those forecasts, but if we deregulate air travel and allow a second runway at Gatwick in due course, after the agreement runs out in 2019—I agree with the hon. Member for Cambridge (Dr Huppert) that it should not be immediately—it will make it more attractive for the airline to expand in the airport. At some point, the Liberal Democrats may think that we will need at least one runway in the south-east. The strongest demand from the vested interests is for that to be at Heathrow, but there is a strong argument for the country as a whole for it to be at Gatwick. It would benefit from being there because we would then have competing hubs, with potentially another airline alliance based at Gatwick. It would drive down prices, serve more destinations and operate for the benefit of UK consumers as a whole, rather than just those who happen to have the strongest vested interests and shout loudest in current consultations.

[Nigel Mills (Amber Valley) (Con)]

I congratulate my hon. Friend on securing the debate. If I may intrude on the London and south-east grief with a question about the midlands, what are his views on encouraging passengers from the midlands and further north not to go to Gatwick or Heathrow for their leisure flights, but to use the airport they are driving past? Does he support the idea of a congestion charge around London to make regional airports more competitive?

[Mark Reckless]

Higher APD on short-haul flights from Gatwick and particularly Heathrow could allow airports beyond the south-east to compete for marginal business that might make more sense at those airports, particularly the leisure flights of people based in the midlands and the north who are flying point to point. Similarly, if we deregulated our international air agreements, there would be a better chance that intercontinental networks would base themselves at Birmingham airport, for example, which now has a longer runway.

[Julian Sturdy (York Outer) (Con)]

My hon. Friend makes a powerful case. An argument is that regional airports across the country will take up some of the slack. My airport, Leeds Bradford, has invested heavily—£11 million—in expansion and has new links to Heathrow. Is it not the case that despite the important role that regional airports play across the country, they will not lessen the need for expansion in the south-east and London? Ultimately, people want to fly into the capital city of a country and we cannot get away from that fact.

[Mark Reckless]

Yes, I think that is right. My argument is that it is entirely conceivable to have two hubs. Heathrow currently has many more passengers and planes using it than most of the other supposed competing hubs. The problem is that the slot prices are very high and profits are being maximised by those who, under EU law, own the property rights in those slots. If instead we allow a second hub, and Gatwick is the more attractive and conceivable hub to develop, and both operate in that way, competing airlines would drive down prices and give many more links to emerging markets, rather than very thick routes to New York and Hong Kong. That is my view, but perhaps the Mayor of London has considered matters that I have not. Stansted, and potentially regional airports—Southend and, I am delighted to see, Luton are developing in this way—could take many more point-to-point leisure flights, rather than them flying from Gatwick, or even Heathrow. Why does Heathrow have so many flights to Orlando? Why does it have flights to Malaga or Larnaca?

There is a very strong case for Gatwick. Many regional airports can help with the load. The debate that we have been having about aviation has been horribly distorted by what I am afraid are preposterous efforts by the Mayor of London to put the Thames estuary airport on the agenda, 10 years after it was categorically ruled out, and by the issue of Heathrow. Very strong vested interests want expansion at Heathrow. There are some economic arguments for the country as a whole for expansion there. However, there are costs, in terms of those living under the flight path, and in terms of our political promises; and the value of politicians sticking to what they promise is strong.

As to what the Transport Secretary says, and the argument that “It is all very well talking about a third runway at Heathrow, and mixed mode, but what is the next step?” it is incumbent on those who want expansion at Heathrow to say what happens in 30, 50 or more years. The reason the Secretary of State does not get the answers is that those with a vested interest at Heathrow—BAA and British Airways—do not want unlimited expansion there. It would undermine their monopoly position. The idea of going for mixed mode is attractive to BA—not necessarily to BAA, because it does not get the higher regulated capital. A third runway allowing marginal expansion of perhaps another 20 million passengers is attractive, because it maintains the value of the slots but allows them to develop. My hon. Friend the Member for Spelthorne (Kwasi Kwarteng) may want to discuss the fact that if we want Heathrow to be a mega-hub, perhaps remaining the biggest in the world and taking on Dubai as well as competitors in Europe—there are strong arguments against that, particularly from the point of view of people who live in the area, and the environment—it could mean taking over RAF Northolt and putting in several runways linked into Heathrow, as a long-term single giant hub solution.

Despite arguments that two hubs are not ideal, that is a far better solution than complete constraint on any expansion, or only looking after the interests of Heathrow. If we were to see the Oneworld alliance at Gatwick— short-term expansion is being done very well at the moment, and there could be longer-term expansion, but only once the 2019 agreement runs out—it would be a much more sensible way forward. There is a basket of other options, all of which make more sense than harking back to the preposterous estuary airport proposal, or looking at UK aviation solely through the issue of a third runway at Heathrow.

[Several hon. Members]

rose—

[Jim Dobbin (in the Chair)]

Order. I have had seven notifications from hon. Members who want to speak. I intend to call the shadow Minister at 20 minutes to 11, so we have less than 40 minutes for those seven speeches.

10:02

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

It is a pleasure to serve under your chairmanship, Mr Dobbin, for what I think is the first time.

I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on obtaining this important debate on the different issues relating to competition in the aviation industry. I agree with many of the points he made, and it is worth exploring further the points with which I disagree. He is serious about trying to find a solution to the country’s aviation policies, and that is worth discussing. Judging by the expressions of everyone taking part in the debate, there is agreement that Boris island is a complete non-starter. It is a decoy duck, Potemkin village, a red herring, or, as the previous Labour Secretary of State said, bonkers; it will not happen. But it is part of the illusions around aviation policy—which are the basis not of what the hon. Gentleman has been saying but of the Government’s policy—that somehow we do not know what has been happening in aviation, and there is more information to be found out. That simply is not true.

Going back to the Roskill commission in 1969 and a series of other White Papers and investigations, more is known about aviation policy in the south-east of England than about possibly any other area. If we want to be competitive, there must be more airport capacity in the south-east. Otherwise, the decline and damage that lack of aviation is causing to the economy will continue. I do not agree with the hon. Gentleman that it is right to suspend any discussion for the length of the Parliament. It might be right for the coalition agreement, but it is not right for the economy.

[Mark Reckless]

Will the hon. Gentleman give way?

[Graham Stringer]

I will in a moment, but I want to go through some of the points that the hon. Gentleman made.

I do not think the “Heathwick” proposal works in detail. When I give way to the hon. Gentleman I want him to tell me about any city in the world—Toronto, Washington, Glasgow—that has tried having two airports. There are examples all round the world of countries saying “We will have an intercontinental airport here and a domestic one there,” and finding that neither of those airports has worked. Off the top of my head, I cannot think of a city with two competing hubs. The nature of hubs, and what makes them valuable—both for countries and airlines—is that airlines from all over the world go into them, with great interconnectivity. The idea of competing hubs is a contradiction in terms, and there is no real evidence that having two adjoining airports works.

[Mark Reckless]

I am delighted to have some discussion of the issue in the current Parliament, and I look forward to hearing from the Minister what decisions may be made about how that discussion should happen. I just do not think we should build any new runways during this Parliament.

I disagree about dual hubs. Perhaps the idea has been tried in, say, Tokyo and one or two other places and has not been ideal, but we are not making a comparison with the ideal; we are making a comparison with the constrained capacity possibility that 14 million people might try to fly from Exeter. Expanding Gatwick, rather than restricting it, will not result in the perfect economic hub airport, but hubs give declining returns, to scale, to the extent that they get bigger and bigger. If we allow flights to new emerging markets and competing hubs operating in the competitive interest of the country, rather than one hub operating in the interest of the monopolist based there, that would be a significantly better airline policy than the one we have.

[Graham Stringer]

All I would say is that the proposition has not worked. We are in decline and we need extra runways in the south-east. Only one new runway has been built in this country since the second world war. Heathrow was, I think, originally planned to have 12 runways, albeit in a different configuration. The hon. Gentleman can look at the history books if he wants to.

The hon. Gentleman’s argument relies on two issues: first, that our connections to China, as the Minister of State said, mean that we are not really suffering; and secondly, that slots are too cheap at Heathrow, and if we freed up that market we would help the economy as a whole. Let me give some evidence.

The Frontier Economics report, “Connecting for Growth”, which was produced in 2011, showed that trade is 20 times higher where there are direct flights to cities in China. It estimates that the UK is missing out as trade goes to France, Germany and Holland, and quantifies the cost to the UK economy of a lack of connections as £1.2 billion a year. Taking that present value over 10 years, that amounts to £14 billion. Paris and Frankfurt boast 1,000 more annual flights to the three largest Chinese cities, Beijing, Chongqing and Guangzhou, than we get from this country. The Minister of State is right to say that we send a large number of flights to Hong Kong, and that there is hubbing in the Oneworld alliance at Hong Kong. The City of London is doing quite a lot of damage at the moment, but if we consider some of the effects, and the latest financial centres index, the Hong Kong index has gone up by 21 and London has gone down by three. There is a correlation, if not a direct one, between the hubbing that is going on there and the damage that is being done to the UK economy. Forbes Magazine has shifted the UK down from sixth best country in the world in which to do business to 10th best. One contributing factor is our connections with other countries.

[Zac Goldsmith (Richmond Park) (Con)]

Does the hon. Gentleman agree that some of the problems that he has just described result not from lack of capacity but from poor prioritisation? Hundreds of flights every day to and from Heathrow involve places that do not in any way contribute to Heathrow’s hub status. We have short-haul flights, flights to Malaga and 15 flights a day to Cyprus. Such point-to-point flights could happen at any other airport. We have masses of spare capacity, but it is not all at Heathrow. If that is the problem, surely the priority is to make better use of existing capacity and to get rid of some of those pointless flights that could easily happen elsewhere.

[Graham Stringer]

I always find that a particularly difficult argument to be put by Conservatives, who suddenly want to plan routes and move away from a completely deregulated market in Europe—apart from where it is constrained by slots. Having argued ideologically for that position, all of a sudden they want to tell aeroplanes that they can only go from Manchester and Leeds and not from London. I do not believe that that is the Conservative party’s position at all. Even if we put up the price of slots, which has been kept artificially low by how slots are regulated, we would not necessarily get the flights going to the right parts of the world that will benefit this economy. We would get even more flights going to New York and the west coast of the United States because those are the most profitable routes from this country in the short term. The two cheap slots would not solve the problem because the central issue is lack of capacity.

I have a few more facts from the London chambers of commerce that represent the views of 350 business leaders from the BRIC countries: 92% made the general point about the importance of direct flights; 67% said that they were more likely to do business in a place if there were direct flights to it; and 62% said that they would only invest in an area if there were direct flights between the city in the country in which they were operating and the city in which they were likely to invest. Such flights to Brazil, Russia and China are limited.

I wanted to talk about the damage that air passenger duty is doing to regional airports, but I do not think that there is time because of the number of Members who wish to contribute to this debate. None the less, such duty is doing damage and the Government really need to change their policy. Twenty-two of our competitor countries in the EU have no air passenger duty whatever, so imposing a duty is a ridiculous anti-competitive position for this country to take.

I want to talk a little about how we use capacity in the regional airports. It is not possible to, as the hon. Members for Rochester and Strood and for Richmond Park (Zac Goldsmith) suggested, somehow move flights about, but there is no reason whatever why we could not have a completely open skies policy in the regional airports. There is 15 times more capacity in our regional airports than would be provided by one extra runway at Heathrow. It would be against the law to direct flights within Europe to that runway; that simply could not happen. At the moment, airlines are reluctant to make use of the partial open skies policy in relation to major regional airports with fifth freedom rights, but the Government must agree that, and sometimes there are difficulties. Airlines, which have a real interest in getting into Heathrow, are suspicious that if they use the facility of partially open skies in the regional airports they will be kept out in any future negotiations to get into Heathrow. Having a completely open skies policy in the regions, however, might shift out one or two intercontinental routes. It will not change the whole structure of aviation, but it will help.

Finally, the central point of the Government’s policy, especially the Liberal Democrat part, seems to be that constraining capacity in the south-east will help the environment and not damage the economy. I hope that I have shown that that constraint in the south-east is already damaging our economic competitiveness, and the answer to that is to build extra runways and not a new airport. It is worth saying, and it has been said before, that our policy is damaging not only our economy, as we are, in effect, helping other hubs in France, Germany, Denmark, Spain and Holland to do better, but our environment. When planes take off from the United Kingdom, taking passengers to airports such as Schiphol to pick up intercontinental flights, they are putting more nitrous oxide, sulphur oxides and carbon dioxide into the atmosphere than would otherwise be the case. Although the whole aviation debate needs to be opened up, the solutions have been known for a long time, and the Government have had their head in the sand for their whole time in office.

[Jim Dobbin (in the Chair)]

Order. Six Members still wish to speak in this interesting and important debate, so they will have roughly four minutes each before those on the Front Bench respond

10:17

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dobbin. In four minutes, I will speedily go through some of the points that I want to raise. First, may I mention the passengers? We did not hear my hon. Friend the Member for Rochester and Strood (Mark Reckless) say much about them. It is almost as if they are a pain in the neck for wanting to travel. I happen to regard leisure travel as a good thing—rather liberating, in fact. May I also say—I did not hear my hon. Friend say this—well done to the Government? The Minister might be shocked by that remark, given my track record on aviation.

The South East Airports Taskforce has effectively sweated our assets in the south-east, increasing throughput at all major airports. Like the hon. Member for Blackley and Broughton (Graham Stringer), I speak as a northern MP. Most of my constituents and businesses stopped using Heathrow as a hub long ago, which is one reason why Heathrow is already in decline. For the north of England, the hub is Amsterdam or Paris, which is a major national problem.

I congratulate the Government on their recognition, earlier this year, that we need a hub airport in the UK, and that we need only one hub airport. If I had more than four minutes, I could give a lecture on the economics of hub dynamics. There is no such thing as a twin hub; it is a contradiction in terms. I could tear out my hair in frustration every time I see that idea printed, or hear it being discussed. If we tried to make Heathrow and Gatwick a joint hub airport, all we would do is guarantee their obsolescence within a decade and the downgrading of the UK. It would be an absolute national disaster.

We have heard a lot about China. Some people say mainland China, while others say China, which allows us to accommodate Hong Kong into our calculations. Let me talk specifically about Wuhan, which has been of interest to the Department for Business, Innovation and Skills. Air France has just launched a service to Wuhan to facilitate PSA Peugeot Citroën’s joint venture with Dongfeng Motor Corporation. Despite labouring under the heavy burden of the treaty of Rome, France has somehow managed to put its economic interests ahead of the interests of Brussels. How it managed it I would love to know, because we could then replicate it here. Clearly, it has put economic interests ahead of narrow, petty interests.

I am fascinated to note that COMAC—the Commercial Aircraft Corporation of China, a new Chinese aircraft manufacturer—is basing itself in Europe not in London but in Paris. I wonder why that is. Could it be because France has better links to China? Could it be because France is where China is getting inward investment from? Surely not.

If I had had more time this morning, I would also have mentioned air passenger duty. I realise that it is a controversial issue, but I make this plea: will the Department for Transport try to encourage the Treasury to conduct an independent economic assessment, bringing in all relevant factors, of the overall cost of APD to the UK economy? If I had more time, I would go on to talk about Chinese tourism. I know that it has been the subject of what might be called civil war in higher echelons in the Government, but it crystallises the problem that we face in this country. The problem is not that we have APD per se; it is the scale of our APD, compared to that charged by our competitors, that is a real problem.

We have heard lots of discussion about south-east airport capacity and about where airports should or should not be sited. We have also heard mention of New York, which has found what I would describe as a “string of pearls” solution—a number of sizeable airports, all of which act as international gateways, but none of which actually act as hubs. There is a perfectly logical and coherent argument to be put forward to say that that is what the UK might need. I would disagree with that argument, but it would be a rational argument to make.

Interestingly, in the Mayor of London’s submission, ahead of this debate, I could find no mention of Boris island. Can the Minister confirm that that option has been officially removed from the table? I looked very carefully; perhaps it was my eyesight, but I just could not see it.

10:21

[Jim Shannon (Strangford) (DUP)]

Thank you, Mr Dobbin, for calling me to speak.

I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on securing this debate and bringing the issue to the House today. In four minutes, I quickly want to give the Northern Ireland angle. In particular, I want to mention a subject that is often talked about, and perhaps hated: air passenger duty. It is an issue that must be considered.

Recent press coverage of APD shows that the Government raise very little money from internal flights from Northern Ireland, and airlines actually take advantage of the tax and retain it when flights are not taken up, as they charge a fee and most people do not ask for the refund. That was not the intention with regard to the tax, and that is the first thing that must change if we are to boost competitiveness.

I spoke to the hon. Gentleman yesterday about this debate and I said very clearly that I wanted to put forward the Northern Ireland angle. With the Government committed to regional rebalancing in the UK, and an economy that is heavily reliant on the south-east, where better to start than with a change to APD? I understand that APD does not apply to flights to Scottish islands. If the Government are serious about rebalancing the UK economy, surely Northern Ireland should have the same treatment in relation to APD as the Scottish islands. Making that change would send a strong signal that the Government are serious about regional rebalancing.

As a frequent flier from Northern Ireland to the mainland UK, I am well aware of flight prices and the critical importance of having a good flight system and links. Having spoken to various airport managers, I know there are some central themes that continually emerge. I want to touch on those themes quickly.

The first is future national economic growth. The UK needs improved links to key emerging markets. I was surprised to learn that UK businesses trade 20 times as much with countries to which there are daily flights than with those countries with which we have a less frequent service, or no direct service at all. It is very clear that the more direct flights to countries we have, the more our economy will grow, the more employment will grow, and the more we all benefit. We must boost growth by increasing inward investment and exports. Improving international connectivity is critical if those things are to happen. That is one reason why competitiveness is an essential component of growth. We should have regular contact with the BRIC countries—Brazil, Russia, India and China—and we should open up more links with them, because that will boost our economy.

London is open for business, and so is Gatwick airport, in particular. However, although in the summer months Gatwick is at full peak capacity, at other parts of the year it is not. Sometimes it is operating only at 78% capacity. The hon. Member for Rochester and Strood spoke about that. There is potential for a further 11 million passengers to use Gatwick every year, which would represent a 25% increase on current levels. Gatwick has secured new direct routes to China, Hong Kong, South Korea, Vietnam and Nigeria. In each of these countries, there are opportunities for economic benefit, and the routes can only strengthen and enhance the possibilities.

The hon. Member for Cambridge (Dr Huppert) spoke about the need to improve rail surface access links to airports, and that is important, too. Millions of air passengers go on to use other transport infrastructure, such as rail lines. It is imperative that those lines are up to the standard that is expected of a thriving central business hub. That will encourage new flight-lines, which in turn will encourage competitiveness in the market. As soon as bmibaby pulled out of Belfast City airport last month, all the other airlines there upped their prices, and the reason was clear—they had less to compete with. Their flights were being almost filled at higher prices, which in the long term will affect businesses. A flight from Belfast can cost approximately £400 to £500. One can get a flight to the USA for £450. There has to be something wrong there, with regard to competitiveness.

The UK aviation industry provides about 352,000 jobs and more than £8.6 billion in tax each year, as well as contributing more than £50 billion to Britain’s gross domestic product. It is a major player in the economy of Great Britain, and when it comes to improving Britain’s international competitiveness, it is very important.

In conclusion, in a history class many moons ago, I was taught that the secret of the success of Great Britain was her mastery of the seas; that probably shows my age. That was not simply about having a good fishing fleet, or the Royal Navy; it was about having connections and building up trade all over the world. That must be an ingredient in our continuing success, and the key to true competitiveness.

10:25

[Dr Julian Huppert (Cambridge) (LD)]

I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on securing the debate.

We are world leaders in the aviation industry. London is the best connected city in the world, with seven runways operating at six airports, and Birmingham, Manchester and Edinburgh all pose formidable regional challenges to the dominance of the south-east. Gatwick is opening new routes to China, Vietnam and South Korea. British Airways has global alliances for massive hub operations. Airlines are competing to make use of the capacity we have, particularly since the BAA monopoly was broken.

However, there are constraints. By 2050, the UK must cut its carbon emissions by 80%. That is an important and challenging task, and if we allowed unconstrained expansion of aviation, as has been suggested by some Members, I believe that it would be all but impossible to achieve it. Given the environmental constraints, what kind of growth can we manage to have?

In 2009, the independent Committee on Climate Change said that if we are to meet our 2050 target, the aviation industry must not emit more than around 37.5 million tonnes of carbon dioxide a year by 2050. Allowing for increased plane loads, new technology and fuel improvements, that allows for a 60% increase on current passenger numbers to around 368 million passengers per annum. That is the carbon budget that we can have.

What is the capacity constraint? We have enough spare capacity in this country already. We can get to the limit imposed by our environmental obligations without any new runways anywhere: not at Heathrow, not at Gatwick, and not at Stansted. That is why the Liberal Democrats oppose the expansion of the airports in the south-east. We have spare capacity, and if we were to build more capacity and make use of all of it we would do irreparable damage to our global environment.

It is very hard to forecast demand, as the old “predict and provide” approach of the previous Government tried to do. Even in the US, the Federal Aviation Administration says that it is not possible to make reliable forecasts beyond 2030, so I simply do not understand how any Government think they can forecast demand to 2050. That is particularly true given that, with the possible exception of the Secretary of State for Business, Innovation and Skills, people are very bad at forecasting recessions and other economic changes.

We also have local environmental problems that make a huge difference to our nation’s well-being. One in four of all those in Europe who are affected by aviation noise live under the Heathrow flight path. I find it astonishing that so little has been done about that, and that the previous Labour Government were so keen to keep blindly increasing Heathrow. Now Labour are completely and utterly unclear as to what their policy on Heathrow expansion is; if the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), the shadow Minister, wants to try to say what it is, I would be delighted to hear from him. No?

Aviation planning has categorically failed to take account of the north-south divide, and how we can ensure that we provide decent air quality and access to decent public transport. About half of all emissions from aviation are actually caused by the ground access to the airport rather than by the planes themselves. Rail access, which is being called for by so many airports now, is critical in reducing those emissions.

This is a very abbreviated speech so I cannot go through all the detail. What is the way forward? I have been very clear about Heathrow, Gatwick and Stansted; I say a big “no,” and I am delighted that that is what the coalition agreement says. I have also been very clear about what we need to do to control UK aviation policy. We need to get the greatest hubbing potential that we can and achieve the greatest economic benefit possible, given all the constraints.

We should support growth, such as we are seeing at Gatwick; a fifth of Gatwick’s capacity is still free. Gatwick is doing well and it wants a new rail service. Stansted is half-full; its big call is for a new rail service, not a new runway. Birmingham is looking to expand and Manchester already has two runways. We need to provide the rail links to make those airports work.

We also need to reform air passenger duty. It is poorly designed, has a number of anomalies and favours short flights for which there are overground alternatives. We should be moving towards a per-plane duty. We should introduce new noise limits in population centres to incentivise quieter planes, and tough requirements for low-emission surface access, to reduce the overall impact. We also need to support the European Union’s emissions trading scheme, to promote the “polluter pays” principle.

What about the hub? Although the Government have done well to rule out proposals for a third runway and other expansion, we should also put an end to talk of mixed-mode operations at Heathrow. They cause damage to the air and through the noise they create; they are a non-starter and provide very little benefit. Heathrow is badly located, and mixed-mode operations would give all the pain with little of the gain. We need to move point-to-point flights elsewhere, as has been discussed, reform the EU allocation rules and perhaps consider a departure tax. Heathrow is not the place for a hub airport, but as Members have said, Boris island is certainly not right either, for a whole range of reasons; it is expensive, there is a higher risk of bird strike and it does not serve the north.

Our consideration of where to have a new hub needs to be subject to some serious constraints: a strategy for removing excess capacity above the climate change cap outside the airport; no net increase in the number of UK runways, so that we would have to close some to make up for new openings; greater recognition of the need to serve both north and south; and significantly lower noise impacts than at Heathrow. We could have something that is better both economically and environmentally, and I hope that the Government will consider the matter very carefully.

10:30

[Mr Robert Syms (Poole) (Con)]

The UK aviation industry has been a remarkable success story, post war. It is the second largest in the world. It has been so successful that most of us take it for granted and assume it will always be there. Sometimes we are a little disparaging of British Airways as a national carrier, but it is a competitive world out there, and in Schiphol, Charles de Gaulle and Frankfurt there are people who want to compete with us and take jobs away. The aviation industry creates lots of well-paid jobs for lots of people, so we must think clearly about where we are going with it.

It is perfectly sensible to say “We will not expand Heathrow” or “We will not expand Gatwick” or “We will not expand Stansted”, but it is not sensible to say that we will not expand any of them. At some point, we have to increase airway capacity in the south-east of England. Some of the BALPA pilots who came to lobby us last week pointed out that one of the most environmentally dangerous things is to have 15 aircraft sitting on a runway running their engines while waiting for a take-off slot. Sometimes, an additional runway might not necessarily be a bad thing environmentally. We can do a lot to have smart working at Heathrow, and I agree with my hon. Friend the Member for Richmond Park (Zac Goldsmith) that considering slot allocation would be a sensible way to begin.

It would be sensible to have a link between Heathrow and Gatwick. Given their proximity, a fast rail route would provide consumers with more diversity and variety of choice. However, the principal area that ought to be expanded is Stansted. I use the airport myself, and sometimes it looks as though it is half-shut. It has a lot of capacity but its biggest weakness is the rail link with central London. Passengers amble through the Essex countryside wondering whether they will ever get to the airport. On one occasion I was late for a flight, and I burnt up a lot of nervous energy on the way. If we could get a fast rail connection from Stansted to the rest of the rail network and the tube system and halve the journey time from 60 minutes to 30 or 35, many more people would use the airport. Stansted is as far from London as de Gaulle is from Paris and Schiphol is from Amsterdam, and potentially there is capacity for more people to start using it.

The other advantage of Stansted is that significant numbers of people do not live around it. One only has to stand in the constituency of my hon. Friend the Member for Richmond Park and watch the number of aircraft coming in to realise that putting a lot of money into expanding Heathrow is not the environmentally sensible thing to do. One has to pay regard to the many millions of people who live below the flight path.

We can be smarter. We can invest in rail links and, at some point, we will have to increase capacity by putting in more runways, with the logical place being the underutilised Stansted. Although Heathrow will always remain the hub, we can be a bit smarter with the airports around London and make them a bit more efficient, thereby promoting our national interest.

10:30

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dobbin. I congratulate my hon. Friend the Member for Rochester and Strood (Mark Reckless) on securing the debate. We have, I think, focused a little too much on the impact in the south-east and have not looked at the full national interest, although my hon. Friend tried to do so. I want to talk about the impact of aviation policy on the midlands.

One thing that pushes flight numbers in the south-east up to near capacity is passengers from the midlands needlessly driving down to use its airports—Gatwick in particular—to go on holiday, when there are perfectly sensible flights, probably to the same places, from midlands airports, which, in many cases, people drive straight past. Trying to find ways not of forcing but of encouraging such passengers to use the midlands airports rather than the London ones has to be a way of solving the problem. I agree with the hon. Member for Blackley and Broughton (Graham Stringer) that it is strange for a Conservative to want to regulate and to force people to do something, so I suggest that we do exactly the opposite. The problem is that once we start regulating an industry and a market, we end up with a problem and decide that the solution is to regulate a bit more or a bit differently, or to bolt something on, to try to force a change in the behaviour that the regulation created in the first place. I suspect that the answer in this case is to deregulate much more of the industry.

I am not at all convinced of the logic of forcing BAA to sell Gatwick, and now Stansted, only to end up still economically regulating both airports. Surely we only regulate a dominant player in the market, and it is hard to see how in one market there can be three. I would free everything up and let Gatwick and Stansted compete with Heathrow, to see what they could do. That would get us a much better short-term fix than any of the other options.

In the midlands, what can we do to encourage people to use the regional airports? An interesting report was produced by Birmingham airport, and we have all seen the adverts on the tube about not putting all our eggs in Heathrow’s basket. If we are talking about fast rail links between airports and London, we have a plan for that; it is called high-speed rail to Birmingham, and it will reduce the journey time from Birmingham airport to London to just over 40 minutes, which is not far off the aspiration that my hon. Friend the Member for Poole (Mr Syms) mentioned for Stansted. I have driven to Stansted airport a few times, and it is an awful place to get to—a terrible location. I cannot see any real attraction in it. No offence to the hon. Member for Cambridge (Dr Huppert), but it is not a solution for a national airport for the UK. Such a solution would be a complete disaster. If we want fast rail links into London, let us have high-speed rail, and then Birmingham airport can become London Birmingham airport, or some other such preposterous name.

More seriously, if we are trying to balance the economy away from the south-east, and out to the midlands and the north, aviation can play a role in encouraging airports in those areas to get more flights, including flights to the new emerging markets. The midlands is the centre of the UK’s manufacturing industry, so it would be good to have links between those local businesses and the major areas they serve. My constituency, for example, has about 550 employees at Rolls-Royce, who fly all over the world. If we are a Government looking at regional benefit rates and regional pay, why can we not consider regional air passenger duty? We have done it for Northern Ireland, so why not do it elsewhere and try to give the areas concerned a chance to build up their competitive airports, increase capacity, attract new routes, and generally grow the market outside London?

I do not pretend that the majority of people will not want to fly to London, and that that is not where the economic powerhouse will be, but we ought to consider the scope and capability that exists outside London as well, rather than just forcing people into the capital’s airports, which happen to be relatively cheap to fly to because they already have full capacity, in which they are protected, and because regulation keeps the prices down.

Finally, if we want our national hub to be truly national, we must ensure that regional airports to which the rail journey is too long have access to the hub. Otherwise, airlines will discontinue their routes to Belfast and Scotland, for example, because they can make more profit from routes to New York, and the hub will become purely a London and south-east one. That is not an attractive way of growing the economy all around the country.

[Jim Dobbin (in the Chair)]

We have hit the deadline of 20 minutes to 11. I call the shadow Minister.

10:39

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

It is a pleasure to see you in the Chair, Mr Dobbin. I congratulate the hon. Member for Rochester and Strood (Mark Reckless) on securing this important debate. We all keenly anticipate the publication of the Government’s consultation documents—a subject that I will come back to later. If they had already published them, we might not have needed this debate. None the less, this is a great opportunity for the Minister to update us on the documents.

As many Members have said, aviation is a success story, whether we are talking about the Scottish airports, Manchester, Birmingham, East Midlands, or the other regional airports. The focus of this debate, and the focus generally in recent years, has been on London and the south-east. The third runway debate has overshadowed the excellent work, which a number of colleagues have mentioned, being done at Gatwick, London City, Luton and Stansted, but the capacity of the south-east remains the big issue.

Our aviation industry is central to our economic prosperity and should be a key driver of growth, without which we have no prospect of emerging from the dangerous economic situation that we are in. The industry contributes at least £11 billion to UK GDP—more than 1% of the total—although briefings for this debate state that the figure is £23 billion. It also supports up to 200,000 jobs directly and 600,000 indirectly across the UK. However, just as the Government do not have a credible strategy for growth, they have not yet managed to set out a credible strategy for aviation, let alone the role that it could play in our economic situation. Aviation is a crucial sector on which our economy depends, and the reaction from business to the Government’s decision not to set out an aviation strategy until the latter part of this Parliament has ranged from incredulity to plain bemusement.

[Mrs Villiers]

Will the hon. Gentleman give way?

[Jim Fitzpatrick]

If the Minister will allow me to get to end of my remarks, I will be happy to give way to her. I hope that I will be able to give way, but I am constrained by time.

The chairman of the Airport Operators Association, Mr Ed Anderson, has said that, while the industry knows what the Government are against,

“we are not sure yet what it is in favour of”.

He went on to describe “better, not bigger” as an “election slogan”, saying:

“Better not bigger doesn’t constitute a strategy.”

Sir David Rowlands, a former permanent secretary at the Department for Transport, has described the Government’s policy as “mildly extraordinary”. Baroness Valentine, who speaks for London First, said earlier this year that the

“government seems content for aviation policy to drift.”—[Official Report, House of Lords, 24 March 2011; Vol. 726, c. 872.]

She has also said, most damningly, that

“the Government’s aviation strategy is damaging our economy and enhancing that of our EU rivals.”

Seventy-four business leaders wrote to The Times, saying that setting a long-term strategic direction for aviation in London, the wider south-east and across the country is a vital part of delivering the growth and jobs the country needs. They concluded that all options must be considered—short term and long term—to address growing demand. Only last week, John Longworth, the director general of the British Chambers of Commerce, said:

“The Government must stop tiptoeing around on aviation because of short-term political considerations. Unless politicians grasp the nettle and make some tough decisions, both our export and inward investment potential will suffer.”

I hope that the Minister will indicate when we will be able to see the consultation documents.

[Mrs Villiers]

Will the hon. Gentleman give way?

[Jim Fitzpatrick]

I assure the Minister that if I finish what I have to say by 10.47 or 10.48 am, I will give way to her, but I want to get my points on the record.

The hon. Member for Orpington (Joseph Johnson), who is no longer present, gave a couple of quotes from the Mayor of London’s briefing. To save time, I will not repeat what he said, but he did not cite two points—although others have mentioned this—relating to the loss of visitors to the UK. The Mayor’s briefing states:

“While France and Germany each managed to attract between 500,000 and 700,000 visitors from China in 2010, the UK had only 127,000. In total, France earns £1.3bn per year from Chinese tourist spending on visits in the country, compared to the UK’s Chinese tourist spending receipts of £115m.”

It also notes:

“France’s hub airport, Paris Charles de Gaulle (56 departures per week), has better connections to Brazil than Heathrow (27 departures per week). In 2009, inward investment from Brazil totalled $800m in France, and only $1.7m in the UK.”

The Mayor has a strong argument on those figures.

The Government seem to accept that there is a capacity issue. In the Budget statement, the Chancellor referred to south-east capacity, as did the Prime Minister in response to a question from the hon. Member for Richmond Park (Zac Goldsmith) during Prime Minister’s questions. As I have said, we are waiting for the Government’s consultation document to indicate their likely direction of travel. Constraints on aviation, whether from a lack of capacity or lack of investment, will not stop flights happening—or increasing. As Members have said, those constraints will simply displace flights from the UK to Schiphol, Charles de Gaulle or elsewhere.

The hon. Member for Rochester and Strood effectively articulated the arguments against the proposed estuary airport. He made some interesting points about EU competition law, and I will consider them carefully.

My hon. Friend the Member for Blackley and Broughton (Graham Stringer) spoke with great authority on the issue, as he always does. He mentioned in passing other factors that affect aviation, such as air passenger duty, which was also mentioned by other colleagues. Nobody developed the argument, but APD is a huge factor in whether people decide to go to the UK or elsewhere in Europe. Given that it brings in between £2 billion and £3 billion for the Treasury, it will not surrender APD, but that is a factor and it needs to be looked at.

Another big issue that affects our economic performance is visas and the obstacles we place in the way of people who want to come to the UK, particularly from China. Moreover, as we discussed at length during deliberations in the Civil Aviation Bill Committee, the performance of the UK Border Agency—I accept that it is not the Minister’s responsibility—is harming the way that potential tourists and business visitors perceive the UK, because of what they read and hear in the media.

Lack of time meant that we did not have the opportunity to hear a lecture by the hon. Member for Blackpool North and Cleveleys (Paul Maynard) on hub dynamics. I would be interested to read it, so perhaps he could send me a copy. He made the point about the decline in our aviation industry and the rise of Schiphol and Charles de Gaulle.

The hon. Member for Strangford (Jim Shannon) reinforced the points about connectivity and regional access, and the hon. Member for Cambridge (Dr Huppert) raised the issue of emissions. That issue has to be addressed, and we were addressing it when we were in government. The industry was confident that it could meet the levels set, but it meant using the emissions trading scheme, with the expectation that emissions would rise and that the industry would have to offset them elsewhere within the industry.

[Dr Huppert]

Will the hon. Gentleman give way?

[Jim Fitzpatrick]

I assure the hon. Gentleman that I have nearly finished—I have three minutes left—and will give way to him when I have done so.

As I was saying, the industry was confident that it could meet the levels set, but the bottom line is that Lib Dem policy on aviation is the obstacle to the Government having any policy at all, certainly before 2015.

The hon. Member for Poole (Mr Syms) mentioned the need for more capacity and made the case for Stansted, and the hon. Member for Amber Valley (Nigel Mills) asked how we can give more support to regional airports and proposed deregulation.

The aviation industry and Britain’s wider business community came together last week to call for a cross-party consensus on aviation that lasts beyond the term of one Parliament. For several months, the shadow Secretary of State, my hon. Friend the Member for Garston and Halewood (Maria Eagle), has repeatedly offered to take the politics out of aviation, put party differences aside and work together on a joint aviation strategy for the good of the nation. It is a clear, unambiguous offer, with no catch. Aviation matters to the country, the economy and businesses and families throughout the country. It is an industry that needs stability in the long term and a long-term plan that straddles Parliaments and Governments. We must not repeat the party political wrangling that turned the proposed third runway at Heathrow into a political football, and we must agree to stick to the agreed strategy, whatever the outcome at the next election.

[Mrs Villiers]

These issues are very important, so why have the Opposition not suggested any ideas for dealing with the long-term capacity challenges in the south-east? They have suggested nothing at all.

[Jim Fitzpatrick]

The Minister knows that we had a game plan in place, but we lost the election. Then, as a gesture, to try to achieve national consensus on this important issue, we said that we would drop support for the third runway so that we could have cross-party talks. We have not even had the courtesy of a reply from the Secretary of State for Transport about engaging in talks. Until the Government introduce their consultation—it is they, not the Opposition, who are responsible for creating aviation policy—it is a bit rich of the Minister to ask me about policy.

[Dr Huppert]

The hon. Gentleman said that the Labour party dropped its support for the third runway as a gesture. Will he be clear on what his party’s policy is now? Is it against a third runway, or is it merely in favour of having a blank page that can be filled with anything in future?

[Jim Fitzpatrick]

The hon. Gentleman tempts me to respond but, given that I fully explained our policy during a five-minute discussion only two days ago, I think that he knows what it is, and that he is just playing games to try to throw me off. He knows that we are in the throes of devising our aviation policy, and I assure him that it is likely to be formulated way before the coalition reveals its policy, which we do not think will be published until 2014, or even 2015.

Finally, I have the following questions for the Minister. What is it that the Government will publish? How long have we been waiting for the documents? What exactly will they consult on in the documents and—the most important question of all—when will we see them?

10:50

[The Minister of State, Department for Transport (Mrs Theresa Villiers)]

I congratulate my hon. Friend the Member for Rochester and Strood (Mark Reckless) on securing the debate, which has been excellent; there have been many very useful contributions. There is no doubt that the UK has a highly successful aviation sector, and I pay tribute to the energy and enterprise that we see from that industry, in the face of challenges as tough as the global slow-down and, of course, rising world oil prices. Developments over the past 20 years, such as the introduction of low-cost, no-frills airlines, have provided real passenger benefits and unprecedented choice and opportunity to fly.

In the year of the Olympics and the diamond jubilee, we are reminded once again of aviation’s critical role as the route to bringing in tourism. However, the very success of our aviation industry presents us with a key challenge: how do we accommodate growth and seize the benefits generated by aviation while meeting our environmental commitments and addressing the quality-of-life impact of aircraft noise?

It is very clear that London is one of the best-connected cities in the world, with its five busy and successful airports—six, if newly expanded Southend is included. Together, those five airports provide direct links to around 360 international destinations, including virtually all the world’s great commercial centres. That compares with just 309 such links from Paris, and 250 from Frankfurt. Heathrow provides more flights to New York than Paris and Frankfurt put together, and has more flights to the crucial BRIC—Brazil, Russia, India and China—economies than other European hubs, including more services to China.

Airlines are launching new routes to key emerging-market destinations. BA has recently announced a new service to Seoul. China Southern Airlines now flies from Heathrow to Guangzhou. Gatwick has a new Air China service to Beijing, and the aviation industry continues to invest and innovate. Birmingham airport will shortly begin constructing a runway extension better to enable it to serve long-haul destinations. The operators of Heathrow and Gatwick are investing £5 billion and £1 billion respectively over the next few years in better infrastructure. Of course, it is important to press for the further liberalisation of aviation, in terms of opening up the opportunity for UK airlines to provide flights to more destinations—something called for by my hon. Friend the Member for Rochester and Strood.

[Mark Reckless]

Why does it need to be UK airlines? Surely the benefit for the UK is to have airlines—Brazilian or Chinese as much as UK ones?

[Mrs Villiers]

Naturally, trade agreements on aviation between different countries provide mutual benefits. Liberalisation and expanding the range of airlines that can serve routes between the UK and other countries can provide real benefits economically and for passengers. We seek mutuality in these agreements, but we are also prepared to consider a more open approach for regional airports along the lines proposed by the hon. Member for Blackley and Broughton (Graham Stringer).

It is true that Heathrow is pretty much full, and Gatwick, too, is starting to fill up. However, it is simply not true to claim that London’s connectivity is falling off a cliff-edge. We are taking action right now to make our airports better, as well as preparing for the longer-term challenges of capacity in the south-east. We are reforming the way aviation security is delivered to make it more passenger-friendly and cost-efficient. We are trialling a set of operational freedoms at Heathrow, which we hope will make the airport more resilient and reliable. However, we will carefully have to assess their environmental impact. We are finally making progress on the single European sky, which has the potential to cut fuel-burn, improve punctuality, address noise and increase capacity.

[Zac Goldsmith]

Will the Minister give way?

[Mrs Villiers]

I am sorry, but I do not have time. If I have time at the end, I will give way.

We have an extensive programme of surface access improvements under way. Hon. Friends were right to raise that as being important for our aviation competitiveness. Manchester is getting a new Metrolink extension and will benefit from Northern Hub improvements. Gatwick station is getting a major upgrade; Thameslink will benefit Gatwick and Luton; Luton is getting improved access from the M1; and tunnelling has started on Crossrail. That project will ultimately see Heathrow connected to the City and Canary Wharf by train directly for the first time.

In the longer term, High Speed 2 will provide greatly improved surface access to Heathrow and Birmingham. As my hon. Friend the Member for Amber Valley (Nigel Mills) mentioned, that is a real game-changer, bringing Birmingham within easy travelling distance of many more people across the country. Of course, our HS2 plans will also provide an attractive rail alternative to thousands of short-haul flights coming into our south-east airports. That will potentially free up even more space for the long-haul destinations that hon. Members have rightly identified as crucial to our economic success.

However, good government is about not only tackling the problems of today, but preparing for the future. That is why the Chancellor announced in last year’s autumn statement that we would explore the options for maintaining the UK’s aviation hub status, with the exception of a third runway at Heathrow. The coalition is clear that it does not support a third runway at Heathrow. The airport is unique in Europe, in terms of the magnitude of its noise impact on densely populated areas. Thousands live daily with a plane overhead every 90 seconds, and have more planes that wake them up at 4.30 in the morning. The quality-of-life impact of a third runway and up to 220,000 more flights over London every year would be massive, and there is no technological solution in sight to ensure that planes become quiet enough quickly enough to make that burden in any way tolerable. We do not support mixed mode, which would see the end of the much-valued respite period that means so much to those who live with Heathrow noise daily.

We need a better solution. Last year, we kicked off the process of deciding what that will be, with the publication of our scoping document on aviation. The 600 or so responses we received are being used to prepare our draft aviation policy framework consultation, which will be published shortly. We plan to adopt the final framework in March next year, as set out in our business plan. It will set out the overarching economic and environmental framework within which we want to see aviation grow. We also intend to issue an open call for evidence on maintaining the UK’s international aviation connectivity. We will fully consider all representations to that consultation. The shadow Minister, the hon. Member for Poplar and Limehouse (Jim Fitzpatrick), wants us to go faster, but had no ideas whatever to share in today’s debate.

[Jim Fitzpatrick]

When will we see the documents, Minister?

[Mrs Villiers]

The consultation will be published shortly.

[Jim Fitzpatrick]

Does “shortly” mean before the summer recess?

[Mrs Villiers]

The consultation will be published shortly. The decision is a crucial one that requires objective, thorough and evidence-based analysis of our connectivity needs and how best to meet them in a sustainable way. We do not want to make the mistake that the previous Government made of coming up with the wrong solution and seeking to reverse-engineer the evidence. Put simply, that landed them in court and ensured that they failed to deliver any new capacity. We need to get this right. We need to base our decisions on the evidence, and on a process that allows the communities affected by any of the options fully to take part and ensure that their voice is heard.

[Zac Goldsmith]

Can my right hon. Friend tell us what work her Department has done on considering the viability of maintaining two hubs rather than one? We have today heard a lot of statements from Members, but no evidence at all, that we must have a single hub. Has her Department looked at that question, and are there any data she can share with us?

[Mrs Villiers]

Certainly the debate that will be triggered by our call for evidence will look at a range of options, including how a hub can interact with highly successful point-to-point airports, and will consider connections between our airports to see if they can provide a way to improve and enhance our connectivity. Those are the sorts of ideas we have already been looking at, because they were proposed in response to our scoping document, and they will provide an important basis for future debate over the next few months on how we maintain London’s and the UK’s top-class connectivity.

[John McDonnell (Hayes and Harlington) (Lab)]

Will the Minister give way?

[Mrs Villiers]

I am afraid that I am about to run out of time, so unfortunately not.

My hon. Friend the Member for Rochester and Strood raised a number of issues about the potential for a new airport—issues relating to cost, airspace management and impact on the local environment. It is, of course, vital to consider the sorts of questions he raises about costs and local environmental impact whatever options are put forward as a result of our call for evidence. Those are important questions to ask, and important criteria against which to judge any of the potential ways to address the future connectivity needs of the south-east airports. On air passenger duty, as hon. Members will be aware, taxation is a matter for the Chancellor.

To conclude, we are taking forward a range of measures right now to improve our airports and ensure that they are top-class international gateways to the rest of the world, and we are carrying out the process needed to determine our future connectivity needs. We believe our approach represents a responsible, structured and proper process that takes us towards delivering a sustainable solution that will maintain the UK’s connectivity and competitiveness in the future.

Voluntary Sector

Wednesday 4th July 2012 Westminster Hall

11:00

[Stephen McPartland (Stevenage) (Con)]

It is a pleasure to serve under your chairmanship, Mr Dobbin. I thank the Minister for coming, and I am pleased that some hon. Members are here today to celebrate the voluntary sector in small towns and cities. I know that my hon. Friend the Member for Carlisle (John Stevenson) is keen to speak, and that my hon. Friend the Member for Lincoln (Karl MᶜCartney) is keen to intervene. I am happy for both to do so.

Everyone here today recognises the important contribution in our areas that the voluntary sector makes to many families and to our local economies. The voluntary sector receives and spends tens of billions of pounds every year and employs hundreds of thousands of people who are all trying to make a difference to the life of other people.

Before I raise two points with the Minister, I would like to celebrate the work of the 163 charities and more than 100 community groups in my constituency. Yes, that is right—in my constituency, with 69,000 people on the electoral roll, we have about 300 charities and local community groups all trying to make a difference. A classic example took place just this weekend, when Stevenage hosted the largest armed forces day celebration in Hertfordshire. The Stevenage indoor market traders, under the chairmanship of Peter Mason and its outstanding committee, welcomed the market stall that Mark Williams, a Gulf war veteran, runs for the national Gulf Veterans and families association. It not only raises funds, but tries to support servicemen and servicewomen who fought in the Gulf.

There were more than 20 charity stalls on the day, and thousands of people attended. I was honoured to be given the opportunity to speak at the opening of the day, and was humbled to meet a Dunkirk veteran who was collecting money in a bucket for the Royal British Legion. As a nurse, she had looked after wounded soldiers on the beaches at Dunkirk. I was very proud of what she had done, and it was an honour to meet her. There were many other stories from veterans and war widows. I was proud that our community came together to show our support for our armed forces.

Turning to more established local charities in my constituency, I am proud to be a patron of Turn the Tide, a local charity that tries to help disadvantaged young people. We are trying to teach children, in groups of two, how to build a small sailing dinghy. Once they have built the dinghy, we then teach them how to sail it on Fairlands Valley Park sailing lake. We hope this will develop into a lifelong hobby for the children, and we are also looking into the possibility of giving them access to some qualifications. The charity is run by a good group of people. A number of people have come through the scheme so far in the past year or so, and it is proving to be a huge success.

I am also a trustee of The Living Room in Stevenage, which is a charity founded and led by the inspirational Janis Feely, who now has an MBE for her services. The Living Room is a charity that helps people put their lives back together and makes a massive contribution to the local community. It simply tries to break the cycle of addiction and uses abstinence-based group therapy to help addicts recover, whether from drugs, alcohol, food or other addictions. The programme at The Living Room in Stevenage works. It has a high success rate because of a very unique selling point—all the counsellors have been addicts in the past. They have all reached rock bottom and they all know what it is like to be there. They know when the people they are counselling are pushing a little bit further than they should, and when they are not going fast enough. It is a unique charity and I am delighted to have been involved with it for a number of years.

[Karl MᶜCartney (Lincoln) (Con)]

I congratulate my hon. Friend on securing the debate. It is also a pleasure to serve under your chairmanship, Mr Dobbin.

My hon. Friend mentioned being a trustee of various charities in his constituency. He also mentioned how many charities there were in his constituency. There are 270 charities and voluntary sector organisations in Lincoln. With the help of two companies, Lindum Group and Wright Vigar, we have a number of receptions coming up to thank the trustees of those charities. With 270 charities and voluntary organisations, the number of trustees in my constituency numbers in the thousands. I am sure that my hon. Friend would like to welcome that.

[Stephen McPartland]

The importance of trustees to charities is massive. The Minister will be aware that one of the biggest challenges for charities is to attract good-quality trustees. It is like being a school governor—they are overwhelmed with paperwork and given a huge amount of responsibility. Like most people involved in charities, all they want to do is help people. I am delighted to hear that my hon. Friend is welcoming all the trustees in his constituency. It has given me a very good idea, and I will no doubt be doing something similar later this year.

Returning to the work of The Living Room, the charity is very good at putting people’s lives back together. It has helped mothers recover to the point where they have been able to get their children back out of care. It has helped to rebuild marriages, and it has helped many clients, as we call them, to go back to the world of work and put their lives back together. It is a fantastic organisation, and I am very proud to be associated with it.

Another charity that was started in Stevenage is unique, and I love it. It is run in partnership with Hertfordshire police and has expanded across the county, and I understand that a number of other police forces are interested in it. It is called Dog Watch. Everybody has heard of neighbourhood watch, but we have a system called Dog Watch. Dog walkers are often the ones who identify fly-tippers. It is usually a dog walker who is unfortunate enough to discover a dead body, because their dog finds it. More than 400 people have signed up with Hertfordshire police through the Dog Watch charity, and they are effectively the eyes and ears on the ground in Stevenage. There are many community events, and the whole community gets involved. Dog Watch helps rescued dogs and looks after a number of animals. Most importantly, people are out there with the police on a day-to-day basis. If something happens and the police are keen to find out what is going on, they have access to a resource of people who have probably walked past the very spot three times that week and may have seen a particular vehicle or something else. Dog Watch is led by a lady called Sarah Sheldrick, and she is also an inspiration.

Young people are very important in charities. Only last week, I visited Thomas Alleyne school in Stevenage, where the pupils presented me with a petition that I hope to give to the Secretary of State for International Development. They want all children throughout the world to have access to primary school education. You know, Mr Dobbin, that I am very interested in global poverty and what is going on around the world, especially in relation to access to education. The pupils of Thomas Alleyne school have gone a step further and raised enough money to send three African children to school for the next year. The pupils are making a personal demonstration to those children in Africa that they will try to help them get educated. That is very important, because it shows that in my constituency of Stevenage people are becoming involved with community spirit right from the start.

A slightly larger charity based in Stevenage is POhWER, which provides highly skilled advocates to support vulnerable people who find it difficult to challenge the NHS and other services when things go wrong, and to help people get the public services they need. I work very closely with POhWER and am a huge fan of the support it gives to people. It understands the challenges, as most of the board of trustees have used advocacy services themselves in the past. The Minister with responsibility for care services has written to POhWER to thank it for the work it does, particularly with those who have mental health issues. POhWER is also a success, because it is one of the few charities that has managed to win some Government contracts to provide advocacy services. That brings me to my first question to the Minister. Why is it so difficult for charities and community groups to win contracts from the public sector?

The Minister is keen for local councils, local NHS, police and various public sector bodies to work more closely with local charities and community groups, and many do, but that never seems to translate into a contract in my area. The tendering processes of local public bodies are bewildering. Most charities just want to get on with helping local people and cannot navigate the complex bureaucracy that is put in their way.

I met a couple of people last week who are keen to launch a self-empowerment service in Stevenage, but they are coming up against huge barriers and do not think that they can deal with the tendering process. They believe—I have heard this complaint from many small local charities—that many of the contracts are too large and say that, when they can get involved in a contract, they effectively have to subcontract to a larger charity or a private sector organisation, and feel that they do not get what was promised. I am also starting to hear complaints that charities are being used as a form of bid candy; that is, they are being used by large providers to win a contract, but see little benefit locally. That issue has arisen time and again in my constituency, especially in the past 18 months, as ever more contracts of this kind have gone out.

We need to level the playing field and have services delivered more locally, but how does the Minister intend to do that? The Government’s localism agenda works; it is the right thing to do. We have to push power away from central Government towards local people and communities. However, many local councils seem to be acting as a barrier between the Government and local communities. Councils pay lip service to the Government, but do little to help local community groups and small charities tender for contracts. It is almost as if they want to keep as much work as possible in-house. In my constituency, Stevenage borough council keeps everything in-house and does not outsource anything, so it is difficult for small groups and charities to be involved in any way.

Will the Minister consider introducing to councils more standardised bidding and monitoring forms that pass the plain English test? We are giving councils guidance and working hard—the Minister is desperate for them to engage with local community groups—but in my experience in the past two years, there is a barrier between the Government and local communities, which means that community groups cannot navigate bureaucracy and red tape. Those groups want to help people, just as small businesses want to get on and sell their product and not deal with health and safety and myriad other regulations. Many small charities and community groups are subject to the same regulations as businesses and are not geared up to work with them.

It would be remiss of me not to mention the issue of irrecoverable VAT, which costs local charities and community groups up to £500 million a year. This is a long-standing issue, but it is important that we try to tackle it.

Many people in my constituency come to me about Criminal Records Bureau forms. One man has had 15 CRB forms for the different groups that he is involved in. We put the Protection of Freedoms Act 2012 into place and we are getting rid of unnecessary bureaucracy to do with CRB forms, and I know that the idea is that, if there has been no change in people’s circumstances, they will be able to log on to the internet, check the system and move forward. However, it is two years on and that measure does not seem to have been implemented yet, and nobody knows when it will be implemented. People are agitated, saying, “Do I need to get my new CRB forms, because I’m going to be helping out?” The CRB forms are a huge barrier to people being involved in community groups.

The Government have made it clear that volunteers should not have to pay for CRB forms. However, most councils are, in my experience, charging an administration fee to process the forms, so the reality is that most volunteers are being charged for a CRB form, and that cost is borne by the individual or the charity. There is a sense of a barrier between what we want to achieve and what local communities want and what is happening. We need to leap across the barrier and deliver this free service to volunteers.

I would have loved to mention every one of the 300 charities and community groups in Stevenage, but no doubt we can do that in an hour-and-a-half debate in future.

11:14

[John Stevenson (Carlisle) (Con)]

It is a delight to serve under your chairmanship, Mr Dobbin. I congratulate my hon. Friend the Member for Stevenage (Stephen McPartland) on securing the debate, which is relevant to small towns and to cities, such as my constituency of Carlisle. I should like to make a small contribution to the debate.

The Government and politicians talk a lot about the role and importance of the public and private sectors, and the relationship between the two. That is natural, to a large extent, because the private sector is the wealth-producing part of our economy and creates the vast majority of our employment. It is dynamic, innovative and varied and vital to the success of our economy, nationally and locally. The public sector is similarly important. It provides our schools, hospitals, much of our infrastructure, the police and welfare and is important both nationally and locally. There is often political debate about the size of each sector and what each should do and how they should do it.

Sometimes, we neglect the third sector—the voluntary and charitable sector—which is equally important in small towns and in cities, as it makes a valuable contribution to communities in many ways. It plays a huge role, sometimes doing things that neither the private nor public sectors can or will do. It is important in terms of its contribution to society and to local communities, and in respect of how it helps people to get involved.

In 2009-10, 40% of adult volunteers formally volunteered once a year and 25% at least once a month. In my view, much of the voluntary sector flies below the radar: that is true of my constituency. Throughout the country, about 80% of voluntary organisations are not registered and there are an estimated 600,000 informal groups, many of which have annual incomes of less than £10,000; yet they play a vital, important role in our communities, especially in small towns and cities.

The voluntary sector is diverse. In my constituency, for example, Friends of the Settle-Carlisle Line is a heritage trust that plays an important role in publicising the importance of that railway. A recently created charity called Cumbria Gateway helps people with drug issues move back into mainstream society. Cumbria Council for Voluntary Service helps voluntary groups generally with administration and encourages more people to get involved in the third sector.

It is important that we recognise the benefits of a thriving third sector, but it should be an independent sector that is not dependent on the state and it should not be over-regulated. What will the Government do to ensure that the sector continues to thrive, develop and expand? I want to be able to reassure organisations in my constituency that the Government support them. I should like the Minister to confirm that there are no proposals for additional regulation in the sector.

Although I appreciate that funding has been reduced, can smaller organisations in particular be provided with help to gain access to the funding that is out there? Often, small organisations struggle to find out where to get access to such finance, and even to find out where it is advertised and in which organisations or parts of government they have to seek it.

[Stephen McPartland]

Does my hon. Friend agree that small charities often find it difficult to apply for funding because they do not have the resources?

[John Stevenson]

Yes. Indeed, sometimes they do not even know where to go to seek such support. I also support my hon. Friend’s comment about the third sector having access to public sector contracts. It is important that small organisations have that opportunity, too, and that it is not just national charities that have priority in that regard.

The voluntary sector has an important role to play in our society—in changing the way we do things—and I seek reassurance that the Government will give as much support as they can to it.

11:18

[The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)]

It is a pleasure to serve under your chairmanship, Mr Dobbin. I congratulate my hon. Friend the Member for Stevenage (Stephen McPartland) on securing the debate and for the sincere way in which he expressed his admiration and respect for the 300-odd local charities in Stevenage. He clearly does more than talk the talk: he walks the walk by being a patron and trustee of at least two of those organisations, which is admirable.

My hon. Friend and other colleagues are reflecting the importance of the sector to the country in a year when we are presenting to the world the best of Britain, and I have absolutely no doubt that the voluntary sector is part of that. The ecosystem of charities, supported by millions of people who give time and money to improve other people’s lives and the conditions in their neighbourhood, underpins our sense of well-being; it is massively important.

My hon. Friend the Member for Carlisle (John Stevenson) spoke well about organisations in his area. I vividly remember visiting the Living Well Trust on the Raffles estate when I first became a Member of Parliament. What was really brought home to me was that on a troubled estate the thing that made a difference—the people who made a difference—were Barrie, Kath and the team there. They did much more than anything a council could do to support residents from the estate. The Living Well Trust was the battery at the heart of the estate, and that forged a strong impression in my mind.

Times are challenging for such organisations: less money is around, there are more demands and there is a huge amount of change. We are sensitive to that. In the short time I have, I shall reassure colleagues that the Government are extremely committed to protecting the sector as best we can through a difficult short term, while putting in place measures that will underpin its resilience and effectiveness in the future. I will address specifically how we can make it easier for charities to access money and to help us deliver better public services.

First, we are trying to make it easier to run a charity. We all know that it is one of the most difficult things to do; it has always been difficult, but it is particularly hard now. The Government can do things to help, such as looking hard at the amount of bureaucracy and regulation imposed—my hon. Friend the Member for Carlisle made that point—and we are undergoing probably the biggest and most comprehensive review of the regulation and legislation that affects the sector. Our instinct is to deregulate and to remove bureaucracy, so that there are fewer forms to fill and fewer daft questions to answer, freeing time and money that can be better spent.

My hon. Friend the Member for Stevenage mentioned CRB checks, which have been a huge source of frustration. We are certainly not going as fast as many people would like, but the reform is radical; millions fewer people will need to have CRB checks, and those who do will find it much easier to carry the check around the system. The reform, which my colleagues at the Home Office are working hard on, is complicated, but the new system will be in place at the beginning of next year. It will be a new era for CRB checks, with an injection of common sense in a system that had grown out of all proportion. That is only one example of the kind of things that we are doing to make life a bit easier.

Mention was made of how small charities can find access to what money is around. Information is important, so we have continued to fund a website called Funding Central, which I recommend to colleagues. It is probably the most comprehensive source of grants and pots of money available.

My hon. Friend the Member for Lincoln (Karl MᶜCartney) talked, importantly, about the value of trustees, which we are keen to encourage. The environment is challenging for charities, and most of them recognise that they lack certain things, such as business skills in particular, which will become increasingly relevant if they are competing for more tenders and public work. There are business skills in every constituency, but they happen to be engaged in different things. The impression I get in my constituency is that if we can make better connections between local businesses and local people with business skills and the charities that are on their doorstep, the effect can be transformational; it can raise the capacity and capability of small local charities. We will be doing a lot to make those connections work much better. Furthermore, some of those business people will be inspired to become trustees and become part of the governance of local charities.

Making it easier to run a charity, therefore, and helping the sector to modernise its skills is important. Behind most front-line charities, of course, sits a local council for voluntary service, or another support organisation, and we have invested £30 million in the CVS network to encourage the councils to think about how they can improve their offer to front-line charities. That is a serious investment when there is not a great deal of money around. Making it easier to run a charity is the first important strategic strand.

Secondly, how do we get more money into the sector? How do we get more resource in terms of more volunteers and people giving their time? I recommend to colleagues the White Paper on giving and the update we published last week for dissemination to local charities, because in those documents we communicate clearly our absolute commitment to broaden the base of people in this country who give.

I shall throw a spotlight on a couple of initiatives where we are putting up taxpayers’ money as a match to stimulate giving to local charities. Localgiving.com is a new platform set up by one of the participants in “The Secret Millionaire” to inspire more support for local charities. In September, we will be matching, pound for pound, local donations given through that site. It will be our third match. The previous one sold out in 24 hours, which tells us that if people are given information about the local charities on their doorstep, they are interested in doing more to support them. I encourage colleagues to get their local charities to register and get engaged with Localgiving.com, for the pound-for-pound match in September.

We have also put up £50 million to match donations from local philanthropists—people who have been relatively fortunate and want to put something back into their communities. We will match every £1 they give with an additional 50p towards the building of local endowments that will be a source of sustainable, long-term grants for local organisations. We are determined on such interventions for the long term, so getting more resources into the sector is hugely important to us.

Thirdly—a relatively new area—how do we make it easier for charities to participate in and help us to deliver better public services? Part of the problem is that the public services in the past have been closed and opportunities have not been available. The Government are opening up opportunities, but it is a big cultural change and will not happen overnight. Big question marks are raised about the capability and competence of commissioners throughout the country—many are new and many are being asked to do things in different ways—and of local charities, which need to step up and persuade commissioners that they have the resilience and ability to deliver.

We are working hard to make that a reality. We are sending strong signals to commissioners. We supported the private Member’s Bill promoted by my hon. Friend the Member for Warwick and Leamington (Chris White), which places a requirement on commissioners to consider social value in their commissioning processes. The “Best Value Statutory Guidance” issued by the Secretary of State for Communities and Local Government to local authorities also makes it clear that we want them to consider social value. The Localism Act 2011 contains a right to challenge, so that local groups can question existing provision in a public and transparent way. We are setting up a commissioning academy, because commissioners need support, and the first cohort is going through this summer. That is about encouraging more intelligent commissioning, in particular at local level.

We are supporting local charities that want to do more in that space. A £10 million investment and contract readiness fund has been set up as a source of grants available to charities and social enterprises that want to do more public service delivery but recognise that they need a little more help and support to increase their capability and readiness. The principle is clear, however: we want the people buying on our behalf to have much more choice in who they buy from.

In some of the most stubborn and difficult social areas, charities and social enterprises frequently make the extra bit of difference in keeping people out of jail or off drugs, as has been said, but such organisations are often small. One of the challenges mentioned is a real one; commissioners naturally want to buy at scale, with all the potential efficiencies that can be pursued, but they find it difficult to reconcile that with including small, local charities that could make that additional bit of difference in the supply chain.

We are feeling our way, but there is definite progress. This morning, I had a meeting with the National Council for Voluntary Organisations and Serco, which have come together with a new framework to guide prime contractors—big private organisations or big charities—in their engagement with small charities in their supply chain. In an environment where we are paying people for outcomes, it is in the interests of bigger organisations to engage with the small local charities that, in our experience, can make just that additional bit of difference.

Finally, if my hon. Friend the Member for Stevenage wants to bring any of the 300 magnificent charities in his constituency to meet the Minister, he is extremely welcome to do so, because I regularly have such meetings. I would like them to feel the appreciation of the Government for the incredible work that they do.

11:29

Sitting suspended.

West Bank (Area C)

Wednesday 4th July 2012 Westminster Hall

14:30

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

I am grateful for the opportunity to speak on the important issue of Area C in Palestine. Following the Oslo agreement in 1995, the occupied Palestinian territories were divided into three areas: Area A, about 18% of the west bank, contains most of the main Palestinian settlements and is under full Palestinian civil and security control; Area B, roughly 22% of the west bank, is under Palestinian civil control and Israeli security control; and Area C, on which I want to concentrate, makes up the other 60% of the west bank and is under complete Israeli civil and security control.

The Oslo agreement as concerned with the west bank was intended to be interim and to last for only five years. The lands should have been handed over gradually to Palestinian control, but that has never happened.

[Dame Joan Ruddock (Lewisham, Deptford) (Lab)]

I apologise to my hon. Friend for the fact that I cannot stay for the whole debate. Does he agree that Area C would, and does, make up the backbone of any future Palestinian state? The failure of the Oslo process to follow its proper track therefore jeopardises the whole future of the two-state solution. Will he ask for the Minister’s views on that?

[Mr Doran]

I thank the right hon. Lady for her intervention—I always thank the right hon. Lady, and I always give way to her. The Minister has heard her question, and I am sure that he will respond. Of course, I agree that the solution, if there is one, to the problems of Area C is crucial to the whole settlement of a particularly difficult issue.

Israel, as an occupying state, has clear and unambiguous responsibilities to the Palestinian people in Area C, including for the safety and welfare of civilians living in the occupied territory. It has no sovereignty over Area C or any other part of the west bank. I want to concentrate on Area C and the way in which the Israeli authorities have met their obligations under international law.

In May this year, I had the opportunity to visit Palestine for the first time, on a trip with some colleagues organised by the Britain-Palestine all-party parliamentary group and CAABU, the Council for the Advancement of Arab-British Understanding. One of the first things I noticed travelling through the west bank, as a newcomer, is the enormous amount of new development. The hills are full of new housing complexes, but in Area C those developments do not belong to the indigenous population—they have all been developed by the occupying force, Israel, and are therefore illegal. The scale is staggering.

According to the Israeli human rights organisation B’Tselem, there are 124 formally recognised settlements in the west bank, not including East Jerusalem, and about 100 informal settlements—outposts—that are illegal under Israeli law. As a result of the restricted road network—restricted for Palestinians, at least—the settlements dominate more than 40% of the west bank. There are 310,000 settlers now living in Area C, where the rate of population growth is much higher than in any other part of the country, with an increase of 4.75% per year.

The Israeli Government not only condone illegal development but encourage it, providing incentives, subsidies and funding for housing, education and infrastructure, including special roads and water connections. According to a Peace Now report from 2006, 40% of the land—or 3,400 buildings—on which settlements have been built in Area C is privately owned by Palestinians.

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

Is the hon. Gentleman aware that, at most, about 5% of the west bank consists of settlements, and most of them are in settlement blocks? Does he not accept that the vast majority of the settlements are along the peace line and that, to get to peace, land swaps will be required? Most of those settlements are more than likely to come into Israel anyway.

[Mr Doran]

That does not alter the facts on the ground. Owing to the road networks, the various infrastructure around the settlements and the inability of Palestinians to go into that territory without a permit from the Israeli authorities, 40% of the land is effectively taken up by the settlements.

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

I congratulate the hon. Gentleman on securing this important debate. I, too, have recently returned from a visit to the region. Someone remarked that because of the Israeli settlements the whole of Area C looks similar to a Swiss cheese, which is a very good description. That lack of a contiguous, sustainable two-state solution in the area is making peace very difficult to achieve.

[Mr Doran]

I agree with the hon. Lady. There are less light words than Swiss cheese for what is happening; it is very serious and damaging to any potential solution. She is absolutely right.

[Mr Philip Hollobone (Kettering) (Con)]

I refer the Chamber to my declaration in the Register of Members’ Financial Interests.

I take the issue of settlements seriously, but listening closely to the hon. Gentleman, I simply cannot understand his repeated reference to settlements taking up 40% of the west bank. I have the United Nations “Humanitarian Atlas”, and there is simply no way that the Israeli settlements amount to anywhere near 40% of the west bank. May I ask him to ensure that he is quoting a correct figure?

[Mr Doran]

I stand by the figure. I am not suggesting that 40% is built on; that is not the issue. I am talking about the area of land that is restricted with regard to Palestinians. It includes the road network. The Swiss cheese effect was mentioned by the hon. Member for Maidstone and The Weald (Mrs Grant). There are large areas to which the Palestinian community is denied access. That calculation is made, as I said, in a 2006 report by an Israeli human rights organisation. I want to make progress now, because the hon. Member for Kettering (Mr Hollobone) will have his opportunity to speak later.

On my visit to the west bank, I saw numerous examples of how the Israeli civil Administration restrict any kind of development by Palestinians. Around 70% of Area C, or 44% of the west bank, is effectively off limits to Palestinian construction—the hon. Member for Kettering made me nervous of getting into such statistics, but I have to stick by them—and is designated for exclusive use by Israeli settlements and the Israeli military, or is taken up by nature reserves or the barrier buffer zone. In the remaining 30% of Area C, a range of restrictions makes it virtually impossible for Palestinians to be granted permission for development.

The most frequent obstacle to Palestinian development is the requirement on the applicant to prove that he or she owns or has the right to use the land, but most land in the west bank is not registered, so the owners must go through a complex system involving tax and inheritance documents. The second ground for the rejection of most Palestinian permit applications is the requirement that the proposed building must be in conformity with an approved planning scheme that is detailed enough to enable building permits to be used. Palestinian villages, however, lack sufficiently detailed plans. The outdated plans that do exist are interpreted restrictively by the Israeli civil authority. In practice, only about 1% of Area C is available for the construction of new properties, and most of that is already built up.

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

I congratulate my hon. Friend on securing this important debate. Does he share my concern that among the buildings demolished are structures funded by the European Union, such as schools? I visited the occupied territories in the west bank a year ago, as part of a delegation, and saw a school that had been built with funding from an Italian charity, but that had been subject to a demolition notice.

[Mr Doran]

We were obviously on the same visit, because I will mention that particular project later. Under the restrictive laws and regulations, many Palestinian structures, including homes, schools, water systems and farming infrastructure, are treated as illegal and are therefore subject to demolition orders.

In 2011, nearly 1,100 Palestinians, half of them children, were displaced through 222 house demolitions—an 80% increase on the number of people displaced in 2010—and 4,200 people were affected by the destruction of structures necessary to their livelihoods, such as water storage and agricultural facilities. In total, 622 Palestinian structures were destroyed, including mosques and classrooms. At the end of 2011, there were more than 3,000 outstanding demolition orders. Those figures included 18 schools.

So far this year, 371 Palestinian structures have been demolished on the west bank, 124 of which were homes, and 600 people have been displaced so far this year. That is a significant and troubling increase in the weekly average, from 21 people a week displaced in 2011, to 24 a week this year. Of the structures demolished since the start of 2000—this relates to the point made by my hon. Friend the Member for Easington (Grahame M. Morris)—60 were EU-funded structures, and 110 are at risk of demolition. Will the Minister tell us the total cost of those demolished EU projects, and whether he has made any representations to the Israeli Government on this matter? It would also be helpful if he would identify any projects funded by the Department for International Development that have suffered the same fate.

In addition to the demolition of Palestinian structures, there is the issue of the natural resources of the occupied territories, which have for decades been diverted for the use of Israel and Israeli citizens. International law, of course, requires the natural resources of the occupied territories to be used for the benefit of the local population, except when they are required for an urgent military purpose. The most crucial natural resource on the west bank is water, and 80% of the water extracted from the west bank mountain aquifer goes to Israel, with only 20% going to the Palestinians.

Settlers consume between six and 10 times more per head than their Palestinian counterparts. Many settlers have swimming pools and are able to irrigate their farmland. By contrast, 190,000 Palestinians live in 134 villages without running water. Palestinian consumption in the occupied territories is about 70 litres per day, well below the 100 litres recommended by the World Health Organisation. In some rural communities, people survive on 20 litres per day, and many Palestinians are forced to buy water of dubious quality from mobile water tanks at high prices. Wells and systems built without permits are frequently destroyed by the Israeli army.

Demolition orders are in place, and actual demolition has occurred, all over Area C. On a recent trip, we visited two Bedouin communities. The first was Kahn al-Ahmar. The residents are a Bedouin community who are refugees from the Negev. The area in which they live could not be described as remote. They live cheek by jowl with a main highway, and there is a substantial settlement on the other side of the road. However, the actions of the ICA have led to the community being isolated in practical terms.

The residents recognised that one of the costs of that isolation was the impact on their children’s schooling, and they decided to build a school. They obtained funding support from an Italian non-governmental organisation, and were given help with design and materials. They managed to build a school, and the main material was used tyres—it is a fascinating building—covered in mud or some form of mortar, but it is well insulated and cool, and it suits the children very well in their environment. The children are being supplied with an education in good surroundings. However, the Bedouins there did not have permission to build the school, and since its construction it has been under constant threat of demolition.

The families living there have been targeted on two fronts. First, the ICA wants to demolish the school, and there is no permit. That is the law. That will deprive the children of their education. The second threat, which has been made to all the Bedouin groups in the area, is to move them to another site. The proposed site is next to a rubbish dump that services the settlement up the hill. Everything that will involve, and the risk to health for all those who are moved to the site, is anathema to the community involved. We spoke to a community leader, Abu Khamis, who said:

“They are saying they are moving us to a rubbish dump, if we move out of this community it should be to return to the home of our tribe in the Negev.”

He continued:

“Whether the rubbish dump or the French Riviera we don’t want to go”.

That Bedouin community lives where it does because there was a river and natural wells, but they were diverted to serve the local settlements on the other side of the road, and the land used for grazing the Bedouins’ sheep has been severely restricted. We were told about the harassment by nearby settlers. Abu Khamis told us that his wife had been beaten by settlers while on the hillside with their sheep. On the day we visited, a group of settlers had entered the community, and had taken photographs of the children and structures to intimidate the residents.

As well as settler intimidation, and the constant threats to demolish the school and of possible removal to the rubbish dump site, there is further institutional harassment. For example, the access route to the village from the main road that the villagers used to use was sealed off by the authorities, and the only access to the village by vehicle now is along an extremely rough river bed track. The authorities have built a sewage air vent 5 metres from the classroom, and that obviously affects the air that the children breathe in the school. My hon. Friend the Member for Easington visited the same site and he will recall how difficult the drive to the village was, but those people have to put up with that every day, and it is much worse for them because they are cheek by jowl with a major road.

Despite all that, Abu Khamis and his community are adamant that they will not be intimidated or moved from their home. Their most earnest wish is to return to their tribal home in the Negev, but that is not possible now. It is difficult to interpret the behaviour and actions of the Israeli authorities as anything other than intimidation of the worst kind. They hope that the constant threat from the authorities, and their mean and insidious actions, such as cutting off access, will grind the community down.

The community at Kahn al-Ahmar has in some respects become a symbol of the way in which the Israeli authority treats the Palestinian communities. There has been considerable media interest in the school project, and it is a tribute to Abu Khamis and his community that they have continued to resist all efforts to intimidate them from their home, but how long can that go on?

On the same day, we visited the Kurshan community, who also live nearby in the Khan al-Ahmar area. An international non-governmental organisation has funded a new home for each of the eight families in the community, but within a week of completion 24-hour eviction notices were served. On the day we visited, the community had been told that an appeal against the orders had been refused, and that their homes would be demolished the next afternoon. We were told that just an hour before came an ICA representative had visited and told the families that they would be relocated to the rubbish dump area—presumably the same rubbish dump area where the other sect of the tribe was to be moved to.

A member of the community, Abu Faris, said that he had told the ICA representative

“that’s a rubbish dump and I am a human being. In any country a human being should not live near a rubbish dump and I have a right to be a human being just like you have”.

He told us that they intended to carry on finishing the inside of the new building. I understand that the following day an injunction was obtained for the Kurshan community, and the court asked the ICA not to carry out the demolition. The case is winding its way through the court processes, but in the meantime the Kurshan Bedouin community remains in its new homes, but under constant threat of displacement.

[Mr Ben Bradshaw (Exeter) (Lab)]

On the illegal demolition of infrastructure that has been built with British, UK, EU or international money, is it not time to move beyond the ritual criticism and condemnation that we always make of the Israeli authorities, and sue them for damages? They are recklessly wasting and destroying our taxpayers’ money, and our taxpayers deserve that money back from the Israeli Government.

[Mr Doran]

My right hon. Friend makes an excellent point, and I hope that the Minister has taken note of it. It raises another issue, because my understanding of how international law operates is that the Israeli authorities have responsibilities to the Palestinian communities that are being met by our country, the EU, and non-governmental organisations around the world, saving Israel that expense. There is a serious issue that needs to be considered.

[Mr Robin Walker (Worcester) (Con)]

The hon. Gentleman is generous in giving way again. He makes the point that the Israeli authorities have responsibilities; does he also agree that it is in their interest to have a better-educated and better-off Palestinian population that is able to feed itself? That is in the interests of a two-state solution and long-term peace.

[Mr Doran]

This is the politics of the mad house. We have a very suppressed Palestinian population, and one day the kettle will explode. There is no question about that; it is just a question of when.

I started by mentioning the responsibilities of the Israeli authorities as the occupying force in Area C. It is clear that the Israeli Government are ignoring their responsibilities under international law, and I have raised a few points about that in this short debate. There is a virtual free-for-all, with new housing developments for settlers actively encouraged and supported financially by the Israeli Government. That development has taken place regardless of the rights of the true owners of the land. Resources, particularly water, have been channelled to the illegal settlers, but restricted or denied to the Palestinians, who have been denied all the rights given to illegal settlers.

As the hon. Member for Maidstone and The Weald said, we have a Swiss cheese approach. It is almost like the creation of bantustans; the communities will be separated out and surrounded by Israeli settlements, or roads that Palestinians cannot access. That appears to be a deliberate strategy by Israeli authorities to isolate Palestinian communities in Area C.

We in this Chamber are all politicians, and we know that the only solution to this problem is political. On where the two sides stand—I was aware of this in this country, but it was underlined for me in my short time in Palestine—the Palestinian Authority are frustrated and feel that they cannot go any further. They have done an excellent job in managing, looking after and ensuring security in the areas that they control, but they are frustrated that they cannot make any progress during talks. Whatever plans the Israeli authorities have in mind for the long term, settlement of this problem does not seem to be one of them.

When we met the Israeli authorities, it was clear that a number of things were on their mind. Iran was top of the list, and next was the Arab spring and the impact that that will have on their plans. There were also concerns about what a second Obama presidency might mean to the state of Israel.

We will reach a resolution only if we find a political solution, and it does not seem to me that either side is capable of working towards that. It is, therefore, a question for us. I know the excellent work that the Minister has done in this area, and his praises were sung virtually everywhere we went. I say that to him as an old football colleague; I know him and his integrity on these issues well. A simple fact, however, is that the people whom we and others in the debate met in Palestine, including those who live in Khan al-Ahmar, deserve a better life. It is our job to help them find it.

14:53

[Bob Stewart (Beckenham) (Con)]

I start by congratulating the hon. Member for Aberdeen North (Mr Doran). I am speaking loudly because I understand that the sound system is not very good and people cannot hear. I apologise if I am shouting like a sergeant-major, but I hope people can hear me.

I spent my boyhood in Amman; my father was an officer with Glubb Pasha. I loved Amman and I remember visiting Jerusalem. I even spoke a bit of Arabic. In 1967, when I was doing my A-levels, I watched the war in June with horror. My dad despaired. He just put his head in his hands and said, “What will happen now?”

I remember Security Council resolution 242 being passed. It said that Israel should go back to the pre-1967 boundaries, and that the security of Israel should be guaranteed internationally. In 45 years, that has not been achieved—[Interruption.] Oh—the sound is back on; I shall calm down.

Israel has only to lose a war once, so I understand why it is dominated by thoughts of its own security. It is surrounded by people and some states that wish nothing more than its demise. Iran has declared that it wants to see Israel eliminated, and rockets are fired into Israel by Hamas and associated terrorist groups that also carry out suicide bombings against innocent people.

Jerusalem is a holy city for the world’s three great Aramaic religions. Jews, Arabs and other peoples have always lived in Jerusalem together, almost since history began, and in a way it is the world’s first international city. However, I want to talk specifically about the west bank, particularly Area C.

The hon. Member for Aberdeen North has already explained the meaning of the three areas, A, B and C, but if I may, I will amplify his comments to stress that Area A is the population centre for the Palestinians and contains mainly towns; Area B is controlled administratively by the Palestinians—although not for security which lies with the Israelis—and has more villages; Area C, as the hon. Gentleman said, occupies about 60% of the west bank and includes about 310,000 settlers, not including the 200,000 who live in East Jerusalem, which is separate. That area is under full Israeli security and civil control. It also has Israeli-controlled water, planning and administration.

As the hon. Gentleman said, the Oslo agreement was meant to be an interim measure, although it seems to be becoming the status quo. Internationally, Israel does not have sovereignty in Area C, or indeed the west bank—it does not. Therefore, under international law, Israel is the occupying power in that land, and it most definitely has responsibility for the people who live there.

[Grahame M. Morris]

The hon. Gentleman is making some excellent points. Does he agree that although under the terms of the Oslo agreement the Israeli authorities have responsibility for planning, water and security measures in Area C, that was an interim measure? The plan was for responsibility to be transferred to the Palestinian Authority over time, but that does not seem to be happening.

[Bob Stewart]

Yes, I accept what the hon. Gentleman says about that.

Area C is, of course, the key to sorting out the problem because it makes up the majority of the west bank. The right hon. Member for Lewisham, Deptford (Dame Joan Ruddock), who is no longer in the Chamber, has already made that point.

[Mr Hollobone]

Can we please get the facts right? According to the United Nations, Area C is 39% of the west bank. That is not the same as the area covered by settlements. I am afraid that my hon. Friend is not correct to say that Area C makes up the majority of the west bank. According to the UN, it is 39%. I recognise that it is a big area, but let us get our facts and figures correct to better inform the debate.

[Bob Stewart]

I hope my hon. Friend will forgive me, but when I look at the map he is holding up, it looks to me more like 60% blue. But let us not get into an argument; whether the area is 40% or 60%, something is wrong.

There are, as we have mentioned in the debate, about 310,000 Israeli settlers in Area C. There are 149 settlements—okay, people might dispute that, but it is more than 100—and there are about 100 outposts, which are illegal under both international law and Israeli civil law. Already, it is said, about four of the settlements could rightly be called cities. That is quite big. Under international law, all settlements are illegal and outposts are most definitely illegal.

Two kinds of people live in Area C. There are Israelis, who are subject to Israeli civil law, loosely—as I understand it—because they sometimes do not pay much attention to the Israeli police. In fairness, they are sometimes, apparently, in defiance of what Israeli police are trying to do. The other kind of people living there are Palestinians. They are subject to military law. That is wrong. When I visited Area C, the difference was quite clear. Palestinians cannot build where they live, except in a small percentage—1%, 2% or 3%—of the country; nor do they have freedom of movement. They have to stay in their home area. For example, a Palestinian living in Area C with relatives in East Jerusalem cannot easily go to visit them. That is wrong.

[Andrew Percy]

Does my hon. Friend accept, on the movement issue, that 100 roadblocks have been removed and movements between Israel and the west bank and within the west bank have increased significantly? Who does he blame for the lack of progress on a negotiated peace settlement? Everyone knows that the 1967 line will not be the final settlement, so who does my hon. Friend blame? Does he blame the Israelis or does he blame the Palestinian side?

[Bob Stewart]

I thank my hon. Friend for that intervention. The answer to his question is that I do not blame either side. I have been involved in too many negotiations for the UN to start from a position of saying “You’re wrong” to one side or the other. The answer is: negotiate. There is wrong on both sides in this matter.

[Andrew Percy]

rose—

[Bob Stewart]

I have given way once. You can keep quiet for the moment.

[Mr Robin Walker]

I neglected earlier to refer to my entry in the Register of Members’ Financial Interests. Is my hon. Friend aware of the work of organisations such as Breaking the Silence, which tries to show in Israel the damage that the occupation is doing to Israelis?

[Bob Stewart]

I thank my hon. Friend for that point, and I apologise if I seemed rude to my very good hon. Friend the Member for Brigg and Goole (Andrew Percy). I do not mean to be rude.

I am aware of the organisation Breaking the Silence. Perhaps someone else will bring it up.

[Mr Bradshaw]

rose—

[Bob Stewart]

Perhaps it will be my right hon. Friend, although he is not meant to be.

[Mr Bradshaw]

On this issue, I think I probably am. Does the hon. Gentleman agree that a better description than settlement, which is a fairly neutral, anodyne word, would be colony? These are illegal colonies. Does he agree that the description that he has just given of Area C, although it is not a complete parallel, is moving towards a situation that is comparable with apartheid South Africa?

[Bob Stewart]

I thank the right hon. Gentleman for that point. I am trying to avoid using words such as “apartheid” and “ghetto”. They are emotive terms. “Colony” is just acceptable, but I am trying to avoid using those terms, because, as I said to my hon. Friend the Member for Brigg and Goole, I am trying to avoid putting blame on anyone. I am just trying to explain the situation.

[Mrs Grant]

I understand why my hon. Friend resists labelling, but does he accept that the terrible lack of freedom of movement is having a devastating effect on jobs, investment and economic growth for the entire region?

[Bob Stewart]

I thank my hon. Friend, who is most definitely a very good friend. I agree. It is quite clear that that is one of the problems.

[Bob Blackman (Harrow East) (Con)]

I recognise and accept that apportioning blame in this situation is not the right thing to do. We should be aiming to get people round the negotiating table, but does my hon. Friend not agree that during the 10-month period when the Israeli Government froze all settlement activity, there was a failure by the Palestinians to get round the negotiating table and make progress?

[Bob Stewart]

Yes, but there are circumstances as to why that was the case.

[Andrew Percy]

rose—

[Bob Stewart]

I give way to my hon. Friend, otherwise he will give me hell later.

[Andrew Percy]

Not at all, but I thank my hon. Friend for giving way. Like other hon. Members in their contributions, he has hit on the nub of the situation, which is that we want to encourage economic development. That is probably the best way of going towards peace, but it is not the fact that continued Israeli frustration is harming the economy. The economy in the west bank is growing significantly. The number of work permits issued to citizens in the west bank to work in Israel has increased, and the number of work permits issued to west bank residents to work in the settlements has also increased. Trade between the west bank and Israel has increased substantially year on year in the last few years.

[Annette Brooke (in the Chair)]

Order. I remind Members that a number of people still wish to speak, and the number who are able to do so is in your hands. The winding-up speeches will start promptly at 3.40 pm.

[Bob Stewart]

Thank you, Mrs Brooke. I will speed up and allow fewer interventions. I am going to speed up and cut down, because I think that is fair.

My experience as a United Nations commander informs me of one essential truth, which everyone in this room will fully understand without having been in my circumstances. Injustice will in the end cause such resentment that it will erupt. That happened in Ireland and it has happened in other places where I have been—it will eventually burst.

I know that Israel has often been provoked mightily, but what is happening in Area C worries me. There is continued expansion of settler communities in the west bank. That in a way signals to the Palestinians that there is very little intention to stop it or to come to some sort of solution. Unless the settlements stop, there can be no chance whatever of a two-state solution, and the only alternative to a two-state solution is a one-state solution—one state where Jews and Palestinians recognise one another as equals. Surely that is not totally utopian. Acceptance of human beings’ human rights is what the United Nations is all about and what everyone in this room feels strongly about, too. For its part, Hamas, in Gaza, must somehow recognise the right of the state of Israel to exist. After all, Israel did withdraw from Gaza in 2005.

[Bob Blackman]

What happened?

[Bob Stewart]

For doing so, its reward was often a rain of rockets. The whole situation seems somewhat intractable. In my experience, it is always the little people, the ordinary people, who suffer in conflict situations. They simply want to live their lives as best they can. Whether they are Israeli or Palestinian, they are human beings. Remedial action must come from leaders on all sides. They must convince their people that it is necessary.

I end by asking God to bring back King Solomon. He was respected by Jews and Muslims equally, and my God, we need his wisdom now.

[Several hon. Members]

rose—

[Annette Brooke (in the Chair)]

Order. Members can see by the number of people rising that not everybody will be able speak unless there is discipline over time.

15:10

[Mr Andy Slaughter (Hammersmith) (Lab)]

In deference not only to that, Mrs Brooke, but to the two fine speeches we heard setting out the core of the issue with Area C, I will keep my comments short and limit them principally to one case, which is the village of Susiya.

When debating Palestine, we sometimes lose a little context when we talk about Israel’s problems in its governance of the west bank. Israel is an occupying power of the west bank and has been since 1967. Over that time, it has engaged in an aggressive policy of colonisation, which has also involved the active displacement of the indigenous Palestinian population, whether they be settled or Bedouin communities. That is the context.

The lives of the Palestinians are compromised and disrupted daily, whether physically, by the settlements, barriers and checkpoints, or organisationally, through pass laws and restrictions on movement, trade and so on, which, sadly, bear a resemblance to some activities of the apartheid regime in South Africa—pass laws and such matters. The fact is that Israel has no business under international law being in the west bank. That is why, although I agree with the hon. Member for Beckenham (Bob Stewart) that we must try to bring people together, blame must be attached where blame falls. It principally lies with the occupying power.

To assist the hon. Member for Kettering (Mr Hollobone), I can tell him the figures that the United Nations Relief and Works Agency gave recently when it came to Parliament to brief Members on the situation in Area C: Area A, which is under full Palestinian control, is about 17% of the west bank; Area B is about 21%; and Area C, where there is full Israeli control, is about 61%. Those figures were given to us within the past two weeks.

Equally important when considering Area C is the fact that 70% of that 60% is off limits to Palestinians. It is either settlements, land controlled by settlements or other areas—my hon. Friend the Member for Aberdeen North (Mr Doran) mentioned nature reserves and other “scams”, for want of a better word—that restrict Palestinian access. Given that 29% is already built-up land, only 1% of Area C is actually potentially available for development by Palestinians—the people whose land it is. We will get nowhere until that situation is resolved.

I will briefly use the example of the village of Susiya to show exactly what the Palestinians are up against. It is a Bedouin village on an escarpment in the south Hebron hills, and is the agricultural centre of the region. It has been settled by the same families since the 19th century. In that respect, it is similar to other villages around Jerusalem or in the Negev. I visited one of the villages and have seen villages in the Negev that have been demolished five times by Israeli forces and then rebuilt. Just this week, B'Tselem, a well respected human rights organisation, said about Susiya:

“On Tuesday, 12 June 2012, Israel’s Civil Administration distributed demolition orders to…50—

that is essentially all—

“structures in the Palestinian village of Susiya in the South Hebron Hills. The orders stated that they were renewals of demolition orders originally issued in the 1990s. Residents were given three days, until 15 June 2012, to appeal the orders…Residents are planning to submit their opposition”.

With the intervention of human rights groups, the demolition orders were extended to last Sunday, but they have now expired again. We are talking about residential tents, which house over 100 people; kitchens; shops; a clinic; a community centre; museums; the solar panels that provide electricity; and shelters for animals. The entire village—everything—will be demolished. The villagers are on watch every day waiting for the bulldozers to arrive under the protection of the army. That is life for many Palestinians. Will the Minister take up that case, not only because it is important in itself, but because it is the tip of the iceberg of what is happening to villages in that area? If he has not done so already, I ask him to make particular mention of the case to the Government of Israel.

I was alerted to that case by an organisation called the Ecumenical Accompaniment Programme in Palestine and Israel, which is a very good Christian organisation through which people live peacefully with Palestinian villagers for months. Its members brought in videos that showed me not only threats from the military, but from another village called Susiya, which is a nearby, well developed Israeli settler village with every modern convenience. Under the protection of the military, the settlers come down to the Palestinian village armed with guns; they throw stones and attack Palestinian villagers. That is something that I have seen myself on video and film.

[Mrs Grant]

Does the hon. Gentleman agree that the activities of the Israeli defence and security forces in a number of situations have a real effect on normal people—the little people whom my hon. Friend the Member for Beckenham (Bob Stewart) referred to—and engender an atmosphere of worrying hate and distrust?

[Mr Slaughter]

Absolutely. Occupation does that in its own right, but this is not a benign occupation. This is violence. It has accelerated with an increase in settler violence of 144% in the past two years. It is an organised campaign to disrupt the lives of Palestinians and to extend the occupation, which continues year-on-year and which, as the hon. Member for Beckenham said, increasingly makes a two-state solution difficult, if not impossible. That is why we need more from the Government—not only words, but action.

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

Does my hon. Friend agree that one of the most cynical aspects is the Kafkaesque way in which the illegal occupiers use international law to say, “Ah, we should rely on the established law—Ottoman law and mandate law—for the legal framework for house demolitions”? Those laws are used in a perverted way to disadvantage the Palestinian residents who should have rights in that illegally occupied land, while a completely different set of legal rights are applied to the illegal occupations. Is it not that twisted way of interpreting the law that adds offence to the physical destruction of homes, schools and other properties?

[Mr Slaughter]

My right hon. Friend is right. Rules and regulations are manipulated in an absolutely cynical way to wear down and break the spirit of Palestinians living in the west bank. I think that it has been proved that that does not work. The resilience of the Palestinian people there is extraordinary, which is why there is also violence. Arrests, detention—including of children—and administrative detention, which happens on a continual basis, are all designed to break the will of the Palestinian people and favour the occupier and settlers over the indigenous population. I know that the Minister knows those matters well, but I hope that he will redouble his efforts. I will end on that point.

I know that it is a little cheeky, but in the interests of trying to be conciliatory on these matters, can I get a response from the Minister fairly soon on Mohammed Abu Mueleq? He is a former Hamas fighter and activist who is now reformed and wishes to come to the UK to talk to us about the ways of peace.

[Mr Doran]

On a point of order, Mrs Brooke, in my previous contribution I mentioned trips that had been organised by the all-party group, but I forgot to draw attention to my entry, which I would like to be noted, in the Register of Members’ Financial Interests.

[Annette Brooke (in the Chair)]

I thank the hon. Gentleman for putting that on the record.

Because of the number of hon. Members still wanting to speak, I am imposing a time limit of three minutes on Back-Bench speeches. Each of the first two interventions accepted will stop the clock and give the Member accepting the intervention an extra minute. The Clerk will ring the bell when there is one minute left.

15:19

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

I think I understand the timings, Mrs Brooke, and will try to stick to them. I congratulate the hon. Member for Aberdeen North (Mr Doran) on securing the debate, and on his point of order, which reminds me that I should also draw attention to my declaration in the Register of Members’ Financial Interests.

I feel that some rebalancing is needed in some of our discussions in the House on this subject. I make no apology for my position of support for Israel as a state, and its right to exist. Accepting it as the only legitimate democracy in its part of the world, we rightly attach to Israel a higher standard than we do to others. That is entirely correct. However, the middle east process is fraught with difficulty and nuances, and it is important to give a fair hearing to both sides.

The use of language is important, and I bristle somewhat at the use of the word “apartheid”, just as I do not approve of those who accuse people of being anti-Semitic if they criticise Israel. Some of the issues raised today, such as settlement, are important factors, which deserve debate and must be dealt with. However, they do not necessarily lie at the core of the conflict. Making them, as has happened increasingly in recent years, the sole reason for the lack of peace, while blaming Israeli intransigence, is not helpful. It is important to look at the history of peace negotiations and offers.

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

Will the hon. Gentleman give way?

[Andrew Percy]

I will give way quickly, because I get my extra minute, and I want to hear the hon. Lady.

[Cathy Jamieson]

Before the hon. Gentleman goes on to talk about the history, will he accept that, notwithstanding all he has outlined, and all the nuances, we should be concerned when we hear of the basic humanitarian issue of people not getting enough water to live on?

[Andrew Percy]

Absolutely, and projects have just been approved, I think, by the United States Agency for International Development that we hope will resolve that. The issue of water needs to be resolved quickly. My support, if one calls it that, for the state of Israel does not mean that I am an unconditional friend. There are things that the Israeli Government do that I—and a large number of Israeli citizens—do not approve of. It is important to remember that some of the biggest criticisms of the Israeli Government come from within Israel.

[Guto Bebb (Aberconwy) (Con)]

On the humanitarian issue in the Israeli-Palestinian conflict, people often describe the security barrier as an apartheid tool. Has not the number of people killed in suicide attacks and similar occurrences fallen dramatically as a result of the building of the wall? Does not every state have a responsibility to protect its citizens from violence?

[Andrew Percy]

That is true. It is important to remember that the barrier—the figures speak for themselves, but I do not have time to quote them—protects Israeli citizens, including Arab and Christian Israelis, as well as Jewish Israelis. We should never forget that. We should also not forget that the Israeli Government have been taken to court and have lost in the courts on the issue, because Israel is a democracy.

Let us look at some of the offers that have been made. There were peace treaties with Egypt in 1979 and with Jordan in 1994. Both of those are clear examples of land being relinquished in return for a peaceful settlement. It is not true that Israel is not prepared to cede land for peace. In 2000, at Camp David, a major peace offer was made by Israel. Had that been accepted, 97% of the land in the west bank and Gaza would have been available to create a Palestinian state. My hon. Friend the Member for Harrow East (Bob Blackman) mentioned the settlement freeze. That was rejected and ignored, and then, all of a sudden, at the end of it, with about a month to go, settlements were an issue that was key to bringing the Palestinians around the table.

On a recent visit to Israel, hon. Members heard from Ehud Olmert that the offer made in 2008 would have meant withdrawal from 93% of the west bank. As I said in some of my interventions, we need to understand that there have not been any new settlements since 1993. I personally do not agree with the expansion of settlements, but we must understand that the vast majority of those settlements are along the 1967 green line, and most of them will come into Israel. Israel has not been frightened in the past of removing illegal settlements, as it is doing with outposts at the moment.

I am a bit confused as to how long I have left for my speech. [Interruption.] I think that is a minute—excellent. My goose is cooked in a minute. I wanted to talk about incitement. It is a matter of concern that documents from junior Foreign Office officials say that incitement is being used as an excuse in Israel. That is not the case. Some of the examples of how Israel, Jewish people and, indeed, Christians are described on Palestinian television are unacceptable. There is incitement in the Palestinian Authority, which has a serious impact. It is an abuse of the population there, and it has an impact on bringing the two sides together. That needs to be addressed more rigorously. In particular, there is the issue of school text books, on which we have not received a satisfactory response from the Department for International Development. At the end of the day, as my hon. Friend the Member for Maidstone and The Weald (Mrs Grant) said, the issue is education and increasing trade. Those things are more likely to bring both sides together—

[Annette Brooke (in the Chair)]

Order.

15:25

[Yasmin Qureshi (Bolton South East) (Lab)]

It is a pleasure to serve under your chairmanship, Mrs Brooke.

We have talked about the context, and I want to go back to that. When the state of Israel was created, the Jewish population was given 55% of the land, even though three quarters of the population of the then state of Palestine was Palestinian. In 1948, after the war of independence, Israel managed to obtain 78% of the land, and the Palestinians were given 22%, which is what we call Gaza and the west bank. More than 3 million Palestinians were expelled by the Israelis during those times.

One part of the Oslo agreement related to the west bank, and it was divided into three sectors. My hon. Friend the Member for Aberdeen North (Mr Doran) has talked about that, and I want to talk about Area C, which is now controlled by the Israelis. As a result of various actions in the past few years, it appears that a further percentage will be absorbed, and that Area C will probably end up as part of Israel, leaving Palestine with only 12% of the land.

I am not overly fond of statistics, but they show the stark contrast in the picture. In 1972 the number of Israeli settlers in Area C was 1,200; in 1993 it was 110,000; and in 2010 it was 310,000. That does not include the 200,000 living in East Jerusalem. The number of Palestinians, as of now, is only 150,000. The illegal settlers often live in the 124 formal and about 100 informal settlements, both of which have been declared illegal under international law and, as been mentioned, under Israeli law as well.

If people doubt the sources of my information, what I am referring to comes from the UN Office for the Co-ordination of Humanitarian Affairs. A fact-file from January states:

“The forced displacement of Palestinian families and the destruction of civilian homes and other property by Israeli forces in the West Bank, including East Jerusalem, have a serious humanitarian impact. Demolitions deprive people of their homes, often their main source of physical and economic security. They also disrupt their livelihoods”.

The psychological effects on families are distressing. The fact file adds that the Israeli authorities say that often

“demolitions are carried out because structures lack the required building permits. In reality, it is almost impossible for Palestinians to obtain permits. The zoning and planning regime”—

[Annette Brooke (in the Chair)]

Order.

15:28

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to follow the hon. Member for Bolton South East (Yasmin Qureshi). I congratulate the hon. Member for Aberdeen North (Mr Doran) and draw hon. Members’ attention to my entry in the Register of Members’ Financial Interests.

I have listened with interest to the debate. One of the problems is that we get hung up on the issue of settlements. We must consider Israel’s history of dealing with settlements in relation to peace. In 2005, Israel destroyed the Jewish settlements in Gaza and withdrew from them. In 1982, in return for peace with Egypt, it withdrew from Sinai, destroying the settlements as part of the peace agreement. In fact, only last month, the outpost of Ulpana was ruled illegal by the Israeli courts. Israel has withdrawn from that and will demolish it.

The key point is that the Israeli Government will remove settlements once peace has been agreed. I have been to Israel and the west bank with the Conservative Friends of Israel, and I have also been to Jordan, the west bank and Israel with the Council for European Palestinian Relations, and I have seen that the situation on the ground is dire. It is important that negotiations take place without preconditions.

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

The hon. Gentleman mentioned the settlement of Ulpana, which is being demolished. Will he confirm that the deal that demolishes that illegal settlement includes the construction of 851 other units somewhere else? When he refers to settlements, does he include East Jerusalem, which Israel does not regard as settlement building?

[Bob Blackman]

East Jerusalem must be part of the negotiations between the Palestinians and the Israeli Government. The reality is that there are now more Arabs living in Jerusalem than ever before. I agree that the negotiations are paramount and must take place forthwith. The problem is that while the Palestinians fail to get round the negotiating table, and continue to set preconditions that will not be acceptable to the Israeli Government, settlement activity will continue apace. We have heard lots of statistics today. The reality is that just 5% of Area C is occupied by settlements. There will be a negotiation at some future time over whether that land is to be part of Palestine and the west bank, or part of Israel, as a result of land swaps.

The key issue before us today is the need to encourage the Government of Israel and the Palestinian authorities to get round the table. I urge my hon. Friend the Minister to do all that he can to persuade both parties to do so immediately. The position now is that Netanyahu is heading a coalition Government, which gives Israel certainty for the indefinite future. Under freedom of information requests, we have discovered that Foreign Office officials seem to have written off Netanyahu. That is wrong, and what we should be doing is encouraging him and his whole Government to get round the table with the Palestinians.

[Guto Bebb]

On the issue of the Netanyahu coalition, does my hon. Friend share my aspirations to see the Kadima and Likud Government move forward to constructive dialogue? Such a dialogue might have been difficult in the past because of the dependence of the previous coalition on some of the extremist parties in Israeli politics.

[Bob Blackman]

Indeed. The one thing that I would not wish on anyone is Israel’s system of elections. However, the coalition Government give us the potential for a lasting and just settlement, and the opportunity for stability and peace. It is for the Palestinians to grasp this opportunity. It is right that they get round the table now, without preconditions, to ensure that they achieve that peace.

Finally, there is one significant gap in the Queen’s long reign: she has never paid a proper state visit to Israel or any part of Palestine. I ask the Foreign Office—I have written to the Foreign Secretary about this—to prevail upon the Queen to make such a visit. After all, if she can go to Northern Ireland and shake hands with the Deputy First Minister, why not go and seek peace in that great part of the holy lands of this world?

15:33

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

I draw the Chamber’s attention to my declaration in the Register of Members’ Financial Interests, and to the fact that I accompanied my hon. Friend the Member for Aberdeen North (Mr Doran) on his recent visit to the region.

What the hon. Member for Harrow East (Bob Blackman) described as preconditions were, until recently, regarded as the mutually agreed starting point for the way to achieve a two-state solution. Those have now been withdrawn from negotiations, which makes things more difficult. I wanted to highlight the way that Area C, which was originally conceived of as a transitional measure—part of the process of going to a two-state solution—is slowly but surely being taken by the Israelis as an area of Israeli authority, in which they are able to impose their will, often with a fiction of law, as I said in an intervention, to the disadvantage of the Palestinian people. That is a very different concept of Area C. It raises a number of important questions.

As European taxpayers, we are, to a considerable extent, paying the human and social cost of that occupation. We are paying the very substantial funding for the Palestinian Authority, and for pretty much all of what is described as economic growth within the occupied territories. It has been wholly right to provide funding in that way, as part of a genuine transition towards a two-state solution. It is not at all obvious to me how we will continue to make the case for European taxpayers finding that money when we are funding not a transition to a peaceful solution, but the status quo.

One of the things that struck me on my most recent visit was how small the place is and how critical the issues are. We went to the Ma’ale Adumim area, where the Bedouin whom we talked about earlier were. The area between that settlement and Jericho is the same as the area between my constituency in Southampton and Winchester. On a train, that is about enough time get a cup of coffee and get out a laptop. Yet if that settlement continues, the west bank is effectively wholly divided. There is no possibility of a Palestinian state with physical integrity. That is why the settlement must stop now; otherwise, it will be almost impossible for the negotiations to reach a resolution.

15:36

[Mr Philip Hollobone (Kettering) (Con)]

It is a pleasure to follow the right hon. Member for Southampton, Itchen (Mr Denham). I congratulate the hon. Member for Aberdeen North (Mr Doran) on securing this debate. This is a hugely complex issue. All of us who have visited Israel or the Palestinian Authority will know what a small geographical area of land we are talking about. It is important to get these complex issues into some sense of proportion. We are talking about Area C, in which 150,000 Palestinians live. There are 1.4 million Palestinians living in Israel and 2.5 million Palestinians living in Areas A and B. It would be wrong if this Chamber today gave the world the impression that we are talking about most of the Palestinian population, because we are not.

The west bank has always been under occupation. In 1948, it was annexed by Jordan, which, as far as I can tell, did not do much with it. The Gaza strip was annexed by Egypt, and then the situation was even worse. To imply that it is just Israel that has occupied this benighted land would be quite inaccurate.

[Mr Slaughter]

The hon. Gentleman is showing uncharacteristic false logic. The reason for designating Area A is because it contains the main Palestinian towns. It would be a bit like saying that as long as we excluded London, Manchester and Birmingham, we could allow someone else to occupy all the rural areas of England. This is the Palestinians’ land, and they are entitled to all of it.

[Mr Hollobone]

One of the big tragedies of the Palestinian nation was that it did not accept the United Nations partition plan in 1948. A whole series of wrong decisions have been made by the Arab people since that time. The Israelis are not going to go away. After the holocaust in Europe, they deserve a homeland. As David Ben-Gurion said, we will have to arrive at a peaceful settlement with the Arab people who live in the Holy Land. We are all still in pursuit of that peace. Some of the Palestinians live in terrible situations. I visited them myself in the Gaza strip, and on the west bank. That is all the more reason to arrive at a peace settlement with Israel, so that both peoples can live in harmony with each other. Like my hon. Friend the Member for Beckenham (Bob Stewart), I am not in the blame game. I recognise that this is a hugely complicated situation, but we must get a sense of proportion if we are to arrive at sensible and lasting peace for both the Israeli and Palestinian people.

[Annette Brooke (in the Chair)]

I call Ben Bradshaw—literally for one minute.

15:39

[Mr Ben Bradshaw (Exeter) (Lab)]

Thank you, Mrs Brooke, for giving me—a former middle east Minister —a minute to speak.

I want to ask the Minister specifically about the Government’s policy on produce from the illegal settlements. As he will be aware, the Foreign Office has consistently said that it cannot move the British Government’s policy forward on this issue, because it would be illegal to do so. However, he may be aware that the Foreign Office has recently received new legal advice—if he is not aware of it, I hope that he will make himself aware of it—that points to the opposite being the case. It is actually arguable that a country that sells or receives produce from the illegal settlements is itself breaking the law—in other words, we may be breaking the law—and that a ban on produce from the illegal settlements would not be illegal under EU law, under World Trade Organisation law or under the general agreement on tariffs and trade obligations.

I make this appeal to the Minister if he is interested in doing something that I think most people here would like him to do. Condemnation and criticism is all very well but it has achieved nothing with the Netanyahu Government. The remorseless expansion of settlements continued during the years when I was a Minister, it continued under my successors and it still continues now that he is Minister. Will he please look at the issue again and, with his European partners, ensure that we have a much more robust policy on importing goods from the illegal settlements?

15:40

[Ian Lucas (Wrexham) (Lab)]

It is a privilege to be here in Westminster Hall under your chairmanship, Mrs Brooke, and to have listened to the contributions to the debate. As always seems to be the case when we have debates on the middle east, we have not had enough time for people to expand their arguments. It would be very welcome indeed if we could have a longer debate. Perhaps we could consider approaching the Backbench Business Committee to ask for an opportunity to discuss matters at greater length. That would be very helpful.

I also want to draw Members’ attention to my entry in the Register of Members’ Financial Interests. I was privileged to go to the middle east—to Israel and Palestine—recently, in the company of my hon. Friend the Member for Aberdeen North (Mr Doran), my right hon. Friend the Member for Southampton, Itchen (Mr Denham) and the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). As a member of Labour Friends of Israel, I visited Israel last November, in the company of the shadow Foreign Secretary, my right hon. Friend the Member for Paisley and Renfrewshire South (Mr Alexander).

On my most recent visit, which was about two months ago, I was struck by the urgency of the issues relating to Israel and the Palestinian Authority, and by the profound frustration that I found on the west bank in Ramallah when I spoke to representatives of the Palestinian Authority about the pace of progress in the discussions that were taking place. Like most people, before I went out there I was aware that people were perhaps looking to a second term for President Obama as a time when there might be some progress. However, the message I received from the Palestinian Authority was that the situation on the ground was very pressing indeed and much more urgent than I had appreciated. There is a real sense of frustration, and I feared what the consequences of that frustration might be when I visited communities in the west bank.

Let us be clear. If we are to build a two-state solution, which I think everyone in the Chamber wants, there must be two viable states, which are secure in their borders. It is, of course, accepted that the precise nature of the two states—their geographical outline—will be a matter of negotiation between Israel and the Palestinian Authority, but the continued expansion of the settlements poses an urgent threat to the future for a two-state solution.

I was very struck when I was in Israel by a discussion that I had—other Members in the Chamber were present—with an official from the Israeli Ministry of Foreign Affairs. First, he said that, in his words, “A one-state solution would be a disaster for the state of Israel.” Secondly, he said that he wanted to see a two-state solution but time was running out for the creation of two viable states in Israel and Palestine. The reason why time is running out is the expansion of the settlements, which is happening each day, each week and each month that goes by. The Palestinian Authority has done a very good job in improving security, which is a profound and legitimate concern for Israel, but it feels that it is not making progress with Israel in the way that it wishes to.

Many of us are very frustrated by the present approach of the Israeli Government. I am a very strong supporter of an Israeli state; for so long, although thankfully no longer, it was the only democracy in the middle east. However, it is imperative that we continue to engage with Israel, and I deplore those who suppress discussion and debate with legitimate organisations that support Israel, because none of us will get anywhere by cutting off discussion and debate; it is very important indeed that they continue.

When I meet friends from the Israeli embassy, I always make clear my frustration about the expansion of settlements. It is a key issue and it must be resolved. One or two comments in the debate have rather diminished it, but it is central and it must be resolved if we are to make real progress.

I am afraid that when I visited the west bank I was depressed by what I saw. I will talk about one particular visit, which was to Hebron, a beautiful city.

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

Very sad.

[Ian Lucas]

It is profoundly sad, because Hebron is a place that I would love to see in better times. In the centre, a horrible concrete wall runs down the middle of the main shopping street, which separates Palestinians from Israelis. It is profoundly sad to see, and the situation is clearly untenable in the longer term.

Sometimes I think that we have too many maps of Israel and Palestine, and not enough good sense, because this is about attitude, state of mind and trust between communities. Of course people have lived together in communities for a long time in the region, but it is imperative that some element of trust is built up. In the Palestinian Authority, it is very clear that Prime Minister Salam Fayyad is highly thought of by the Israelis, and the security situation has improved enormously, but the authority feels that the progress that has been made, including some economic progress, is not being rewarded by progress in the creation of an atmosphere of trust that will lead to proper negotiations that will bring resolution to the dispute.

Israel has a very strong record, with an independent judiciary and judges who stand up to the Government, much as our judges do—sometimes—in this country. However, I am afraid that Israel is not applying the law fairly in areas of the west bank, as we have heard. I visited a military prison where juvenile offenders were being tried. They had not had access to legal advice; indeed, they were not allowed to have their parents present at interrogations. Israel could do something about that. Israel has a proud tradition of giving individual rights to people, and that tradition should be extended to those courts. I have written to the Israeli embassy expressing that view in forthright terms, because this is about building up trust.

At the moment, there is an increasing sense of resentment in the west bank among Palestinian communities who are seeing the expansion of settlements. “Settlements” is a very misleading word, because they are huge estates and developments; they do not appear temporary at all. We need a different attitude from the parties to the dispute, to begin to take matters forward. I hope that comes from the creation of a new Government in Israel—set up in the week I was there—but as yet, I am afraid that no progress has been made.

I urge the Minister to convey the strong views that have been expressed today to the Israeli authorities and to Palestine, and to ensure that the Palestinian Authority sees that engagement with Israel and discussion about the pressing issues is vital—I am sure he will. There needs to be active discussion, certainly before the presidential elections in the United States. The current situation cannot continue. The two-state solution is under threat.

15:50

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Alistair Burt)]

It is a pleasure to serve under your chairmanship, Mrs Brooke. I thank the hon. Member for Aberdeen North (Mr Doran) for securing the debate, and for the thoughtful and measured, but passionate, set of remarks with which he opened it, in typical fashion. That was followed by a number of high-quality contributions from Members on both sides—so many, in fact, that I hope colleagues will appreciate that I am not able to refer to each and every one. They were followed in turn, and in no small measure, by the equally thoughtful remarks of the hon. Member for Wrexham (Ian Lucas).

In a sense, we have two issues: the placing of the discussion of Area C in the context of the overall settlement, to which a number of colleagues referred, and the matters that relate specifically to Area C. I will concentrate on the latter but, as all colleagues know, and as many have mentioned, it is impossible to separate the ultimate future of Area C and the issues that we have discussed from the overall context of the need for a conclusion to the long-standing dispute between Israel and Palestine.

I want to pick up, and endorse entirely, the sense of urgency with which the hon. Member for Wrexham spoke. In the past 18 months, when the world’s attention has been directed to many things in the region, not least the Arab spring, the Government have sought continually to raise with those most closely involved the importance of not losing sight of making progress in the middle east peace process, efforts of which I hope colleagues are proud. I recognise the sense of urgency. I recognise the sense of frustration when visiting areas where people are wondering what happens next. We convey that to both sides, and it is why we have engagement.

In the past few days, I have spoken to the negotiators on both the Israeli and Palestinian sides. Despite the fact that talks in Oman earlier this year were not conclusive, there is still contact on both sides. I think there is recognition that something has to happen, but it is tentative stuff, as we all know. We encourage both sides to be as flexible as possible, and not to talk about preconditions but to ensure that those who need to talk together are able to do so. Ultimately, this is all about Israel’s future security, about ensuring that it is a viable, secure and universally recognised state, and that there is an independent and viable state of Palestine that has the opportunity to develop.

[Richard Burden]

I certainly know the sincerity with which the Minister is talking. He has been clear—both Front-Bench speakers have—about the illegality of settlements, and about the fact that the window for a two-state solution is closing rapidly. Will he, though, address the question that my right hon. Friend the Member for Exeter (Mr Bradshaw) asked? If the settlements are illegal—they are—and the European Union and the UK purchase goods from them, or are involved with companies that trade with them, there is growing legal opinion that we are colluding in that illegality. Is the Minister prepared to look into that? There might need to be some pressure, if we are going to move this along in the way that we need to.

[Alistair Burt]

I will come to settlements in a moment. On settlement produce, we value the fact that people have choice about their purchase of goods, but the issue of settlement produce and financing is under active consideration in London and in Brussels.

I shall say a little bit about settlements. The fact that we have such a good relationship with both Israel and the Palestinians is important. It enables us to discuss issues directly. Israel is a valued friend to the United Kingdom, and we are working together to deepen that relationship in a number of important areas, but not at the expense of other relationships. Just as we are building a strong partnership with Israel, so too we are continuing to enhance our relationship with the Palestinians. We do not always agree with each other, and one of our primary concerns, which a number of Members have addressed, is in relation to settlements. We take the view, which we have repeated, and which is shared on both sides of the House, that settlement building is illegal under international law and increasingly threatens the viability of the two-state solution. The issue is rising up the international agenda, and I urge the Israeli authorities to listen carefully. They do not take the same view of its importance as those outside Israel do.

The issue of settlements is increasingly important, and we will repeat our concerns when we hear about new ones, but it cannot be denied that the issue will not be concluded unless the overall settlement is agreed. That is why we encourage both sides to get to work on it. Merely complaining about settlements will not be enough. I assure the House that we take the matter seriously, and continually urge the Israeli authorities to try to understand why we are so concerned. If the viability of the two-state solution is threatened, I do not think that the ultimate prospects will be as good for Israel as they should be.

The international community considers the west bank and Gaza as occupied territory, and recognises the applicability of the fourth Geneva convention on the protection of civilians. In relation to Area C, certain things could be addressed now, regardless of the overall context, one of which is building. Figures from the Israeli civil administration show that between 2007 and 2010, 1,426 building permit applications were submitted by Palestinians in Area C, of which only 64 led to permits being issued. That is in contrast to Israeli settlement and development, and it affects the economic viability of Area C and the west bank. That viability is to the mutual benefit of Israel and the Palestinians, and we hope to see the issue settled. Equally, until Area C comes more under Palestinian control, it will not be possible for the Palestinian Authority to build up its revenues and deliver to the rest of the Palestinian people, which would save the rest of us money because we support that economic development and the Palestinian Authority.

A particular concern, which a number of Members have highlighted, is the situation of the Bedouin in Area C. We have objected strongly to Israel’s plans for the forced transfer of Bedouin communities, in particular from the area east of Jerusalem. A number of Members mentioned Khan al-Ahmar, and colleagues probably know that I, too, have been there, and have seen the school that the hon. Member for Aberdeen North mentioned. I saw the construction of the road barriers, because we dropped in unannounced on the day they were being put in, so we saw that the access to the village had been changed.

We have discussed the Bedouin settlement itself; the question is what to do in the future. The chances of the settlement being moved to a rubbish dump are now lower than they were, but that is not conclusive. Of importance is that I also spent time with Israeli Minister Benny Begin. He is Minister without portfolio, who is responsible for the difficult job of talking to the Bedouin community about their ultimate future. I formed the view that he is sincere in his efforts to consult with the many different Bedouin groups, to try to find an answer that is not forced, but colleagues will have the chance to judge for themselves because he is due to be in the UK next week. His programme is not fully settled, but I am hopeful that there will be an opportunity for Members to have a conversation with him about the matter. I recommend that they take the opportunity, should it arise, as I think they would find it helpful.

A point was raised about EU projects being demolished. That issue has been taken up with the Foreign Affairs Council. We need to work hard to ensure that the EU builds things that are not prone to demolition, but we have expressed our concerns.

Finally, Members raised the different treatment under the law of Palestinians, particularly children, in the west bank and Area C. The matter was recently taken up by an independent report, which speaks for itself. We will be looking closely to see how the Israeli authorities, who have said many good things about wanting to change the law, deliver.

It is 4 o’clock, so I conclude by saying that I appreciate colleagues’ engagement with such an important topic.

Nuclear Power

Wednesday 4th July 2012 Westminster Hall

15:59

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

It is a pleasure to serve under your chairmanship today, Mrs Brooke.

In the debate on the future nuclear programme, our inability to learn from past mistakes is sometimes staggering. I well remember the 2008 Public Accounts Committee report that drew attention to the vastly underestimated cost of nuclear power and highlighted the nuclear industry’s tendency to lumber the taxpayer with an ever-increasing and seemingly endless bill. The fallacy of committing billions more pounds of public expenditure to nuclear energy has never been more apparent than it is now. Whether it is the disastrous consequences of the Japanese earthquake, Germany’s decision to end investment in nuclear or, closer to home, the billions of pounds of subsidies being squandered at the uneconomical mixed oxide—MOX—plant at Sellafield and the decision of RWE, SSE and E.ON to pull out of the market, it is clear that nuclear is not the energy source on which the Government should be concentrating.

Hon. Members may be wondering why an MP from a constituency in Northern Ireland has a particular interest in this subject. I represent the constituency of South Down, which is straight across the Irish sea from Sellafield, and we have had many concerns over the years. I am very pleased that the Minister is here to respond to the debate. Although its main focus will be the economic costs, I must mention the impact of nuclear on public safety, which cannot be separated from the economic argument.

The real point in looking at a disaster such as Fukushima in Japan is not necessarily to try to draw a direct parallel to what might happen here, but rather to use it to illustrate the fact that nuclear power can never be made entirely safe. There will always be unforeseen contingencies that have potentially disastrous consequences. People in my constituency and across Ireland have been living in the shadow of such a possibility because of the Sellafield plant, which has been considered the most radioactive site on the planet for more than 40 years.

Over the plant’s lifespan, there have been hundreds of recorded safety breaches and high levels of indiscriminate discharges of radioactive waste into the Irish sea. The MOX plant at Sellafield, which was built to process spent fuel from the old thermal oxide reprocessing plant or THORP—itself the subject of an international nuclear event scale level 3 leak—has also required high levels of hazardous transportation of plutonium dioxide through the Irish sea to Cumbria. All this for a plant that was disastrously inefficient and had to be closed following its financial failure. It is not therefore surprising that public opinion in my constituency has been consistently anti-nuclear, and it must be recognised that a major incident will not heed, or relate to, any borders on our island. There is also concern about the possibility of underground storage for the world’s radioactive waste.

It was against the backdrop of such catastrophic risk, as demonstrated by the disaster at Fukushima, and with a more realistic appraisal of the spiralling cost of nuclear power provision, that Chancellor Angela Merkel and the German Parliament decided to pull out of the nuclear market and to invest in a truly secure, low-carbon renewable energy future. Given where I come from, I want this Parliament to move in a similar direction.

Nuclear power development has always required high levels of public subsidy. The Minister should know better than anyone the deferred cost of an ill-thought-out nuclear programme, as the Nuclear Decommissioning Authority spends £1.7 billion a year on managing nuclear waste and other liabilities from Britain’s current nuclear power programme. That amounts to more than half the budget of the Department of Energy and Climate Change, which is a staggering legacy for the taxpayer and one to which the previous Secretary of State frequently alluded.

The Nuclear Decommissioning Authority was also responsible for closing the MOX plant at Sellafield. That plant cost the taxpayer £1.6 billion, and was another disastrous legacy of the nuclear programme. Its existence also meant that a constant stream of hazardous material was being shipped daily through the Irish sea and along the Irish coast. That was all for a plant designed to process 120 tonnes of MOX a year, but which instead produced the grand total of six tonnes over its entire lifespan.

On the draft Energy Bill 2012 and the future nuclear programme, sadly, there are warning signs that this Government are prepared to repeat the same mistakes. I fear that people will be having a similar debate in 20 years’ time. It could not be clearer, given current record oil and petrol prices, that reliance on imported fossil fuels is not serving customers, business or the wider economy. Although I commend the stated aim in the Government’s draft Energy Bill to decarbonise the electricity sector, the path set out in the legislation seems to prioritise subsidising nuclear fuel, and people will continue to be vulnerable to high prices.

In Northern Ireland, more people every year are falling into fuel poverty, and the draft Bill was an opportunity to make the bold changes necessary to reform the energy market with a view to the long-term needs of the economy. Consumers and businesses are suffering and they need a coherent strategy that delivers clean, green jobs and sustainable fuel prices. Sadly, the draft Bill appears to do little more than nod to the renewable industry, while winking at the nuclear industry. The Government seem intent on delivering more of the same, especially in their continued obsession with the expensive and ultimately unsafe energy source that is nuclear power.

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate the hon. Lady on securing this important debate, and I agree with all the points in her extremely cogent argument. Is not one of the many risks that consumers, and the economy generally, will get locked into artificially high prices for electricity as the only means of making it viable for energy companies to undertake the huge investment necessary to build nuclear plants?

[Ms Ritchie]

I thank the right hon. Gentleman for his intervention, and I agree with that thesis. I want to make a little progress.

[David Mowat (Warrington South) (Con)]

I, too, congratulate the hon. Lady on securing this debate. She is talking about the level of subsidy in relation to the current Bill and in general. Does she not agree that the level of subsidy that will be proposed for nuclear is considerably lower than that for solar, offshore wind or, indeed, onshore wind? How does that equate with her concerns about fuel poverty, because that seems a little odd?

[Ms Ritchie]

I thank the hon. Gentleman for his intervention. I take what he says, but I am obviously putting forward a different thesis. I disagree with his fundamental point, but perhaps I can provide some explanation, if he will let me continue.

The Government are clearly going in the face of the energy industry, given the decision by various companies to pull out of the future nuclear programme. Even EDF, the only remaining player in the game, has seemingly adopted a lukewarm approach to the new build programme and has postponed its commitment to it, saying only that it will decide at the turn of the year. To answer the hon. Gentleman’s question on cost, I come from the position of favouring renewables; I have a strong belief in them, as opposed to nuclear, given the geographical position that I come from. EDF’s approach is hardly a ringing endorsement, from the only company that has even tentatively committed to the future nuclear programme. It seems that no serious player in the industry thinks that future investment can go ahead without a serious public subsidy. Indeed, no nuclear plant has ever been developed without large amounts of public subsidy, and it is obvious that the companies will not enter into the future nuclear programme without such assurances.

The Government’s proposal in the draft Energy Bill for contracts for difference appears to be little more than a subsidy through the back door. CFDs allow utility firms to levy a top-up charge should the price fall below a certain level. If the cost of nuclear power is to be cheaper than the current market rate, or at least competitive, as EDF and the Government maintain, why is the complex mechanism of CFDs required at all? In the words of Keith MacLean, policy director of Scottish and Southern Energy, which has itself pulled out of the future nuclear programme:

“This complex and messy CFD policy looks like an attempt to try to hide the state aid from the European Commission and the subsidy from political opponents of new nuclear.”

[David Mowat]

CFDs are necessary because nuclear is considerably more expensive than either coal or gas, even though it is many multiples cheaper than most large-scale renewables. I find the hon. Lady’s position difficult to understand, given her concern about fuel poverty.

[Ms Ritchie]

I thank the hon. Gentleman for his intervention. I have made it clear that I am opposed to nuclear power, which, as he has said, is very expensive—it has required Government subsidy to sustain it, and I fundamentally disagree with that.

[Guto Bebb (Aberconwy) (Con)]

I congratulate the hon. Lady on securing this debate. Her position is contradictory, because she seems to be complaining about subsidy for the nuclear industry, yet applauding it for the renewable sector. Surely we should have a level playing field. I share the hon. Lady’s concerns about fuel poverty, but in my part of north Wales we have poverty because our nuclear industry is closing down. If we do not get a replacement for the nuclear capacity in north Wales, we will see real poverty in many parts of north-west Wales.

[Ms Ritchie]

I understand the concerns of hon. Members whose constituencies have nuclear facilities, but I see the issue from a different perspective. We have witnessed the harmful effects of nuclear on the environment. I will not talk about its harmful effects on health, because I do not think that the evidential base has been built up sufficiently, but it has definitely had an effect on the environment. There has been too much public subsidy for nuclear, and I firmly believe in and support renewables.

How can CFDs be seen as anything other than a veiled subsidy, and how is that coherent with the coalition agreement, which ruled out any such subsidy? Has the Minister consulted on the potential conflict with European Union state aid rules? Is he able to rule out a potential long-running wrangle with the EU, which would do nothing other than bring more uncertainty to the sector and to renewable energy investment at this vital time?

No nuclear plant has ever been built without state subsidy, and such plants simply cannot exist in the open market. There is a pattern of activity to underscore that, because every statement from and move by the industry is a tacit admission of that fact. We must learn from past mistakes and acknowledge that the headline price attached to nuclear power is always far below the eventual cost once decommissioning and waste disposal have been accounted for. It not only presents a potential environmental catastrophe, but leaves a radioactive economic legacy. It is not good enough to buy now and leave taxpayers and future Governments to foot the bill years down the line.

In summary, is the Minister not concerned that three of the four major players in the nuclear new build programme have pulled out; that the fourth, EDF, has expressed serious concerns; that no nuclear plant and subsequent decommissioning has ever been achieved without a large Government subsidy; and that the draft Energy Bill’s proposals have been considered by many in the industry as tacit admission that the new build programme is little more than a subsidy through the back door that may contravene EU state aid regulations?

It is often said in relation to energy policy that the Government should not try to pick winners, but it seems as though they are determined to pick a loser. I do not want us to be left with a potential environmental catastrophe that we will have to subsidise for years to come. Instead, we need a lasting commitment to truly renewable energy sources and a green new deal. The coalition Government have underscored a commitment to the Green investment bank and to green and renewable resources. I am firmly committed to that and I look forward to the Minister’s response to the various issues that I have raised. I understand the points made by hon. Members who reside in Britain and have nuclear facilities in their constituencies that provide jobs, but I see the issue from a different geographical and political perspective.

16:15

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

It is a pleasure to serve under your chairmanship, Mrs Brooke, and I am grateful to the hon. Member for South Down (Ms Ritchie) for securing this timely debate. Transparency and openness are an important part of the discussions that we need to have about nuclear. In that context, I want to start by making a couple of corrections to what she said. We are not down to just one major nuclear player alongside EDF. Centrica, the UK’s biggest energy company, is a partner in its consortium, and other major European players, such as Gaz de France and Iberdrola, as well as other international players, are considering how they can be part of the nuclear renaissance in the United Kingdom. This is an area that has attracted a significant amount of investment from major companies, and it continues to do so.

On another issue of transparency—to pick up on a point made by my hon. Friend the Member for Warrington South (David Mowat)—I hope that the hon. Lady would also accept that, if she rules out the least costly large-scale, low-carbon source of generation, the consequence for her constituents, particularly those who are off-gas-grid customers and have a greater reliance on electricity, would be a rise in their bills, because of their reliance on higher-cost sources of generation. That is an integral part of understanding the economics of this debate.

The challenge of building new nuclear is undoubtedly significant. Since 1995, when Sizewell B began generating electricity, no new nuclear power station has been built in Britain, which demonstrates the challenge of ensuring that the first new nuclear power station is followed by a full nuclear programme. Although new nuclear power stations are being built elsewhere around the world, some of them have gone over time and over budget.

Tackling the nuclear legacy is a national priority, as the hon. Lady has said. We are keen to see it dealt with with a degree of vigour that has never been seen before. We want to ensure that the current and previous UK nuclear fleet is cleaned up and decommissioned properly as the various sites cease operation. To do that, we must understand and learn from the lessons of the past on nuclear decommissioning.

That is why the previous Secretary of State, the right hon. Member for Eastleigh (Chris Huhne), commissioned a report, which was published in March, by Professor Gordon MacKerron of the university of Sussex, on the history of managing nuclear wastes and decommissioning. Professor MacKerron paints a warts-and-all picture of the UK’s nuclear history and explains why we have such a difficult legacy of old facilities and waste to manage. He found that delays by Government and public bodies in tackling nuclear liabilities led to a progressive escalation of costs and a deterioration in facilities, which has only begun to be addressed in recent years.

The cost of decommissioning those old nuclear facilities today is high for two primary reasons. The first is the post-war military and research origins of the UK nuclear industry as this country raced to build a nuclear deterrent. We are dealing with many of those costs today. The second reason is that those responsible—in Government and industry—gave too little priority to clean-up. As the hon. Lady has said, half the Department of Energy and Climate Change budget is spent on that, and the amount will rise to two thirds of our budget in due course. We are absolutely adamant that there should be no financial constraints on dealing with those legacy matters. To all of us involved in these policy issues, an unparalleled commitment to clearing up the legacy of the past is an integral part of having permission for a new-build nuclear programme in the future.

It is necessary to understand that the UK’s civil nuclear legacy is quite unique, as it is made up of a range of experimental facilities created up to 50 years ago. The poor condition of some of the estate and the high cost of dealing with it now reflects the unfortunate fact that, historically, decommissioning challenges were overlooked and ignored. However, that also means we are moving into the sector ahead of many other countries. There is a very important business opportunity for British companies in the sector to win international contracts as other countries start their decommissioning programmes as well.

Of course, with new nuclear power will come nuclear waste. The cost of managing our existing nuclear liabilities is significant. The current discounted estimate of the cost of managing that programme is some £50 billion. That is why we are so committed to finding a long-term, cost-effective solution for managing and disposing of our radioactive waste going forward. The Government’s policy for the longer term is a safe and secure management of higher-activity radioactive waste by placing it in a geological disposal facility. That is the internationally accepted way forward and it is the Government’s policy, which continues on from the work of the previous Administration.

[Ms Ritchie]

On the potential disposal site for radioactive waste, will the Minister indicate where it might be located and which countries the waste might come from? There are concerns in my constituency about that because of the geological fault line that lies in Cumbria and the clear, direct parallel with my constituency straight across the Irish sea in South Down.

[Charles Hendry]

Let me give the hon. Lady a complete assurance that we are looking at managing our own legacy waste, which includes one of the biggest stockpiles of plutonium in the world. Alongside that we are looking at whether there are ways to reuse that plutonium as a fuel. We are looking for volunteer communities and have identified some in Cumbria who are prepared to work with us to see where appropriate sites might be. However, that would only happen if we are absolutely clear about the geological safety of the sites being proposed. We are just beginning to carry out such a process. We want to move it forward faster than has been the case so far, but that can only happen if we are absolutely satisfied about the environmental, geological and geographical matters that relate to it. Builders of new plant will have to put funds into an independent fund to ensure that their own costs associated with their nuclear waste in due course can be managed within that programme. This is an integral part of the process moving forward.

I want to focus now on why I believe we need new nuclear in this country and how that ties in with the concerns the hon. Member for South Down has raised about market reform and why that is such an important part of this process. We estimate that in order to have a low-carbon economy where we have sufficient generation to ensure security of supply we will need up to 70 GW of new low-carbon generation by 2030. To put that in context, the ambition of the industry in the nuclear sector is for 16 GW by 2025. The overwhelming focus, therefore, is on a range of other low-carbon technologies alongside nuclear, including carbon capture and harnessing our own renewables. It is completely wrong to suggest that we are focusing only on nuclear. We see that as a very important element within a much wider and more balanced programme.

[Guto Bebb]

The point my hon. Friend has just made is extremely important because sometimes the debate is structured in terms of renewables versus nuclear. That is not the issue. For example, in north-west Wales, the commitment has been made to develop all sorts of energy sources, not just nuclear.

[Charles Hendry]

I am delighted to respond to my hon. Friend’s point. I recently had the chance to be in Anglesey, which is close to his constituency, to see its vision as an energy island. An immense amount of work is going on there by a range of industrial and educational partners, the local authority and others to create a very compelling case for investment in renewables alongside nuclear as part of a balanced mix.

The process of market reform is fundamental to achieving that. We have structured things in a way that we believe delivers the necessary investment at the lowest cost to consumers. The hon. Lady highlighted one part of the contract for difference and said that if the price drops, more will be paid. However, the corollary of that is that if the price is high, we will claw back the contribution. Investors will have continuity, certainty and predictability of income stream, which reduces the cost of capital and of the building programme to consumers.

In answer to the point made by the right hon. Member for Oxford East (Mr Smith) in his intervention, such an approach is necessary because we must secure twice as much investment each and every year of this decade, compared with the previous decade, to keep the lights on. The matter is a national emergency in terms of our energy security and is absolutely critical.

[David Mowat]

Will the Minister give way?

[Charles Hendry]

I hope that my hon. Friend will understand if I do not give way in the last remaining moments. I think that I have picked up on some of his points. I completely agree with him that market reform is the best way of delivering for consumers and that having a range of policies and technologies is the best way of delivering security of supply.

On new build, as on decommissioning, we are keen to control costs. The progress of construction of the first new nuclear power station in the UK will be watched carefully by potential investors and developers. We know that an inability to deliver to time and on budget will affect the level of interest in nuclear new build in the future, and that would severely limit the potential for a new nuclear programme.

If we are to maintain strong public support—this is one of the few countries where public support for nuclear has grown since the Fukushima accident in Japan—we must continue to demonstrate that we are learning from experiences around the world. Implementing lessons from other nuclear power plant construction projects has the potential to reduce the cost in the United Kingdom, reduce the construction risks, help to validate timings and identify design changes that will allow for more efficient construction practices. Some of those are already being dealt with, and the whole process of the generic design assessment programme has been absolutely at the heart of that. We must ensure that we have identified the exact nature of the new reactors to be built before we start taking that forward.

One of the most important aspects of the whole programme has been the work to take the matter out of politics and carry on Lord Hutton’s work when he was Secretary of State. He did an enormous amount to identify the challenges and give security to investors in enabling them to understand that there is a continuity of Government approach here that will secure the investment.

Finally, I want to deal with the issue of subsidy. Let me make it absolutely clear where we stand on the matter. The coalition agreement set out clearly that nuclear power plants should be taken forward without public subsidy and, in a written statement to Parliament in October 2010, we reconfirmed that policy. There will be no market support to a private sector new nuclear operator for electricity supplied or capacity provided unless similar support is also made available more widely to other types of generation.

Within that, it is implicit that we recognise that nuclear is the lowest-cost large-scale, low-carbon source of generation and that, therefore, additional support will need to be made available to those emerging technologies in the renewable sector. They will be a very important part of the process. Any such change requires state aid approval. We have started to engage with the European Commission on that and we believe that approval will be achieved because the Government are not providing support; they are providing a mechanism whereby investors can get a return on their investment.

We see nuclear as an important part of our energy future, which has the potential to bring an enormous number of jobs to the United Kingdom. We have already seen the university of Oxford, which is represented in part by the right hon. Member for Oxford East, harnessing its own nuclear skills and working in coalition and partnership with the university of Bristol. Many other universities are coming forward, and a tremendous number of companies recognise that they can benefit from the programme.

I assure the hon. Member for South Down that we are looking at the matter very much in the round. We see the benefits of nuclear power, but we will only take that forward when we are completely convinced about the wider issues. Market reform is an important part of that process and will be critical to securing the necessary investment. The wider range of issues—safety and security matters and long-term waste management—are also important. We have a programme in place that comprehensively addresses those and I hope that I have been able to help to reassure her on those points.

Cruise Market (Competition)

Wednesday 4th July 2012 Westminster Hall

16:29

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

It is a pleasure to serve under your chairmanship, Mrs Brooke.

At the outset, I pay tribute to all the right hon. and hon. Members who called for this important debate. I draw the Minister’s attention to the cross-party nature and geographical spread represented by those present. This is not simply Southampton versus Liverpool; it is about the principles of fair application of competition rules wherever they are applied. The issue relates to all parts of the country. I am particularly pleased to see the hon. Member for North Tyneside (Mrs Glindon) and the right hon. Member for South Shields (David Miliband). There are very few things that can bring together the south coast ports of Southampton and Portsmouth, so I regret that my hon. Friend the Member for Portsmouth North (Penny Mordaunt) cannot be here, but she has expressed sympathy on the matter before.

I direct the attention of right hon. and hon. Members much further north to the Scottish satirical writer, Thomas Carlyle, who said:

“Our life is not really a mutual helpfulness; but rather, it’s fair competition cloaked under due laws of war”.

That is why so many hon. Members here today are flummoxed or angry, or both, at the different application of due laws of war to different parts of the country, to different ports and to different port operators. Those due laws of war are not simply set down by a very British sense of fair play and a desire to see a level playing field—or whatever the equivalent nautical term is—but are clearly set out in European competition rules designed to ensure that state aid is not available to give an unfair advantage.

[Charlie Elphicke (Dover) (Con)]

I congratulate my hon. Friend on securing this important debate, which is also of significant concern to the people of Dover and its very successful cruise turnaround business. When it comes to state aid, should not the entire £19 million be repaid?

[Caroline Nokes]

I thank my hon. Friend for making that point, and for standing up for the cruise business in Dover. He makes an interesting point, which I will move on to later.

I have an unashamed loyalty to my home port of Southampton, the second-largest cruise port in Europe and the embarkation point of a cruise voyage for 720,000 passengers a year. Southampton is not a port that is afraid of competition. It is not afraid to invest private money to provide the facilities required for a thriving and expanding cruise business. As port director Doug Morrison, who has taken the time to be here today, has said on more than one occasion:

“We believe in fair competition. We do not fear Liverpool and competition, but it is simply not right.”

Of course, that is what our debate is about: ensuring that competition in the cruise industry is on an equal footing, and that a leg-up to one port is not an iceberg to another.

European competition rules on state aid are clear. The European Commission website devotes a considerable number of words to explaining them. Why does that come as no surprise? The Commission seems to be very good at devoting a considerable number of words to many things, but perhaps less good at applying those ideals when it comes to the crunch. I will quote those words to the Minister:

“Sometimes Government authorities spend public money supporting local industries or individual companies. This gives them an unfair advantage over similar sectors in other EU countries. In other words, it damages competition and distorts trade...It is the Commission’s job to prevent this,”

which seems a fairly unequivocal statement to me. It does not say that the Commission’s job is to sit back and allow market distortion. No—it is the Commission’s specific job to prevent it. However, first it must apparently ask some questions. That is fair enough, and I would like to take hon. Members and the Minister through those questions and ask whether they have been rigorously asked and responded to in relation to the UK cruise market.

Have state authorities given support, for example, in the form of grants, interest and tax relief, guarantees, holdings in companies, or goods and services provided on preferential terms? The answer strikes me as a big yes in the case of the port of Liverpool, which has received £19 million in grant and been asked to pay back only somewhere between £8.8 million and £12.6 million. Has such aid been available to other port operators in the UK, or has investment and expansion in their cruise facilities been without such support and advantage?

Is the support likely to affect trade between EU countries? Arguably, yes again. Barcelona and Venice are two of the leading ports in southern Europe, and a significant proportion of the UK cruise market heads directly to the Mediterranean. Clearly, therefore, there is potential for an impact. Of course, it is not only ports on the Mediterranean, but other European ports, too. For the past two years, the port of Copenhagen, primarily hosting departures to the Norwegian fjords and the Baltic, has been rated as Europe’s leading cruise port at the world travel awards. In Southampton, we might have a view on that, but it would come as no surprise to learn that cruises from Liverpool might reasonably be expected to head in that direction as well.

Southampton has been shortlisted at the world travel awards for the past four years, and I am pleased to see that it is nominated again for 2012. I have no doubt that the other ports shortlisted this year, which range from Las Palmas in Gran Canaria to Stockholm in Sweden, are all extremely concerned about the state aid to the Liverpool cruise terminal, which could have a very detrimental effect on the business they have worked so hard to attract. It is a market that continues to expand, as one in every eight British package holidays sold is a cruise.

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

I congratulate the hon. Lady on securing the debate. She has made a compelling case about the importance of EU rules in this case. I am sure that she will be aware of the recent statement by Commissioner Almunia, who said that he has reminded the British Government

“of their obligation to comply with EU state aid rules.”

Does the hon. Lady agree that this is not a matter where the Minister can simply say that it is down to the European Commission in Brussels? He has a personal responsibility to ensure compliance with the rules, which means taking action to prevent Liverpool from breaking them.

[Caroline Nokes]

I thank the right hon. Gentleman for that comment. When I conclude, I will ask the Minister to work with his colleagues in the Department for Communities and Local Government on that very subject.

Is the support selective? Does it confer an advantage on specific companies, parts of industries, or on companies in specific regions? Yes, again. No other port operator, whether ABP, Hutchison or the port of Tyne, has received that sort of assistance for their cruise facilities. They have had to invest in their facilities themselves using private capital, just as they should in a free and fair market.

Has competition been distorted or might it be in future? We can fairly safely respond to that one. In requiring Liverpool city council to get state aid clearance from the European Commission prior to commencing turnaround cruises, the Government appear to endorse that view. However, what has happened in Liverpool? It has started anyway. The European Commission states that if that has happened, the Commission must disallow the support unless it is shown to be compatible with the common market.

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

Would the hon. Lady care to comment on what appear to be further proposals by Liverpool for a permanent terminal by investing £23 million, including a further £10 million of possible public subsidy? I understand that that was not discussed with the Department for Transport when competition was first raised. Does she consider that it indicates a possible permanent arrangement as far as distortion of trade is concerned?

[Caroline Nokes]

The hon. Gentleman makes an important point. We are not just talking about £21 million of public money, but future moneys, including the £10 million he mentioned, for a permanent turnaround facility that, in my view and that of several other hon. Members across the country, will have a permanent distortion on the cruise market.

To relate some of the history, as the Minister is well aware, the city of Liverpool cruise terminal was built using £19 million of public money on the explicit condition that it would not compete with other ports that had invested their own money to build similar facilities.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Lady on bringing this matter to the Chamber. We all have constituencies where cruise ships bring benefits. People come to Belfast and then go by bus to enjoy the scenery and history of the Strangford area. Does the hon. Lady feel that we need—perhaps the Minister will drive it—a UK or Great Britain strategy that involves all regions to ensure that competition is fair and that we all gain advantage from cruise ships?

[Caroline Nokes]

Of course, the existing port strategy makes a very clear point about the need for fair competition and a level playing field.

When talking about ports that have invested their own money, I could mention Southampton again, but there are many other examples, such as the port of Tyne, where investment worth £100 million has been put in over the past 10 years, and Harwich, where there has been significant investment since 1998, when it joined the Hutchison Port Holdings Group. Throughout the country, as evidenced by hon. Members today, large private investment has been put into both freight and passenger-focused ports.

[Mrs Mary Glindon (North Tyneside) (Lab)]

Like my colleagues, I congratulate the hon. Member for Romsey and Southampton North on securing this important debate. Surely, fairness is an important consideration when talking about private investment. State aid clearance is crucial. We hope that the Minister will assure us that fairness will be the key in this matter.

[Caroline Nokes]

The hon. Lady is correct. I commend her on the extensive work that she has done on the subject. She hits the nail on the head: state aid and fairness are what matter.

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

Before my hon. Friend gets back into her stride, does she agree that good faith, as well as fairness, should come into account? It was revealed, as a result of a freedom of information request, that Liverpool city council resisted pressing for a turnaround facility at the outset

“due to advice that there could be state aid complications which could prevent the terminal being built at all.”

The key words are:

“Their approach was to build as a port of call facility and address turnaround later.”

It seems that it was using a Trojan horse tactic and acting in very bad faith.

[Caroline Nokes]

My hon. Friend makes an excellent point. It is partly about good faith and trusting that the port of Liverpool and Liverpool city council will abide by conditions and rules that are set for them.

By 2008, Liverpool city council had launched its first attempt to lift the conditions, and the conclusion, after a detailed assessment by the Department for Transport, was that the change of use to turnaround cruises would have an

“unfair and adverse effect on competition between Liverpool and other cruise ports. It would be unfair to allow one port to benefit when competitors have found, or would have to find, private money to achieve the same objective.”

And so to today. The Government have decided, “based on independent advice”—even though that advice is from First Economics, a consultancy that freely admits it is not expert in either competition or the cruise industry—that they will withdraw their objection to removing the funding condition and Liverpool being used for turnaround calls, provided Liverpool repays either £8.8 million upfront or £12.6 million over 15 years. None of the European regional development fund money would have to be paid back, but—this is crucial and goes back to the good faith argument—state aid clearance from the European Commission would have to be secured.

[Charlie Elphicke]

Does my hon. Friend agree that what is happening is astonishingly high-handed? The project has gone ahead regardless, without state aid clearance having been obtained. I note that no Member of Parliament representing Liverpool is in the Chamber.

[Caroline Nokes]

I thank my hon. Friend for mentioning that. I was about to move on to that point.

Within one week of the Government’s making their announcement and prior to having even sought, let alone secured, European clearance under state aid rules, the port of Liverpool accepted its first turnaround cruise, which visited France, Guernsey and the Scilly Isles. A quick inspection of the cruises scheduled for the coming year reveals a number of cruises to the Canaries, a focus on the Baltic and various other destinations. Whatever else that was, it certainly was not playing by the rules of war so eloquently described by Thomas Carlyle; it was more like a massive two-fingered salute to the Government and to anyone’s idea of fair play.

[David Miliband (South Shields) (Lab)]

I cannot resist intervening in a debate that brackets South Shields and Venice in the same speech. I congratulate the hon. Lady on that. The addition of Trojan horses raises extraordinary prospects. I congratulate her on securing the debate.

Does the hon. Lady agree that the uncertainty of the current situation will blight a lot of the business development that is taking place around the country? The port that is of interest to me is the port of Tyne, which has a ferry terminal in North Shields and its headquarters in South Shields. It has doubled the number of cruise ships docking in the past year and there is concern that an elongated, uncertain process will damage the business investment planning that it is trying to do. Does the hon. Lady agree that we need some clarity from the Government to get the sequencing of decisions clear and right?

[Caroline Nokes]

The right hon. Gentleman is spot on. We want certainty and we want a level playing field for private investors, who might otherwise feel nervous and anxious about investing in a number of ports throughout the country. It is important that they have that certainty from the Government.

It is the Government’s responsibility to ensure that there is fair competition. The Minister will have heard that hon. Members wish to hear that state aid rules are not flouted and that original conditions and amended agreements are adhered to. As I said, within a week Liverpool had started turnaround calls without having made any effort to ensure that it had clearance to do so.

The European Commission is in contact with the United Kingdom authorities and has reminded them of their obligations to comply with EU rules. The Commission has written to the United Kingdom requesting information to assess the change in use of European regional development funding. Should the conditions of the original grant offer no longer be complied with, recovery of that grant may be necessary.

A letter dated 8 June 2012, from the head of the ERDF closure team at the Department for Communities and Local Government, states:

“DCLG recognises that the commencement of turnaround operations in advance of State Aid clearance from the Commission may result in financial penalties if the Commission concludes that there is unlawful State Aid.”

The most pertinent statement in the letter is that any penalties that are subsequently levied would fall upon Liverpool city council and will not be recovered from the Government.

As Andrew Carnegie once said:

“And while the law of competition may be sometimes hard for the individual, it is best for the race”.

Are any hon. Members suggesting that Liverpool would not survive if obliged to refund all the public moneys it has received? Not a bit of it. If the business model is good and if the figures stack up, the operators of the port of Liverpool should be prepared to do what every other port operator in the country has done and put their money where their mouth is. However, we are where we are. As free marketeers, we have to deal in the marketplace where we find ourselves—a marketplace that has become or has the potential to become distorted.

I call on the Minister to respond to three points. First, I should like him to justify the current inaction on the flouting of the conditions laid down for Liverpool with regard to the commencement of turnaround calls before state aid clearance was sought or received, and to use a suspension injunction to prevent further turnaround cruises until such time as the outstanding issues are resolved. Secondly, I should like him to support the calls by Members of the European Parliament throughout the country to the European Commission for Liverpool city council to repay the European regional development funding, and to work with his colleagues in the DCLG to ensure that that goal is achieved. Thirdly, I should like him to ensure that the apparent “anything goes” attitude to the use of taxpayers’ money is halted forthwith and that, in these difficult times, the private companies that we wish to see lead the economic recovery are not disadvantaged by unfair competition from a state-subsidised operation that appears to have no respect for the rules of competition that I mentioned at the start of the debate.

16:48

[The Parliamentary Under-Secretary of State for Transport (Mike Penning)]

It is a pleasure to be here, Mrs Brooke. I should like to get some facts on the record, not only for my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes), but to give the Government’s side.

Like my hon. Friend, I am keen on competition, because I am a free marketeer as well. I am also keen, as a Minister, to consider in detail a request made by anybody anywhere in the United Kingdom. That is not what happened in 2008. The right hon. Member for South Shields (David Miliband) knows full well that when a request was submitted in 2008, it was dismissed quickly. I have not seen any legal advice instructing the Government that it would be illegal for them to look at the matter. Certainly, my legal advice, when Liverpool city council said that it would like to start turnaround, was not that I could not look at that. As a free marketeer, the Minister for the whole United Kingdom, and a Tory MP, here I am defending Liverpool. That is an interesting anomaly. Lord Heseltine would be proud of me.

It is clear that we were open and transparent all the way through; I will come back to how we achieved that. I met the operators of Southampton port—and Members from across the House—on more than one occasion to explain things exactly. In a democratic society that believes in a free market, any request should be looked at fairly by a Minister of the Crown. I looked at the request made by Liverpool city council, and I asked my officials what the procedures would be, what powers I had, and what powers were not in my hands. It was obvious that I had the power to look at the request, so we consulted widely, and got submissions from all parts of the House and across the country on what should happen. The key thing that I got back from the submissions was the point about fairness; that needs to be in whatever we do.

I looked at what I could do about the two separate payments made to Liverpool when it got the grants. First, I asked whether I or anyone in the UK had the power to ask for the regional development grant to be repaid. The answer was no; it is a Commission issue, for the Commission alone to deal with.

[Dr Julian Lewis]

rose—

[Mike Penning]

I will continue for the moment, because I am conscious of the time, and I want to cover many of the points made. If I have time at the end, I shall come back to my hon. Friend.

The issue is being looked at by the Commission, and it is for it to decide. What was in my power was the ability look at whether Liverpool had to pay back the full UK part of the grant, whether there was any depreciation because of the length of time, and whether interest would be added. My Department made an evaluation, and Liverpool asked to pay £5.3 million as a lump sum, which I rejected. The assumptions of my officials were that the amount should be about £8 million —we ended up with a figure of £8.8 million. To ensure that I was seen to be impartial, I asked for some independent advice on how much money should be repaid. My hon. Friend the Member for Romsey and Southampton North came up with the right amount, which was £8.8 million, or £12.6 million if phased. That is almost identical to the figures that the modelling came up with, after consideration of how other repayments were made.

I made that decision, and put it to Liverpool that it would have to pay those moneys back. As yet, Liverpool has not indicated how it will pay that—in stages, or in one lump sum. The assumption—that is all it is—is that it will be a one-stage payment. As yet, Liverpool has not indicated to the Department for Communities and Local Government how it will pay the money, or when it intends to do so. My officials have been in touch with DCLG officials, who have been in touch with the city council to push it on the need for a decision.

It is absolutely the case that state aid has not been cleared yet, but I do not have any power to stop Liverpool while we wait for the Commission to act. The key to the situation is that my officials and I as the Minister, independently and with no vested interests, have looked at what can be done. I believe that competition is good, and that competition around the country will drive up the excellent cruise market. I was at the European Cruise Council conference in Brussels only last week, and even after the terrible Costa Concordia disaster, the market has picked itself up and is moving forward again.

[Mr Denham]

Will the Minister give way?

[Mike Penning]

If the right hon. Gentleman could bear with me, I will give way in a moment.

Looking at the situation from my point of view, have we been open and completely honest about what we did and the process? I believe we have. Is Liverpool doing what I asked it to do? No, because it has not paid the money back and we do not yet have state aid clearance. Do I have the power to stop Liverpool? The answer is no. Would I really want to? If the European Commission declares the payment to be incorrectly done state aid—my legal advice is that it is not—Liverpool would have to pay the moneys back. Liverpool, however, has indicated that it will pay the money back. The words of the then leader of Liverpool city council, now the mayor, were, in effect: “We will pay back what you ask us to pay back.”

[Mrs Glindon]

Will the Minister give way?

[Mike Penning]

Will the hon. Lady bear with me for a second, because two other colleagues have tried to intervene as well? I have been given only 10 minutes to sum up the debate and, with so many people present, we could have done with a little longer.

The key for me is whether the effect on other ports and other incomes around the country will be dramatic. I have seen no evidence for that yet. At the European cruise conference, I spoke to the representative of a cruise operator that does not operate here at the moment, but will put 22 cruises in next year. I asked, “Would you be doing this at any other port in the UK?” The answer was no. I had to take that at face value. Will there be such a dramatic effect? I do not honestly think so. The Government have been genuine and honest about how much pain there should be, and Liverpool city council will have to step up to that and be as honest and open with us, and with its own electorate, as we were with it on what will have to be paid back and when. Also, should it have gone ahead without state aid approval? No, it should not have done.

[Dr Julian Lewis]

With regard to the European money, are the Government in a position to make representations to the European Commission on the matter? If the Government think that the Commission is unlikely to ask for the money back, does that not suggest that the Commission acted in a distorting and anti-competitive way when making the money available in the first place?

[Mike Penning]

My hon. Friend is leading me down a path that I am probably quite happy to be led down. I understand from my legal advice that the Commission has never asked for any such funding back in other, similar cases. Looking around Europe at subsidies, the Commission would probably rather not open such a Pandora’s box.

[Mr Denham]

The Minister says that he has no power to act, but infraction proceedings would be taken against the British Government in the first instance, not Liverpool. Ministers have always had the ability to prevent the misuse of European regional development fund money, if they thought the misuse would leave the Government liable to action by the Commission. There must be legal powers for him to take to guard against the risk of infraction proceedings by the European Commission.

[Mike Penning]

The right hon. Gentleman would be absolutely right if my legal advice was that I would be in breach, but my legal advice is that I will not be. He has had far more senior positions in government than me, so he knows that Ministers look at their legal advice and sometimes ignore it and sometimes accept it. In this case, I decided to accept the legal advice, as it came from those more qualified than me.

[Mrs Glindon]

I thank the Minister for giving way. In 2009, the Department for Transport specifically said that the port of Tyne would be adversely affected by the lifting of the restrictive conditions, and that remains the case, because as a port, we are in direct competition with Liverpool for some of the cruise destinations. Furthermore, if the Government do not enforce a suspension injunction, they could be failing to comply with their EU treaty obligations.

[Mike Penning]

I thank the hon. Lady for her intervention. I have visited the great port of Tyne, and there are great plans for it. I was not a Minister in the Department for Transport in 2009, so she will have to speak to her colleagues about not paying back the subsidy. The key is that there is a formula for how much should be paid back, because there is a discount for the period of time, and interest must be added. That formula produced the figure. The issue is difficult for hon. Members, especially those who represent other ports, and I would probably feel exactly the same if I represented a port. The issue is all about fairness and what is legal.

I have sought advice. Any former Minister in this Chamber knows that we would never have said how much must be paid back without obtaining legal advice on whether it would be in breach of anything. Based on the legal advice that I have received, we are not in breach, and that is why I gave Liverpool the option of paying back the £8-plus million, or £12 million over a period. That is what Liverpool must make up its mind about. It should have paid back earlier, and it should not have gone ahead as it did.

[Mrs Glindon]

rose—

[Mike Penning]

I need to come to my conclusion. It is useful that people understand that the process has been open. I have tried throughout to ensure that competition is fair. I know that some colleagues will not like the result, and that people in other ports think that there will be a huge adverse effect. As a Conservative, I passionately believe in competition, and that is what this is all about. If the legal advice is that under the formula £8.8 million should be paid back, subject to the Commission’s permission, that is only fair. If I had acted in any other way, I would have had a load of Liverpool MPs in this Chamber arguing the matter the other way around.

Instead of ignoring the situation, I looked at it carefully, and instead of dismissing it straight away, which is what happened in 2008, we considered whether we could increase capacity, create jobs and create more turnaround. That is what I hope we have done. This debate has been useful, but I do not think everyone will agree.

17:00

Sitting adjourned without Question put (Standing Order No. 10(11)).