House of Commons

Thursday 5th July 2012 Commons Chamber

Thursday 5 July 2012

The House met at half-past Ten o’clock

Prayers

Thursday 5th July 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 5th July 2012 Commons Chamber

The Secretary of State was asked—

[Mr Robin Walker (Worcester) (Con)]

1. What steps she is taking to promote agricultural exports.

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

13. What steps she is taking to promote agricultural exports.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

In January we published the joint Government-industry action plan, “Driving Export Growth in the Farming, Food and Drink Sector”. Since then we have worked closely with a number of organisations, including the Agricultural and Horticultural Development Board, to promote UK agriculture in a number of target markets, and we are pursuing all opportunities to export fine British food.

[Mr Walker]

May I thank the Secretary of State for supporting the recent Worcestershire day in Parliament, to which all six Worcestershire MPs invited local food and drink producers? Does the ministerial team agree that there are many other producers in the county who could join the legendary Lea and Perrins in becoming known around the world?

[Mr Paice]

My hon. Friend puts his finger on an important point: the value of brands. The Lea and Perrins brand is obviously extremely well known and Britain has a great tradition of good food brands from Worcestershire and elsewhere, so we are taking every opportunity and doing everything we can to support the British food industry to export and build on those excellent brand reputations.

[Stephen Mosley]

My right hon. Friend will be aware that we export more food and drink to Belgium than we do to Brazil, Russia, India, China and Mexico combined. I am aware that he has recently been to China. What action is he taking to encourage more exports to some of these fast-growing, emerging economies?

[Mr Paice]

My hon. Friend is entirely right to use that statistic, which I have used many times. He is also right to say that I recently took a food trade mission to China, representing a number of sectors of the British food industry. The most important result was that we opened up the Chinese market to British pigmeat exports, which the industry believes could be worth some £50 million a year. What is interesting is that the industry would not just be exporting the conventional cuts that we eat in this country, because China has an appetite for other parts of the pig, sometimes called the fifth quarter, which will add value to many pigs, not just those exported as full carcasses. He is absolutely right about there being plenty of other opportunities. In particular, we are targeting the Russian market to complete the process of opening it up for the British beef industry.

[Mr Andrew Turner (Isle of Wight) (Con)]

2. Under what circumstances the Forestry Commission may decline to comment on proposed developments on land for which it is responsible.

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

It is for the planning authority to decide whether to grant permission for a development, guided by the national planning policy framework issued by the Department for Communities and Local Government. The Environment Agency and Natural England are statutory consultees in the planning process. The Forestry Commission will provide factual information on request on a non-statutory basis.

[Mr Turner]

Parkhurst forest is an ancient woodland that is home to rare flora and fauna, and much of it is a site of special scientific interest. It is owned partly by the Forestry Commission and partly by the Ministry of Justice, which wants to site two 410-feet high wind turbines there, but the Forestry Commission has a policy of not objecting to schemes put forward by Government Departments unless there is a specific operational reason. Will the Secretary of State tell me who is responsible for evaluating the suitability and impact of these proposals on such sensitive sites?

[Mrs Spelman]

Natural England is responsible for the SSSI. The land in question, on which it is proposed that the wind turbines should be built, is not managed by the Forestry Commission; it manages land adjacent to it. It has studied the proposal and the environmental assessment and assessed that the application will not impact on land it manages or owns.

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

To be able to offer advice, the Forestry Commission must be properly staffed and resourced. Given the announcement yesterday from the independent panel, will the Secretary of State confirm that there will be no further cuts in the Forestry Commission’s staff or resources?

[Mrs Spelman]

Yes. We gave the Forestry Commission additional funds to assist with its restructuring, but, as the hon. Gentleman will understand, we inherited a situation in which the previous Government left us with a very substantial deficit and we have to set about clearing up the mess. That involves all DEFRA agencies playing their part, but we have provided assistance to the Forestry Commission on restructuring.

[Gavin Shuker (Luton South) (Lab/Co-op)]

May I commend the Secretary of State on completing her about-face on forests? She was an innovative trailblazer back in the day when she halted her sell-off of the forests, setting a U-turning example that I am pleased to see has been followed by almost every Department in Whitehall ever since. In her answer to the previous question, she said that additional funds had been made available to the Forestry Commission to carry out its programme of cuts. Will she now commit to halting those cuts until she brings forward her decision on the report that was published yesterday?

[Mrs Spelman]

We are dealing with two separate things here, but I am grateful to the hon. Member for Wakefield (Mary Creagh) for recording her cross-party support for the forestry report. To reiterate for the House and to make it perfectly clear, the public forest estate will remain in public ownership and there is no programme of sales, but, as I have just said in response to the question from the hon. Member for Edinburgh North and Leith (Mark Lazarowicz), DEFRA has to help to reduce the deficit that the Labour party left this Government to clear up. Every DEFRA agency is playing its part, but we have given assistance specifically to the Forestry Commission with its restructuring programme.

[Mr Ben Bradshaw (Exeter) (Lab)]

3. When she plans to establish a network of marine protected areas to conserve biodiversity in England’s seas.

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

This question would normally be answered by the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), who is currently representing the United Kingdom at the International Whaling Commission.

We already have a network of 84 marine protected areas in English seas out to 12 nautical miles from the coast, and we plan to complete the set designated under the EU habitats directive this year. In addition, we are working to designate more sites under the EU birds directive and more marine conservation zones, as provided for in the Marine and Coastal Access Act 2009, to add to the network from 2013 onwards.

[Mr Bradshaw]

I am sure the whole House will wish to send its best wishes to the right hon. Lady’s colleague at the International Whaling Commission. I bear the scars of a number of those conferences and, in particular, I hope that the Under-Secretary delivers a tough message on the outrageous South Korean decision to resume so-called scientific whaling. No such thing exists.

Marine protected areas are absolutely vital if we are to protect fish, seafood and other aspects of marine biodiversity in the seas around our coast, including around Devon. Their designation is already running two years’ late, however, and there are worrying reports that the Government intend to reduce the number from 127, which the right hon. Lady’s own independent scientific advisory group said was the minimum required, to just 30. I hope that she can dispel those concerns now. Thirty would be totally inadequate; we need the 127 that her own advisory group recommends.

[Mrs Spelman]

I will convey the right hon. Gentleman’s encouragement to the Under-Secretary, because the negotiations are indeed tough when dealing with countries that still pursue whaling practices.

May I put the matter of marine conservation zones in context? The Under-Secretary made a statement to Parliament in November last year, making it clear that an independent scientific review had found the evidence base for the designation of those zones to be insufficiently robust. I am sure the House wants the decision to be based on evidence and led by science, so we will not be rushed into making a decision without that additional evidence. On the figures in reports, the right hon. Gentleman should take them with a pinch of salt.

[Andrew George (St Ives) (LD)]

I welcome the introduction of further marine conservation zones, but does my right hon. Friend agree that the intention is not to put out of business those fishermen who engage in low-impact fishing, particularly mackerel handlining on the Cape bank off the Cornish coast? Surely, in designating these zones the intention is to strike a balance and to ensure that we get things right.

[Mrs Spelman]

I thank my hon. Friend for that observation, which underlines the point about the need to ensure that the evidence is robust and to balance the needs of all those who require access to our marine and coastal waters, but who have at heart the health and welfare of our seas. We need to ensure that the evidence base is robust.

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

4. What steps her Department is taking to support food producers in Lincolnshire.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

The Government are determined, as I have already described, to support British food and farming. Much of our support for businesses in Lincolnshire, including food producers, will be available through the local enterprise partnerships in the county and, of course, through the rural development programme. As I said earlier, the Government will do all that we can to encourage such businesses to export their excellent products.

[Stephen Phillips]

My right hon. Friend will be aware of the application for protected geographical indication status for Lincolnshire sausages. The application has overwhelming public support, particularly in Lincolnshire, but it has recently been rejected by his Department, despite the acceptance of similar applications for Cornish pasties and Melton Mowbray pork pies. There is an appeal, for which new evidence has been submitted. I hope that my right hon. Friend can reassure me and the people of Lincolnshire that our compelling case for the Lincolnshire sausage will now be recognised.

[Mr Paice]

Obviously, I am aware of the disappointment throughout Lincolnshire at the application’s rejection. However, given my hon. and learned Friend’s expertise, I am sure that he knows it was on valid grounds.

First, the sausages have been made outside Lincolnshire for more than 20 years. We found—[Interruption.] This is all on the public record. We found considerable variation in the recipes being used and a large proportion of so-called Lincolnshire sausages are made outside the county. If the appeal brings forward new evidence, that, of course, will be properly taken into account. I will write to my hon. and learned Friend with the final decision.

[Mr Edward Leigh (Gainsborough) (Con)]

Is the Minister aware that Lincolnshire is in revolt on this issue? The last time we rebelled, it was against Henry VIII, who called us his “most brute and beestelie” of counties. This is not good enough. The Minister must support the people of Lincolnshire in this great campaign.

[Mr Paice]

My noble Friend Lord Taylor of Holbeach has assured me, within the Department, of the concern expressed throughout Lincolnshire, but we have to be consistent in our application of the criteria. As I have just described, we felt that the whole application was rather too loose. We have an appeal to consider and if Lincolnshire people come forward with a variation on the application, that will also be considered.

[Julie Hilling (Bolton West) (Lab)]

5. What steps her Department is taking to ensure universal availability of flood insurance.

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

11. What steps her Department is taking to ensure universal availability of flood insurance.

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

The availability and affordability of insurance in flood risk areas is an important issue for the Government. We are at an advanced stage in intensive and constructive negotiations with the insurance industry on alternative arrangements for when the statement of principles expires. I will be providing a further update to the House shortly.

[Julie Hilling]

Simon Douglas, the director of AA Insurance, believes that some homes will not be able to renew their flood insurance this year because their new policy will extend beyond the life of the statement of principles. The situation is now urgent. The Secretary of State must resolve it. When is she going to sign the deal?

[Mrs Spelman]

I took the trouble to find out the situation in the hon. Lady’s constituency. The Environment Agency has confirmed that it has received no reports of flooded properties there, notwithstanding the surface water pressure over Bolton in June. None the less, the issue is important.

On the urgency, I gently remind the hon. Lady that her party had two years in government from the time when it agreed that the statement of principles would not be renewed. It found no solution, leaving this Government with a ticking time bomb in the safe where no money was left.

[Mr Sheerman]

In answer to a previous question, the Secretary of State said that she was keen on evidence-based policy. All the evidence suggests, and everybody knows, that in places such as Yorkshire, which have been hard hit by the floods, the relief that comes from insurance or any other help takes too long. During that time, individuals, families and small businesses suffer dreadfully. This is not party political. Will the Secretary of State do something to help those people?

[Mrs Spelman]

As the hon. Gentleman will know, DEFRA Ministers have visited each part of the country severely affected in the sequence of heavy rain that we have had. I went to Gateshead last Saturday. A number of Government Departments can be engaged in providing help. Most importantly, the Department for Communities and Local Government has a formula—the Bellwin formula—that I urge local authorities to apply to for funds. Before the recess, I shall give hon. Members the opportunity for a briefing on how we can provide further assistance.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

May I commend the report on the water White Paper published today by the departmental Select Committee? We stand ready to assist the Secretary of State in reaching a deal. Will she give the House an assurance that the cohort of tenants on low incomes will be granted affordable insurance where they are at risk of flooding?

[Mrs Spelman]

Yes, I can give that assurance, which is very important. The deal that we are in the process of negotiating with the insurance industry tackles for the first time the question of affordability, which the statement of principles—the previous scheme—did not.

[John Stevenson (Carlisle) (Con)]

As the Minister will be aware, flood insurance is a vital issue for many people in my constituency. In 2007, the previous Government agreed with the industry the statement of principles, which, as we all know, expires next year. Will she advise the House on what work was carried out by the previous Government in preparation for that?

[Mrs Spelman]

None. I could stop there, but I would also like to point out that this Government will be spending over £2 billion on flood defences and that the flood defences in Carlisle held despite the fact that the rainfall was heavier than in 2005.

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

15. Of course, this is a massive issue for the householders affected. It is also a big issue for the local authorities, which often have to face massive clear-up costs and help people who are left destitute. Will the Secretary of State now commit, as the Labour Government did in 2007 and 2009, fully to reimburse local authorities for those costs?

[Mrs Spelman]

The hon. Gentleman’s question gives me the chance to place on the record my appreciation to the local authorities in different parts of the country which have done an excellent job in implementing the emergency plans that they prepare for flooding. The Prime Minister, no less, when visiting the north-west, urged the Department for Communities and Local Government to be generous when applying the Bellwin formula to assist local authorities in the way that the hon. Gentleman requests.

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

Does the Minister agree that rather than the short-term measure that was put together in 2007, we now need a long-term approach that addresses affordability and availability? That is surely something that colleagues in all parts of the House could support.

[Mrs Spelman]

Yes. The successor to the statement of principles must address both universality and affordability of insurance in a way that the statement of principles did not. As I said, we are very close to reaching agreement on that. It is of great importance to the Government that we do so, and I will shortly inform the House of more details.

[Karl Turner (Kingston upon Hull East) (Lab)]

16. I am grateful to my hon. Friend the shadow Secretary of State for attending a flood summit in Hull last Friday. It was clear from that meeting that people are very concerned about flooding and flood insurance. Is it not time that the Government reached an agreement with the insurance industry that will guarantee that our constituents’ homes are protected in future?

[Mrs Spelman]

Mr Speaker, you can understand that the Ministers who inherited from the previous Government the ticking time bomb of having no way forward on the statement of principles are frustrated by the suggestion that we get a grip on this. We have, and we are close to an agreement that will provide both universality and affordability of insurance. That underlines the significance of the dereliction of duty by the hon. Gentleman’s party when in office.

[Neil Carmichael (Stroud) (Con)]

In thanking the Secretary of State for her Department’s help with flood management issues in my constituency, does she agree that flood risk assessments should include natural and man-made defences in any planning?

[Mrs Spelman]

Putting sustainable development at the heart of the planning reform means that flood-affected and flood-prone areas now give greater consideration to their sustainability. Natural and man-made flood defences can both help to make an area prone to flooding more sustainable.

[Bill Esterson (Sefton Central) (Lab)]

17. The relaxation of planning rules in the national planning policy framework has meant that planning consent was recently granted at Damfield lane in Maghull, which is on a flood plain. The town already has an overstretched drainage system—a situation that can only be made worse following recent additional developments. What discussions has the Secretary of State had with her colleagues about the impact of the new planning policy framework on flood protection insurance?

[Mrs Spelman]

I do not know the detail of that case, so I do not know whether the planning permission was granted by the council before or after the planning reforms were made. As I have said, putting sustainable development at the heart of the planning system means that greater consideration is given to sustainability in flood-prone areas. A number of things can be done to improve sustainability in flood-prone areas but, without knowing the specifics of the case, I cannot answer the hon. Gentleman’s question.

[Mary Creagh (Wakefield) (Lab)]

I am very disappointed at the party political nature of the right hon. Lady’s comments. My right hon. Friend the Member for Leeds Central (Hilary Benn) behaved admirably after the 2007 and 2009 floods, not least through the flood recovery grant. We are still waiting to hear from the right hon. Lady whether any money will go to the people who have been left homeless and destitute by the recent floods. She lit the fuse on the expiry of the statement of principles by cutting flood defence spending by 27%. She uses the figure of a 7% cut—

[Mr Speaker]

Order. We are short of time, so we must now have a single-sentence question.

[Mary Creagh]

The right hon. Lady promised an update on flood insurance in the spring. She has talked about vouchers and now she is finally talking about insurance. Will she get a deal with the Treasury before the recess?

[Mrs Spelman]

The hon. Lady clearly prepared that question before I gave my answers. I will give a detailed reply to the House before the recess. We are close to the end of the negotiations. As a former commercial negotiator, with experience in such matters, I know that one does not provide a running commentary on the state of negotiations.

[Mary Creagh]

Homes across the country are facing another night of severe rain and more homes are at risk of flooding. People are very anxious and upset because of the right hon. Lady’s total lack of progress on this issue. She has not given an answer. The deal runs out on 1 July 2013. Will she get a deal with the Treasury, and will it happen before the recess—yes or no?

[Mrs Spelman]

How can I have lit a fuse underneath this problem when I am not a Labour politician and it was the Labour Government who agreed with the Association of British Insurers that they would not renew the statement of principles? That is when the fuse was lit. They placed a smoking bomb in the same container that said, “Sorry, there’s no money left.” We have found a way forward that will provide for the affordability and universality of flood insurance.

[Andrew Griffiths (Burton) (Con)]

6. What steps she is taking to support the dairy industry.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

This week’s announcement of further price cuts for many dairy farmers, especially those who are not aligned to supermarkets, is a heavy blow, especially when global commodity prices seem to be rising again. I will be meeting industry representatives next week to hear their concerns. In the meantime, I remain committed to persuading the industry to develop its own code of practice regarding contracts and, as the House will be aware, the Bill to introduce a groceries code adjudicator is in the other place.

[Andrew Griffiths]

I thank the Minister for that answer, but he will know that the dairy industry is in crisis. Dairy farmers in my constituency faced a 2p cut in June and face a further 2p cut in August. That is unsustainable. Is it not time that he intervened to impose a code of conduct, so that our dairy farmers get a fair price?

[Mr Paice]

I fully understand the anger; it has been expressed to me by many farmers in the past few days. I am as concerned as my hon. Friend. However, as he knows, Ministers cannot and should not set prices. A compulsory code is provided for in the EU dairy package and we have said that we will consult on it. However, that would exclude a number of aspects that could be included in a voluntary code. That is why I still believe that a voluntary code is the better way forward.

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

A year ago, our sympathies went out to the Secretary of State, who said that she was having sleepless nights over the plight of dairy farmers—no one wants to see a Cabinet Minister with bags under her eyes at the Dispatch Box. However, Ministers have slept soundly while milk processors, one after the other, have slashed farm-gate prices to dairy farmers below the cost of production. Will the Government act urgently on the calls from Labour and the National Farmers Union to allow farmers to exit contracts when price changes are made; do more to bring farmers together in producer organisations; and either bang heads together to strengthen the voluntary code and enforce it, or consider regulation of this dysfunctional supply chain? No more sleeping on the job, please.

[Mr Paice]

I think the House will recognise synthetic anger when it sees it.

I am absolutely determined to do everything in the Government’s power to put things right. I have already explained that we want a voluntary code, on which I am more than prepared to bang heads together, and that we will consult on a compulsory code. We have also made it clear that we strongly support the idea of producer organisations, but I have to point out to the hon. Gentleman that the biggest cut announced this week was by a producer organisation.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Dairy farmers in Cumbria and across the country are being exploited appallingly by supermarkets and milk buyers of all kinds. They are now getting an average price per litre of 6p less than the cost of production. I am sure we all welcome the introduction of the groceries code adjudicator, which is real action to tackle the problem in the long term, but will the Minister take immediate action to call in the supermarkets and other buyers and tell them that the current situation is not only morally reprehensible but massively counter-productive? The low cost of milk under the Labour Government saw 50% of dairy farms close.

[Mr Paice]

We have to look at the picture in the round. The reality is that most farmers on aligned supermarket contracts have not had their prices cut. The problem is with supermarkets and the other big retailers that operate in the middle ground, whose processors have continued to invest in new bottling plant and undercut each other for contracts instead of attacking growing markets both overseas and in import substitution.

[Ian Murray (Edinburgh South) (Lab)]

The Gangmasters Licensing Authority is very important to the dairy industry, and the recent ministerial statement on the GLA has given the supermarkets grave concern. Has the Minister had any discussions with the supermarkets about that matter and the potential suspension of the supermarket protocol?

[Mr Paice]

No supermarket has approached my Department with any concerns about the GLA or the changes that I announced a few weeks ago, so frankly, I think the hon. Gentleman is whistling in the wind. If supermarkets have evidence that there are problems, I am happy to listen, but I am not aware of any concerns.

[Graham Evans (Weaver Vale) (Con)]

7. What steps she is taking to ensure rural areas have access to reliable and high-speed broadband.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

DEFRA is working with the Department for Culture, Media and Sport and Broadband Delivery UK to meet our target to have the best superfast broadband in Europe by 2015. The Government’s £530 million rural broadband investment will provide 90% of premises with superfast broadband, and everyone else with standard broadband of at least 2 megabits per second. The Government’s £20 million rural community broadband fund provides grant support to enable communities on that basic 2 megabit speed to increase it for the last 10% of people in hard-to-reach locations.

[Graham Evans]

I am grateful to my right hon. Friend. High-speed internet access is essential for rural areas to take part in a growing digital economy. When will my constituents, and people in greater Cheshire, see reliable high-speed broadband rolled out for them to access?

[Mr Paice]

I can give my hon. Friend some good news. DCMS has approved all the local broadband plans covering north-west England, and Broadband Delivery UK has allocated £3.24 million to the plan for Cheshire. BT and Fujitsu have now signed the delivery framework, and the first projects to use it have commenced procurement. Cheshire’s will be among the group of projects to commence procurement in October.

[Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)]

Given that so much Scottish broadband funding is UK-provided, although the Scottish Government provide the delivery, what follow-through does the Minister’s Department have with Edinburgh once that funding is allocated? From reading the publicity, if not propaganda, north of the border, people would think it was all Scottish Government funding, which it manifestly is not.

[Mr Paice]

As my right hon. Friend suggests, of course not all the funding is from the Scottish Government. As I have just described, the lion’s share is from the UK Government. As he well knows, it is not unusual for such claims to be made in Scotland, and we all have a responsibility to ensure that the Scottish people know the full facts. The £530 million that I mentioned is to roll out superfast broadband to 90% of the population of the whole UK, and as I have said, there are measures to address the other 10%. That is all a UK policy.

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

8. What progress her Department has made on the establishment of marine conservation zones.

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

My Department is awaiting formal advice from Natural England and the Joint Nature Conservation Committee, which is due on 18 July. We will then examine all the evidence before us and work towards a public consultation, which we plan to begin in December, with the first tranche of sites being designated in summer 2013.

[Tristram Hunt]

Although it is always best to draw on the widest evidence base for policy, the Department’s guidance is clear that that is not a good enough reason for delaying site selection. We are an island nation and these marine habitats are an extraordinary natural resource. Let us get on with establishing these conservation zones.

[Mrs Spelman]

To refer to an answer I gave earlier, it is clear that policy needs to be made on an evidence base. Therefore, the science advisory panel—an independent body of expert marine scientists—was established to support the four regional projects in selecting marine conservation zones. It offered the objective scientific advice that we need to make decisions.

[Karl MᶜCartney (Lincoln) (Con)]

9. What steps her Department took to promote recycle week.

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

Recycle week is delivered by the Waste and Resources Action Programme—WRAP—on behalf of the Government. This year, the focus was on plastic bottles. Some 40% of the UK’s local authorities took part, highlighting local recycling schemes. It was supported by both retailers and brands.

[Karl MᶜCartney]

Will my right hon. Friend join me in supporting the work of Lincolnshire waste partnership, under which the county’s latest recycling figures reached 53%? Will the Department seek to encourage one of my local authorities—City of Lincoln council—to raise its recycling rate from 46%?

[Mrs Spelman]

I certainly support the work of the Lincolnshire waste partnership, along with all other waste partnerships and local authorities. I urge all local authorities to continue that effort to reduce the volume of waste sent to landfill.

[Alex Cunningham (Stockton North) (Lab)]

10. What recent progress she has made on banning the use of wild animals by travelling circuses.

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

My written statement to Parliament on 1 March 2012 confirmed our intent to ban wild animals in travelling circuses on ethical grounds. There are a number of issues to consider in developing the ethical case and the exact nature of the ban. We therefore hope to publish a draft Bill and full legislation as soon as parliamentary time allows. In the meantime, we aim to lay regulations shortly to introduce a new licensing scheme that will protect the welfare of such animals in the interval.

[Alex Cunningham]

In June 2011, the House of Commons unanimously passed a Back-Bench motion calling for all bans to be in place. We do not need to discuss it; we need to get on with a ban. DEFRA Ministers have failed to show any political leadership. They are just messing about, fiddling about. When will the Minister bow to the will of both the House and the public and bring forward the legislation?

[Mr Paice]

I can only repeat what I have just said. We have said we will introduce a ban on ethical grounds. We have also made it clear that we cannot introduce a ban on welfare grounds, because we believe that is legally flawed—

[Alex Cunningham]

Why not?

[Mr Paice]

I have explained several times why not. We believe that such a ban would be wide open to judicial challenge, which we might well lose, hence we are using ethical grounds. That will be done as soon as parliamentary time allows.

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

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

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

My Department takes responsibility for safeguarding the environment, supporting farmers and strengthening the green economy.

In the light of the weekend’s forecast, I urge people to heed flood warnings and follow the advice of the Environment Agency, which has played a remarkable role in difficult circumstances. I will arrange a briefing for all Members in flood-affected constituencies so they can be aware of the full range of help available from the Government before the House rises.

[Tristram Hunt]

Thanks to the Government’s disastrous cancellation of the housing market renewal scheme four years early, my constituency is dotted with derelict brownfield sites. At the Emma Bridgewater factory in Hanley, sunflowers and an urban meadow have been planted. What plans does the Secretary of State have to sit down with colleagues at the Department for Communities and Local Government to ensure that some of our poorest inner-city communities have access to the natural environment?

[Mrs Spelman]

That is principally a question for the Department for Communities and Local Government, but a close reading of the natural environment White Paper, which was produced by my Department a year ago, will show the attention that we pay to making space for nature, particularly in proximity to urban areas, where it is of disproportionately greater benefit.

[Mr Edward Timpson (Crewe and Nantwich) (Con)]

T2. Dairy farmers in my constituency told me at a recent meeting of their continued frustration with the number of duplicated farm inspection visits, which are both costly and time consuming. What progress has the Minister made in addressing that, and will he go further in helping to alleviate some of these unnecessary burdens on our farming industry?

[The Minister of State, Department for Environment, Food and Rural Affairs (Mr James Paice)]

I am happy to say yes, we are determined to reduce the number of unnecessary inspections, and we have committed ourselves to doing so as a result of the farming regulation taskforce. Progress has been made, but I want to go further, and I can assure my hon Friend that, this year and next year, farmers who demonstrate one way or another that they are at low risk will see a significant reduction in the number of inspections.

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

T3. Last Friday, I met farmers in my constituency and was shocked to hear about the nature of the milk contracts in the dairy industry that many of them face. I appreciate what the Minister has just said about a voluntary arrangement, but I think he would acknowledge that there is great scepticism about whether it will be enough for colleagues on both sides of the House and farmers themselves. What can he say to reassure me that it will be enough?

[Mr Paice]

We have to be realistic, and I want to be: no code of practice or compulsory contract will solve all the woes of the dairy industry. I believe that a voluntary code is better because the EU legislation on a statutory code restricts what can be in it to only a certain list of headings. A voluntary code would allow a wider range of headings. The stumbling block in negotiations appears—obviously I am not integrally involved, as this is a matter for the industry—to be over the period of notice that a farmer can give to leave a contract, if they do not like a price or other change, and over the period of notice that a processer can give the farmer. That is the point of difference, and the point on which I encourage both sides to find a compromise.

[Mr Edward Leigh (Gainsborough) (Con)]

T4. I was horrified to learn recently that three Departments, which will remain nameless, have actually increased their operating costs over the past two years. Will my right hon. Friend assure me that she has reduced operating costs in her Department?

[Mrs Spelman]

We have cut administrative spend by £140 million since May 2010, which is an 11% reduction in cash terms.

[Sheila Gilmore (Edinburgh East) (Lab)]

T7. I was interested to hear the Secretary of State say last weekend that people should heed the flood warnings. If she had been in the north-east on Thursday, she would have known that there were none. However, there is apparently an underspend in Departments. Has the Secretary of State made a bid to the Chancellor for additional money for flood defences?

[Mrs Spelman]

I should underline the importance of this matter. Tragically, a gentleman in my part of the country, the west midlands, lost his life when he stepped into fast-flowing floodwaters. It is important, therefore, to reinforce the point to all our constituents not to walk or drive into floodwaters. We have secured £2.17 billion to spend on flood defences. I remind the hon. Lady that her party said it would cut capital by 50%.

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

T5. I am delighted that the Secretary of State will attend the Kent county show next week, when she will have the opportunity to meet some of our fantastic farmers and fruit growers. I would be grateful if she could explain to the House what action she has taken to boost the export of British fruit.

[Mrs Spelman]

I am looking forward to the Kent county show this year, and I praise the Kentish farmers for the quality of their apples and other soft fruits, particularly in such a difficult year for soft fruit production. She will have heard my right hon. Friend the Minister of State say how actively DEFRA Ministers are promoting good British produce across the board and encouraging UK Trade and Investment to include food exporters in their outbound missions.

[Mr Speaker]

There is plenty of scope there for an Adjournment debate, I should imagine.

[Ian Mearns (Gateshead) (Lab)]

I am grateful to the Secretary of State for visiting my constituency last Saturday, in the aftermath of Thursday evening’s deluge, when 80 mm of water fell from the sky in two hours and about 1,500 lightning strikes were recorded in the Tyneside area. Is her Department thinking of reviewing the flood-risk incident assessments in the light of what seems to be a significant increase in the number of extreme weather events?

[Mrs Spelman]

I pay tribute to the hon. Gentleman, who was on the scene on Saturday, and to his local authority, which played a remarkable role in trying to assist his constituents during that extreme weather event. He is right that they are becoming more frequent. After every one of these events, we review the emergency plans to ensure that we improve them all the time. However, the emergency services and the Environment Agency have done an excellent job during all these flooding episodes, of which there are potentially more to come.

[Mr Dominic Raab (Esher and Walton) (Con)]

T6. The public will spend as much on the renewables obligation this year as on flood and coastal defences over four years, yet in my constituency the lower Thames flood risk management strategy risks being undermined by a 27% cut in the Environment Agency’s capital expenditure, given the debt legacy left by the last Government. Will my right hon. Friend take another look with Department of Energy and Climate Change Ministers at the balance between public subsidy for renewables and public investment in resilience? Ultimately, it is the same people paying for both.

[Mrs Spelman]

I am afraid that my hon. Friend has been taken in by the figure used by the Opposition. [Interruption.] It is important to set the record straight. In that comparison, the increase in expenditure made by the last Government the year before the election is being set against our first year in office. Under the correct comparison—the last four years of the Labour Government with four years of this Government—the figure is just 6%. I take seriously the threat in the lower Thames region, and under partnership funding it should be possible to get the flood defences built more readily than they would have been under the previous scheme.

[John Mann (Bassetlaw) (Lab)]

The Youth Hostels Association does a brilliant job of getting kids from the cities out into the countryside. Will the Secretary of State look at how her Department can assist the organisation in expanding that vital work?

[Mr Paice]

I assure the hon. Gentleman that DEFRA regards the issue of building bridges between people from our cities and the countryside as extremely important, which is why we are involved with a number of different schemes. I cannot give the hon. Gentleman a direct answer about links with the Youth Hostels Association, but I assure him that I or one of my colleagues will be happy to have a meeting with the YHA.

[Duncan Hames (Chippenham) (LD)]

12. I congratulate the Government on deciding to go ahead with mandatory reporting of carbon emissions for stock exchange listed companies. Can the Secretary of State tell us whether the reporting arrangements she will put in place will provide an open but consistent platform, so that other companies can join it on a voluntary basis, in order to be fairly judged against others on their achievements in this field?

[Mrs Spelman]

I can give that undertaking. I am proud of the fact that, as the Financial Times noted,

“Britain will be the first country in the world to make it compulsory for listed companies to include emissions data”.

After two years of its operation, we will review the efficacy of the decision we have taken to see whether we need to expand the number of companies involved.

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

What practical advice can the Secretary of State give to my constituents, as some 3,000 householders in my constituency face a risk of flooding? They are renewing their insurance, but no agreement has been entered into by the Government with the insurance industry. What is she going to say to my constituents?

[Mrs Spelman]

Let me reassure the hon. Lady that, having been flooded out myself and in temporary accommodation for 10 months, I know what it feels like and I know the fear of flooding. I also know that it is really important to take out insurance. The premiums average £300; the average flood claim is £15,000. We are finding a way forward to provide universal and affordable insurance for her constituents, but it is vital that homes are insured.

[Neil Parish (Tiverton and Honiton) (Con)]

Further to my right hon. Friend’s comments on milk prices, the international milk price has been far higher for many years now, and my farmers and my constituency have suffered lower prices. What can he do to get a greater export market for milk products?

[Mr Paice]

My hon. Friend puts his finger on a very important thing. I referred earlier to my visit to China, which has a massive market of 1.4 billion people, who are rapidly increasing their dairy consumption. I was disappointed that neither I nor my colleagues could find any British dairy produce on the shelves, yet there was plenty from other European countries. That demonstrates to me that there is great export opportunity. I would very much exhort our processors to target those growing markets.

The hon. Member for Banbury, representing the Church Commissioners, was asked—

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

1. What information the Church Commissioners hold on the number of churches sold and subsequently turned into bars or casinos since May 2010.

[The Second Church Estates Commissioner (Sir Tony Baldry)]

None that I am aware of.

[John Robertson]

I thank the hon. Gentleman for that extensive answer. I am disappointed that although I have asked this question on many occasions, I am yet to receive a satisfactory answer—which we have again not received. Is it not despicable that a place of worship should be turned into a bar or a casino? Is it not time that the churches looked at that, to ensure that it does not happen and that they are not sold to those kinds of people?

[Sir Tony Baldry]

We are at cross purposes. The answer that I gave to the hon. Gentleman was very clear: I am not aware of any redundant or former churches having been turned into a bar or a casino. If he has details of any such instances, will he please let me have them so that I can investigate?

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

2. What the average number of parishes is per Church of England priest in rural areas; and if he will make a statement.

[Sir Tony Baldry]

The Church does not calculate an average figure for the number of parishes per priest in rural areas, because different dioceses take varying approaches to pastoral organisation.

[Miss McIntosh]

I thank my hon. Friend for that answer. I wonder whether we could urge the Church Commissioners to undertake such an exercise. I should like to praise the work of rural priests. In North Yorkshire, they are being asked to spread themselves extremely thinly, and any support that they could be given would be most welcome.

[Sir Tony Baldry]

My hon. Friend is quite correct to draw our attention to the fantastic work being done by priests in rural areas. We will collect statistics on rural priests, and I will ensure that they are shared with her.

[Hugh Bayley (York Central) (Lab)]

3. What discussions he has had with the Church Commissioners on the role of clergy in a reformed House of Lords.

[Sir Tony Baldry]

I have regular discussions on the question of Lords reform with senior colleagues in the Church of England, including the archbishops and the Bishop of London, who are Lords Spiritual and Church Commissioners. Like me, they welcome the view of the Government and the parliamentary Joint Committee that there should be a continuing, albeit reduced, place for Lords Spiritual in a reformed House of Lords.

[Hugh Bayley]

Some years ago, Parliament changed the law to allow members of the Anglican clergy to stand for election to this House, which has enabled my hon. Friend the Member for Rhondda (Chris Bryant) to become a Member of Parliament. Will the Government’s proposals for an elected second Chamber permit the Anglican clergy to stand for election, and has the Church considered that it might make sense for the Anglican representation in the second Chamber to be elected, so that women as well as men could offer themselves for election?

[Sir Tony Baldry]

The answer to the first part of the hon. Gentleman’s question is yes. I do not think that there will be any constraint on priests or former priests standing for election to the elected part of the second Chamber. On the second part of his question, I suspect that all of us here earnestly hope that, sooner or later, the Church of England will have women bishops.

[Chris Bryant (Rhondda) (Lab)]

I completely agree, and I praise the hon. Gentleman for all his work on trying to bring in women bishops, but has he read the Bill that we are to debate next week? It does not actually define what a bishop is. The Bill does not say whether it refers to diocesan bishops, suffragan bishops, Anglican bishops, Catholic bishops, bishops from Scotland or bishops from Wales. Is this a radical step that the Church is going to support?

[Mr Speaker]

I think that the hon. Gentleman has just applied to speak in the debate. He has already applied to me in writing, and I think that his question was an additional application, for which we are all very grateful.

[Sir Tony Baldry]

May I also make an oral application to speak in the Lords reform debate, in response to the many speeches that I know the hon. Gentleman is going to make about bishops?

[Guy Opperman (Hexham) (Con)]

4. What steps the Church Commissioners are taking to mark metal items in churches for the purpose of preventing metal theft.

[Sir Tony Baldry]

The Church Commissioners have taken a keen interest in the development of metal marking undertaken by the Institute of Minerals, Mining and Metals—IOM3. Marking systems are under development that can be used to mark new and existing roofs with a clear mark of ownership. We have been working to achieve that with IOM3 and the insurance industry.

[Guy Opperman]

Churches, war memorials and monuments throughout the north-east have been affected by this despicable crime. Will my hon. Friend do all that he can to get behind the private Member’s Bill that is to be debated in the House shortly, and ensure that the churches themselves do all that they can to mark their property?

[Sir Tony Baldry]

My hon. Friend the Member for Croydon South (Richard Ottaway) has introduced an excellent Bill, and we hope that it will get a good hearing tomorrow and make progress. Of course the churches have a responsibility to do everything they can to protect their own metal from theft. They do this by using SmartWater, CCTV cameras and other examples of the latest technology. We are all seeking to crack this despicable crime, but at the end of the day we have to make the scrap metal business a cashless business involving only business-to-business transactions, to prevent people from ripping lead off roofs and taking it round to the scrap metal market the next day and getting cash for it.

[Philip Davies (Shipley) (Con)]

My hon. Friend mentioned SmartWater, which is a tried and trusted method not only of bringing criminals to justice but of deterring them from committing crimes in the first place. Will he update the House on how many churches have SmartWater technology on their premises, and will he ensure that as many as possible are covered by it in the future?

[Sir Tony Baldry]

I can assure my hon. Friend that a very large number of churches are using SmartWater.

The right hon. Member for Manchester, Gorton, representing the Speaker's Committee on the Electoral Commission was asked—

[Dan Rogerson (North Cornwall) (LD)]

5. What recent assessment the Electoral Commission has made of the accuracy of the electoral register.

[Sir Gerald Kaufman (Manchester, Gorton)]

The Electoral Commission’s 2011 report, “Great Britain’s electoral registers”, estimated the accuracy of the 1 April 2011 parliamentary register to be 85.5% and the accuracy of the 1 April 2011 local government register to be 85.4%. The Electoral Commission defines accuracy as the percentage of entries on the registers that relate to verified and eligible voters who are resident at that address.

[Dan Rogerson]

I am grateful to the right hon. Gentleman for that answer. He will be aware that in areas such as Cornwall, the number of multiple property owners appearing on the register at various addresses is a matter of concern. I welcome the steps the Government have taken to provide electoral registration officers with the tools to help crack down on that issue. Will the Electoral Commission look at that issue to ensure that the guidance to electoral registration officers is absolutely up to date and that they are aware of the role they can play in ensuring that it really is one person, one vote?

[Sir Gerald Kaufman]

I know that this issue has been a matter of continuing concern to the hon. Gentleman, and I am grateful to him for raising it again on this occasion. The Electoral Commission is certainly ready to advise electoral registration officers on how most accurately to ascertain the residences of second home owners and whether the people living in them have the right to be registered for a second home. As the hon. Gentleman will know, there are rules in secondary legislation to make that more precise. I am sure that the Electoral Commission will be willing to advise all electoral registration officers if they feel in need of that advice.

[Mr Speaker]

I am immensely grateful to the right hon. Member.

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

My right hon. Friend will be aware that the problem of inaccuracy in the register and, indeed, the lack of registration more generally is particularly serious in inner-city areas. Is it not right that the Electoral Commission should make particular efforts over the coming period to improve registration rates and accuracy in the inner-city areas of our country?

[Sir Gerald Kaufman]

As a Member representing a city area, I share my hon. Friend’s concern about this matter. There are always going to be errors and shortcomings in the register, partly because in areas such as the ones he and I represent people often move house without necessarily informing the electoral registration officer that they have done so. The Electoral Commission stands ready to advise registration officers whenever they seek that advice.

The hon. Member for Banbury, representing the Church Commissioners, was asked—

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

6. What advice the Church Commissioners have given on the implications of a decision to agree to the appointment of women bishops.

[Mr Ben Bradshaw (Exeter) (Lab)]

9. What representations the Church Commissioners have received on recent amendments to the Women Bishops Measure made by the House of Bishops.

[The Second Church Estates Commissioner (Sir Tony Baldry)]

I made my own position very clear in a speech to the General Synod shortly after my appointment. I had hoped that the Synod would give final approval to the legislation for women bishops next Monday, but as a result of an amendment made by the House of Bishops in May, it is possible that the Synod will ask the House of Bishops to think again, in which case we may be in for a short period of ping-pong between the Synod and the House of Bishops.

[Simon Hughes]

Those of us such as the hon. Gentleman who have argued for a long time for women to have equality in the Church and to be able to become bishops are getting a bit frustrated. I respectfully say that the objective he should communicate to his colleagues on the Synod is that during this year—either at the forthcoming Synod or the autumn Synod—a final decision should be taken. If there has to be a bit of compromise, so be it—but not on the principle. The differences of view need to be respected, but we need a clear decision on women bishops to be taken this year while this archbishop remains in office.

[Sir Tony Baldry]

I agree entirely with everything my right hon. Friend has said.

[Mr Bradshaw]

It is terribly sad that, yet again, the bishops have threatened this measure by trying to water it down. A couple of weeks ago, they accused this House of jeopardising the status of the established Church because we are likely to vote for equal marriage. Will the hon. Gentleman tell the bishops that establishment is a two-way street, and that by putting themselves so far away from mainstream opinion on women bishops—in this House, in the country and even in the Church of England—it is they who are threatening the established status of the Church?

[Sir Tony Baldry]

I take the point, but let me say, in fairness, that I think the Archbishop of Canterbury and the bishops were trying hard to find a piece of territory on which they felt that everyone could stand. Many of us in the House are familiar with that concept. As the archbishop said, it is rather like one of those Christmas cracker games that involve trying to get three ball bearings into a hole: you always get two in, but one falls out. I think that a genuine attempt was made, but it obviously backfired, and we shall have to review the position.

The House of Commons well understands the concept of ping-pong. I hope that if the General Synod sends this back to the House of Bishops, the bishops will reflect on what has been said by people including my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes). I also hope very much that, before the year is out, the House will have an opportunity to pass legislation that will make it possible for the Church of England to have women bishops.

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

Does the hon. Gentleman accept that in years to come, it will be as difficult for people to understand the controversy about women bishops as it is for them to understand now why 100 years ago women had to fight in every conceivable way to become Members of Parliament and to have the right to vote?

[Sir Tony Baldry]

The hon. Gentleman has made a fair point, and one on which the General Synod ought to reflect at its meeting in York over the next few days.

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

7. What consideration the Church Commissioners have given to the use of an inclusive admissions policy for Church of England schools.

[Sir Tony Baldry]

The ethos and purpose of the original foundation of Church of England schools was to serve the local community. The National Society was founded by the Church of England in 1811 to provide community schools for poor children, and currently provides resources for 4,700 Church of England schools and 172 Church in Wales schools. All those schools have a strong Christian foundation and a commitment to the local Christian community.

[Mr Speaker]

The hon. Member for South West Bedfordshire (Andrew Selous) is now fully informed.

[Andrew Selous]

I find that in my constituency most Church schools are hugely popular with parents, but concern is sometimes expressed about admission policies. How can we best expand popular Church schools in an inclusive way?

[Sir Tony Baldry]

I believe that the Church schools admissions policy involves a duty to balance the need to admit children from Christian families with the need to admit those from the wider community. The diocese of St Albans, which contains my hon. Friend’s constituency, places considerable emphasis on community involvement and ensuring that children from the wider community enter Church schools. The schools were set up in the first place to educate children of the parish.

The hon. Member for Gainsborough, representing the Public Accounts Commission, was asked—

[Mr Philip Hollobone (Kettering) (Con)]

8. What assessment the Public Accounts Commission has made of the most effective piece of work undertaken by the National Audit Office in 2011-12.

[Mr Edward Leigh (Gainsborough)]

The Public Accounts Commission’s role is not to assess individual pieces of work, but each year we ask the National Audit Office’s external auditors to assess the value-for-money aspect of the NAO. The NAO’s annual report shows that in 2010-11 it influenced the Government to improve public services in key areas such as financial management, and saved the UK taxpayer more than £1 billion.

[Mr Hollobone]

What investigation does my hon. Friend think will be the most interesting, exciting and effective in 2012-13?

[Mr Leigh]

Probably the most successful piece of work done by the NAO is its recent report on central Government’s use of consultants, which had a financial impact amounting to more than £323 million. I am convinced that we could save a great deal more money in the operation of central Government: many billions of pounds.

[Mr Speaker]

The hon. Gentleman has confounded me. I thought he was going to say that he was spoilt for choice.

The hon. Member for Banbury, representing the Church Commissioners, was asked—

[Robert Halfon (Harlow) (Con)]

10. What recent assessment the Church Commissioners have made of the listed places of worship grants scheme.

[The Second Church Estates Commissioner (Sir Tony Baldry)]

The sum of £30 million per year, for the life of this Parliament, will be added to the existing listed places of worship grant scheme, making a total fund of £42 million per year. The fund will be made available annually to ensure that all eligible repairs and alterations to listed church buildings receive a full rebate of the equivalent of VAT.

[Robert Halfon]

On behalf of many church leaders from Harlow and the villages who have written to me about this issue—Valerie and Simon Dinwiddy from St Mary-at-Latton church, Joan Jones and many others—I thank the Government for listening. Can my hon. Friend give those people comfort by assuring them that his financial support will not last for just a few months, but is a longer-term commitment from the Government?

[Sir Tony Baldry]

I think that we must all thank the Chancellor of the Exchequer for making the extra money available. Indeed, he has undertaken to make it available each year for the remaining life of the current Parliament. I hope that we can secure cross-party agreement and understanding that the scheme will continue irrespective of what happens at the next general election.

[Mr David Hanson (Delyn) (Lab)]

Can the hon. Gentleman confirm that churches in Wales will benefit from the rebate scheme when VAT similar to that in England is imposed on them?

[Sir Tony Baldry]

I shall have to take advice on that point. I am not responsible for the Church in Wales, which was cruelly disestablished and dis-endowed by Lloyd George.

Business of the House

Thursday 5th July 2012 Commons Chamber

11:34

[Ms Angela Eagle (Wallasey) (Lab)]

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

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

The business for next week is as follows:

Monday 9 July—Second Reading of the House of Lords Reform Bill (day 1).

Tuesday 10 July—Conclusion of Second Reading of the House of Lords Reform Bill (day 2).

Wednesday 11 July—Debate on motions relating to the sitting hours of the House of Commons, followed by a debate on a motion relating to VAT on air ambulance fuel payments. The subjects for these debates have been nominated by the Backbench Business Committee. Followed by opposed private business for consideration, as named by the Chairman of Ways and Means.

Thursday 12 July—Motion relating to the reform of the Court of Justice of the European Union, followed by a motion on a European document relating to the EU draft budget, followed by a motion on a European document relating to EU human rights strategy.

Friday 13 July—Private Member’s Bills.

The provisional business for the week commencing 16 July will include:



Monday 16 July—Opposition day (4th allotted day). There will be a debate on an Opposition motion. Subject to be announced.

Tuesday 17 July—Debate on a motion relating to the Public Administration Committee’s recommendation for the Prime Minister’s adviser on Ministers’ interests to be empowered to instigate his own investigations, followed by a motion on the summer recess Adjournment. The subjects for these debates have been nominated by the Backbench Business Committee.

I should also like to inform the House that the business in Westminster Hall for 12 July will be:

Thursday 12 July—Debate on banking competition.

[Ms Eagle]

I thank the Leader of the House for announcing next week’s business.

Last week I suggested to the right hon. Gentleman that, as Liberal Democrats and Conservative Ministers now spend their time rubbishing each other, it might be better if future parliamentary business were organised so that Government time was divided between the two parties to give both sufficient time to differentiate themselves from each other. I am delighted to see that the Leader of the House has quickly adopted my suggestion, because in announcing two days of debate on House of Lords reform next week, he omitted to draw the House’s attention to the fact that Government time had been so arranged to allow Liberal Democrat Ministers to speak on Monday and Conservative Ministers to speak on Tuesday. It will be interesting to monitor the differences of approach from one day to the next. Will the Leader of the House confirm that in future all Government business will be organised in this way?

We have learnt this week that Network Rail, a publicly funded body, is planning to pay millions in bonuses to senior managers. Government decisions mean that rail passengers are facing fare rises of 11% a year at a time when people are struggling to make ends meet. It is simply unacceptable for Network Rail to pay out millions in bonuses to its top managers. Six months ago the Transport Secretary promised to appoint a public interest director, yet she has failed to do so. The Transport Secretary has the power to stop Network Rail bosses paying themselves massive bonuses at their annual general meeting on 19 July. Will the Leader of the House confirm that the Government will block Network Rail’s plans, and arrange for the Transport Secretary to make an urgent statement to the House?

The Government have set up an independent inquiry into forests. That was done after 500,000 people signed a petition objecting to the Government’s proposal to flog off England’s forests to the highest bidders. The Government’s U-turn on the issue started a trend; they have been U-turning ever since. The inquiry report was published yesterday. Will the Leader of the House confirm that the Government have now dropped their plans to sell off 15% of English forests, and will he say when they will instead set out plans to protect and secure the future of our forests? Will he also arrange for the Environment Secretary to make an oral statement on the Government’s response to the independent inquiry?

The Government ask a bishop to hold an independent inquiry into the future of forests, but refuse to have an independent inquiry into the banking scandal. On Monday, the Government were against holding any inquiry; then they were in favour of a parliamentary inquiry, but against a parliamentary vote; then they were in favour of a parliamentary inquiry and a parliamentary vote, but still against an independent judicial inquiry. The Government have had three different positions in three days. May I urge the right hon. Gentleman to adopt a fourth? The British people want an independent judge-led inquiry, and all the Opposition parties want an independent judge-led inquiry. In fact, the only people opposing an independent judge-led inquiry are Government Members of Parliament and bankers themselves.

Something else the bankers wanted was for the Vickers report to be watered down, which is exactly what the Government have done. On Tuesday, Martin Wolf, the Financial Times economist and a member of the Vickers commission, described the Government’s decision not to implement the recommendation on high-risk derivative trading as “really quite serious”. Will the Leader of the House explain why the Government are watering down the Vickers commission recommendations, and arrange an urgent statement on this matter from the Chancellor?

May I congratulate the Leader of the House on his sterling performance in the recent ConservativeHome league table of Cabinet Ministers? The right hon. Gentleman has surged up the rankings. [Interruption.] Much to his surprise—perhaps he does not follow it—but he has. Conservative Members have put the Leader of the House in the premier league of Cabinet Ministers. However, the part-time partisan Chancellor, who has presided over a double-dip recession, has slumped into the third division. Does the Leader of the House have any tips on how the Chancellor can raise his game?

[Sir George Young]

On the first issue, these two parties are working together harmoniously to repair the damage done by the Labour party. In the debate on the House of Lords on Monday and Tuesday, there will be a seamless approach to the legislation from those who are opening and closing the debates on the first and second day. I remind Labour Members what their policy was when they were in government, and I hope, therefore, that they will support the Government on Monday and Tuesday, both on the motion on Second Reading and indeed on the programme motion. Through the latter, we propose to allocate 10 days in Committee, which contrasts with the four days they allocated on their Lords reform Bill.

The extraordinary corporate governance structure for Network Rail was actually set up by Labour; they are responsible for the decision-making process. We propose to reform it, and I will pass on the hon. Lady’s suggestion about the bonuses to my right hon. Friend the Secretary of State for Transport.

So far as the forests are concerned, the hon. Lady will have seen the written ministerial statement from my right hon. Friend the Secretary of State for Environment, Food and Rural Affairs. The joke that we just heard from the hon. Lady was the same one we heard in DEFRA questions a few moments ago; I am sure she told it better. The initial response was set out in the written ministerial statement, and there will be a more substantive one next January. We have confirmed that the forests will remain in public ownership.

On the issue of a public inquiry, we are going to debate that. If the hon. Lady is asking for a debate on this issue, I have granted it, and very quickly. Our view, which will be set out later, is that any Committee should have the power to interview witnesses under oath; it should have the power to send for the necessary people; it should sit in public and have full access to the necessary documents and papers. We believe that a Joint Committee of the House will be able to discharge its responsibilities, and we will move on to that debate in a moment.

We have not watered down the Vickers report. We are introducing a banking reform Bill, and in due course the House will have an opportunity to consider our proposals to separate the retail and investment wings of the banks.

I am grateful to the hon. Lady for bringing to my attention something I had not noticed before—the league table. One thing that is almost certain after her endorsement is that, next time, my position will be a lot lower.

[Several hon. Members]

rose—

[Mr Speaker]

Order. A very large number of hon. and right hon. Members are seeking to catch my eye, but as the House will know and as I simply remind Members, there is a defence statement to follow and thereafter a heavily subscribed and very important debate. Therefore, it may not be possible for me to accommodate all contributors at business questions in the way that I would usually intend, but maximising the number of contributors depends upon brevity, which will now be exemplified, I know, by Miss Anne McIntosh.

[Miss Anne McIntosh (Thirsk and Malton) (Con)]

Will my right hon. Friend allow time for a debate on the health and social care White Paper and its implications for community hospitals?

[Sir George Young]

My hon. Friend raises a key issue. We hope to publish very shortly the White Paper on social care together with a progress report on funding. I hope that when we do that, there may be an opportunity for a debate either at that time or subsequently. The issue needs to be addressed as soon as possible, and I think that Members on both sides of the House would welcome a debate on the future regime for social care along the lines my hon. Friend suggests.

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

Does the Leader of the House realise just how angry Yorkshire Members of Parliament from all parties are about the announcement that the Leeds children’s heart unit will close? There has been a vigorous campaign—the hardest fought that I have ever known in this House—and we have been ignored. Yorkshire has been downgraded in terms of this very important service for children.

[Sir George Young]

Of course I understand the concern of Yorkshire Members at the outcome of the independent review, which was established by the previous Government at arm’s length from Ministers and has now reported. The key motivation was to drive up outcomes for children who suffer from congenital heart disease. There was powerful evidence that the more operations a surgeon performs, the better the performance, which improves the outcome for children. The review has been supported by the royal colleges as well as national charities. Although I understand what the hon. Gentleman has said, I think that the prime objective for us all ought to be to improve the outcomes for children who suffer from this serious disease.

[Martin Vickers (Cleethorpes) (Con)]

More and more decisions both nationally and locally are being taken by unaccountable officials acting in a quasi-judicial role, leaving elected representatives powerless to influence them. Can the Leader of the House find time for a debate to discuss that growing trend and how it can be reversed?

[Sir George Young]

My hon. Friend will have noticed that in the first Session of this Parliament, we introduced the Public Bodies Bill, which abolished a number of public bodies and repatriated to Ministers powers that had previously been devolved. I hope that he recognises that. The responsibility for the budget of non-departmental public bodies rests with Ministers, and although their day-to-day running has been delegated, the overall efficiency of the organisations remains a matter for Ministers. There will still be opportunities for him to hold NDPBs to account through the responsible Minister.

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

We understood the need to move the Back-Bench business scheduled for today to make way for the important banking debate that is to be held this afternoon. As the Leader of the House has announced, we have now found slots for the displaced business by cutting it down quite finely, and that would not have been possible without the understanding and co-operation of all lead Members and participating Members. I want to put on the record my thanks for that co-operation.

The Government have placed on the Order Paper for tonight a business motion that will make room for the air ambulance debate on Wednesday 11 July after the debate on sitting hours, and I thank them for doing that. I hope that the House will be co-operative in ensuring that the business motion is agreed to. I know that the Leader of the House cannot provide a guarantee, but will he try to ensure that there are no statements, if possible, on either 11 July or 17 July, the last day of the term, so that we can ensure that Back-Bench business is not further curtailed?

While I am here, the deadline for submissions for the pre-recess Adjournment debate is Monday at 11 am in the Table Office. Thank you for your patience, Mr Speaker.

[Sir George Young]

I am very grateful to the hon. Lady and the Backbench Business Committee for responding to the inconvenience that has been caused to them by today’s urgent debate, and I am glad that she has been able to find time for the two debates that were displaced. I shall use my best endeavours to avoid statements on those two days, but I cannot give a cast-iron guarantee. The business motion on today’s Order Paper will safeguard two hours for the sitting hours debate on Wednesday and guarantee that the rest of the time until 7 o’clock is available for the air ambulance debate. I hope that the House will smile on that motion and let it through without any controversy. I also welcome the public service announcement that she has just made, reminding people to make submissions in respect of the pre-recess Adjournment.

[Karen Lumley (Redditch) (Con)]

More than 18,000 people have signed a petition in Redditch against the possible closure of our accident and emergency department. Will the Leader of the House secure time for a debate on health issues in Worcestershire?

[Sir George Young]

I understand my hon. Friend’s concern about the future of the Alexandra hospital in her constituency. In the first instance, this would be a matter for the local NHS, as any reconfiguration should be driven by local commissioners. She will know that my right hon. Friend the Secretary of State for Health has set out safeguards—conditions that must be fulfilled before any reconfiguration can go ahead. It must be supported by local GP commissioners; demonstrate strengthened public and patient engagement; show clarity on the clinical evidence base; and be consistent with current and prospective patient choice. In the first instance, I suggest that my hon. Friend engage with the local NHS and share her concerns with it.

[Nic Dakin (Scunthorpe) (Lab)]

The decision to close the Leeds children’s heart unit appears to disregard patient choice, and fails the four criteria for the reconfiguration of services set out by the Secretary of State for Health. Will the Leader of the House arrange for a statement by the Secretary of State on whether he will refer the decision to the independent reconfiguration panel?

[Sir George Young]

I cannot promise an early statement from my right hon. Friend the Secretary of State for Health. He was at the Dispatch Box yesterday, dealing with NHS issues. I understand the concern of Yorkshire Members about the decision—of course I do—and I wonder whether it might be an appropriate subject for a debate between now and the summer recess, either on the Floor of the House on the Adjournment or in Westminster Hall.

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

The Leader of the House may be aware of the campaign for an apology for the victims of forced adoption in the 1950s, ’60s and ’70s, and early-day motion 92, which is currently the 16th most popular EDM of this Session.

[That this House recognises the suffering that forced child adoptions during the 1950s, 1960s and 1970s caused, which took place due to social pressures on women who had children outside of marriage; notes the unacceptable adoption and care practices of the past, such as not giving information about welfare services including housing and financial help which were available at the time and not questioning whether women putting their children up for adoption had given informed consent; further recognises the negligence of previous Governments, with regard to ensuring that the care provided for unmarried mothers was appropriate and that they and their children were not mistreated or discriminated against, resulting in many women suffering traumatising pre and post-natal experiences and children being denied contact with their birth parents; and calls on the Government to apologise in order to go some way toward helping the parents and children who were victims of these practices.]

Will the Leader of the House find time for a debate on whether the UK should follow Australia’s lead and issue an apology to victims of this terrible injustice?

[Sir George Young]

I understand my hon. Friend’s concern, and I will share that with the appropriate Minister. As for a debate, the hon. Member for North East Derbyshire (Natascha Engel), who chairs the Backbench Business Committee, has issued an invitation for bids for the pre-recess Adjournment debate, and it strikes me that my hon. Friend’s suggestion would be eminently suitable.

[Graeme Morrice (Livingston) (Lab)]

In view of the failure of the Secretary of State for Defence to meet the trade unions in the Ministry of Defence on the issue of cuts and increased privatisation in the civilian side of the service, will the Leader of the House ask the Secretary of State to hold a debate in the Chamber on this matter and also use his good offices to encourage him to hold an urgent meeting with a delegation from the PCS parliamentary group?

[Sir George Young]

There will be questions to the Ministry of Defence on Monday 16 July, but my right hon. Friend the Secretary of State will be at the Dispatch Box very shortly, and there may be an opportunity for the hon. Gentleman to put that question to him.

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

Will my right hon. Friend convey my thanks to the Backbench Business Committee for making an accommodation to make sure that the motion on the Prime Minister’s adviser on ministerial interests is dealt with before the end of term? I would like to record my thanks to my right hon. Friend for generously accommodating and showing his commitment to Back-Bench time. May I therefore make a further request about Monday’s business? Will he table a motion to lift the 10 o’clock rule, because it would be a travesty if that debate was so over-subscribed that speeches were truncated? I remind him that Second Reading of the Bill on the Maastricht treaty was spread over two days and went significantly into the night, providing the opportunity for a great many more Members to participate.

[Sir George Young]

On the first point, I used to work for Royal Mail before I became a Member of Parliament, so I am delighted to act as a postman between my hon. Friend and the Chair of the Backbench Business Committee, and relay that message. The Government’s view on my hon. Friend’s second point is that a two-day debate on Second Reading is relatively unusual. I can recall only two such occasions in my time in the House, and I believe that a two-day debate on Second Reading, followed by 10 days in Committee and two days on Report, gives the House adequate time to debate that important issue.

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

Further to the welcome commitment the Prime Minister gave yesterday in Question Time to discuss with the Chancellor the Ulster bank crisis and the role of Her Majesty’s Revenue and Customs, can we have an update next week, by way of a statement to the House, about progress on that issue and about the Ulster bank crisis generally, which it is now believed will continue until 16 July? For a full month, people will have been denied access to normal banking facilities, affecting both businesses and individuals.

[Sir George Young]

I share the right hon. Gentleman’s concern, and I will inquire of the Chancellor whether a written ministerial statement on progress would be appropriate, or if that is not the right way forward, whether a letter can be sent to the right hon. Gentleman and his hon. Friends who represent Northern Ireland constituencies to bring them up to date on progress in safeguarding the interests of the customers of those banks.

[Christopher Pincher (Tamworth) (Con)]

Jaguar Land Rover in Castle Bromwich has expanded its plant with a further investment of £200 million, which offers great opportunities to skilled workers in Tamworth, so can we have a debate on what further steps the Government will take to improve skills for young people and school leavers so that they can take full advantage of this opportunity?

[Sir George Young]

The whole House will welcome the good news of a £200 million investment in the Castle Bromwich plant to which my hon. Friend referred. The short answer to his question is the increased expansion of apprenticeships, which is the largest expansion that the country has ever seen: 457,200 starts last year, and another 400,000 this year. I hope that that gives him the answer that he is looking for, as it demonstrates a real commitment to training people to take advantage of this investment.

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

May we have a statement from the Secretary of State for Justice to explain why it is possible for someone to defraud the taxman of more than £400,000 but merely be given a fine?

[Sir George Young]

There were Justice questions on Tuesday, but having listened to the hon. Gentleman’s question I wonder whether it is more appropriate for the Treasury than the Ministry of Justice, if it relates to a fine for the non-payment of tax. Of course, I will relay the issue to my right hon. Friend the Chancellor and ask him to write to the hon. Gentleman with a response to his question.

[Gareth Johnson (Dartford) (Con)]

In my constituency of Dartford, we have seen a near-eightfold increase in the number of apprenticeship places in the past two years, which has helped to reduce unemployment in Dartford. Can we have a debate on the merits of apprenticeships and how they can boost our economy?

[Sir George Young]

I applaud what my hon. Friend says, and I also applaud the e-mail that I believe was sent to every Member by David Way giving a link to those in our constituencies who want to become apprentices as well as a link for firms that want to offer work to apprentices. It is up to every Member of the House to make sure that that information is available so that the funds that the Government have put at the disposal of the apprenticeship scheme can be taken up locally.

[Fabian Hamilton (Leeds North East) (Lab)]

I thank the Leader of the House for his helpful replies to my hon. Friends the Members for Huddersfield (Mr Sheerman) and for Scunthorpe (Nic Dakin) on the closure of the Leeds children’s heart surgery unit. I do not know whether the right hon. Gentleman is aware that more than 600,000 people in Yorkshire signed a petition to prevent the closure, and that the criteria used to make the decision by the Safe and Sustainable review were deeply flawed and did not take into account the post-16 congenital heart defect work that is done so well in the city of Leeds and the Leeds unit. Will he therefore grant time for a debate?

[Sir George Young]

The whole House has now realised the depth of concern on the part of Yorkshire Members about the decision that was announced earlier this week. If there is a petition of 600,000 signatures, that would go through the threshold to trigger a reference to the Backbench Business Committee, which would then have to find time for a debate. In the meantime, I will relay to my right hon. Friend the Secretary of State for Health the points that the hon. Gentleman has made about alleged deficiencies in the review, and see whether there is any role for him to play in that respect.

[Jason McCartney (Colne Valley) (Con)]

Last month, I had a young lad called Seb from Holmfirth on work experience with me. Seb has had three major heart operations, and a pacemaker fitted at Leeds children’s heart unit. Most of my constituents and I are absolutely appalled at the decision to close Yorkshire’s only children’s heart surgery unit, as are many other Yorkshire Members—and, indeed, Lincolnshire Members. Patient flows and parent journeys have not been given due consideration in the decision. Yet again, may I ask for an urgent debate on this pressing issue?

[Sir George Young]

My hon. Friend has confirmed that concern about the decision crosses the Floor of the House, and it is a matter for all Yorkshire Members. I repeat what I said at the beginning of business questions: this was an independent review, conducted at arm’s length from Ministers and endorsed by the Royal College of Surgeons and by charities with an interest in this field. I cannot promise an early debate in Government time, but I say to my hon. Friend and others who have intervened that I recognise their concern, and I hope that in some way it might be possible to raise these issues on the Floor of the House, given the depth of that concern.

[Paul Blomfield (Sheffield Central) (Lab)]

Within minutes of the decision to close the Leeds children’s heart surgery unit being announced, I was contacted by a constituent who has depended on the service provided. As is becoming clear, this issue not only affects the whole region, but unites the whole House, so will the Leader of the House consider again the need for a ministerial statement?

[Sir George Young]

As I said a moment ago, my right hon. Friend the Secretary of State for Health was at the Dispatch Box yesterday dealing with NHS matters, although I appreciate that that might have been before the decision was announced. I cannot promise an early statement from my right hon. Friend, but I will leave him in no doubt about the depth of feeling on the issue on both sides of the House when we next meet.

[Glyn Davies (Montgomeryshire) (Con)]

A High Court judge recently ruled that a young Welsh anorexia sufferer should be force-fed, a case that can be interpreted as allowing force-feeding to become a standard treatment for all anorexia sufferers. Can the Leader of the House arrange for a written statement to clarify the Government’s position on this most sensitive area?

[Sir George Young]

The Government take very seriously the problem of eating disorders, which particularly affect those between the ages of 15 and 24. Speaking from memory, I think that more than 1 million people in the UK suffer from eating disorders and anorexia. Speaking from memory again, I think that there is a pathway of treatment that has been prescribed, and those dealing with people suffering from anorexia should follow those guidelines. I will see whether there is any lack of clarity, particularly with regard to force-feeding, and ask my right hon. Friend the Secretary of State for Health to write to my hon. Friend.

[Liz Kendall (Leicester West) (Lab)]

May I reinforce calls for a full and proper debate on the future of children’s heart surgery? Yesterday’s decision to close services at Glenfield hospital in my constituency has come as a devastating blow to patients, families and staff. They have serious questions about how and why the decision was made and the impact it will have on the local and national services the unit provides. A debate would allow those questions to be asked and answered. At present, there is no other way of doing that.

[Sir George Young]

Again, I recognise the depth of concern. I have announced an Opposition day for Monday week and it would be perfectly appropriate for the Opposition, if they so wanted, to choose this as the subject for debate. The Government provide time for Government legislation but do not normally have time available for debates of this nature.

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

The decision was not made by Ministers, but the closure of the Leeds children’s heart surgery unit leaves the north with only two children’s heart hospitals. It is really important that we have a debate on the decision and the knock-on effect on cardiology services for adults and other members of the community.

[Sir George Young]

Again, I understand my hon. Friend’s concern. The review was not about closing heart services for children; it was about driving up quality and improving chances of survival. The independent review panel decided that concentrating these operations in a smaller number of hospitals will increase the skill of the surgeons and improve outcomes. That is the background. I understand the concern, expressed by many hon. Members, about the consequences and take the point that they would like time for a debate. I cannot promise one in Government time, but I have indicated a number of options, including having a debate in Westminster Hall, going to the Backbench Business Committee and debating the matter as part of the Opposition day debate on Monday week or, indeed, in the pre-recess Adjournment debate.

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

Tomorrow we return to private Member’s Bills, the first of which is highly relevant in the light of the events of the past week. It relates to the parliamentary role in the appointment of a new Governor of the Bank of England. I hear that the Government are organising for their Back Benchers to talk the Bill out, which means we will again experience the puerile antics that have brought the House into disrepute. What progress has been made on the proposals to debate private Member’s Bills earlier in the week or allow them to be subject to deferred Divisions?

[Sir George Young]

I congratulate the hon. Gentleman on his good fortune in the ballot for private Member’s Bills. I have no idea what will happen tomorrow, so he will have to await the Minister’s response. It may well be that Conservative Back Benchers are very interested in his Bill, and rightly so. On his last point, the Backbench Business Committee has announced that it wants to have a separate inquiry into the regime for private Member’s Bills, and I am sure that it would be interested in taking evidence from the hon. Gentleman.

[Tessa Munt (Wells) (LD)]

The Leader of the House will know that section 2 of the Protection from Harassment Act 1997 prevents the police from taking any action against a perpetrator of harassment without violence or violent intent if it took place more than six months previously. Will he find time for a debate to protect those people, such as a constituent of mine, who have been subjected to a sustained campaign of harassment on the internet and by mobile phone? The six-month threshold should be changed.

[Sir George Young]

I understand my hon. Friend’s concern. The Government have put forward some proposals that deal with antisocial behaviour, and the behaviour she outlines certainly strikes me as antisocial. When appropriate legislation is brought forward to deal with this, there might an opportunity to close any loopholes that exist.

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

We heard a statement yesterday from the Health Secretary in which he talked about steady progress in the NHS, but I draw the attention of the Leader of the House to the funding guidelines for public health, which mean that my region will lose £53 million and my local authority, Durham county council, will lose £20 million. I know that that is in line with the Government’s policy of moving resources from poor areas to rich ones, but may we have an urgent statement or debate on the gerrymandering of public health funding?

[Sir George Young]

I resist any accusations of gerrymandering. As the hon. Gentleman knows, the Government have transferred responsibility for public health from the NHS to local authorities, which I think is a perfectly progressive move, and one that has been welcomed by local authorities. The money has been redistributed in what I regard as a fair way. I will certainly raise with my right hon. Friend the Secretary of State for Health the hon. Gentleman’s concern that his region has somehow been short-changed, but I hope that the hon. Gentleman will endorse the principle of transferring responsibility and linking it with social care, housing and other responsibilities discharged by local authorities.

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

May we have a debate on the value for money the UK receives from the European Investment Bank in the light of the fact that we are being asked to contribute yet another £1 billion to it?

[Sir George Young]

If my hon. Friend is very ingenious, he might be able to raise his point during next Thursday’s debate on an EU motion relating to the EU budget. We would expect the UK to benefit significantly from any additional EIB lending of the sort he refers to, and it is of course important that all member states get their fair share of lending.

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

May we have a debate on the delivery of London bus services? Last night, not for the first time, I and a number of other travelling passengers were invited to leave a bus and stand on the pavement because the driver had been instructed by his manager to turn the bus around before it reached its destination and return to its original point of departure. Those people were left abandoned on the street without any compensation and had to pay an extra fare. Is that really how we are going to treat residents and visitors to London during the Olympics?

[Sir George Young]

I am sorry that the hon. Gentleman and his fellow passengers were inconvenienced in that way. If he will let me have the relevant details, I will certainly pursue the matter with the Mayor of London.

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

May we have a debate on renewable energy and the apparent contradiction between the document “Planning for Renewable Energy” and the national planning policy framework? The Government have accepted, in answer to a written question on 3 July, that there is a contradiction between those documents and a review is under way, but it is causing great confusion for local authorities up and down the land, so can we have the guidance issued promptly?

[Sir George Young]

I will share my hon. Friend’s concern with Ministers at the Department of Energy and Climate Change, who will be at the Dispatch Box a week from today. If he is successful, he might be able to raise the matter during topical questions. I will arrange for a response to be available dealing with the alleged inconsistency to which he refers.

[Paul Flynn (Newport West) (Lab)]

After debates in the Dutch and Canadian Parliaments, those countries withdrew their troops from Afghanistan after great sacrifices in blood and treasure. Should not we in this House answer public opinion, which is strongly in favour of bringing our troops home, adopt a policy of independence from the United States and ensure that our troops are no longer at risk in this increasingly dangerous war?

[Sir George Young]

As the hon. Gentleman knows, there is a commitment to bring our troops home, and it has been put on the record. We are committed to making regular quarterly statements on Afghanistan, and when the next one is due he will have an opportunity to make his case, but the view of the House, as expressed in earlier debates, is that we should rightly honour our commitment, stay with our fellow countries in Afghanistan and give that country the opportunity to build up its police force and armed services so that it can restore law and order on its own.

[Henry Smith (Crawley) (Con)]

I recently met a very courageous 11-year-old constituent, Katie Pole, who is dealing admirably with the results of type 1 diabetes. Will consideration be given to holding a debate about that condition in terms of raising awareness and in terms of further medical research to resolve it?

[Sir George Young]

I think that the right hon. Member for Leicester East (Keith Vaz), who chairs the Home Affairs Committee, recently had a debate in the Chamber about diabetes, and some issues that my hon. Friend raises may have been raised then. I refer him to the public service announcement, made by the Chair of the Backbench Business Committee, that there may be an opportunity before the House rises on Tuesday week to have a further debate about that important illness.

[Hugh Bayley (York Central) (Lab)]

Two days ago, when the Leader of the House announced today’s business, he was unable to assure me that the Back-Bench Business which had to be abandoned would be rescheduled, so I warmly welcome his decision after listening to representations from me and the Chair of the Backbench Business Committee to reschedule the air ambulance debate.

The right hon. Gentleman shows that he listens, and I share the view of other Yorkshire and north Lincolnshire Members that the decision to close the local children’s heart surgery unit is wrong. He has heard those representations, so will he return next week and during his response to business questions advise the House of a time, whether Government, Back-Bench or some other, when we can have that debate, which the House clearly wants and needs?

[Sir George Young]

I am grateful for what the hon. Gentleman said in the earlier part of his question. Between now and next Thursday, I should like to touch base with the Chair of the Backbench Business Committee, with the Opposition and with business managers to see whether there is any way in which we can respond to the very strong demand from Members on both sides for a debate about the recent decision on children’s services.

[Karen Bradley (Staffordshire Moorlands) (Con)]

The Stanley Head outdoor education centre, located in my constituency but owned by Stoke-on-Trent council, faces closure. A number of my constituents would like to take on the centre and run it as a community asset, and they have the support of Staffordshire county council and other interested parties, but so far they have not been successful. Will the Leader of the House find time for a debate about community assets, and about residents taking over their ownership to keep them going for the people who use them?

[Sir George Young]

It is, indeed, one of the policies of the coalition Government to enable community groups to take over and run public services when they are threatened with closure. I should like to raise my hon. Friend’s case with my Cabinet Office colleagues, who have responsibility for the policy, in order to see whether there is a way through which enables these services to continue, run by the community group that she mentions.

[Valerie Vaz (Walsall South) (Lab)]

May we have an urgent debate about how to access funds for zebra crossings, a matter that was raised at Prime Minister’s questions yesterday? On Darlaston road in the Pleck ward of my constituency, a four-year-old boy was knocked down and a woman suffered broken bones on its crossing, but both central and local government cannot find the £30,000 required to upgrade it to a signal-controlled one. We need to do something before there is a death on the crossing.

[Sir George Young]

I am sure that the hon. Lady has raised the matter with the newly elected mayor of Leicester, who has responsibility for the transport budget—[Hon. Members: “Walsall!”] Walsall, sorry. I will raise the matter with the appropriate authorities and see whether there is any way in which we can make progress on that important crossing.

[Mr Speaker]

As far as I am aware, the hon. Lady bears no obvious resemblance to her brother!

[Stuart Andrew (Pudsey) (Con)]

Yesterday, I spent seven hours sitting in a meeting, carefully listening to the decision from the Safe and Sustainable review of children’s heart units. There was a clear disregard for a fundamental principle of the NHS constitution, namely patient choice, as it was said that patients would be managed to use the Newcastle hospital and Lincolnshire patients were barely mentioned at all. In addition, the review goes against the Secretary of State’s recently stated four principles for the reconfiguration of services. This is a fundamentally important issue to many of our constituents, so please may I urge my right hon. Friend to ensure that, at the very least, the Secretary of State gives a statement to the House?

[Sir George Young]

Again, I recognise the strength of feeling, which has been added to by my hon. Friend, whose concern I recognise also. I am not sure that I can usefully add to what I said a moment ago, except to say that I do recognise the strength of feeling on the issue and will try, between now and next Thursday, to find a way through so that we might provide an avenue for a discussion on this important matter.

[Mr Denis MacShane (Rotherham) (Lab)]

When my son was a tiny tot, I took him to Leeds children’s hospital, but now my constituents will go to London because it is easier than going to Newcastle—on the recommendation of Sir Ian Kennedy, whose care for families and parents spending time with their children is well known to this House. It is a recommendation, but the decision is that of the Secretary of State, and “suffer the little children of Yorkshire to suffer” is not something that the NHS should support. This Government have the reputation of being a Government of the south, by the south, for the south. We do not want a debate; we want a decision to reject this recommendation and to keep the hospital open.

[Sir George Young]

I am sorry that the right hon. Gentleman uses the words that he does. All the physicians who carry out the operations will, of course, remain in post; what we are talking about is where they carry them out. I cannot add to what I have said on several occasions in response to earlier questions, but I will do my best to find an avenue for a debate about this important issue.

[Duncan Hames (Chippenham) (LD)]

If on Tuesday it is the will of this House that the Committee stage of the House of Lords Reform Bill should potentially be without end, where will the Leader of the House look to secure additional sitting days in order to protect Government and other House business?

[Sir George Young]

The Leader of the House is not contemplating that eventuality; I am confident that, on reflection and having listened to the debate, the House will want to agree to the programme motion on the Order Paper.

[Helen Jones (Warrington North) (Lab)]

In the light of what has already been said about Leeds, will the Leader of the House find time for a debate about the quality of decision making in the NHS? Yesterday my local NHS considered a report on removing vascular services from Warrington, based on flawed evidence and dated “June”, although the consultation closed only on 5 June, and it refuses to announce its decision. Yet, the Prime Minister said yesterday that

“changes should not go ahead unless there is proper listening to local clinicians and local people.” —[Official Report, 4 July 2012; Vol. 547, c. 913.]

When are we going to get that listening exercise, instead of managers taking flawed decisions and refusing to look properly at the evidence?

[Sir George Young]

We have moved away from a system in which decisions are taken by managers to a process that is more clinically based; that is what local commissioning is all about. I will raise with my right hon. Friend the Health Secretary the particular concern that the hon. Lady mentions and ask him to write to her.

[Philip Davies (Shipley) (Con)]

I welcome my right hon. Friend’s clear willingness to try to secure a solution and find time to debate the appalling decision not to designate Leeds as a children’s heart centre, but does he agree with the principle that, before the Secretary of State decides to ratify or not that particular decision, a debate in the House is absolutely crucial in order for him to listen to the arguments for retaining Leeds?

[Sir George Young]

Again, I recognise the force of my hon. Friend’s argument that there should be some opportunity for the House to debate and, if possible, to take a view on that particular decision. I cannot promise an early debate in Government time, but as I have said repeatedly I recognise the strength of feeling on this and will do my best to see whether we can find some time to debate it in the not too distant future.

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

Newcastle city council is just one authority dealing heroically with the aftermath of last week’s floods. With further flood warnings issued for this weekend, and with little reassurance provided in Environment, Food and Rural Affairs questions this morning on any financial assistance from the Government or on any progress on the flood insurance deal, will the Government make time for a debate about the economic impact of flooding?

[Sir George Young]

The hon. Lady will know of the Bellwin formula, which extends Government help to local authorities that are confronted with significant problems as a result of things such as flooding. My right hon. Friend the Secretary of State for Environment, Food and Rural Affairs was in Gateshead recently, and she was at this Dispatch Box a few moments ago answering questions about flooding and other issues, but I will ask her to write to the hon. Lady about the specific matter that she raises.

[Greg Mulholland (Leeds North West) (LD)]

There is clear evidence of market abuse, manipulation, price fixing and mis-selling to small businesses by unregulated big business—I am talking not about the banks, but about Britain’s giant pub companies. So far, Ministers have ignored the Business, Innovation and Skills Committee report and inexplicably recommended self-policing. When will we have a statement from Ministers saying that they will uphold the clear will of the House, expressed on 12 January, and announce a review of this unsatisfactory position in the autumn?

[Sir George Young]

I commend my hon. Friend on his vigorous campaign on behalf of the country’s pubs and understand his disappointment with any decision to remain with self-policing. I will raise his concerns with my right hon. Friend the Secretary of State for Business, Innovation and Skills and see whether there is anything to add to the statements that he has already made on the response to the Select Committee.

[Mrs Madeleine Moon (Bridgend) (Lab)]

On 19 July, the Government announced their consultation on the draft suicide prevention strategy. That ended on 11 October. We are still waiting for the strategy finally to be announced. The Department of Health website says that the consultation responses will inform the final strategy “in early 2012”. May we have a statement before the House adjourns so that we know when we will have the suicide prevention strategy?

[Sir George Young]

I understand the hon. Lady’s concern at the length of time it has taken to get a response. There are Health questions on 17 July. I will see whether by then there can be a response to the issues that she has raised, as she may be able to ask a question.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am genuinely sorry to disappoint colleagues. This is a rarity; as the House will know, I like to accommodate everybody. However, there is heavy pressure on time, and we must now move on.

Army 2020

Thursday 5th July 2012 Commons Chamber

12:21

[The Secretary of State for Defence (Mr Philip Hammond)]

Before I begin, I would like to pay tribute to the air crew from 15 Reserve Squadron, based at RAF Lossiemouth, who were involved in the Tornado GR4 aircraft accident on Tuesday—Flight Lieutenant Hywel Poole, who was killed in the accident, and Squadron Leader Samuel Bailey and Flight Lieutenant Adam Sanders, who are still missing and must be presumed dead. My thoughts, and I am sure those of the entire House, are with their loved ones at this difficult time and with the fourth member of the squadron involved in the incident, who is currently in a serious but stable condition in hospital.

With permission, Mr Speaker, I wish to make a statement about the future structure of the British Army. I know that I can speak for the whole House in expressing our gratitude for the superbly professional job that our armed forces are doing in Afghanistan and around the world and in paying tribute to their courage, commitment and self-sacrifice as they do so. We have seen again this week, in all too stark contrast, the risks that they take on our behalf, both in Afghanistan and at home, and the price that all too many of them pay.

The operation in Afghanistan remains the Ministry of Defence’s top priority, but our combat role in Afghanistan is coming to an end—and with it, the predictability of the Army’s main effort. Looking beyond 2014, we need to restructure to face an increasingly uncertain world, ready to intervene whenever and wherever to protect our national interest and with an ability to project force and prevent conflict through “agile and adaptable” armed forces, as set out in the 2010 strategic defence and security review.

We also need to address the reality of the fiscal situation and to ensure that our armed forces are sustainable and affordable. My predecessor, my right hon. Friend the Member for North Somerset (Dr Fox), announced in the House last July that, as part of the measures to bring the defence budget back into balance and to eliminate the £38 billion black hole that we inherited from the last Government, the future strength of the Army would be around 120,000, including an integrated trained reserve of 30,000—a total trained strength not dissimilar to the pre-SDSR level.

So this statement is not about the size of the Army; that decision has already been announced. It is about how we structure the future Army and how we support it to deliver the greatest possible military effect within the manpower envelope available. The Chief of the General Staff could have taken the attitude that a given reduction in regular manpower must inevitably lead to a similar reduction in military capability. But he did not; he has grasped the opportunity presented by the end of the Afghan campaign to review fundamentally the structure of the Army and its relationships with the reserves and its commercial contractors.

A team led by Lieutenant General Nick Carter has produced “Army 2020”, a detailed plan for a future Army with two distinct elements: reaction forces and adaptable forces. The reaction forces will generate high-readiness contingent capability, trained and equipped to undertake the full spectrum of intervention tasks, including provision of forces for the first phases of any future brigade-scale enduring operation. The reaction forces will be based around 16 Air Assault Brigade and three armoured infantry brigades, and equipped with new or upgraded armoured fighting vehicles.

Given the high readiness of the force, it will be made up predominantly of regular troops. The reaction forces will form a powerful UK contribution to a coalition effort and act as the initial land component of a joint war fighting operation, alongside air and maritime components. At best effort, it will deliver a division into the field. The remaining infantry and armoured units will form the adaptable forces—a pool of regular and reserve units, commanded by seven infantry brigade headquarters, capable of generating forces for tasks including overseas capacity building; homeland resilience; the Army’s standing commitments, such as Cyprus, Brunei, the Falklands and ceremonial duties; and, when required, generating the further brigades to sustain any future enduring operation.

Over a full career, soldiers and officers in infantry and armoured units will expect to serve in both reaction and adaptable forces. Both the reaction forces and the adaptable forces will include force troops—the artillery, engineers, signals, Royal Electrical and Mechanical Engineers, logistics, intelligence, medical and other specialist units on which the Army in the field depends and without which it could not function.

To achieve that design while reducing the size of the Regular Army demands a much higher level integration of the regular and reserve components. In the past, the reserve may have come to be seen by some as an add-on to the Army; in future, the reserve will be a vital integrated component of the Army. The requirement for greater integration was a principal conclusion of the independent commission set up to review the UK’s reserve forces, led by the vice-chief of the defence staff, General Sir Nicholas Houghton. I am most grateful to the members of the commission, including my hon. Friend the Member for Canterbury (Mr Brazier), for their work in producing that invaluable report.

I can tell the House today that we accept the thrust of the commission’s recommendations. In the interest of keeping this statement to a reasonable length, I have this morning laid a written ministerial statement setting out the detail of how we intend to proceed with our plans for enhanced reserves. But I can tell the House that the process of reshaping the reserves for their future role has already begun, and that I have set up an independent scrutiny team to assess its progress, led by retired Lieutenant General Robin Brims, chairman of the Council of Reserve Forces’ and Cadets’ Associations, who will make his first report in the summer of 2013.

Let me now return to the future structure of the Regular Army. In reducing the size of the Regular Army in line with the announcement made last July, there must inevitably be a reduction in the number of units. In headline terms, there will be 17 fewer major units as a result of this announcement. The reductions will fall across the various arms and services of the Army.

The importance of the regimental system to the British Army and its contribution to the fighting spirit that delivers a battle-winning edge is very clear. I understand the dismay, felt particularly by former members, at the withdrawal of units that may have illustrious histories and antecedents. I understand, too, the attachments of the regions and nations of the United Kingdom to specific units within the British Army, and their justifiable pride in those units. In designing the new structure, the Army has sought to be sensitive to those issues.

But I am also very clear that the Army that emerges from the process must be a forward-looking, modern fighting machine, remaining best of its class—respecting the past and honouring its proud history, but looking resolutely to the future, with its principal focus being the brave men and women currently serving and the units in which they serve. The Army has approached this task methodically, carefully redesigning the way it delivers force support and building up a “whole force” concept that gives effect not only to the integration of the reserves but to the greater use of contractors, sometimes using sponsored reserves, to support operations, maximising the combat effect of the regular manpower available.

I should emphasise to the House that the withdrawal or merger of units is completely separate from the redundancy process. An individual in a unit which is withdrawn or merged is no more or less likely than any other individual with similar skills and service record to be selected for future redundancy. When units are withdrawn, their personnel are reassigned to other units, where possible within the same regiment. Nor does anything that I shall announce today prejudice the basing review that is looking at the optimum future basing pattern for our armed forces units around the United Kingdom.

I will list the changes to individual units. Starting with the force troops, 39 Regiment Royal Artillery, 24 Commando Engineer Regiment, 28 Engineer Regiment and 67 Works Group will be withdrawn. In the Army Air Corps, 1 Regiment and 9 Regiment will merge in preparation for equipping with the new Wildcat helicopters. In the Royal Logistics Corps, 1 and 2 Logistics Support Regiments will be withdrawn and 23 Pioneer Regiment disbanded, with its functions assumed by other units. In addition, 101 Force Support Battalion REME and 5 Regiment Royal Military Police will be withdrawn, with 101 becoming a reserve unit.

Army 2020 calls for a greater focus on mobility and the ability to mount expeditionary warfare based around the air assault and armoured infantry brigades of the reaction forces. This evolution of our posture still further away from the cold war lay-down inevitably means a reduction in the size of the Armoured Corps from 11 units to nine. After careful consideration of all the factors, including regional distribution and the requirement for a balance of capability, the Army has decided that this will be achieved by an amalgamation of the Queen’s Royal Lancers with the 9th/12th Royal Lancers and a merger between the 1st and 2nd Royal Tank Regiments.

Turning to the infantry, I can confirm that no current regimental names or cap badges will be lost as a consequence of the changes that I am announcing today. Five infantry battalions will be withdrawn from the Army’s order of battle, all of them from multi-battalion regiments. In selecting battalions for withdrawal, the Army has focused on the major recruiting challenges it faces in the infantry. It has looked carefully at recruiting performance, not just at a point in time but over the last decade; at recruiting catchment areas; and at demographic projections for the age cohort from which infantry recruits are drawn. It has also considered regional and national affiliations, the merger and disbandment history of individual battalions, and existing commitments of battalions to future operations. The overriding objective has been to arrive at a solution that those currently serving in the Army will see as fair and equitable.

The conclusion of this process has been that 2nd Battalion the Royal Regiment of Fusiliers, 2nd Battalion the Yorkshire Regiment, 3rd Battalion the Mercian Regiment and 2nd Battalion the Royal Welsh will be withdrawn from the order of battle. In addition, the Royal Regiment of Scotland will see one battalion reduced to a single company. Ministers have agreed with the Chief of the General Staff that in order to raise the profile of the Royal Regiment of Scotland, and of the Army, in Scotland, a public duties company will be created, returning sentries to Edinburgh castle and the palace of Holyroodhouse on a permanent basis for the first time in years. Accordingly, the Argyll and Sutherland Highlanders, 5th Battalion the Royal Regiment of Scotland, will be re-roled as a public duties company.

These withdrawals and mergers, unwelcome as I know they will be in the units affected, are fair and balanced and have been carefully structured to minimise the impact of the regular manpower reduction and maximise the military effectiveness of the Army. The reduction in regular forces will be offset by the enhanced role of the reserves and the “whole force” concept, which optimises the use of contractors in both peacetime and on operations.

The Chief of the General Staff and his team assess that this configuration will mean that Army 2020 can deliver the level of capability agreed in the strategic defence and security review. That is an excellent outcome given the appalling state of our inheritance at the Ministry of Defence, and I am extremely grateful to the Chief of the General Staff and the senior leadership of the Army for the constructive and intelligent way in which they have managed this process. What I have announced today, while difficult and challenging for those directly affected, represents a vision for the future—a vision of a balanced, capable and adaptable British Army that will remain best in class.

The British Army has seen several transformations since the end of world war two—from wartime structure to cold war, from conscription to professional force, and the downsizing at the end of the cold war in “Options for Change” and “Front Line First”—and now it is embarking on another. The values of the Army have endured through previous transformations; they have sustained it through a decade of continuous campaigns. Those same values—courage, discipline, respect, integrity, loyalty, selflessness—will sustain it through this transformation; and, no doubt, through many further iterations in the decades and centuries ahead as this most enduring of British institutions looks confidently to a future in which it continues to adapt to an ever-changing world. I commend this statement to the House.

12:36

[Mr Jim Murphy (East Renfrewshire) (Lab)]

I thank the Secretary of State for his statement and the courtesy of a briefing this morning in his office.

I join the Secretary of State in paying tribute to Flight Lieutenant Hywel Poole, Squadron Leader Samuel Bailey and Flight Lieutenant Adam Sanders. As he rightly says, our thoughts and prayers are with their families.

Today’s statement is, correctly, long on detail but totally short of strategic context. New threats are emerging and weak and failing states outnumber the strong by two to one. There is an arc of instability from west African states to central and south-east Asia. Non-state actors are on the rise, and climate and population change are new sources of tension. The United States is pivoting towards the Pacific while the European end of NATO will take greater strain. In that context, a statement that delivers plans for the smallest Army since the Boer war is an entirely inadequate response.

We can judge a statement not only by what is said but when it is said. This statement has been delayed deliberately to spare the Prime Minister’s blushes during Armed Forces day. He sought the reflected glory of the heroes while preparing to cut the prestige that they embody. This process has been chaotic, and the Prime Minister’s behaviour has been cynical and should never be repeated.

The British Army is an institution that is central to our national security as well as our national identity. The UK is cutting a higher proportion of our Army than many major allies. Indeed, France and Germany have higher net debt than the UK and yet they are cutting their forces by less. The SDSR announced cuts of 7,000 to the Army and new defence planning assumptions which stated that the UK could carry out one major and two lesser operations. Now, with a cut of 20,000, it is inconceivable that there will not be an impact on force projection, especially in the light of cuts to combat support and key enablers. I believe in the deterrent effect of the British Army and its ability to deploy, but for that to be effective, we need both flexibility and sustainability. The plans announced today may provide flexible forces, but it is far from certain that they will provide sustainable military utility.

Deployments in Iraq and Afghanistan have rightly been controversial, and all of us, in all parts of the Chamber, are learning the lessons of those conflicts. However, it is one thing to take a decision never again in future to become involved in large-scale counter-insurgency operations, but when it is impossible to say that the next decade will be safer than the last, it is quite another to make a change to our defence posture that may mean that we could not make large long-term deployments even if we wished to.

Will the Secretary of State confirm that the SDSR planning assumptions that applied to an Army of 95,000 can no longer be guaranteed with a regular Army of just 82,000? We all know that tough decisions are necessary. We support the changes in the non-deployable administrative structure and the equipment programme, and the moves to tackle top-heavy structures. However, all who believed the Prime Minister when he said in opposition,

“We want to see the British Army increase in size”,

will be dismayed by today’s news.

The Secretary of State had said previously that recruitment was a criterion for determining cuts. According to the honorary colonel of 2nd Battalion the Royal Regiment of Fusiliers, his battalion is just nine short of full strength. He has said that this move

“cannot be presented as the best or most sensible military option.”

Further, some battalions have today lost their historic identities: the Green Howards, the Staffords and the Duke of Wellington’s. In Wales, there is a pyrrhic victory in saving a cap badge, but losing 600 people. The Argylls are being reduced to guarding castles and being the backdrop to Japanese tourists’ photographs. Will the Secretary of State explain precisely the military grounds for the decisions on the Green Howards, the Staffords and the Duke of Wellington’s? How many of the 17 units being affected today are at full strength or within 5% of full complement? What specific additional measures can he announce today to help service leavers find work?

We support an increased role for our reservists, but 15,000 brilliant part-time reservists cannot fill the gap created by the loss of 20,000 full-time regulars. To many, that appears to be not a response to the threats, but a self-made capability gap. Will the Secretary of State make it clear that reservists will not form stand-alone units on operations, and say what proportion of the forces on enduring operations he envisages being made up of reservists? Some will see this as a military gamble, and it is undoubtedly an enormous employment challenge. Will he guarantee that the Government will consider new legislation to prevent more active reservists from being discriminated against in the workplace?

In conclusion, these decisions flow from a defence review that put savings before strategy. Our forces face a perfect storm. We are seeing the largest number of service leavers in a generation at a time of deep recession. Today, jobs and military capability have been lost, and tradition and history have been sacrificed. There will not only be a smaller Army; many believe that there will be a less powerful Army and that this will be a less influential nation. Our armed forces, their families and our country deserve better.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I remind the House that, in accordance with convention, Members who arrived in the Chamber after the Secretary of State had begun his statement, of whom there was a significant number on both sides of the House, should not expect to be called.

[Mr Hammond]

We have been treated to a lecture on the strategic context by a member of a Government who did not conduct a strategic defence review in 12 years. We have been told about reductions in the Army by a shadow spokesman who wrote to his party’s leader saying that they would have to examine the structure of the Army and that he recognised the need for manpower reductions. The Labour leader wrote back to him saying that

“we can expect to have to make further savings after the next election”.

What we have not heard from the right hon. Gentleman today is any kind of plan for how he would manage the £38 billion deficit in the Ministry of Defence’s budget that we inherited from him—no plan, no clue.

Let me address some of the specific points that the right hon. Gentleman raised. He referred to Germany and France. Germany spends 1.2% of its GDP on defence, while this country spends 2.1% of its GDP on defence. He talked about France. France is only at the beginning of a fiscal review that will lead to the production of a new livre blanc in the spring for the French armed forces. If he knows that there will not be cuts in the French armed forces, he is better informed than I and better informed than most of the French politicians and staff officers to whom I talk.

The right hon. Gentleman talked about sustainability. One of the achievements of the work that has been carried out over the past few months—it has been a huge piece of work—is the maintenance of capability through an intelligent approach to the challenge of doing more with less. We are using the reserves more intelligently, using our contractors more effectively and reshaping the Army—this process is about the shape of the Army in the future—to improve the tooth-to-tail ratio. We are ensuring that the manpower cuts are made in the areas that will have the least impact on the Army’s fighting capability. I assure him that the Army will be able to deliver the SDSR outputs required of it.

The right hon. Gentleman talked about the strength of individual units. He referred to a leaked letter from the colonel of the Royal Regiment of Fusiliers. The Army has looked at the recruiting ability of regiments and battalions not at a spot-point in time, but over a period of 10 years. It has looked at the demographic projections in the areas where the regiments and battalions recruit and drawn the appropriate conclusions.

The right hon. Gentleman clearly does not understand how a public duties incremental company works. The 100 or so men who make up the PDIC in Scotland will be drawn in rotation from the other battalions in the Royal Regiment of Scotland, so no one will serve a career in the Army being, as he disparagingly put it, photographed by tourists.

The right hon. Gentleman asked about the arrangement of affairs within the regiments where battalions are being lost. He asked specifically about the Green Howards and the Duke of Wellington’s. When battalions are withdrawn, it is for the regiments to decide how the antecedents and the thread behind those battalions are merged into the other battalions.

Finally, the right hon. Gentleman referred to the reserves. We are talking about an Army reserve of 30,000 trained strength, not 15,000 as he mentioned. Reserves will be deployed on operations. That is what will give the Army its sustainability in the future. On an enduring operation, we would expect the first six-month tours to comprise less than 10% reserves, with the reaction forces making up the bulk of the land forces.

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

It’s 12 months.

[Mr Hammond]

It is six months. In the fourth and fifth turns of the handle, we would expect reserves to make up as much as 30% of the deployed force.

[Nicholas Soames (Mid Sussex) (Con)]

My right hon. Friend has come to the House with hard news for many regiments, which are extended families whose soldiers at all ranks will feel these announcements very strongly indeed, as do we all. Will he confirm that the reserve forces will have a new contract of employment, will be properly equipped for the tasks that they have to undertake and will be fully integrated into the regular Army? Finally, may I assure him, as I am sure he already knows, that the Army will make this work?

[Mr Hammond]

I am grateful to my right hon. Friend. That final comment is the point: the Army gets things done. When it has to deal with a situation, it makes it work. He is right that key to the strategy is the effective integration of the reserves. There will be a new deal for reservists. There is ring-fenced money for kit and training in a way that there has not been in the past. That kit has already started to arrive. This year, reserve formations will train overseas. The number of units training overseas this year will be 26 and that will increase over time. Vital to this process are the integration of the reserves, the deal for employers and the deal for reservists, which involves a greater commitment on our behalf, but also expects a clearer commitment from them about their liability to deployment. I have published a written statement today that sets out further details on how we intend to take the process forward.

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

The Secretary of State said that this announcement would have no impact on the basing review, which started last July. May I press him to say whether the proposal for a multi-role brigade to come to Scotland will still go ahead? Specifically, what will happen to Caledonia and Leuchars? Will the Minister meet me and the right hon. and learned Member for North East Fife (Sir Menzies Campbell) to discuss those two bases?

[Mr Hammond]

The right hon. and learned Member for North East Fife (Sir Menzies Campbell) has often reminded me of the concerns about Leuchars. I can only repeat that there will be no impact whatever on the basing review, and our intentions on basing remain as set out. We are doing the work to enable us to deliver them, and we have set out a time scale for doing so.

[Mr James Arbuthnot (North East Hampshire) (Con)]

At last, the uncertainty that has been hanging over the Army’s head has been dispelled. We can all be thankful for that, and I know that the Army will be. However, this plan relies on an increase in the recruitment of reservists unparalleled in modern history. What gives my right hon. Friend confidence that that will happen, and what incentives will employers be offered to release their best workers to serve their country?

[Mr Hammond]

I am grateful to my right hon. Friend. The Army has looked at the experience of comparable forces around the world in recruiting reservists, and I agree that co-operation with employers will be critical. We intend to publish a consultation paper in the autumn on our proposed changes and our engagement with employers—the offer for employers, if you like—and we will bring forward our proposals in the new year. If implementing our vision of reserves requires legislation, we will legislate.

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

May I pay tribute to the young Guardsman Craig Roderick, who was one of the three soldiers killed earlier this week in Afghanistan? He was described as follows by his superior officers:

“Brave, honest and loyal, he was the sort of man anyone would be glad to have in his fire-trench when the going got tough.”

Does the Secretary of State recognise that although the Welsh Cavalry being saved is a great tribute to those who have campaigned for it, it is, as my right hon. Friend the shadow Secretary of State said, a pyrrhic victory considering the loss of the historic 2 Royal Welsh?

[Mr Hammond]

I do not agree with the hon. Gentleman. There has been much speculation in the media about the Queen’s Dragoon Guards, which will continue in its current form. It is necessary to take five battalions out of the infantry, and the Army has taken a methodical and scientific approach. Regrettably, 2 Royal Welsh is a battalion that has to be lost.

[Sir Menzies Campbell (North East Fife) (LD)]

I share the relief of many in the House that the cap badges and traditions of regiments and units will be preserved. However, in spite of the efforts of my right hon. Friend the Secretary of State, I retain a certain scepticism that we can cut the professional Army by 20% with no impact on capability or on the policy options that might be available to Her Majesty’s Government.

My right hon. Friend seeks to separate the issue of the structure of the Army from that of its basing requirements. Again, I must respectfully disagree with him. The proposal that Typhoons should be transferred from Leuchars to Lossiemouth was based on the proposition that the Army required Leuchars because there was to be a multi-role brigade stationed in Scotland. Now we hear that no such brigade is to be stationed in Scotland. Is not that the final nail in the coffin of the proposal to move Typhoons from Leuchars to Lossiemouth?

[Mr Hammond]

No, it is not. It remains our intention to locate an infantry brigade in Scotland. As the right hon. and learned Gentleman will see when he looks at the brochure that the Army has produced, which is being circulated to Members, such brigades will be multi-role.

I want to tackle the right hon. and learned Gentleman on his point about capability. He questions whether a 20% reduction can possibly lead to no reduction in capability. The SDSR was already predicated on a reduction to a trained regular strength of 94,000. The challenge that the Army has taken on board is how to manage a reduction of a further 12,000 with the minimum impact on the outputs that it delivers. It has done that by using the intelligent approach of the “whole force” concept, with reservists and contractors playing a significantly larger role. The General Staff assures me that they can deliver the outputs required under the SDSR with that construct, and I believe them.

[Mrs Madeleine Moon (Bridgend) (Lab)]

The House is well aware that this is a dangerous moment. This country will now have the capacity to fight only in coalition, with expeditionary forces, no enduring capacity and no surge capacity. How can the Secretary of State be sure that the people of Wales, and those of England and Scotland, will be willing to take part in the reserve forces? How can he be sure that employers will be willing to free their people for the reserve forces, and how can we be sure that this country will be able to defend itself with such a high level of reserves, which we have no assurance will actually be in place?

[Mr Hammond]

More rubbish from the Opposition, I am afraid, and that from Members whose Government systematically under-equipped our forces and cancelled training for our reservists. We have the fourth largest defence budget in the world. The hon. Lady asks me why I think we will be able to recruit reservists. The first reason is that we will guarantee them the training, kit, uniforms and equipment that they never had under the last Government. It is simply rubbish to say that we will have no surge capacity and no enduring capacity. I have just set out how the construct that the Army has put together will deliver us the ability to deploy a brigade-sized formation on an enduring operation indefinitely.

[Mrs Moon]

One.

[Mr Hammond]

Well, how many would the hon. Lady like to deploy? How many wars does she want to fight at a time?

[Mr Julian Brazier (Canterbury) (Con)]

In welcoming the statement, may I seek assurance from my right hon. Friend that the members of the 5th Battalion the Royal Regiment of Scotland, in my constituency, who are hearing what will inevitably be painful news, will still have exciting prospects within the remaining four battalions and one company of the regiment?

I particularly welcome what my right hon. Friend said about the reserve forces and urge him to recognise that what he said about integration is critical. If we want to rebuild the officer base of the reserve forces, at the core of that will be roles for formed bodies of men—units and sub-units—not simply the milking-off of augmentees, as has been happening for the past three years in Afghanistan.

[Mr Hammond]

First, the positive news for people in the 5th Battalion the Royal Regiment of Scotland, which is based in my hon. Friend’s constituency, is that the regiment is under-recruited, so the merging of that battalion into the remainder of the regiment should be done without the need for a loss of personnel.

My hon. Friend is absolutely right about the integration of reserves. There will be a role for all three forms of use of reserves. Individual augmentees will continue to play an important part, delivering specialist skills in support of the reaction forces on an early deployment. However, formed sub-units, and in some cases formed units, will also be a vital part of how the adaptable force operates. That is one of the major changes being announced today.

[Angus Robertson (Moray) (SNP)]

It is with great sadness that I add my tribute to my constituents from RAF Lossiemouth who died in the Tornado incident earlier this week—Flight Lieutenant Hywel Poole, Squadron Leader Sam Bailey and Flight Lieutenant Adam Sanders—and to the fourth crew member, who is still in hospital. The thoughts of everybody in Moray and across the House are with their families, friends and colleagues.

Turning to today’s defence announcement, the UK Government have already acknowledged that defence personnel in Scotland have been cut disproportionately in recent years—more than 27% in Scotland, compared with 11% in the UK as a whole. Today, those cuts continue. Although the retention of cap badges is welcome, the Tories have broken their promise to restore the six Scottish infantry regiments. Will the Government confirm what the established strength of the Royal Regiment of Scotland will be after the changes have been introduced, and that the Scottish infantry in Scotland is already smaller than the infantry of the Irish Republic?

[Mr Hammond]

The hon. Gentleman confuses basing, on which he talked about personnel in Scotland, with the structure of the Army, on which he talked about the Royal Regiment of Scotland. I simply do not think he understands what we are talking about today.

The key fact that the hon. Gentleman cannot deal with is that although he talks about a sixth regiment—I presume he means a sixth battalion—in the Royal Regiment of Scotland, the truth is that it has five battalions and has not been able to recruit to keep them up to strength. It is one of the most under-recruited regiments in the British Army. It is no good his asking for extra battalions and more regiments, because it cannot recruit to fill the ones that it already has. It also has one of the highest percentages of overseas-recruited troops in the British Army. That is the challenge that he faces before he can bring such issues before the House.

[Sir Peter Tapsell (Louth and Horncastle) (Con)]

My right hon. Friend’s statement is an echo of the Geddes axe statement of the 1920s, for which the country, Europe and the rest of the world ultimately paid a very heavy price. One of the main reasons national service was abandoned was that it was decided that too many non-commissioned officers and too many of the best young officers of the Army had to be withdrawn from the fighting ranks to train 18-year-old national servicemen, who served for only two years. One thing that is absolutely certain is that the day will come when we need to increase our armed forces in some unpredictable crisis. Will the new, reduced Army have the capacity to train the necessary numbers of young men in the way Kitchener did, raising 1 million in a year?

[Mr Hammond]

I am not sure that raising 1 million troops in a year will be easy, but I can say to my right hon. Friend, who raises an important point, that one design parameter we set for the Army 2020 exercise is that the Army should be able to regenerate capacity if, at a point in the future, the strategic context demands it and the fiscal situation permits it. I can assure him that the Army, in designing Army 2020, has held that very much to the front of its consideration.

[Mr Jeffrey M. Donaldson (Lagan Valley) (DUP)]

This is a difficult day for the Army, but I welcome the retention of the 1st and 2nd Battalions of the Royal Irish Regiment—the 2nd Battalion is a reserve unit—and of the Irish Guards. Reserve forces are heavily recruited in Northern Ireland. We supply up to 20% of operational reserves in the United Kingdom. When will we hear of the new formation of the reserve units in each of the regions?

[Mr Hammond]

If the right hon. Gentleman looks at the written statement that I laid this morning, he will see that a new Royal Auxiliary Air Force unit will be stood up in Northern Ireland.

[Bob Stewart (Beckenham) (Con)]

The cuts have been particularly savage on English county regiments, especially given the fact that not one Scottish regiment is going. This is difficult, and will impact on the regimental system. English county regiments are meant to be linked to counties, but they are being dislocated, whereas Scottish regiments still have the regimental system. From now on, we will have a two-tier regimental system. Will my right hon. Friend explain how the system will work with regard to connecting regiments to the people of England?

[Mr Hammond]

As I said in my initial statement, I recognise the importance of the affiliations of individual units to regions and nations of the UK, particularly for recruiting. We intend to maintain that system. Much of the speculation in the media over the past few months has been about the suggestion that we would somehow abolish the regimental system and move to a continental-style army. Nothing could be further from the truth. I should remind my hon. Friend that many English territorial regiments—for example, the Royal Anglian, The Princess of Wales’s Royal Regiment, The Rifles, and the Duke of Lancaster’s Regiment—have not been touched by today’s announcement.

[Mike Gapes (Ilford South) (Lab/Co-op)]

Does not the statement mean greater co-operation with our European Union NATO partners? Does the Secretary of State agree that the future of British defence policy will be increasingly Europe-oriented?

[Mr Hammond]

I agree that most, but not all, operations in which we will wish to be involved are likely to be conducted with allies, which will usually mean NATO allies. It is absolutely true that as the US pivots towards the Asia-Pacific region in responding to the increasing strategic challenge from China, we and our European NATO allies will have to work harder to generate the European end of the NATO deal.

[Sir Bob Russell (Colchester) (LD)]

I welcome what the Secretary of State has said about 16 Air Assault Brigade and am relieved that the Royal Anglian Regiment’s two battalions survive, but, according to the House of Commons Library, we have to go back to 1750 to find a time when the British Army was smaller than that projected—the Army will be half the size it was at the time of the Falklands war. Given the armed forces covenant and the proud military history of our nation, is the Secretary of State aware that he will go down in history as the man who hammered the Army?

[Mr Hammond]

If there is a man in the Chamber who has nothing to complain about today, it is the hon. Gentleman. It is simply not helpful or relevant to compare the size of the Army now with that of 50 or 100 years ago. The capabilities—equipment, connectivity, communications and firepower—of an infantryman in the field today are an order of magnitude different from those of infantrymen of the past. I come back to two simple facts: first, both the country and the MOD inherited a fiscal disaster; and, secondly, we must reconfigure the structure of our forces to deal with the threats we will face in future, not the ones we faced in the past.

[Dan Jarvis (Barnsley Central) (Lab)]

May I record my sadness at the loss of a battalion from the Yorkshire Regiment? Today’s statement has not been underpinned by a strategic analysis of the world in which we operate. It depends on a much greater reliance on our reserve forces, which carries real risk, and the process has increased uncertainty and doubt among our forces and their families. What specific measures can the Secretary of State announce today better to support those who remain in the service, and—very importantly—what can he say about those who will be moving into the labour market at a particularly challenging time?

[Mr Hammond]

The hon. Gentleman says that the announcement is not underpinned by any strategic analysis, but he supported a Government who did not conduct a strategic defence review in 12 years. The announcement is underpinned by the findings of the strategic defence and security review of 2010, which established a National Security Council, which continuously reviews the strategic context.

The hon. Gentleman asks about people who will remain in the forces. I hope to be in a position very soon to make an announcement about the military pension scheme, and we are well advanced in designing what the military calls the new employment model, which will set out more clearly our offer to military personnel, including how we can make the remuneration package that underpins the armed services more flexible and responsive to the needs of individuals than it has been in the past.

The Army has well-structured arrangements in place to support those leaving the service, but we are looking at additional measures, including working with external charities, to ensure that they are supported in every way possible.

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

However painful the statement is, and it must be bitter for my right hon. Friend to deliver it, we recognise that it is an inevitable consequence of the circumstances we face. Does he accept, and will he underline in his response, that there is an element of gambling in every defence review and decision, and that the ability to regenerate is central? Will he also confirm that the importance of maintaining the equipment programme—equipment takes much longer to regenerate—is reflected in the priorities of his Department?

[Mr Hammond]

My hon. Friend is absolutely right. It is critical that we make the Army sustainable by dealing with the underlying fiscal chaos that we inherited. Labour did not deal with the equipment programme but simply pushed the problems further to the right, building up a larger and larger bubble of unfunded theoretical projects that would never be delivered. That does not help anyone. He is correct, of course, that the ability to regenerate is critical to the Army’s strategic resilience. We do not know what will happen in five or 10 years, so the ability to regenerate capability is our greatest protection for the future.

[Joan Walley (Stoke-on-Trent North) (Lab)]

Today’s announcement about the 3rd Battalion the Mercian Regiment—the Staffords—will be met with anger and dismay. Given what the Secretary of State says about the importance of affiliation to local counties, will he tell me how he arrived at the decision to disband the battalion? Does he not realise that the help that will be needed, particularly from the British Legion, by those who will lose their jobs, and who have only ever served with loyalty and distinction, will be more badly needed than ever before?

[Mr Hammond]

The hon. Lady has completely misunderstood the point.

[Joan Walley]

indicated dissent.

[Mr Hammond]

Yes, she has. The statement is not about individuals losing their jobs but about the structures within which individuals will serve. The disbandment or withdrawal of a regiment or battalion does not mean that the individuals in it will lose their jobs. As the Army works on its manning plan over the next couple of years—there will be further tranches of redundancy—people will be able to move across the Army to fit the newer structure. The hon. Lady asked me how I arrived at the decision. I did not arrive at the decision: the Army arrived at it. The Army has done the modelling work, and the Army has come to the conclusions. [Interruption.] Opposition Members do not like a Government who listen to the professionals running our military, our health service or our schools. They are used to a model based on political interference from the top down. That is not the view of this Government.

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

Most of us understand, while deeply regretting, the financial imperative that has resulted in the reduction to 82,000 soldiers. Central to the Secretary of State’s announcement today is the importance of the TA in coming years. I might have missed this, but I would like his assurance on a couple of details. First, timing is central. Will the TA be built up before the regular forces are reduced? Secondly, is there room for transfers from the regular forces into the Territorials?

[Mr Hammond]

I think I mentioned that one of the units being withdrawn will become a TA unit. Of course, people leaving the regular forces are always most welcome to join the reserves. My hon. Friend’s point about timing is important, and the process of building up the reserves has already begun. A recruiting campaign was launched over the Christmas-new year period, and further campaigns are in hand. We expect there to be a steady build-up in the reserves between now and 2018.

[Hugh Bayley (York Central) (Lab)]

I am still unclear. The Secretary of State said, “I can confirm that no current regimental names or cap badges will be lost”. Will he state clearly for the House that neither the names nor the badges of the Duke of Wellington’s or the Green Howards will be lost? Will he tell us the current strength of a Yorkshire regiment, both in reservists and regulars, and what it will be after the 2nd Battalion the Yorkshire Regiment has been disbanded?

[Mr Hammond]

The reference to current regiments is to the current regiments of the British Army. There will be no loss of regimental names or cap badges. We have assured that by removing battalions only from multi-battalion regiments. He is referring not to a current regimental name but to an antecedent regimental name attached to a battalion. What happens to that name and how the battalions within the regiment rename and reorder themselves after the structural change is a matter for the regimental family. It is for them to decide. If they wish to retain the antecedent names appended to the battalions, they will be entitled to do so.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I welcome the well-placed confidence expressed in reserve forces in the statement. The Secretary of State will well know, however, that our reserve forces are under-recruited, particularly in specialised areas. What consultation has he done with employers, particularly in the private sector and among small employers, who are particularly affected by the loss of their reservists, to determine whether his plans are feasible? Has he consulted SaBRE— Supporting Britain’s Reservists and Employers—and the National Employer Advisory Board?

[Mr Hammond]

General Sir Nick Houghton, who headed the reserves review and is managing the ongoing work, has consulted SaBRE and all other interested parties, and continues to do so, but I will be frank with my hon. Friend: it will be hardest to recruit from among small and medium-sized employers, because public sector and large corporate employers are much better able to offer the flexibility that reservists need, and much better able to see the benefits of having reservists in their employment. There is also considerable potential among the self-employed—people who perhaps carry out consultancy work—with the offer of much more predictable periods of training and deployment, which would enable them to plan for those deployments as part of their self-employed career. We will seek to recruit from SMEs but it will be the most difficult part of the ask.

[Derek Twigg (Halton) (Lab)]

Today is a dark day for the Army and the country’s ability to project sufficient force around the world in its national interests. I wish to ask the Defence Secretary a specific question about the reservists. He said that we will have enough in place by 2020—30,000, according to his written statement—but what if we do not? Has his Department done a risk assessment, and if so will he publish it?

[Mr Hammond]

The intention is to have a 30,000-strong trained reserve in place by 2018, but clearly much of what we do, including building up a trained reserve to 30,000, has risks attached. However, the management of risk is the everyday business of the Department and the Army, so of course we will have considered the risks and how to manage them. I am not sure whether I will publish the risk assessment.

[Derek Twigg]

Why not?

[Mr Hammond]

Because risk assessments and registers are useful business tools, provided they can be used internally as business tools—as soon as they become public documents, they no longer serve their essential purpose. But I will consider the hon. Gentleman’s question and write to him with a fuller answer.

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

I remind the House of my interest. Integration with the reserve forces will be key. Now that we have announced which regular regiments and battalions will be cut, there will be a clamour to announce which TA units will be merged and changed. May I encourage the Secretary of State to resist that temptation until the basing review is complete, because to do so would be premature for the crucial integration of regulars and reserves?

[Mr Hammond]

My hon. Friend is absolutely right. If the integrated Army is to work, the pattern of regular basing and the pattern of reserve centres have to mesh to allow them to train and work together. We will not be in a position to make a further announcement about the lay-down of reserve units until the basing review, the consultation on reserve terms and conditions, and the employer engagement are completed. I have no doubt, however, that changes will be required. As I have said, and would like to re-emphasise, the reserves will be an integral and essential part of the British Army, and decisions about them will have to be made for the good of the Army as a whole.

[Kevin Brennan (Cardiff West) (Lab)]

May I record my concern at the loss of one of the battalions from the Royal Welsh? Will the Secretary of State tell the House plainly and without obfuscation how many soldiers are likely to be made redundant as a result of today’s announcement, and of them how many will have served in Afghanistan?

[Mr Hammond]

It is no good the hon. Gentleman saying “without any obfuscation”. He is asking a ridiculous question. [Hon. Members: “Oh!] Yes, he is. With no obfuscation, the answer is: no one, as a result of today’s announcement. As a result of the announcement by my right hon. Friend the Member for North Somerset on 18 July 2011, there will be further redundancies, as we reduce the numbers in the regular Army by 19,000 over time.

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I commend the Secretary of State for yet again coming to the House and taking the tough decisions, the need for which we inherited from the previous Labour Government. Will he join me in expressing disappointment at the cries of “Shame” that came across when the regimental names were read out? Under Labour’s watch, we lost four battalions. The Royal Green Jackets—the battalion I served with—the Light Infantry and the Devon and Dorsets all disappeared, and under its watch we also lost 18 TA infantry regiments. I am pleased to see those numbers now going up. Will he confirm that we might be able to learn lessons from the United States and Australia as we rebalance the ratio between the Regular Army and the TA?

[Mr Hammond]

And it was under Labour’s watch that the fiscal problem that underlies today’s announcement was allowed to build up. My hon. Friend is absolutely right: we can learn lessons from the United States and Australia, which are two examples that the Chief of the General Staff and his staff have looked at carefully in formulating today’s proposals.

[Mr Dai Havard (Merthyr Tydfil and Rhymney) (Lab)]

The memorial service for one of my constituents, Lance Corporal Richard Scanlon, which will take place on 21 July, will be easier now that we are not getting rid of the Queen’s Dragoon Guards. I wrote to the Secretary of State about the criterion that was being used. Today’s statement is effectively a work in progress, which is understandable. There is now some limited information in the attached written statement about how the employment model might be taken forward and the discussions about the reserves. However, the argument about saving the Welsh Cavalry was not an argument simply about the Welsh Cavalry; it was an argument about how things looked across the whole of the United Kingdom. This is a United Kingdom issue, but it is also a Navy and an Air Force issue, and at some point I would like to know how the Secretary of State plans to show us how integration will work not only across the Army, but across—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Please resume your seat. Questions must be brief. Hon. Members can see how many—[Interruption.] Order. Hon. Members can see how many of them wish to be called on the statement. I cannot allow it to go until the very end, because we are time limited and there is other business to come. Mr Havard, will you please ask a question?

[Mr Havard]

My question is this. The decision about whether these formations are about need or about money will require further debate in this House, involving a lot of people. How does the Secretary of State intend to proceed?

[Mr Hammond]

It is a pity that the hon. Gentleman did not think of that before. Today’s announcement is about two things: addressing the fiscal necessity of putting our armed forces on a sustainable basis and structuring them to face the challenges of the future, post Afghanistan.

[Patrick Mercer (Newark) (Con)]

I am relieved that there are plans to regenerate the Army in a time of crisis, yet I am concerned that recruiting is about to be passed into the hands of privatised individuals. How confident is the Secretary of State that this untried system will work, particularly in a time of crisis?

[Mr Hammond]

I am confident that employing professionals to support our recruiting effort is the right way to go forward. The Army has a clear plan. My hon. Friend, as a former Army officer, will know that the Army puts a great deal of work and effort into these things. It leaves no stone unturned. The Army is confident, and I take my lead from it.

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

There is real anger in Stoke-on-Trent, a key recruiting area for the 3rd Battalion the Staffords at the way the decision has been handled. Can the Secretary of State explain to my constituents why the 3rd Battalion, which can trace its history back to 1705, was chosen for elimination relative to other battalions—he needs to take responsibility for these decisions—and why, after the expertise built up in Iraq and Afghanistan, it has been removed from the order of battle?

[Mr Hammond]

There were shades of the sound of bedpans dropping there. The point is this: the Army has made a decision about which battalions in each affected regiment should be withdrawn from the order of battle, and it has done so against a number of criteria, including their current deployment and any future commitments to Operation Herrick.

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

I declare an interest, having served with the Royal Regiment of Fusiliers. I am very sorry to say that I think the Government are making a very grave error with these decisions. Not only does the decision to cut the Army by a fifth smack of accountants running amok, but the decision to axe the better recruited English battalions, such as 2RRF, at the expense of the more poorly recruited Scottish battalions smacks of a grubby political fix, given the advent of the Scottish referendum. If the Government cannot make the right decision within the MOD budget, will they at least source funds from the ridiculous £1,200 million that we are sending in aid to India?

[Mr Hammond]

My hon. Friend will have to take up issues about the allocation of budgets between Departments with the Chancellor the Exchequer, but I can tell him—because his comments appear to be drawn directly from the leaked letter from the colonel of the Royal Regiment of Fusiliers—that he is simply wrong to describe the Royal Regiment of Fusiliers as one of the best recruited regiments in the Army. If we look at the position over a 10-year period and at the demographics going forward, along with all the other issues that the Army has set out as criteria to be taken into account, the conclusions are clear.

[Nick Smith (Blaenau Gwent) (Lab)]

Brave men and women of the 2nd Battalion the Royal Welsh, who want to serve our country, have been badly let down today. Instead of giving us warm words, can the Secretary of State tell us what concrete steps will be taken to support sacked soldiers into the job market, given the massive scale of the cuts?

[Mr Hammond]

Nobody is going to be sacked as a result of today’s announcement. The brave men and women serving in the 2nd Battalion the Royal Welsh will continue serving in the 2nd Battalion the Royal Welsh, and when it is withdrawn, many of them—probably most of them—will be absorbed into what will then become a single-battalion Royal Welsh Regiment. We have well established arrangements in place for supporting those who leave the Army—70% of those who left in the last tranche of redundancies were volunteers, who had asked for redundancy—and we hope to make them even stronger in future.

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

I am sure that my right hon. Friend has done the very best possible under the fiscal constraints in which he is operating, but will he take back to his Cabinet colleagues the message that in parts of this House, and in the country, there is a feeling that expenditure on defence does not rank as highly as it should in the scale of the nation’s priorities?

[Mr Hammond]

My hon. Friend is very capable and has, indeed, effectively made that point and his view on it known to my Cabinet colleagues.

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

The Secretary of State referred to demographics being key to the decisions being made. My constituency is a rich area for recruitment into the armed forces, especially the 2nd Battalion the Yorkshire Regiment—the Green Howards—which is currently in Cyprus providing combat support in Afghanistan. Is the Secretary of State saying that the number of a battalion could be reduced for antecedent identities in regiments, so that names such as the Green Howards could be retained?

[Mr Hammond]

No. We looked at the option of reducing the size of battalions, so as to avoid the need to withdraw them, but that would have created a tremendous inefficiency. It would have created a top-heavy structure with, proportionately, a large amount of expenditure going on administration. It is simply not right, I am afraid, to talk about the Yorkshires as a regiment that has historically been well recruited. It is a regiment that has had difficulty in recruiting historically. Looking over a 10-year period—the Army does not look at a point in time—the Yorkshire Regiment has been under-recruited consistently.

[Richard Drax (South Dorset) (Con)]

I speak as a former soldier, and I have huge respect for the Defence Secretary. I appreciate that he has inherited a mess and is under orders from above, but I have to say that I think that the announcements the Government are making are very short-sighted. Soldiers I have spoken to, including senior soldiers, all say—and I agree with them—that if the Army is to get smaller, the proportion of professionals must get higher. Would he be prepared to change his mind on that point?

[Mr Hammond]

No. If we are to protect our military output—the capability of the Army—in a world where budgetary constraints mean that we can have only a smaller number of regular serving soldiers, we must integrate more effectively with the reserves and use our contractors more effectively. That is the only way to protect military capability within those constraints.

[Mr Peter Hain (Neath) (Lab)]

What sort of reward for bravery is it that 600 members of the 2nd Battalion the Royal Welsh could be faced with the sack? Is it not disingenuous for the Secretary of State to say that 19,000 soldiers will be sacked, but that those from a particular battalion, such as the 2nd Battalion the Royal Welsh, might somehow be miraculously redeployed? Those two statements do not add up.

[Mr Hammond]

Well, I am afraid that they do. I remind the House that the right hon. Gentleman was a member of the Cabinet that was responsible for the underlying fiscal shambles that is the cause of many of the things that we are having to do. Whether or not someone is serving in a unit that is to be withdrawn will make them no more or less likely to be selected for redundancy under future tranches of the Army redundancy programme, which will deliver the manpower reductions announced in July 2011.

[Penny Mordaunt (Portsmouth North) (Con)]

During the first round of naval redundancies, an extremely good system was put in place by my right hon. Friend’s Department to flag up any undesirable anomalies, such as a husband and wife in service accommodation both being earmarked for redundancy. As these changes are rolled out to the Army, will people who are leaving it or moving role or location within it have a similarly excellent service so that such anomalies can be flagged up and dealt with?

[Mr Hammond]

One of the strengths of the regimental system in the Army is the degree of close pastoral attention to these matters that can be delivered. The Army regards that as hugely important, and I know that it will do everything it can to support members of the family whenever change is required.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Brief questions, please, and brief answers.

[Jim McGovern (Dundee West) (Lab)]

I am delighted to hear that the name of the Black Watch will be retained. I offer my gratitude to the 3,000 people in Dundee who signed the petition in support of the Black Watch. At the risk of being accused of nepotism, I must also mention my mother, Alice McGovern, who collected more than 1,000 of those signatures. In fact, she was ejected from a local shopping centre for collecting signatures for the petition. People have—

[Mr Deputy Speaker]

The hon. Gentleman should keep his question brief.

[Jim McGovern]

Thank you, Mr Deputy Speaker.

People have talked about what happened on the previous Government’s watch and about what is happening on this Government’s watch. I would like to ask the Minister whether, on his watch, there will always be a Black Watch.

[Mr Hammond]

I have heard that slogan before. I congratulate the hon. Minister’s mother—[Interruption.] I meant to say “the hon. Member’s mother”. As he rightly observes, the Black Watch—3rd Battalion, the Royal Regiment of Scotland—will continue in its present form.

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

May I caution the Secretary of State not to take advice from Labour, which I distinctly remember sending out redundancy notices to my fellow soldiers when they were serving on the front line in Bosnia? Can he assure me that the incremental company that my right hon. Friend is planning to form from the Royal Regiment of Scotland will take part not only in public duties but in homeland security and civil support functions, as well as providing other important military training assistance?

[Mr Hammond]

My hon. Friend is absolutely right to warn me not to take advice from the party opposite, and I shall heed his recommendation. It is indeed the case that the public duties incremental company will also have other military duties. It will also be a rotating company; its strength will be found from the other four battalions in the regiment, so nobody will spend their entire military career in the public duties incremental company.

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

In regard to the infantry battalions that have been axed, will the Minister explain what he meant when he said that the demographics of those recruitment areas had been looked at? Is he seriously suggesting that the birth rate in our areas cannot sustain our battalions?

[Mr Hammond]

In some cases, yes. The cohort from which the infantry recruits—typically they are men aged between 18 and 24—is set to decline across the UK as a whole by 12% over the next decade. There are specific issues in some specific regional geographies, and there is also a projected change in the composition of that population cohort, including a relative increase in groups in which the Army is not very successful at recruiting at the moment. There are therefore some very big challenges ahead.

[Oliver Colvile (Plymouth, Sutton and Devonport) (Con)]

What discussions has my right hon. Friend had with other Government Departments to ensure that they will be able to release reservists in order to defend our country?

[Mr Hammond]

Sir Bob Kerslake, the head of the civil service, is leading on that issue. We will ensure, when we publish our consultation paper in the autumn, that we clearly set out the Government’s offer to our employees in support of the reserve forces.

[Geraint Davies (Swansea West) (Lab/Co-op)]

Welsh soldiers who have risked their lives and lost their friends in Afghanistan now face the sack. We heard this morning in the Welsh Affairs Select Committee from military and academic experts that the Welsh forces should not be the first to be considered in this programme. We should consider the ceremonial forces, the Gurkhas and the Scots. Alongside that, the provisions of the Enterprise and Regulatory Reform Bill will make it much more difficult to recruit people working in small businesses because of the end of tribunals. Does the Secretary of State accept that this is a grubby political fix, and that he will not be able to recruit people into the Territorial Army because of the changes that will make it easier to sack people?

[Mr Hammond]

If the hon. Gentleman were in the Army, I suspect that he would be told to get his hands out of his pockets.

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

Why are we scrapping five infantry regiments in the United Kingdom but not considering the two battalions of Gurkhas? Does the Royal Welsh need an ageing, glamorous film star to take up the cudgels on its behalf?

[Mr Hammond]

No. The reason why we have not taken out one of the battalions of the Royal Gurkha Rifles is that we have a partnership arrangement with the Sultanate of Brunei, under which one of those battalions is stationed on rotation in Brunei. That arrangement works extremely well for the British Army, and it can be sustained only with two separate Gurkha battalions.

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

Today’s announcement has succeeded in doing what our opponents in the first world war, the Boer war, the Korean war, Iraq and Afghanistan all failed to do. It has reduced the Argyll and Sutherland Highlanders to an ineffective fighting unit. The Argylls are recruited from part of my constituency, and the announcement is already being greeted with dismay and anger there. Does the Secretary of State really believe that making the Argylls a ceremonial division will provide it with a suitable future, given its historic legacy?

[Mr Hammond]

If my memory serves me correctly, the Argyll and Sutherland Highlanders were reduced to company strength shortly after the withdrawal from Aden in 1967.

[Greg Mulholland (Leeds North West) (LD)]

The Yorkshire Regiment has a strong, positive association with the whole county. Indeed, we look forward to welcoming the Secretary of State to Leeds next Thursday. Will he assure me that that strong association will continue, and that efforts will continue, if not increase, across the whole county to recruit people to the regiment?

[Mr Hammond]

Yes, I can reassure my hon. Friend that we recognise the value of the link between specific regiments and the regions and nations. It is a potent aid to recruitment.

[Graeme Morrice (Livingston) (Lab)]

Following on from the question from my hon. Friend the Member for Ochil and South Perthshire (Gordon Banks), will the Secretary of State provide the House with further details of what the proposed changes to the Argyll and Sutherland Highlanders—5th Battalion, the Royal Regiment of Scotland—will mean in practice? How many troops will it lose, what capabilities will it retain, and what will its new role as a public duties company entail?

[Mr Hammond]

It will have between 100 and 150 officers and soldiers. Its principal duties will be to provide a guard at Edinburgh castle and at the palace of Holyroodhouse. It will also have additional ceremonial duties around Edinburgh, and as I said to my hon. Friend the Member for Wyre and Preston North (Mr Wallace) a few moments ago, it will support other units of the Royal Regiment of Scotland in other homeland resilience roles.

[Dr Phillip Lee (Bracknell) (Con)]

I am proud to have the Royal Military Academy Sandhurst in my constituency. The officer cadets and the Nepalese community there will welcome the clarity of the Secretary of State’s statement today. I stand fully behind his decisions. However, along with my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) and my right hon. Friend the Member for Louth and Horncastle (Sir Peter Tapsell), I will need reassurance about future upscaling. Will the Secretary of State confirm that we will be able to do that if necessary, and that the RMA’s capacity will be able to match any such requirements?

[Mr Hammond]

Yes, I can give my hon. Friend that assurance. We recognise the value of our world-leading military academies, which train people not only for the British forces but for many other forces around the world. It is a source of great strength to the UK that those academies allow us to deliver influence in that way.

[Nia Griffith (Llanelli) (Lab)]

I am very concerned about the loss of 2nd Battalion The Royal Welsh, and I hope that the Secretary of State will be able to deliver the necessary redeployment opportunities. As he has hinted, however, a 20% reduction is difficult to achieve by voluntary redundancies alone. Following on from the answer that he gave to my hon. Friend the Member for Barnsley Central (Dan Jarvis), will he tell us whether those having to leave service accommodation will be treated sympathetically and given extra time and help to find new homes?

[Mr Hammond]

This is not just about redundancy, voluntary or otherwise. The Army is continually recruiting and people are continually leaving it when they reach the end of their period of service. It is unlike most other careers. Over a period of time, the Army has considerable ability to change its size, simply by slowing the flow of recruiting while allowing the outflow of people at the end of their careers to continue. We will minimise the need for redundancy, both voluntary and compulsory.

[Jeremy Lefroy (Stafford) (Con)]

The Staffords have served our country with great distinction since they were first raised in 1705 in Lichfield, the constituency of my hon. Friend the Member for Lichfield (Michael Fabricant), who supports me in this question. It is essential that the name of the Staffords is maintained, as Staffordshire and Stoke-on-Trent are among the best recruiting grounds for the Army. Will the Secretary of State ensure that the name is retained with the serving unit?

[Mr Hammond]

The opportunity for the name to be retained is there. It is for the Mercian Regiment itself to decide how it wants to append the antecedent names of the battalion that is being removed to the other battalions.

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

When will the Secretary of State provide the Defence Committee and the House with the details of the so-called £38 billion black hole, without which his statement is not credible?

[Mr Hammond]

I think my statement is absolutely credible. The £38 billion black hole is a figure acknowledged by the Opposition spokesman in his leaked letter to the Leader of the Opposition. If the hon. Lady is so interested, I should tell her that I am going to appear before the Defence Committee and will be happy to answer questions on that subject.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Questions need to be very brief with no preambles.

[Anna Soubry (Broxtowe) (Con)]

Will the Secretary of State be so good as to come to the reservist centre at the Chetwynd barracks and meet senior officers who told me on Sunday that they believe we need legislation if we are to deliver the number of reservists we clearly need?

[Mr Hammond]

I am going to publish a consultation paper in the autumn. We will explore through that consultation process whether other changes, possibly including legislation, are needed to give effect to our vision for the reserves.

[John Glen (Salisbury) (Con)]

Many of my Salisbury constituents have expressed concern that the increased number of reservists used to mitigate the impact of today’s cuts will not prevent a loss of capability. Will the Secretary of State reiterate why he is confident that there will not be an emerging capability gap as a result of today’s announcements?

[Mr Hammond]

Because the Chief of the General Staff and the team carrying this work have presented me with a plan for the future Army, which they tell me will be able to deliver the output requirements of the strategic defence and security review. I have confidence in their professionalism.

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

I am pleased that the Queen’s Dragoon Guards, the Welsh Guards and the Royal Welsh are to be retained, although I am disappointed that one battalion of the Royal Welsh has to be lost. Can the Secretary of State advise the House what impact his statement will have on regional brigades?

[Mr Hammond]

The seven brigades in the adaptable force will continue to have a regional function and will deliver that connection with civil society that is so important to our armed forces. If my hon. Friend has not yet seen my written ministerial statement, I remind him that a new Royal Auxiliary Air Force squadron will be stood up—probably in St Athan in his constituency.

[James Morris (Halesowen and Rowley Regis) (Con)]

Does the Secretary of State agree that a modern fighting force is a combination of manpower, technology and modern fighting skills, and that nothing he has announced today can detract from that central strategic purpose of the Army?

[Mr Hammond]

My hon. Friend is absolutely right: this is a forward-facing announcement, looking at the Army of the future while respecting the traditions of the past.

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

I understand the Secretary of State’s predicament, and the Labour party should hang its head in shame for the financial mess they left behind. What message does my right hon. Friend have for the Royal Regiment of Fusiliers, who are currently recruiting and outperforming all other regiments, including the Scottish regiments? Today’s decision will be a very tough one for them.

[Mr Hammond]

I understand that for the individual regiments and battalions affected, today’s decisions are very difficult, but they have been taken in the best long-term interest of the Army.

[Jason McCartney (Colne Valley) (Con)]

As a former RAF officer, may I associate myself with the Defence Secretary’s comments about our air crew in RAF Lossiemouth? I also praise him for the sensitive and respectful way in which he has made today’s announcement—in sharp contrast to his shadow, who made shameful comments about our veterans earlier. As regards the Yorkshire Regiment, will the Secretary of State confirm that members of the 3rd Battalion serving in Afghanistan will be given a timely and accurate briefing on the future of their colleagues in the 2nd Battalion?

[Mr Hammond]

That is an excellent point, and I am glad my hon. Friend has raised it. The military chain of command will be briefing people throughout the Army. That will have started with briefings to people in the affected units at the time I stood up to make this statement.

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

Does my right hon. Friend believe that the very welcome institution for the first time ever of an annual report to Parliament on the state of the reserves will prevent the Territorial Army from bearing the brunt of cuts in the future, as has sometimes happened in the past?

[Mr Hammond]

This approach is being taken precisely to prevent the kind of disgraceful targeting of the Territorial Army that took place under the previous Government, when training was slashed in order to deal with a short-term cash problem. The long-term impact on reserve recruitment can hardly be overestimated.

[Dan Byles (North Warwickshire) (Con)]

With regard to the 2nd Battalion the Royal Regiment of Fusiliers, will the Secretary of State tell us what has changed from just a few years ago, when the Army was actively moving towards multi-battalion regiments as being more flexible and more efficient formations?

[Mr Hammond]

The main things that changed are the fiscal crisis that we have inherited and the need to restructure our forces in the post-Afghanistan era. I say to my hon. Friend, however, that it is open for single battalion regiments to make proposals for future structural change. If they want to merge and look at changes within their divisional structures, they are absolutely free to negotiate them with other regiments and divisions and to make proposals on that basis.

[Mr Marcus Jones (Nuneaton) (Con)]

My constituents will welcome the news on the Gurkha units, but they will be deeply concerned about the effect on the Fusiliers and their recruitment in Warwickshire. What options has the Secretary of State explored, particularly regarding other regiments that, unlike the Fusiliers, seem to struggle with their recruitment?

[Mr Hammond]

I can only repeat what I have said. The Army has conducted a methodical analysis and, looking at all the criteria set out, the decision on the 2nd Battalion the Royal Regiment of Fusiliers was the right one to make.

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

Speaking as someone whose family, like many in Yorkshire, served in the Green Howards, may I ask the Secretary of State to give us an assurance that he will do all he can to preserve the heritage of that battalion? Will he also assure my constituents serving in the 2nd Battalion that they will be treated equally as they move forward?

[Mr Hammond]

Yes, I can certainly give my hon. Friend that assurance. Everyone in the regiment will be treated equally as we move forward, and matters about the preservation of the antecedent names are matters for the regiment.

[Paul Uppal (Wolverhampton South West) (Con)]

Regarding the recruitment of future reservists, may I impress on the Secretary of State that it is vital for our armed forces to talk about the important role they have, particularly in providing positive male role models for many young men? It is vital that we impress upon the British public the important work that the armed forces do abroad and domestically.

[Mr Hammond]

My hon. Friend is absolutely right. We are reinforcing that point by introducing 100 additional cadet forces into state schools and academies over the next few years.

[Stephen Gilbert (St Austell and Newquay) (LD)]

Will my right hon. Friend make efforts to ensure that, as the reserves continue to play an important integrated role with the regular soldiers in our armed forces, we do not see two tiers emerging and that we secure parity of esteem for our reserve soldiers?

[Mr Hammond]

Parity of esteem, parity of equipment, parity of kit—that is indeed the intention.

[Glyn Davies (Montgomeryshire) (Con)]

Along with other Welsh MPs across the House, over the review period I have been deeply concerned about the future of the Queen’s Dragoon Guards. Does the Secretary of State understand the great relief across Wales that the Queen’s Dragoon Guards, along with regimental names and cap badges, have been saved and that the strong link between Wales and the British armed forces has been preserved?

[Mr Hammond]

I welcome the strong link between Wales and the British armed forces, and I am sure that those who have campaigned on the Queen’s Dragoon Guards will be greatly relieved.

[Mr Deputy Speaker (Mr Nigel Evans)]

I would like to thank hon. Members and the Secretary of State. In the end, everyone who wanted to contribute was able to do so.

Point of Order

Thursday 5th July 2012 Commons Chamber

13:49

[Greg Mulholland (Leeds North West) (LD)]

On a point of order, Mr Deputy Speaker. During the course of the safe and sustainable review into children’s heart services in England and Wales, Health Ministers correctly said that they were unable to comment because this was a clinically led process. However, the review has now reported, so there is an urgent need for a statement because of concerns about the flaws in the decision and in order to allow shadow Health Ministers to express their views, as the review was commissioned under the last Labour Government. We have heard nothing so far from any Health Minister. May we have an assurance from you, Mr Deputy Speaker, that we will have an oral statement on the Floor of the House before we rise for the summer recess?

[Mr Deputy Speaker (Mr Nigel Evans)]

I cannot give that assurance. What I can say is that if a Minister from the Department of Health wishes to make a statement, the House will be notified in the usual manner, but to date I have received no such information.

Business without Debate

Thursday 5th July 2012 Commons Chamber

Supply and Appropriation (Main Estimates) Bill

Thursday 5th July 2012 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 56), That the Bill be now read a Second time.

Question agreed to.

Bill accordingly read a Second time.

Question put forthwith, That the Bill be now read the Third time.

Question agreed to.

Bill accordingly read the Third time and passed.

Professional Standards in the Banking Industry

Thursday 5th July 2012 Commons Chamber

13:50

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

I beg to move,

That, in the opinion of this House, the Government should commission an independent, forensic, judge-led public inquiry under the Inquiries Act 2005 into the culture and professional standards of the banking industry, to be completed within 12 months, to be paid for by the banks, and that any such inquiry should provide an interim report and recommendations, by the end of 2012, covering the lessons learnt from the scandal of manipulation of the LIBOR.

[Mr Deputy Speaker (Mr Nigel Evans)]

With this it will be convenient to debate the following motion:

“That, in the opinion of this House, a joint committee of the two Houses ought to be established into professional standards in the banking industry.”

[Ed Balls]

I rise to open this very important debate, and to support a motion that has been tabled in my name and that of my right hon. Friend the Leader of the Opposition, and in those of the right hon. Member for Belfast North (Mr Dodds), the hon. Member for Dundee East (Stewart Hosie), the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd), and the hon. Members for Foyle (Mark Durkan), for Brighton, Pavilion (Caroline Lucas) and for North Down (Lady Hermon). Five separate parties in the House—the Democratic Unionist party, the Scottish National party, Plaid Cymru, the Social Democratic and Labour party and the Green party—have all supported the case for an independent and judge-led public inquiry.

This is a vital moment for our banking and financial services industries, for our economy, and for the reputation of this Parliament. We must today decide how to respond to the massive public anger that has erupted over the past week throughout our country, families and businesses large and small following the revelations of lying and market manipulation which have been exposed at Barclays and which we expect to spread more widely, and of the mis-selling of interest rate derivatives to thousands of small businesses. Those revelations will have also deeply dismayed and angered ordinary bank employees in London and across the country who work hard every day and do vital jobs, and who now see the reputation of their profession undermined by the shocking irresponsibility of a few. There is anger and incomprehension at the fact that traders and executives should behave in such a self-interested and duplicitous way, seemingly without any reckoning or proper punishment.

[Several hon. Members]

rose—

[Ed Balls]

I will give way in a moment.

That sense of outrage comes on top of a deep and wide public discontent at the huge price that our economy and economies around the world have paid as a result of the gross banking irresponsibility in the run-up to the financial crisis. That price can be measured in billions of pounds in loans gone and debts written off, but it is also felt in the everyday lives of citizens in jobs lost, small businesses gone bankrupt, and living standards undermined. With our economy now back in recession and bank lending to small businesses still falling, it is being felt now—last week, this week, and in the months to come. Trust in our banks is in tatters.

[Several hon. Members]

rose—

[Ed Balls]

I will give way in a moment, when I have finished my introductory remarks.

The public rightly want answers and actions to prevent this from happening again, but above all they want reassurance that it is not one law for the many, one price paid by the many, and another, softer option for the rich and powerful.

[Several hon. Members]

rose—

[Ed Balls]

I will give way in a moment.

We need a change not just in laws and practices, but in ethics, culture and responsibility. We need a lasting consensus for the future. Today, in the House, we have a very serious task ahead of us: we have to decide how best that change can be achieved. The way in which we respond will have long-term consequences for the future of banking, for our economy, and also—I say this to Members on both sides of the House—for public trust in this Parliament. We all have a responsibility to get this right together.

[James Morris (Halesowen and Rowley Regis) (Con)]

Will the right hon. Gentleman cast his mind back to the time when he was the City Minister in the last Government? What action did he take to review the regulatory situation, and did he take any action against the manipulation of LIBOR?

[Ed Balls]

As the hon. Gentleman will know—because I said this yesterday—at no point at any time when I was an adviser or City Minister was it suggested to me by the Financial Services Authority, the Treasury, the Bank of England, or anyone in the House that there was any reason to doubt the integrity of the LIBOR market. The facts came to light only subsequently, and they are now being properly investigated. I hope that that serves as a full answer to the hon. Gentleman.

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

This is a very important point, which goes to the heart of the issue of trust. Can the right hon. Gentleman confirm that, as far as he knows, no other Minister at either No. 10 or the Treasury spoke to the Bank of England about LIBOR during his time in office?

[Ed Balls]

Here we go again, Mr Deputy Speaker. The reason we advocate an open public inquiry, judge-led, is precisely in order to get to the bottom of all these things.

Given the direction in which the debate is now going, before I set out the arguments before us today let me just say this to the Chancellor of the Exchequer. The cheap, partisan and desperate way in which he and his aides have conducted themselves in recent days does him no good; it demeans the office that he holds; and, most important, it makes it harder for us to achieve the lasting consensus that we need.

I have to say that what we have seen in the last few days makes the case more eloquently than any speech that I could deliver, or any speech that any of us could deliver, for an independent, arm’s length public inquiry to elevate this debate above the deeply partisan tone set by the Chancellor and his colleagues. As for the false personal accusations that the Chancellor has made against me, not on the basis of any evidence but purely in the hope of political advantage, he said yesterday—[Interruption.] Members should listen to this.

The Chancellor said yesterday that I was “clearly involved” in communicating with the Bank of England and Barclays in October 2008 concerning the LIBOR market, a claim that his aides repeat. He made that utterly baseless accusation before any proper investigation, before any witnesses had been called and before any papers had been examined. He did not say it to an inquiry; he said it yesterday to The Spectator. If he has any evidence, he should produce it now, in the House. [Interruption.] If he will not—[Interruption.]

[Mr Deputy Speaker]

Order. Please can we calm the debate? This is an important debate, and we do not need shouting across the Chamber in that fashion. [Interruption.] Order! Do you understand? Stop it. Let us take the heat out of the debate now, and stop the calling.

[Ed Balls]

The allegation made about me yesterday in The Spectator is utterly untrue. At no point did I have any communication, directly or indirectly, with Mr Paul Tucker, at any time when I was an adviser, a Minister, or subsequently a Cabinet Minister, and I had no discussion at any time with anyone about the LIBOR market and its operation. [Interruption.] It is not for me to provide the proof; it is for the Chancellor to prove his allegation. If he has any evidence, he should produce it now, in the House. I will take an intervention now. [Interruption.] If the Chancellor will not provide the evidence now, he needs to stand up at the Dispatch Box now, and withdraw this utterly false allegation.

[The Chancellor of the Exchequer (Mr George Osborne)]

In the last 48 hours we have discovered two things: first, there is the report commissioned by UBS that Baroness Vadera now says she saw and commented upon; secondly, we have learned from the personal account of Bob Diamond’s telephone call with Paul Tucker that senior figures in Whitehall contacted Paul Tucker, and Bob Diamond said in his evidence to the Treasury Committee that they were Ministers. In the last 24 hours, we have had the shadow Chancellor say it might have been Treasury Ministers at the time, and we have had the previous Chancellor of the Exchequer say they definitely were not from the Treasury, but maybe from elsewhere in Government. Will the shadow Chancellor explain what Labour’s involvement was? Who were the Ministers? Who had the conversation? Who were the senior figures? Let him answer for his time in office.

[Ed Balls]

The House and the public will judge the integrity of a Chancellor who cannot defend here what he whispers to The Spectator magazine. He has no evidence, and he knows it, because what he said is not true, and he knew that too.

Let me read out what he said to The Spectator. He said:

“They were clearly involved…That’s Ed Balls, by the way.”

That is the allegation; it is utterly false and untrue.

I say again to the Chancellor that he should either present the evidence or withdraw the allegation about me right now. I have to say that the sight of a Chancellor who says one thing to the press but cannot defend himself in Parliament is embarrassing to that office.

[Mr Osborne]

The former chief executive of Barclays said this yesterday to the Treasury Committee. He said what Paul Tucker

“was trying to tell me was, ‘Bob, there are Ministers in Whitehall who are hearing that Barclays is always high. That could lead to the impression that you are not funding yourself.’”

Does the shadow Chancellor know who those Ministers were?

[Ed Balls]

I am very sorry, but we cannot have a Chancellor of the Exchequer who behaves in this way. He made an utterly personal allegation about me. He said:

“They were clearly involved…That’s Ed Balls, by the way.”

I have said unequivocally that that is utterly untrue. The Chancellor should either provide the evidence or withdraw the allegation. We should not have to wait for an inquiry for the Chancellor to withdraw a false allegation made about me, which he has no evidence for, and which he knows is utterly untrue.

I have to say that the Chancellor’s behaviour will appal the public, who, rightly in my view, are unpersuaded that any of us—any of this generation of politicians, regulators and bankers—are currently rising to the challenge and putting right the wrongs for which they are paying a heavy price.

[Several hon. Members]

rose—

[Ed Balls]

I am not going to give way to the Chancellor’s aides until the Chancellor himself puts up or shuts up, and he cannot, because he knows there is no evidence: the allegation is untrue and he made it anyway because that is the integrity of the man.

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

rose—

[Ed Balls]

I will not give way now.

The reality is that we must all admit that regulation should have been tougher, including those who argued for less regulation. I say to the Chancellor that I will await, and press for, his withdrawal and apology day after day until I get it. All of us on both sides of this House need to show a little more humility, including the Chancellor—and the Prime Minister, too.

I am more than willing to attend an inquiry and answer any questions. What the public will ask about this Chancellor and this Prime Minister as they listen to this debate is, why are they not prepared to do the same in the public interest? That is the question they will ask.

Let me turn to the motion. The Government have three declared objections to a judicial public inquiry: scope, speed and form. Let me take each in turn. First, on scope, the Prime Minister and the Chancellor argue that we have already had the Vickers commission on banking, which reported last September, and now the Financial Services Authority will report. They say we do not need to have a more broad-based inquiry that, in their view, will lead to more uncertainty. “Get on with it,” they say, and it is right that there are a number of important questions that need to be asked about the LIBOR scandal, not least why, when this market was investigated by the British Bankers Association in 2008, the then chair, now Lord Stephen Green, gave it a clean bill of health. We need to look at these issues, including, if the Treasury and the BBA urged tougher regulation when they discussed LIBOR on 5 March 2012, when the Financial Secretary was asked the next day in Committee whether we needed a change in law, why did he say no? These are important questions that need to be addressed.

The issues go much wider, however. A member of the Vickers commission said earlier this week that

“banks, as presently constituted and managed, cannot be trusted to perform any publicly important function, against the perceived interests of their staff. Today’s banks represent the incarnation of profit-seeking behaviour taken to its logical limits, in which the only question asked by senior staff is not what is their duty or their responsibility, but what can they get away with.”

That is what a Vickers commission member says.

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

Given all the banking scandals to which my right hon. Friend has alluded, how will the banks be able to play a fundamental and trustworthy role in the economic growth and future of this country without our having an independent judge-led inquiry?

[Ed Balls]

That is a very important point. Banks play a very important role in our economy. Hundreds of thousands of jobs depend on our retail and global wholesale banking industry. It would be very dangerous to take risks with that industry and those jobs. It makes no sense to throw the baby out with the bathwater. I say to the Chancellor, and those who use the importance of our financial services industry as an argument against a broad-based inquiry, that they badly under-estimate both public anger and what needs to be done, because banking is a profession which above all needs trust, and that trust is currently badly undermined.

The Chancellor said earlier this week:

“We know what went wrong”.—[Official Report, 2 July 2012; Vol. 547, c. 613.]

When the public hear that, I do not think they believe him. That is the problem. In the light of recent events, when they find out that the Government have decided, against the recommendation of Sir John Vickers, to allow complex derivatives inside the retail bank ring fence, they think, “Well, could this allow the appalling mis-selling to happen again?”

Let me quote to the House the comments of Mr Martin Wolf, a member of the Vickers commission, who was asked last week whether he agreed that any sort of derivative should not be sold to a retail bank. He was asked whether they should be kept separate, and he replied:

“We wanted to separate them completely and the Government has gone back on that and we think that is really quite dangerous. It leads to the very serious risk of mis-selling which we have seen has been a constant theme of the relationship between retail banks and relatively inexperienced, uninformed clients.”

That is right, and that is why a LIBOR inquiry is not enough. We need to look at these Vickers issues as well.

[Penny Mordaunt (Portsmouth North) (Con)]

The shadow Chancellor may know that a constituent of mine is a former Labour Treasury Minister whom I unseated at the last election. For her sake, if not for mine, will he tell us who were the Ministers Bob Diamond was referring to?

[Ed Balls]

We return to the smears of the Chancellor and his aides. We have had answers to that question from the City Minister at the time, the Chancellor and Shriti Vadera. I have asked the Chancellor to provide the evidence or withdraw and apologise, and he cannot. That says quite a lot about the Treasury team that he leads.

It is our view that a comprehensive review of the whole culture of banking must start with the conduct of bankers and traders, look at the institutions in which they operate, and cascade outwards into the rules, corporate governance, industry approaches and regulatory and legal frameworks in which banks have done business in past decades. There are many important, searching questions that we need to answer, and the only way to answer them—I have them here, but for reasons of time I will not go through them all—is through the broad-based inquiry that we need, not a narrow, LIBOR-based inquiry.

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

Does the right hon. Gentleman think it was a mistake to set up the tripartite regulatory structure, in which everyone and no one seems to have been responsible? He does not seem to know which part of his Government was doing what.

[Ed Balls]

When the Conservatives gave reasons in Parliament at the time for opposing the establishment of the new regulator, did they talk about the tripartite system? The shadow Chief Secretary to the Treasury, who was the lead on this issue at the time, said in 1999:

“Our concerns about the Bill may be said to fall into two general areas. The first is the very wide power still vested in the FSA and the danger that any concentrated executive power can lead to abuse.”

We know all about that from this Chancellor and his reforms.

“The second is the danger of over-regulation, with consequential damage to the United Kingdom’s position.” —[Official Report, 28 June 1999; Vol.334, c. 44.]

Perhaps the hon. Member for South West Norfolk (Elizabeth Truss) needs to go back and read the Hansard of the time.

The Government’s second objection to a full judicial inquiry is one of speed. As the Prime Minister said on Monday—

[Andrew Bridgen]

Will the right hon. Gentleman give way?

[Ed Balls]

I need to make some progress. This is a very important issue and others want to speak. I have taken a number of interventions. I have to say, I am still waiting for the intervention that I want—the apology from the Chancellor. [Interruption.]

The Government’s second objection to a full judicial inquiry is one of speed. On Monday, the Prime Minister said that we need to just get on with it. We agree. We need to move ahead as quickly as possible. That is why the Leader of the Opposition has proposed a two-stage process for a judge-led review. Stage one: an immediate review into LIBOR and derivatives. Start now, conclude by Christmas, establish it immediately, meet through the summer—five days a week, if necessary—and without any need to stop for the summer recess. Then, there is a second stage, to be finished within 12 months from now, looking into the wider issues of banking practice that we have identified. That is a timetable that past inquiries have shown can be delivered.

[Several hon. Members]

rose—

[Ed Balls]

This is an important point, and Members should listen.

[Andrew Bridgen]

rose—

[Ed Balls]

I am not going to take an intervention from that hon. Gentleman.

While we need speed, we also need the inquiry to be thorough and genuinely cathartic, and to succeed in rebuilding public trust and confidence, or else we risk being back here again.

The third argument the Government employ is one of form: that, compared to a full judicial inquiry, a parliamentary inquiry can do the job just as well in less time, and with less cost. We do not believe that that argument holds water, but more important, it does not take on board the scale of the task ahead.

[Anna Soubry (Broxtowe) (Con)]

rose—

[Ed Balls]

The hon. Lady should listen before she concludes whether to support our motion later on.

First, all the recent experience of the phone hacking scandal suggests that only a judge-led inquiry, under the Inquiries Act 2005—[Interruption.] Every time that Members interrupt me mid-sentence, I just conclude that I am not going to take their interventions. Why do you not listen and have some respect for this House and our debates? Have some respect for the arguments being made.

[The Attorney-General (Mr Dominic Grieve)]

Will the right hon. Gentleman give way?

[Ed Balls]

I will make the point and then take the intervention.

First, all the recent experience of the phone hacking scandal—[Interruption.] The Chancellor should listen—unless he is composing his apology. We should consider the recent experience of the phone hacking scandal and all the deliberations we see in, for example, the very important report on the details and reality of Select Committees and coercive powers, entitled “Select Committees and Coercive Powers—Clarity or Confusion?”, from the Constitution Society. All the experience shows that only a judge-led inquiry can have the necessary power to compel witnesses to attend and ensure the production—

[Andrew Bridgen]

Will the right hon. Gentleman give way?

[Ed Balls]

I am not going to take an intervention from the hon. Gentleman, who interrupts every sentence. It is not good for the House or this debate, and I suggest that he stay in his seat.

I will say the sentence again, Mr Deputy Speaker, if that is okay with you—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Just to help the debate, Mr Bridgen, save your energy. Mr Balls is not going to allow you to intervene, so please, no more while Mr Balls is speaking, Mr Bridgen.

[The Attorney-General]

rose—

[Ed Balls]

I will take the right hon. and learned Gentleman’s intervention, but I will make the point on powers first. I will do this in a proper way, Mr Deputy Speaker.

All the recent experience is that only a judge-led inquiry can have the necessary power to compel witnesses to attend and to ensure the production of documents, with powers of enforcement that make it a criminal offence to fail to comply—under section 35 of the relevant legislation, the penalty is 51 weeks or a £1,000 fine—or High Court powers of enforcement for contempt of court, under section 36. The problem is that Select Committees, in the modern legal world, just do not have the same powers in law to force witnesses to attend or to give evidence on oath, and nor do they have the necessary sanctions. The last time Parliament—

[Damian Collins (Folkestone and Hythe) (Con)]

Will the right hon. Gentleman give way?

[Ed Balls]

No. I will take the intervention from the Attorney-General next, thank you.

The last time Parliament imposed a fine for contempt of court was before the great fire of London in 1666. The last time a member of the public was imprisoned for contempt was before the Boer war. Select Committees do not have these powers.

[The Attorney-General]

I am very grateful to the right hon. Gentleman for giving way. I intervene on one key point. It is clear from what he says that he desires that the preliminary part of his judicially led inquiry should produce recommendations on the lessons to be learned from the scandal of the manipulation of LIBOR as quickly as possible and by the end of the year. The question whether there is to be a criminal investigation is not in my hands or, indeed, those of anybody in this House. The idea that such an inquiry can be run in tandem with a criminal investigation is, I am afraid, impossible.

[Ed Balls]

We know that this proposal was cobbled together over the course of Monday. I wonder whether the Prime Minister and the Chancellor had the opportunity to consult the Attorney-General before they made this proposal. If we cannot have a judge-led inquiry until the criminal prosecution has been done, how can we possibly have a parliamentary inquiry? Exactly the same argument was made—

[The Attorney-General]

rose—

[Ed Balls]

In a second. I am still waiting for the Chancellor to make his intervention.

The second point is that exactly the same argument was made in the case of phone hacking—that we could not have the inquiry until the criminal prosecutions had been done. But that is not what has happened with the Leveson report.

[Chris Bryant (Rhondda) (Lab)]

Is not the whole point about having a judge-led inquiry that judges are perfectly used to circumventing—making sure they go round the corners, so that they do not prejudice any criminal investigation? For that matter, all the serious evidence that has appeared in the public domain from phone hacking has come from the civil courts, through the Norwich pharmacal process, or from the judge requiring a statement of truth from all those providing evidence.

[Ed Balls]

My hon. Friend is right, and I fear that the Attorney-General has just completely destroyed the basis of his own Government’s parliamentary inquiry. We know from experience that when the subject of a public inquiry overlaps with the prospect of criminal charges and trials, only a judge has the legal skills and credibility to conduct that inquiry without crossing the line of what is acceptable. That is what Lord Leveson showed and that is what parliamentary inquiries have been unable to do on phone hacking.

[The Attorney-General]

I am grateful to the right hon. Gentleman for giving way. So far as the Leveson inquiry is concerned, that question was recognised at the time that it was set up. It is for that reason that it was split in two. Lord Justice Leveson has been at great pains to avoid interfering with the process, but the process contemplated in the motion tabled by the right hon. Gentleman and others envisages, as I read it, that the part of the inquiry dealing with the scandal of manipulation should take place at once. I have made the point as to why I think that that is extremely difficult.

The right hon. Gentleman then raised a second point, which was that that argument could also apply to referring the matter to a Joint Committee of both Houses. If I may say so, he is correct in that. It could present such a difficulty, but I note that there is no prescriptive timetable laid down for the working of the Joint Committee and I have no doubt—[Interruption.] I am sure that despite parliamentary privilege the Joint Committee will have to adapt to any criminal investigation or inquiry that takes place. However, that makes no difference to the fact that, as drafted, the right hon. Gentleman’s motion appears to me to have a fundamental problem associated with it.

[Ed Balls]

I hear the right hon. and learned Gentleman’s points and I only wish the Prime Minister would talk to his own legal adviser. As far as I can see, the Attorney-General has entirely torpedoed the inquiry, which we were told yesterday would conclude by Christmas. If he is saying that the inquiry can take longer in order to deal with the issue of criminal charges, what does that make of the Prime Minister’s argument that the only reason for doing it this way was to do it faster? It is utterly incoherent. I am not saying in any way that the Attorney-General is being incoherent—it is just the Chancellor and the Prime Minister who have completely lost their grip on this whole process.

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

Does my right hon. Friend agree that the legal advice that we seem to have heard on the hoof just now casts a whole new light on the debate? The Government’s argument all week for a Joint Committee of both Houses has been that it could proceed with its work quickly, whereas we have just heard an argument suggesting that precisely the same objections as the Attorney-General made to our proposals could be made to the Government’s proposals.

[Ed Balls]

It is no surprise that the Chancellor has gone completely white as he sits on the Front Bench. Let us be honest: he did not consult the Culture Secretary on a tax on churches; he did not consult the Transport Secretary on a U-turn on fuel; and he did not consult the Law Officers on the inquiry—

[The Attorney-General]

rose—

[Hon. Members]

More!

[Ed Balls]

Yes, let us have more—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order.

[The Attorney-General]

I am sorry that the right hon. Gentleman is being so obtuse about what seems to me to be a fairly clear issue. The motion he has tabled is, for the reasons I have given to him, unlikely to be feasible if there is a criminal investigation. He then conflated that with the suggestion that there could not be any kind of inquiry by a Joint Committee of both Houses. That is simply not the case. Of course there can be, provided that it bears in mind the need to respect comity with any other court or proceedings that might be taking place. It is the structure that the—

[Mr Deputy Speaker]

Order. I call Mr Balls.

[Ed Balls]

I have to say that there would be no point taking an intervention from the part-time Chancellor on this point, as he clearly does not have a clue what is going on. The confusion is that the timetable that we have set down for our first-stage judicial inquiry is exactly the same as that which the Government announced for their parliamentary inquiry. If it is too short for one, how can it be the right length for the other? More than that, my argument was that when we are discussing complex issues that require fine legal judgment, the idea that judges would make that fine legal judgment in a worse way than a parliamentary Committee is nonsensical. The right hon. and learned Gentleman has done a very great service to this House. I had four objections to the form of the inquiry, but it has been torpedoed while I am only halfway through.

I have a feeling that the Attorney-General’s interventions might have completely killed off the parliamentary inquiry, but there are two more reasons why it is a bad idea.

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

rose—

[Mr William Cash (Stone) (Con)]

rose—

[Ed Balls]

No, I will not give way—[Interruption.] Look—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. I point out that this is a time-limited debate and a substantial number of Members wish to contribute. All the noise and the number of interventions will mean that several Members will be disappointed. May we please hear Ed Balls in silence?

[Ed Balls]

I will give way to the hon. Member for Stone (Mr Cash), who is not an hon. Gentleman who is used to getting up to bail out the Chancellor. Perhaps this time he can.

[Mr Cash]

I am extremely grateful to the shadow Chancellor for giving way. On the question of the alternatives of a Select Committee and a judicial inquiry, it is perfectly clear that we can make any necessary adjustments through our Standing Orders on such issues as taking evidence on oath, for example. I will seek to explain that in more detail if I get the opportunity to make a speech.

[Ed Balls]

The hon. Gentleman has proposed that a QC could advise the Committee; perhaps he will make that proposal later. Those important points take us down the road towards the judicial inquiry. The problem is—and this is my third objection—that experience shows that only a judge-led inquiry can ensure the necessary forensic cross-examination of witnesses, prevent witnesses from avoiding answering key questions that are important for establishing the truth and, in particular, avoid blanket refusals to answer questions on grounds of legal advice. I would be happy to take an intervention from the Attorney-General on this point, because we have seen it happen in parliamentary hearings.

The argument is that a witness before a parliamentary inquiry can say on legal advice that they will not answer a question, but in a judge-led inquiry the judge has the ability to explain to the witness why answering the question in the particular form set by him according to his legal judgment will not cross the line. Unless a judge is properly testing the boundary between self-incrimination and the answers that must be given for a proper inquiry, we cannot make progress. That would be doubly the case with the prospect of criminal investigations, which might take some years down the track. On the question of witnesses not incriminating themselves, it seems to me that the evidence shows—perhaps the Attorney-General will correct me—that it is impossible for a parliamentary inquiry to call any witness who might be implicated in the LIBOR scandal without the witness saying, “On legal advice, I will say nothing.” The inquiry cannot work like that. Only a judge can sort this out.

[Damian Collins]

Does the shadow Chancellor accept that a Select Committee can ask a witness to release information covered by client-attorney privilege, as the Select Committee on Culture, Media and Sport did in the phone hacking inquiry? That information cannot be requested by a public inquiry because it is covered by the same remit as a civil court. A parliamentary inquiry can request and receive information that a public inquiry cannot and, in the case of the phone hacking inquiry, that led to the production of the most significant information of the entire inquiry.

[Ed Balls]

All my experience—and there are many Members on both sides of the House who have more detailed experience than I have—is that Select Committees find it much harder than a judge-led inquiry to secure the release of necessary and essential documents and, more importantly, to find out which documents they should ask for in the first place.

Finally, and above all in our view—and I note that the Attorney-General did not correct me on the calling of witnesses, but perhaps he will advise the Chancellor for his speech—only a judge-led inquiry can truly persuade the public that the inquiry is properly independent and objective and, given the Chancellor’s behaviour, non-partisan.

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

Is it not clear that the Government, stacked with bankers and payrolled by the bankers, are frightened of a judge-led inquiry because they want to cover up the scandal?

[Ed Balls]

My hon. Friend makes his point in his own particular way. I was saying that the inquiry needed to be independent, objective and non-partisan, so I understand his concerns. I would probably also understand his bafflement about why the Chancellor and Prime Minister seem to be unwilling to appear before a public inquiry looking at wider issues of culture.

[Simon Hughes]

My constituents—like, I think, the right hon. Gentleman’s—want this mess in the banking industry to be cleared up as quickly as possible. They want laws to be changed—and there are two chances this year—they want people to be taken to court and, if necessary, sent to prison; and they want it now, not some time in future. Why can we not get on with it, rather than delay the action that has been delayed for too long?

[Ed Balls]

I am afraid that the right hon. Gentleman needs to have a word with the Attorney-General, because we just heard precisely why the right hon. and learned Gentleman believes we cannot get on with these issues.

[The Attorney-General]

The right hon. Gentleman has not answered the question I put to him earlier. He says he wishes to have a judge-led inquiry, and he gives some perfectly good reasons—[Interruption.] These are matters of debate. He has been quite unable to explain how, in the light of the fact that at the same time there is a desire for a criminal investigation, those two can be reconciled. He has come to the Dispatch Box to criticise the Government for their approach, so that is a question he ought to be capable of answering, or receiving legal advice on how to answer it. It is a real problem, not an artificial or concocted one, and he has not provided that answer at all.

[Ed Balls]

It is a pity not only that the right hon. and learned Gentleman was not consulted before the inquiry was announced but that he is not leading for the Government today instead of the part-time Chancellor, as that would probably be a more enlightening debate. Let me repeat exactly what I said in my speech. When the subject—[Interruption.] I am going to answer the question, but it does not help if the Treasury Whip shouts from a sedentary position. If he wants to join the Chancellor and withdraw his allegations he can do so.

Let me repeat my answer to the question. When the subject of the public inquiry overlaps with the prospect of criminal charges and trials, it is our judgment that only a judge, as we have seen in the Leveson inquiry, has the legal skills and credibility to conduct that wider inquiry without crossing the acceptable line. A parliamentary Committee will never be able to do so. The reality is that there will be stalemate—witnesses not answering questions, documents not revealed—and we will not make progress. We adopted the Government’s timetable for the first stage of the inquiry, because we thought they had thought it through, but it turns out that they had not done so.

[Anna Soubry]

Will the right hon. Gentleman give way?

[Ed Balls]

I will give way to the hon. Lady in a moment—[Interruption.] There is no need for any favours like that to get me to—[Laughter.]

Let me summarise the case for a public inquiry as simply as I can by quoting from a higher authority. Let me quote from a call for an independent public inquiry on banking:

“Is not the truth that in Britain people are losing their homes, small businesses are closing, unemployment is rising and manufacturing output is falling again and that, by refusing to hold a public inquiry, the Prime Minister is yet again demonstrating that he cannot provide the change people want?”—[Official Report, 5 November 2008; Vol. 482, c. 247.]

I could not have put it better myself. But those are not my words. They are directly from the right hon. Member for Witney—Cameron direct. I checked this morning and the quote is still on the Conservative party website, under the headline, “Why won’t the Prime Minister hold a public enquiry?” It even has a photo of the current Prime Minister there for us all to see. He said we need an independent inquiry. That was on 5 November 2008. How things have changed, for all of us. I know that the Prime Minister makes such a virtue of consistency, so I hope he will join us in the Lobby tonight for another Treasury U-turn—they just keep coming for this Chancellor.

Let me turn to the votes. I have set out three concerns—scope, speed and form—which we are told are the reasons the Government object to our proposal for an independent judge-led inquiry. I have explained why we do not believe that any of these arguments stack up—to be honest, the Attorney-General has been very helpful in this regard. We urge hon. Members to think hard. I said I would take an intervention from the hon. Member for Broxtowe (Anna Soubry), so I will take that first.

[Anna Soubry]

I am grateful to the shadow Chancellor, a fine Nottingham boy, and I am enjoying his contribution. We all agree that this is an outrageous scandal and we need to get to the bottom of it, but does he not also agree that out there in the real world people want to hear a little acceptance of responsibility and a little contrition from him, because he was a member of the Government when this scandal happened and it was on his watch?

[Ed Balls]

Despite trying to intervene, the hon. Lady has been listening to my speech and so will have heard me say that mistakes were made and humility is needed from Members on both sides of the House. As a former barrister, she will also know, as will many Members on both sides of the House who have worked in the law, accounting or financial services, that the highest standards of integrity not only are necessary, but need to be seen if they are to command public confidence. That is the argument for our inquiry. I ask her and hon. Members on both sides of the House to think hard and support our motion today to put the banking industry on a sound footing.

We hope to win the argument this afternoon. We aim to persuade hon. Members to vote with us and support our motion. We recognise that the Government have a majority and intend to whip the vote tonight. If our motion is unsuccessful and the Government railroad through a parliamentary inquiry—they may be reconsidering now—we will continue to make the case for a full judicial inquiry. If further banking scandals emerge, as I fear they will, people will look back at this moment and conclude that the Government failed to grasp the opportunity.

[Gordon Banks]

Does my right hon. Friend agree that, perhaps, the activity and findings of the Leveson commission are the grounds for the Government’s reluctance to join the Opposition in the Lobby this afternoon to vote for a full, judge-led, public inquiry?

[Ed Balls]

I do not know the answer to my hon. Friend’s question; I do know that the open process of the Leveson inquiry has been challenging to Members on both sides of the House—but rightly so. If questions are raised, in an open judicial inquiry, about past regulatory decisions, that is right and proper; if they are raised about decisions made in the mid-1980s, that is right and proper; and if questions are raised about the financing of political parties and where donations comes from, that is right and proper as well.

We should have no fear of answering those questions, but, from what we have heard from Government Front Benchers, we know that the Government have no intention of holding such a full, open, public inquiry; they want an inquiry on the shortest timetable and in the narrowest way. The Attorney-General has told us why one cannot be held on a timetable for completion by Christmas, but let me remind him what the Prime Minister said on Monday:

“The Vickers Bill—the banking Bill—will be introduced in the House of Commons in January, and I want an inquiry to be completed by then so that we can take the best of that inquiry and put it in the Bill.”—[Official Report, 2 July 2012; Vol. 547, c. 590.]

But if that inquiry cannot do the job, how will we end up with the best? We will end up with the worst of all worlds.

[The Attorney-General]

rose—

[Ed Balls]

I will happily give way again.

[The Attorney-General]

It would help if the right hon. Gentleman listened, rather than getting carried away with his own rhetoric. There is nothing to prevent this House, if it wishes, from setting up a joint inquiry of both Houses into—[Interruption.] The “banking industry” is the way it was described, and that is what is in the motion—[Interruption.] Yes, to incorporate LIBOR—I make that quite clear.

Obviously, and this point applies as much to the right hon. Gentleman’s motion as to any other step, if there are criminal investigations or inquiries, any inquiry by this House will have to be managed in the light of that process—[Interruption.] Yes, it will have to be managed, because it must not interfere with that process. But, for the Government to support a motion for a judicial inquiry that cannot even get off the ground if criminal inquiries and investigations are taking place would be a rather odd thing for the Government to do, because such an inquiry could not happen.

The right hon. Gentleman has made a mistake in relation to the motion—

[Madam Deputy Speaker (Dawn Primarolo)]

Order.

[The Attorney-General]

And if he listened carefully he would understand it.

[Ed Balls]

rose—

[Madam Deputy Speaker]

Order, Mr Balls.

Order means order for Front Benchers on the Government side as well. I understand that the Attorney-General is trying to be helpful to the House, but he has made several interventions, they have all been too long and I hope that we can move on now with the debate.

[Ed Balls]

rose—

[Chris Bryant]

Will the shadow Chancellor allow me?

[Ed Balls]

Okay.

[Chris Bryant]

The Attorney-General is not right on that issue. It is far more dangerous to have a parliamentary inquiry, because article 9 of the Bill of Rights says that no court can impeach a proceeding in Parliament. Some witnesses who might want to evade justice might, therefore, choose to come to a parliamentary Committee to say things, so that they do not then get sued in court.

[Ed Balls]

I understand the points made by Members on both sides of the House.

Before I summarise, let me say to the Attorney-General that I have tried to listen very carefully to his contributions. There have been many of them, all have been helpful and constructive and they have helped us to understand the challenges that we face rather better than we had done on the basis of the Chancellor’s contributions in recent days.

Let me say also that, if at any point I misrepresent the right hon. and learned Gentleman, I will always in an honourable way correct the record in this House—not, as we now know, a standard of behaviour that we can expect from the Chancellor in this House.

To summarise, the argument goes as follows. Point one is that the Attorney-General does not believe that it is possible to have a proper, thorough investigation into all the details of the LIBOR market by the end of the year. I understand that; I hear his argument. Our argument is that a judge-led inquiry gives us a better chance of having an investigation into something legally sensitive than a parliamentary inquiry. If one is true and two is true, that means that the Government’s proposal for a parliamentary inquiry by the end of this year is defunct—dead, torpedoed, gone.

That is why, rather than intervening again, the Attorney-General should speak to the Chancellor, call the Prime Minister—wherever he is—and say that they should withdraw these motions, get to the drawing board and come back with a plan that is baked rather than half baked. [Hon. Members: “Plan B!”] Plan B.

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

A few moments ago, the right hon. Gentleman said that even if the House votes for establishing a Joint Committee, Her Majesty’s official Opposition will continue to press for a judicial inquiry. Will he clarify that? Does that mean that he will be discouraging Members from the Labour party, be they in either House, from co-operating with and taking part in a Joint Committee? Is he going to wreck it?

[Ed Balls]

I was going to come to the votes at this point. I have said that we will vote for our motion. I have said that if that fails, we will continue to press for a full public inquiry because we think that that is the only way to do this properly. The Attorney-General probably agrees with us on that matter now.

Tonight, the Leader of the Opposition and I will vote against the Government’s proposal for a limited parliamentary inquiry, for the reasons I have set out, as currently proposed. On the basis of the contributions we have now heard from the Government Front Bench, the inquiry is not even remotely up to the task ahead.

In answer to the question, put by the hon. Member for Harwich and North Essex (Mr Jenkin), about what we would do if we lost the second motion, on the basis of the debate so far and the Attorney-General’s comments, I say to all Members of the House, including the Liberal Democrats, that they should think hard, do the right thing, ignore the Whips and vote for the inquiry that will work.

[Mr Jenkin]

rose—

[Ed Balls]

I am not going to give way because I have answered the hon. Gentleman’s question. [Hon. Members: “No!”] I have.

We want to win this vote for the British people. Set against the depths of malpractice that have now been revealed and the scale of the challenge that we face, our strong belief is that the Government’s decision to reject our call for an independent and judge-led public inquiry is a grave mistake. Only an independent and open public inquiry—not politicians investigating bankers—can rebuild trust. That is our view, and the view of many Opposition Members. The doubters have been persuaded by the Attorney-General. Members on the Government Benches should change their mind—withdraw the motion, do the right thing and let us sort this out once and for all.

14:48

[The Chancellor of the Exchequer (Mr George Osborne)]

Madam Deputy Speaker—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. We are not going to get anywhere in this debate if Members on both sides of the Chamber continue to bawl at each other. It would be a very good idea if we could listen to the Chancellor and proceed with the debate. I am sure that he will be generous in giving way.

[Mr Osborne]

I wish to speak to the motion in the name of the Prime Minister.

Today the House must come to a decision about how best to inquire into the LIBOR scandal that has shocked and angered our country and the failure of the culture and standards in banking that allowed it to flourish undetected for so many years. We have spent the last week, and indeed the last hour, arguing over whether a judge or the Members of this Parliament should conduct the inquiry.

[Several hon. Members]

rose—

[Mr Osborne]

Can I just say this before I give way to anyone? Let us bring the argument to an end today. Let us decide. To enable that decision to happen—and this is why, in Government time, the shadow Chancellor opened this debate—we have adopted a procedure without precedent, which is to allow two motions, one from the Opposition and one from the Government, to be debated today. I hope that although the argument has been a fierce one, and I have no doubt that the partisan attacks will continue—

[Ed Balls]

rose—

[Mr Osborne]

I will give way to the shadow Chancellor if he answers this question for me: if the House votes for a joint parliamentary inquiry, will the Labour party take part in it? If not, he will be blocking any inquiry into this banking scandal.

[Ed Balls]

My advice to the Chancellor, on the basis of the Attorney-General’s comments, is to stop the speech, withdraw the motion, and come back next week when he has done the homework. But my intervention is on the partisan tone. Let me ask him this: will he provide the evidence to substantiate the allegations—false allegations—that he made about me yesterday, or will he now withdraw and apologise for those false and untrue allegations? Has he the integrity to do so?

[Mr Osborne]

The right hon. Gentleman was the City Minister during the LIBOR scandal. We know, as I said in my interventions on him earlier, that, first, Baroness Vadera admits that she saw the report that was commissioned on the LIBOR rate; and secondly, that Bob Diamond said that Ministers in Whitehall were putting the bank under pressure through the Bank of England. If he is able to tell me—[Interruption.] I am answering his question. I have said that he has questions to answer. [Interruption.] That is precisely what I have said. I want to know the answer to this question: which Labour Ministers were involved?

[Ed Balls]

That is not what the Chancellor said. He said to The Spectator:

“They were clearly involved…That’s Ed Balls, by the way.”

Where is the evidence? He should either put up or shut up—present the evidence or apologise. That is his choice if he has any integrity in this House.

[Mr Osborne]

Let me say exactly what I said, and then the right hon. Gentleman can answer my question. I said, “They were clearly involved”, and we now have that from two sources—[Interruption.]

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Mr Gwynne, I have already said that I do not expect people continually to shout across the Chamber. I know that people on all sides are angry about this, but we cannot have a debate if we cannot hear what is being said. I ask all Members, including those on the Government side, to bear in mind that our proceedings are being watched by people who are a darn sight angrier than people in this House.

[Kevin Brennan (Cardiff West) (Lab)]

On a point of order, Madam Deputy Speaker. The best way to abate the anger in the Chamber and to have a calm and proper debate would be for the Chancellor simply to withdraw the accusation that he made against the shadow Chancellor.

[Madam Deputy Speaker]

Mr Brennan, you know full well that that is not a point of order; it is a point of debate and it is on the record. Perhaps now we can proceed. I call the Chancellor of the Exchequer.

[Mr Osborne]

I have never seen Labour Members and the shadow Chancellor so rattled about their time in office. We had one hour of an attempt by the former City Minister to defend his conduct when he was in office and these scandals happened, and we have still not had from him a simple apology for what he did—his failure of regulation. He should get up and say not, “We were all involved in this; there were Governments all over the world doing it”, but “I was the City Minister and I am sorry.”

[Ed Balls]

The Chancellor knows what I have said in the past. I have said that people from all parts of the House regret what happened. I have apologised to this House before. I have apologised to the House for the failures of regulation. I am asking the Chancellor to apologise now. He has impugned my integrity. He made the allegation in The Spectator and all over the newspapers that:

“They were clearly involved”

in the 2008 LIBOR scandal. He said:

“That’s Ed Balls, by the way.”

I was named. He has made an allegation, but he has no evidence because there is not any, because it is untrue. He knew that there was no evidence because he knew that it was untrue, and he said it anyway because that is the character of the man. I am saying to him that if he has any integrity, on this narrow point of his allegation, he should stand up now, withdraw the allegation and apologise. And he won’t.

[Mr Osborne]

The idea that I am going to take lessons in integrity from a man who smeared his way through 13 years of Labour government and who half the people who served with him think was a disgrace in his post is another thing entirely. Let him redeem himself today by not blocking an inquiry into what happened under the last Government. Take part in the inquiry. You are not prepared to do that.

[Nadhim Zahawi]

The shadow Chancellor is creating a smokescreen because the evidence is clear: Ministers in the previous Administration knew of a conversation that took place between Paul Tucker and Bob Diamond. They need to come clean—whether it is shadow Chancellor or the Leader of the Opposition—and answer the question: which Ministers knew about that conversation?

[Mr Osborne]

My hon. Friend is right that throughout this debate and over the past two days, not a single Labour Minister from the previous Government has come forward and told us who was involved. Who was involved? Answer the questions. One of you must know. Hands up, come on. One of you must know who was involved.

[Several hon. Members]

rose—

[Mr Osborne]

I will give way to the hon. Lady, then I will proceed.

[Sheila Gilmore (Edinburgh East) (Lab)]

I want to take the Chancellor back to his comments a few moments ago in which he quoted something that had been said by Mr Diamond before the Treasury Committee. Is not part of the problem that that format does not get to the bottom of these issues? Statements of a general nature were made about some discussion that took place with certain Ministers. Do we not need a judicial inquiry?

[Mr Osborne]

I am very grateful that I took that intervention, because right at the end, the hon. Lady said that there were allegations that Ministers had been involved. As I said, it is extraordinary that they are all blaming each other. The people who were in the Treasury are blaming the people who were in No. 10, and the people who were in No. 10 are blaming the people who were in the Treasury. Why do they not take responsibility collectively for the absolute mess that they made of regulating our banks, including the LIBOR market, during their time in government?

[Several hon. Members]

rose—

[Mr Osborne]

I will take one more intervention and then move on.

[Alec Shelbrooke (Elmet and Rothwell) (Con)]

Would my right hon. Friend like to speculate on why the Opposition may want the review to be pushed back? He might like to comment on the fact that at that time, the shadow Chancellor was the City Minister, the shadow Chief Secretary to the Treasury worked at the Bank of England and the Leader of the Opposition was ducking mobile phones in No. 10.

[Mr Osborne]

Of course, part of the Opposition’s problem is that they cannot admit their mistakes in office.

[Several hon. Members]

rose—

[Mr Osborne]

I have taken some interventions, and many Members want to take part in the debate. The shadow Chancellor spoke for an hour and I have been speaking for 10 minutes, so I will make some progress and then take some more interventions.

For all the fierce argument in the Chamber, let us at least acknowledge that the public are very angry about what happened and want to know how it was allowed to happen and how we can prevent it from happening in future. That is presumably an area of agreement between us. We can also agree that what happened at Barclays bank was completely and utterly unacceptable and demonstrated the triumph of private greed over public good. The FSA report—

[Several hon. Members]

rose—

[Mr Osborne]

I will give way in a moment, but let me make this point.

We all agree that, in the words of the FSA, Barclays

“failed to conduct its business with due skill, care and diligence”,

failed to

“take reasonable care to organise and control its affairs responsibly and effectively”

and failed to

“observe proper standards of market conduct”.

We all agree that the misconduct of Barclays created the risk that

“confidence in or the stability of the UK financial system would be threatened.”

We can also agree—this is material to the point about whether there should be a judge-led inquiry or a parliamentary inquiry—that the FSA and the Department of Justice in the United States have done a very effective job in identifying what went wrong after the event. Sadly our regulators failed to see it coming, but the job afterwards has been effective. Now, I think we can all agree that we want the prosecuting authorities to see whether there are legal routes that they can take to bring proceedings against those involved. That is of course a matter for them. In this very partisan debate, that at least is a matter of consensus.

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

The Chancellor referred to the public anger, which is palpable. Is not the choice of which type of inquiry should take place a matter of public confidence? The public want to see a judge-led independent inquiry.

[Mr Osborne]

We heard from the Attorney-General that a judge-led inquiry may, in his words, not even get off the ground. The idea that we cannot have a parliamentary inquiry is obvious nonsense, because yesterday the Treasury Committee questioned Bob Diamond on the LIBOR scandal. Of course it is entirely possible for a parliamentary inquiry to take place. Our motion will enable us to get an inquiry under way and assuage the anger of the people of Northern Ireland and the rest of the country.

[Andrew Bridgen]

I am very pleased that the shadow Chancellor has agreed to give evidence to the parliamentary Committee, where he can be held to account for his role in the LIBOR scandal. Does my right hon. Friend the Chancellor agree that others who were involved should be compelled to give evidence, including those who are currently absentee Members of the House?

[Mr Osborne]

Of course, all involved need to answer questions. The first thing that we are doing to address the immediate issues with the LIBOR—[Interruption.] There are very serious issues of financial stability that we in the House have to address—[Interruption.] When is the shadow Chancellor going to take some responsibility for his time in office? He takes none whatever.

We have asked Martin Wheatley, the chief executive-designate of the Financial Conduct Authority, to review urgently what reforms are required to the framework for the setting and governing of LIBOR and other price-setting mechanisms in the financial markets.

[Several hon. Members]

rose—

[Mr Osborne]

I will give way in a moment, but let me explain what the FCA’s chief executive-designate will do. It is very important. He will work swiftly and report this summer, so that the Financial Services Bill, which is currently before Parliament, can if necessary be amended and the regulators can acquire the new powers that they need. Yesterday, he responded to the damning FSA report into the failure of RBS with plans for new sanctions for the directors of failed banks, including the possibility of criminal sanctions. I speak for hon. Members on both sides of the House when I say that, sadly, there is a stark difference between the powers available to the UK authorities and those available to their US counterparts. We need to correct that.

[Mark Durkan (Foyle) (SDLP)]

Does the Chancellor accept that the Wheatley review can proceed to do its work and inform changes to the Financial Services Bill without prejudice to the inquiry that the Opposition seek in motion 2? The motion does not prevent the Wheatley review, so using the review as an argument against the motion is a red herring.

[Mr Osborne]

I was not using the Wheatley review as a reason not to have a public or parliamentary inquiry. I was merely explaining the review for the people out there who care what the Government are doing to regulate the financial markets and who want to hear what we are doing urgently to deal with the transparency and integrity of the LIBOR market.

[Nic Dakin (Scunthorpe) (Lab)]

What does the Chancellor have to fear from a judge-led inquiry?

[Mr Osborne]

I was about to explain that a judge-led inquiry would not allow us to amend the law to deal with those problems in this Parliament. That is what I fear from a judge-led inquiry. It simply would not enable us to come to the kind of decisions we need to make in this Parliament. I shall set out exactly why later in my speech.

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

I support the Chancellor’s firm action in the past few days, but he should know that 12 months ago, the Serious Fraud Office declined to investigate whether LIBOR-rigging gave rise to a breach of the Theft Act and the Fraud Act 2006, and to the criminal offence of conspiracy to defraud. Instead, the SFO shuffled responsibility off to the FSA and the Office of Fair Trading. Will the Chancellor guarantee that, as part of his reforms, he will beef up the SFO so we have a serious prosecuting authority like the one in New York?

[Mr Osborne]

My hon. Friend makes a good point, and I agree absolutely with his instinct. We need to look at giving more criminal powers to our prosecuting bodies. One thing that Lord Turner has said is that, unfortunately, the FSA does not have the criminal powers it needs—[Interruption.] While the hon. Member for Islington South and Finsbury (Emily Thornberry) interrupts me from a sedentary position, let me say this: Lord Turner has said that it is a matter of regret that the FSA does not have those criminal powers available to it. That is precisely one of the things we need to look at this year to see whether we can amend the law this year. The second point I would make to address the point she makes from a sedentary position is that the SFO is completely independent of the Government of the day. It is actively looking at what criminal powers are available to it. The director of the SFO has said that he will be able to tell us how he will proceed by the end of the month. The hon. Lady wants to persuade me that the law unfortunately does not give us all the criminal sanctions we need to deal with financial crime in the way that we deal with crime on our high street, but I absolutely agree with her. The people responsible for that situation are Labour Members.

[Elizabeth Truss]

All hon. Members want wrongdoers in both the authorities and the banks rooted out, but does the Chancellor agree that we need swift action so we can attract investors to this country and start to build up our economy? Is not that what our constituents want to hear about?

[Mr Osborne]

My hon. Friend is absolutely right. This is not just about assuaging public anger; it is also about restoring any damage that has been done to the reputation of the City of London and ensuring that London remains the pre-eminent financial centre in the world.

[Several hon. Members]

rose—

[Mr Osborne]

I have already given way quite a lot. I shall make some progress and then give way again. I want to come to the heart of the issue dividing the House today: the question of whether we should have a public judge-led inquiry or a parliamentary inquiry. The Opposition have completely forgotten that one of the first things the Government did was to set up an independent inquiry under John Vickers—the independent commission on banking—that took evidence in public and comprised a panel of experts who came forward with proposals to ring-fence the retail banks and completely change the structure of banking. That was never proposed, let alone enacted, in 13 years of a Labour Government.

We have already had an independent inquiry into the structure of banking. The question, then, is what type of inquiry we should now have into the professional standards and culture in the banking industry. Let me explain why I think a public judge-led inquiry would be a mistake and why a parliamentary inquiry is the right approach. First, there is a general principle that judge-led inquiries be used when other forms of investigation have completely failed. Of course, everyone here has mentioned the Leveson inquiry, but that was set up because of the failure of police investigations. In Ireland, the Bloody Sunday inquiry was set up because of the community’s anxiety about the investigations into Bloody Sunday. No one here doubts that the Financial Services Authority and the US Justice Department have been effective in trying to find out what was happening on the trading floor of Barclays when these things took place. There is no question, therefore, of a failed investigation. We have had a detailed investigation, and now we have to act on its conclusions.

[Several hon. Members]

rose—

[Mr Osborne]

I will give way in a moment, when I have made my arguments about the public inquiry.

Secondly, judge-led public inquiries take an incredibly long time to conclude. I shall set out my evidence. In the motion, the Opposition want an inquiry established under the Inquiries Act 2005. There have been 14 inquiries under that Act, seven of which are still ongoing or have not been published because of criminal proceedings—remember, as we hear, there could be criminal proceedings in this case—and one of which was set up seven years ago and still has not been published.

The shortest inquiry established at the outset under the Act—into the tragic loss of life following the explosion at the ICL Plastics factory in Glasgow—took one year and five months. No other inquiry established from the outset under the Act has taken less than two years. Frankly, the idea that a widespread judge-led public inquiry into the culture and professional standards in Britain’s largest industry would take place much quicker than a public inquiry into an explosion at a plastics factory in Glasgow is fanciful. It leads me to believe that the Labour party wants to put off the moment when we actually investigate what happened.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

The Hutton inquiry opened in August 2003 and reported in January 2004. Why does the Chancellor claim that an independent judicial inquiry would take too long?

[Mr Osborne]

The motion talks about an inquiry under the Inquiries Act, but all the inquiries that have taken place under that Act have taken longer than one year, and the only one that took less than two years was into the tragic explosion at the plastics factory in Glasgow. The idea, then, that we could have a full public judge-led inquiry, while criminal prosecutions are taking place, and that it could conclude inside 12 months is completely fanciful—and the Labour party knows it. And by the way—[Interruption.] Calm down. That presents the House with a serious decision, because if we do not have the results of a broader inquiry, we will not be able to amend the banking Bill, when it is introduced into Parliament next January, in order to change the law and adopt the conclusions of the inquiry. We have one of two choices, then. We can either delay the inquiry—[Hon. Members: “Hooray!] We can either delay the introduction of the Vickers Bill or, as I say, we will not be able to amend it in this Parliament.

[Claire Perry (Devizes) (Con)]

The whole House will be aware that the banking industry employs 1 million people and contributes £60 billion in income in direct corporation tax, with employees contributing a further £25 billion in income tax. Banking is Britain’s biggest export industry and it has suffered enough as a result of the appalling regulatory regime and the failure of moral compass. Does the Chancellor agree that it is imperative that we sort this out and get on with the inquiry?

[Mr Osborne]

My hon. Friend is right. It is worth listening to what Richard Lambert—who used to employ the shadow Chancellor and whom the shadow Chancellor advised the then Chancellor to put on the Monetary Policy Committee—said:

“The last thing that is needed in this period of systemic fragility is the long period of regulatory uncertainty that a Leveson-style inquiry would make inevitable”.

That is something we have to bear in mind about an industry that employs millions of people across this country. As I say, if we have a public—

[Several hon. Members]

rose—

[Mr Osborne]

I will make further progress in my speech and then give way, but I am not giving way at the moment. If we—[Interruption.]

[Mr Jenkin]

On a point of order, Madam Deputy Speaker. I regret to say that I cannot hear the Chancellor of the Exchequer. Mr Speaker regularly reminds this House that we do not look very good to the public, and I think this might be a prime example.

[Madam Deputy Speaker (Dawn Primarolo)]

I am eternally grateful for the help from the hon. Gentleman in reminding the House of what I have already said to the House, which is that if Members believe that this demonstrates the behaviour of the House at its very best on a serious matter, they are sorely mistaken, regrettably. However, each Member in this House is responsible for their own behaviour, and not me, thank goodness, so perhaps we can continue with the debate.

[Mr Osborne]

May I at least make this point to those on the Opposition Benches about the proposal in their motion to have a judge-led inquiry?

[Steve Rotheram (Liverpool, Walton) (Lab)]

Will the Chancellor give way?

[Mr Osborne]

No, I am not going to give way; I am going to make this point.

If we go ahead with a judge-led inquiry, it will almost certainly take longer than the shortest inquiry that has ever taken place under the Inquiries Act 2005. Why? Because we are talking about an inquiry into the professional standards of the entire banking industry, which is a pretty big subject for an inquiry. Even if we assume that we could find a judge very quickly, that the inquiry was up and running at some point in the autumn, that took a year and a half—which is how long the inquiry in Glasgow took—and that the Government were allowed six to nine months to respond to the inquiry’s conclusions, have a White Paper and do the consultation required under Labour’s laws, that would make it impossible in this Parliament to make the changes to the law that might be required. This Parliament would be saying, “We are simply not able to change the law to deal with the scandal,” which would have happened almost a decade ago.

[Several hon. Members]

rose—

[Mr Osborne]

There is something else I want to say to the House. Of course we can act swiftly or follow the Opposition motion, which means delay, but there is a broader point. A Joint Committee can summon people under oath and it can summon papers. I commit to giving it any resources it needs to do its job. It can sit in public, and we can get to the bottom of what happened. But there is this final point for the House to consider—[Interruption.]

[Madam Deputy Speaker]

Order. If Members of the House think that constantly standing and holding out their arms will make the Chancellor give way, they might be wrong. I would be grateful if the Chancellor would indicate to the House whether he has any intention of taking further interventions. In that way, perhaps we can manage the debate in a more seemly fashion than we are doing at the moment.

[Mr Osborne]

I have taken many interventions, and I know that many people want to speak in the debate. That is why we will have a time limit on speeches. I want to say one final thing to the House. We are sent here to hold people to account on behalf of the public. What does it say about us if we fail to investigate? We talk about a lack of trust—

[Ian Austin (Dudley North) (Lab)]

On a point of order, Madam Deputy Speaker. Is it in order for a Member of this House, outside the Chamber, to smear his opponents with utterly false allegations for which he has no evidence whatever, and then to refuse to substantiate or withdraw them when he gets here? It is a complete disgrace.

[Madam Deputy Speaker]

Mr Austin, I think you know that I am grateful for the fact that I am not responsible for what Members choose to say in the House. Each Member needs to reflect on the accusations and counter-accusations, whoever they are. That is not a point of order. It is a matter of debate, and Members are making their feelings felt very forcefully on that point.

[Mr Osborne]

Thank you, Madam Deputy Speaker. I think that we have learnt today that the Brownite cabal and all its tactics are alive and well in the Labour party, and that they have taken over the leadership of the party. All the things that brought the last Government into disrepute are being repeated by the Labour Opposition today.

Let me end by saying this. What does it say about Parliament if we fail to investigate ourselves? We talk about a lack of trust in politics, but why should the public have confidence in their politicians when we politicians do not have the confidence to investigate scandals such as this? We have in Parliament the skills, the expertise and the mandate to do the job. We were created to hold power to account. Let Parliament make its decision today, and let all parties abide by that decision. Let us set up the inquiry and hold finance to account, and let us get on with it.

15:22

[John Mann (Bassetlaw) (Lab)]

In quoting the proceedings of the Treasury Committee, the Chancellor failed to quote accurately. I happen to have the transcript of yesterday’s sitting here, and it is unambiguous. The Tory vice-Chairman, the hon. Member for Sevenoaks (Michael Fallon), asked Mr Diamond the final question on this point. He said:

“I understand all that, but the effect of what you have written down here is that Ministers or officials were in effect asking you to fiddle your submission.”

Mr Diamond replied, in his final comment on this point:

“I didn’t believe that, no.”

He also said something that is of even more significance than the Chancellor’s smears, when it comes to the decision that has to be made. Diamond confirmed what we knew already from what the Financial Services Authority had said: he said that other banks were involved. One bank that has had to sack people is the largely state-owned Royal Bank of Scotland—the one that the Chancellor is primarily responsible for via a Government agency. There is no question but that what went on in Barclays was going on in—it has been suggested—at least 20 other investment banks, including the one that the Chancellor is predominantly responsible for: the Royal Bank of Scotland.

This scandal is therefore not restricted to Barclays. We know what a scandal Barclays is. I asked Mr Diamond 13 questions yesterday, and got no answers, other than his confirming that, as the man in charge of an investment bank, he asked no questions and carried out no analysis whatever of why the rates were different or whether there were any oddities in the rates that were being presented to the British Bankers Association by his bankers. He says he knew nothing, which is a little incongruous, but he did confirm that there were inter-bank issues here, as bankers from other banks were ringing Barclays and asking for favours—with the now infamous bottle of Bollinger being offered as a present in recompense.

The Royal Bank of Scotland is the Chancellor’s responsibility. Unfortunately, he failed to take interventions, including from myself; if he had allowed me to intervene I would have asked him directly what questions he has been asking about what has been happening over the last few months with the fiddling of the LIBOR rate within RBS—the bank for which, I repeat, he is predominantly responsible. In particular, I would have asked what the FSA is now telling the Chancellor about its inquiries. That is important because it will impact hugely on the nature of the investigation to be carried out. To suggest, as did the Chancellor—and the Prime Minister previously alluded to it—that this investigation could be confined solely to Barclays bank is clearly nonsense. What we are going to see, which we have not yet seen, is what the FSA has to say about these other banks—up to 20 of them. We are also going to see what comes out in the United States over the next six months—precisely while the inquiry, whether judicial or parliamentary, is ongoing.

The only thing of which we can be certain is that this is a moving feast. That creates a major dilemma for us, whichever way we choose to go. A judicial inquiry cannot be limited to a short period of a few months and guaranteed. If it comes out that what happened at RBS is comparable to Barclays, that presents an even bigger issue for us and for the Government to address. RBS is a huge British bank—one that the taxpayer has had to bail out and one largely owned by the taxpayer. The consequences for the Exchequer and the taxpayer will undoubtedly be even larger for RBS than for Barclays.

We do not know where the civil actions in the US are going to go or how quickly they will be carried out. That problem would afflict a judicial inquiry, however independent it was—and it would be independent—but it would afflict a parliamentary inquiry even more so. Who is going to sit on it, and for how long? That might sound like a small question to the outside world, but it is a major question. If the Chairman of the Treasury Committee or its members participate in the parliamentary inquiry, which would make some sense, it would effectively put the Treasury Committee out of action—perhaps for six months, but potentially for a year or 18 months—at a time when all these other major issues are before it.

That is the biggest reason why the joint inquiry will not work. It is simply not feasible for the Chair of the Treasury Committee to be effectively seconded for that period of time. However well resourced the Treasury Committee, its members will have to do two jobs simultaneously. The RBS question has not been answered in this context. I urge the House to consider it, because the issues are even bigger than for Barclays.

15:28

[Mr Andrew Tyrie (Chichester) (Con)]

The rigging of the LIBOR market is shocking. It is the worst case of City malpractice I can recall. The Chancellor proposed the idea of a Joint Committee to me in several phone calls over the weekend. It was an honour to be considered. None the less, I made clear right from the start what ingredients I viewed as required to make a success of it.

First, the Joint Committee’s terms of reference should be tightly drawn and forward looking. This cannot be a witch hunt. Having an exhaustive and inquisitorial committee of inquiry, whether it be within or outside Parliament, into the respective roles and responsibilities for mistakes of Ministers, civil servants, the Bank of England, regulators and commercial banks would do more for the history books than for the quality of legislation. The job of the Joint Committee must be to concentrate on how to get one part of the banking Bill into better shape, and in quick time. For that purpose it will need tightly drawn terms of reference, focused on improving standards and corporate governance in banking, and it can and should do the work quickly.

Secondly, as I said in that conversation, any committee of inquiry, particularly a parliamentary Committee, must have the support of the major parties across the House of Commons. It appears from what I am hearing here that it does not have that support at present.

[Mr Watts]

Is it not the case that any inquiry will have public support only if it is carried out on a cross-party basis? It is amazing that a Chancellor who seeks such co-operation from the Opposition should go out and the first thing that he does is tell lies about—

[Hon. Members]

Withdraw!

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Sit down, Mr Watts. I am on my feet.

Mr Watts, you will have to rephrase that last bit. You will do it briefly, and then Mr Tyrie will continue his speech—and that includes withdrawing the accusation of lying.

[Mr Watts]

I will withdraw that comment, Madam Deputy Speaker. I will say that the Chancellor gives the impression that he did something that he did not do, and then refuses to apologise. How does he think that he can secure co-operation across the Benches when he does that?

[Mr Tyrie]

I shall not address the second part of the hon. Gentleman’s question, but the first part was absolutely right. I think it essential for us to have cross-party support for any inquiry of whatever type.

Let me now refer to a tiny bit of history. A hundred years ago, partisanship made a mockery of an attempt by a Select Committee to investigate the Marconi scandal. The Conservative Opposition killed any value that that inquiry might have supplied, and as a result Select Committees were written out of the piece for inquiries for nearly 100 years. I think it vital for Parliament that another clash of the Titans—which seems to be going on now—does not leave us in a position in which we, as Parliament, cannot subject this issue to an inquiry of any type.

[Chris Bryant]

May I raise the issue of the powers that a Select Committee has? One of the things that we have learnt from the Leveson inquiry and the whole phone hacking experience is that the powers of the House of Commons are very, very uncertain. We do not know whether, once we have taken evidence on oath, a perjury case can be brought against anyone who has lied to Parliament, or misled Parliament. We do not know whether we can force someone to come here. However, we do know that courts can do it, which is why we—why I—support a judge-led inquiry.

[Mr Tyrie]

I am confident that can be sorted out if there is co-operation between the Front Benches, if necessary by means of Standing Orders, or by a very swift change in the statute book.

[Anna Soubry]

Will my hon. Friend give way?

[Mr Tyrie]

I will not, if my hon. Friend will forgive me. I am going to get on with my speech now.

The third point that I made to the Chancellor was that while the participation of some very experienced peers could add considerable value, any Committee should be Commons-led, should be governed by Commons rules of procedure, and should draw on existing membership of the Treasury Committee.

The fourth point—which has been made again today—was that the Committee would need full technical support, not only from private sector expertise but from officials and the Bank of England, and some legal advice as well. The absence of all that is the main factor that would inhibit the Treasury Committee from doing this work at the speed that would be required to enable it to contribute to the banking Bill.

Public confidence in banking is now very low. That is bad for Britain in so many ways, but it is particularly unfair on the hundreds of thousands of hard-working and trustworthy people in the financial services industry who do great work for this country, and who, having done nothing wrong, have found themselves impugned by implication. It is not realistic to expect that, in a few months, a Committee of this type would be able to draw the sting of the public anger about banking, but I do believe it realistic to hope that its recommendations could, once implemented, reduce the likelihood of such things happening again. The Wheatley review is due to report in about six weeks. We need to make sure that those perpetrating disgraceful practices such as the rigging of markets face stiff penalties, including jail. It is the fact that so many people have got off scot-free that really sticks in the gullet of the electorate.

Over my time here I have done what I can to strengthen the role of Parliament. If colleagues across the House—and I mean right across the House, including the Front Benches—want me to do this work, I will do everything possible to make an inquiry of this type succeed in order to clear up this scandal.

15:35

[Clive Efford (Eltham) (Lab)]

The tone of this debate has been regrettable. It was, in effect, set by the article written in The Spectator by the Chancellor. It is clear that that article was written before Bob Diamond appeared before the Select Committee yesterday, so the evidence the Chancellor uses to back up what he says in it was given after it was published. He cannot produce any proof or evidence backing up the unfortunate accusation he has made.

The Government must understand that the public are very angry about what banks have been getting up to, and they are not going to be satisfied if a Select Committee or a Joint Committee is set up to investigate the matter. That is just not going to get to the bottom of the issues that have made the public extremely angry.

Mr Diamond was deputy chief executive of corporate investment and banking until 2010, and he had been in that role for three years. That is the division of banking that deals with this area of investment. The idea that when he became the chief executive of Barclays he had no understanding of how LIBOR is set, the negotiations between banks and some of the sharp practices employed, and that he would remain completely ignorant of them, is beyond belief. In my opinion, it is clear that he attempted to cover up his knowledge of that when he appeared before the Select Committee yesterday. That just goes to show that there is a great deal of background that needs to be investigated. A Select Committee or Joint Committee would not be able to do that.

When hybrid Committees investigate a planning issue, it takes an enormous amount of effort and time to trawl through all the evidence and come to a balanced judgment. I have some knowledge of the Crossrail hybrid Committee, as that project affected my constituency. The Committee took up an enormous amount of its members’ time and effort. In respect of this banking issue, in-depth investigations of the allegations and counter-allegations are required, and I am not sure whether a Committee of Members of this House, supported by House of Commons staff, will be able to undertake them with sufficient thoroughness to meet the level of public anger and concern.

[Bill Esterson (Sefton Central) (Lab)]

My hon. Friend is right. Does he agree that the partisan nature of the debate demonstrates why a parliamentary inquiry of any kind cannot do this job properly?

[Clive Efford]

My hon. Friend anticipates another part of my speech. The processes in this House to set up Committees of this nature—with Government Whips selecting Committee members—will undermine the independence of any investigation. Unless this Committee is independent and the Government take their grubby little hands off it, its investigations will not satisfy the public at all.

[Mr George Mudie (Leeds East) (Lab)]

Does my hon. Friend agree that a Government majority on such a Committee prevents any chance of equality or objectivity? Does he also agree that before the wind-up speeches, the Chancellor should be asked whether he will agree with the Whips that, as a minimum, there will be equality of representation on the Committee, in order to secure public support?

[Clive Efford]

My hon. Friend has made the point, and in the interests of brevity I will leave it there for the Government to comment on.

The Attorney-General is wrong to say that we cannot set up an inquiry such as the one the Opposition are calling for today while a criminal investigation is taking place. At least two criminal investigations are going on while the Leveson inquiry is taking place.

We have been here before. On 4 September 2010, the News of the World issued the following statement:

“We reject absolutely any suggestion there was a widespread culture of wrongdoing at the News of the World.”

We all know what that meant. The then editor of the News of the World, Colin Myler, told the Press Complaints Commission in August 2009 that

“Our internal inquiries have found no evidence of involvement by News of the World staff other than Clive Goodman in phone-message interception”.

Let us compare that with Mr Diamond’s comment in his letter accepting the invitation to appear before the Treasury Committee:

“This inappropriate conduct was limited to a small number of people relative to the size of Barclays trading operations, and the authorities found no evidence that anyone more senior than the immediate desk supervisors was aware of the requests by traders, at the time that they were made.”

We heard exactly the same sort of defences being made against the Leveson inquiry being set up, suggesting that this was a small matter that needed to be investigated. This is too deep an issue to investigate through a Joint Committee of this House or a Select Committee.

I am instinctively supportive of the idea that we should set up such Committees, but fundamental reform of this House of Commons would be required for us to carry out such an inquiry. Back Benchers would need to be able to conduct business independently of the Executive. We do not have the structures to deal with an issue such as this. We would also have to change the culture of this place. Back Benchers would have to have a duty to the public, rather than to our respective Front Benchers.

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

Will the hon. Gentleman give way?

[Clive Efford]

I have given way twice and I will not give way any more because of lack of time.

Fundamental change in this House would be required of the type that simply has not taken place. It is such fundamental reform that we need, rather than the messing about that we have with the House of Lords, which will go absolutely nowhere.

The inquiry that the Opposition are calling for today could establish what we need to do in order to legislate to clean up the setting of the LIBOR rate. That could be dealt with and expedited, but when it comes to the underlying issues and the people involved, we are talking about criminal activity. Let us remember that, at a time when taxpayers’ money was being poured into the banking system to prop it up, these people were acting in their own personal interest and to profit Barclays and other banks, and against the interests of the country. In fact, it could even be called treason. These people belong behind bars, and the inquiry that needs to take place here—[Interruption.] Millionaires’ row over there are giggling at that, but I can tell them that the public out there do not think it is funny. We need to have a proper investigation, independent of this House, that will satisfy the public.

00:00

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

I will start by declaring an interest. When I was the chairman of the Future of Banking Commission it was funded by the Consumer Association, which might have influenced my views on this matter.

May I start by commending the Chairman of the Treasury Committee, my hon. Friend the Member for Chichester (Mr Tyrie), for the tone of his speech? I agree that we should not let the smoke of political battle in this place come between us and rescuing one of the most important industries in the country. Members on both sides of the House should bear that point in mind.

The title of the debate and of both motions refers to the professional conduct of the business of banking. This is not just about LIBOR and the LIBOR scandal. If it stopped there, we could deal with it through two actions: a change to the procedure to make it transaction-based and audited, and the criminal prosecution of everybody involved. That would resolve the issue once and for all, but that is not as far as this goes.

We all know that the practice of banking in this country has become perverted by huge incentives, which have led bankers to behave in ways that do not serve the economic interests of the country or our national interests—indeed, they have had the opposite impact. Although the Chairman of the Select Committee rightly said that the inquiry would need to be tightly drawn, it will nevertheless go pretty far. I am quite certain, for example, that even if it is confined to banking, things such as the derivatives market will undergo a lot of investigation in the course of the Committee’s investigation. We must understand that this issue is much bigger than just LIBOR.

Secondly, we should take on board the fact that we are debating the superstructure of the inquiry when we should perhaps be talking about its engine room. What matters are the inquiry’s powers, whichever we have, and they do not need to be so different for a judicial inquiry and for a Select Committee inquiry. I am afraid that the hon. Member for Eltham (Clive Efford) was just plumb wrong about the status of Select Committees in this House and their powers. I speak as a past Public Accounts Committee Chairman who summoned bankers, rail operators, pharmacy companies and all sorts of companies that did not want to come, to give their documents or to give evidence. We did not take evidence on oath, but they did not want to give evidence to the Committee and were made to do so.

[Bill Esterson]

I want to ask the right hon. Gentleman about the relative skills of a parliamentary inquiry and a judge-led inquiry. Some people in this House have very deep skills, but not everybody does, but a judge-led inquiry would have the necessary skills to carry out the kind of deep inquiry that he rightly says is needed. Will he comment on that?

[Mr Davis]

Absolutely. The Select Committee on Culture, Media and Sport and its inability to reach a unanimous view has been held up as an example. In my entire time as PAC Chairman—and, I think, that of all the subsequent Chairmen—there was never anything other than a unanimous outcome, because of the factual basis of the inquiries. That is what this inquiry must have. It must rest on the facts, which is why the Committee will need forensic accountants, lawyers and investigating teams. It will, I think, need one change in the law. It will need protection for whistleblowers, as we do not have that, but the same would be true of a judge-led inquiry. That would open the inquiry up to its full extent.

Let me make one more point about judge-led inquiries—it goes back to the Leveson inquiry and is slightly embarrassing for those on my side of the House, but I shall make it anyway. Judge-led inquiries cannot work around a criminal investigation without paying attention to it, and that can cramp what they do. If Members did not see it, I recommend that they look back at the evidence given by Andy Coulson and Rebekah Brooks, both of whom were facing potential criminal charges. Those were wholly useless days at the Leveson inquiry because the QC involved had to tiptoe around the issues. That might apply to almost every witness who appears before this inquiry, thanks to the issues facing it, so we must bear it in mind that we cannot solve that with a judge. We will solve it through a different mechanism that either approach would have to use and that, frankly, would be in camera hearings with those witnesses. Although the conclusion will have to be wide, open, wide ranging, honest and transparent, that might not be possible for the evidence-taking.

Although a House inquiry will be faster than a judicial inquiry—there is no doubt about that, for the reasons the Chancellor has given—there is the simple problem that any inquiry will have trouble completing by Christmas.

[Alison McGovern (Wirral South) (Lab)]

Will the right hon. Gentleman give way?

[Mr Davis]

I have taken one intervention and I cannot take any more.

Whatever the inquiry, it will take a long time, because it is a big issue, and it has to be got right. If it is got wrong and the inquiry is handled badly, and it turns out not to be well managed, it will do enormous damage to the City of London and the entire economy. If it is got right and it leaves the City of London with a reputation for clean and honest dealing it could be the single most important thing that happens under this Government.

15:50

[Stewart Hosie (Dundee East) (SNP)]

We need an investigation into LIBOR—there is no question about that. We need it because of the result of the FSA investigation into Barclays. The final notice on Barclays makes gruesome reading: LIBOR rates were manipulated for three and a half years, for which Barclays has been given a large fine. That means that there will be questions to the tripartite regulatory framework, and to the British Bankers Association, which is responsible for collating and calculating LIBORs. There will be questions of competence, action, oversight and omission for the Financial Standards Authority, the Bank of England and the Treasury.

This is an historic issue. We are already changing much or most of that, with the prudential regulation authority coming into being; the Financial Conduct Authority looking at the conduct of business; the recommendations of the Vickers commission being implemented; and the Basel III requirements being implemented to sit over what the banks do. The Chancellor has announced that the chief exec-designate of the FCA will be given responsibility for looking at the setting and management of LIBOR. We are looking at strengthening the Financial Services Bill and at criminal sanctions in relation to LIBOR, and we want to make recommendations quickly so that we can change, beef up and strengthen the as yet unseen banking reform Bill. That is all good stuff, but the problem—and it is a huge problem—is that our concerns are about more than simply technical changes, better supervision and the implementation of a criminal sanction regime in relation to LIBOR, however necessary those things are, and they are extremely necessary.

Yesterday, we heard quite extraordinary testimony from Bob Diamond, the ex-chief exec of Barclays, who told us that although LIBORs had been rigged for three and half a years, no one above the pay grade of desk supervisor knew anything about it. That is almost impossible, but it points to the fact that this is more than simply a technical problem—there is a deeper cultural problem.

The other problem is that this is not about Barclays at all. The media tell us that there may be 20 or more banks in the frame, even before we look at other financial institutions that may do similar things. This is a fast-moving story. The right hon. Member for Haltemprice and Howden (Mr Davis) spoke about derivatives: this is not really a LIBOR problem—it is a problem of derivative traders manipulating LIBOR. I am not sure, within the narrow remit of a Joint Committee, that we can do all the cultural stuff we need to do. It might also be the case—in fact, I am certain that it will be—that issues arise not necessarily about LIBOR or even related to it but, equally serious, as a result of investigations that are under way in other banks. We will of course want to deal with those issues in changes that we make, as they may have the same consequences in the real economy and cause the same deterioration of confidence in the banking industry as the LIBOR scandal.

Our political parties back the call for a judge-led inquiry. It is the right thing to do, because the issues are far wider and deeper than merely the technical ones. However—and I say this to my friends in the Labour party—if we fail to secure a judge-led inquiry we will not stand in the way of a joint parliamentary inquiry, because there is an absolute imperative to investigate LIBOR. Nevertheless—and I think that Labour Front Benchers were right on this—the calls for a wider inquiry into the culture that led to the problems at Barclays must be heard.

15:55

[John Thurso (Caithness, Sutherland and Easter Ross) (LD)]

It is a pleasure to follow the hon. Member for Dundee East (Stewart Hosie), a fellow member of the Treasury Committee. I am particularly grateful for his last point. I believe that there is an honest disagreement on the best route, but that there is far more consensus than members of the public who watched the early part of this afternoon’s debate might be given to think. There is a consensus both in the House and across the country that the LIBOR fixing is a scandal, that banking has yet again let down the country and that Parliament must take appropriate action to remedy that. There is also a consensus that further questions must be answered and advice taken to ensure that we take the right steps to remedy the banking industry for the longer term. Today’s debate should be about how to achieve that, and none of our constituents will be grateful if the result is a partisan deadlock while the bankers escape scot-free once again.

What do we actually need to know? First, we need to know all the facts relating to the LIBOR scandal. Secondly, we need to know how that has affected our constituents, both individuals and small and medium-sized enterprises, and how they can be compensated. Thirdly, and to my mind most importantly, we need to know whether banking as it now exists in the United Kingdom is fit for purpose and has the right model to deliver what society requires of it. How best are we to deal with that?

On the first point, with regard to Barclays we have all the facts relating to LIBOR. The report is comprehensive, as most people who have read it would admit, and, along with the US Justice Department’s report, gives us the facts we need. There will be new facts to come when the FSA reports on other banks, an important matter to which I will return. The FSA report on Barclays shows two things: traders fiddled for their own gain before the crash; and Barclays as an institution low-balled after the crash in order to protect itself. Both behaviours are unethical, and when I asked Mr Diamond about that yesterday he said, “Yes, they are unethical.” As I understand it, arrests may have been made and further arrests can be anticipated, so the facts are clear. What we need to know now is what we should do about it.

On the second point, which is about our constituents, the FSA has put forward a model for how it will redress the swap selling scandal, and it involves the financial services ombudsman. I suggest that that is a technical process that will be able to do the job, but that we should monitor it.

We come to the third and most important point: is banking delivering for society? What do we need from our banks, and not the investment banks, but those on the high street? We need a payments system that works. The RBS outage showed us that that is not always obvious. We need to have a safe home for deposits. Most importantly, we need a source of prudential lending for businesses. It should be a low-risk, low-return operation. It is clear that retail and investment banks have, and should have, separate cultures, so it is clear in my mind that they should be separated. We have had the Vickers recommendations, which represent the ring fence. I was prepared to accept that and would like it to be revisited as part of the inquiry.

There are a number of material points that we need to look at. I want to look at how best we can do that, because we need to get right the legislation when it goes through Parliament and the banking Bill that is to come. I happen to believe that a judge-led inquiry is not the best way to fulfil that objective, but I recognise fully that others take a different view. I believe that a parliamentary inquiry is up to the job, but only if the standard Committee procedure is improved. I believe that the Committee should have a QC, a legal team and, as the right hon. Member for Haltemprice and Howden (Mr Davis) suggested, forensic accountants. It should have the resources that the Chancellor has said he will put in so that the new bits of evidence can be properly assessed and the barrister can lead part of the questioning.

If today’s debate, therefore, leads us simply to an entrenched partisan position, nobody wins and the bankers get away again. It is essential that at the end of today’s debate we support an inquiry, whether it be parliamentary or judicial.

When some more facts come to light in respect of what the FSA is looking at, we may decide that a wider and deeper inquiry is needed. Let us cross that bridge when we come to it, but let us for now get on with the job of taking what we have and putting it into legislation, so that we end up delivering for our citizens banks that are fit for purpose.

16:00

[Mr Roger Godsiff (Birmingham, Hall Green) (Lab)]

I strongly support the proposal for a judicial inquiry. I am sure that under the hon. Member for Chichester (Mr Tyrie) a parliamentary inquiry will do its best, but I think that for the reasons that have been advanced today there is a need for a judicial inquiry, because as the hon. Member for Dundee East (Stewart Hosie) and the right hon. Member for Haltemprice and Howden (Mr Davis) have said, this issue goes way beyond fiddling the LIBOR rate. This is a much bigger issue, and it is the bigger issue that needs to be addressed.

Whether the inquiry is parliamentary or judicial, I have concerns about the continual emphasis on the need to do something about the culture and standards of banking, because it implies that if we change the people at the top of banking we will change the behaviour. Would that were the case. I do not believe that it is. There are of course many people who work in banks who do an excellent job. They work very hard, they do not get paid a great deal of money or share in massive bonuses, and they are as disgusted as we are by what has gone on, but even if the most pious, puritanical person is put in charge of a den of inequity, they will eventually be corrupted.

That is what happens when someone is put on a trading floor, and I speak as somebody who worked in a bank. Many years ago I worked for Coutts, when it did what traditional retail banks did—what the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso) described, and what the general public want. But if somebody is put on a trading floor and deals in obscure derivatives and other financial products, they will be either corrupted by what goes on, crushed by their peers or, if he or she is very brave, turned into a whistleblower.

Of course, there is a culture in banking that needs to be looked at—the culture of remuneration and bonuses. However, it is not just banking that has a culture whereby somebody who is paid to do a job, such as a nurse, teacher or bank clerk, then expects to get a massive great bonus for doing it, irrespective of whether they do it well or badly. This is far removed from the lives of the general public because of the amounts of money being talked about. Bob Diamond has earned £100 million, and if he walks away the question is whether he will get £20 million. Twenty million pounds is way beyond what the vast majority of our constituents can expect to earn in a lifetime, even if we add in their pension pots, so we are talking about a surreal world as far as the wider public are concerned.

To be fair to the Business Secretary, he has said that the problem can be addressed through shareholder power. That is naïve, however, because the biggest shareholders of public companies are the institutions—and many of the people in those institutions sit on other boards, so it all becomes an incestuous circle. Different remuneration committees can consist of the same people. It all comes down to, “I’ll scratch your back if you scratch mine.”

If the Government were serious about making radical changes to the culture that I have just referred to, they could do worse than limit the number of directorships of publicly quoted companies that any one person can have. They could also change the rules so that the remuneration committees of all publicly quoted companies had a majority of small shareholders. That would really send shock waves across the institutions, but not the shareholders, who would welcome the opportunity.

Time is running out. We need to change not just the culture but the structure of banking. In 1986, the wild west came back—all the firewalls and protections put in place following the previous financial crisis in 1929 were swept away. We are all responsible in some part for that; we created the masters of the universe, who have not done us any favours. We have to go back to basics and reconstruct a banking system that is fit for purpose, serves the people and is not self-serving for a small minority.

16:06

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

The hon. Member for Birmingham, Hall Green (Mr Godsiff) has underlined the importance of having a banking system that commands public confidence. I do not know how serious the LIBOR scandal is in relation to the ability of the banks to support jobs and growth, which we so desperately need at the moment, but it is clearly a mortal blow to the reputation of the City so we need to deal with it effectively and quickly.

I say to Front Benchers on both sides in this debate that this has not been the finest hour of the House of Commons. We have not seen the finest, highest and most principled leadership from Front Benchers of either side. Many among the public will look at the debate and scoff at our self-importance and arrogance. The City itself will be in utter despair that Front Benchers should have chosen to use this opportunity to tear chunks out of each other instead of co-operating to find a solution on which they can agree.

No solution will work unless there is consensus. I say that with a very heavy heart, having great respect for the prodigious abilities of both my right hon. Friend the Chancellor and the shadow Chancellor, as well as for their public service in the House. But I really think that we have to do better. Anybody could have seen over the past few days that the debate would be a complete car crash, and so it has been. We must seek to extract something positive from it at the end of the day.

My hon. Friend the Member for Chichester (Mr Tyrie) raised the tone of the debate in a laudable manner. He referred to the Marconi scandal of 1912; this is its 100th anniversary, and I will say a few words about it soon if I have time. The parallels are chilling.

First, I shall say a brief word about the powers of Select Committees. The shadow Chancellor is completely wrong—we have the powers. There is some doubt about the manner of their exercise and how we might deal with contempt, but there is no doubt that we have the powers. As Chairman of a Select Committee, I have exercised them. People are in fear of them. It does the House no service for the shadow Chancellor to go around saying that we do not have powers. That undermines the authority of the House and it is not in the interests of the House.

[Damian Collins]

I am closely following my hon. Friend’s argument. Is not the Standards and Privileges Committee currently looking at the sanction for contempt of Parliament?

[Mr Jenkin]

Actually, it is the Liaison Committee on which I serve as a Select Committee Chairman. I am personally looking into the matter and will report to the Liaison Committee next week; that will be part of our report on the powers and effectiveness of Select Committees, which we hope to produce before the end of this term. It greatly ill serves the House to denigrate the powers of Select Committees.

I am going to support the Government motion. I am not in favour of a judicial inquiry; I think it would be completely dotty to plunge us into such a lengthy procedure. However, I want to sound some warnings about the dangers that might befall a parliamentary Select Committee inquiry as proposed in the Government motion. We must be mindful, not least, that if Ministers or ex-Ministers were to be called to give evidence to try to sort out the absurd row that we have seen this afternoon, the Committee could not possibly function. Indeed, it could not possibly function if Opposition Front Benchers were determined to undermine its authority and operation.

It was highly irresponsible of the shadow Chancellor to fail to answer my question or that of my right hon. Friend the Chancellor about whether the Opposition will go on non-speaks if the motion is carried. I commend the hon. Member for Dundee East (Stewart Hosie), who said that even if the Opposition lose the vote, Scottish National party Members will co-operate with the inquiry. How is the House meant to make a judgment about whether to vote for the motion unless we have a clear view from the shadow Chancellor?

My hon. Friend the Member for Chichester mentioned the Marconi scandal. That occurred when Ministers—Liberal Democrat Ministers, I hasten to add, just for fun—were accused of buying and selling shares for profit—

[John Thurso]

I want my hon. Friend to tell us all about the Marconi scandal, but we were Liberals then.

[Mr Jenkin]

I beg my hon. Friend’s pardon. Of course—rebranded to cleanse the history.

Lloyd George’s Government were deeply embroiled in what we would call an insider dealing scandal. A Select Committee was very contentiously set up. It divided on party lines, it divided on whether to call Ministers as witnesses, it divided into party groups during the questioning of witnesses, and it divided along party lines in the writing of the report. In fact, it produced three reports—the official report, the Chairman’s report, and a minority report. Interestingly, the introduction to the 23rd edition of “Erskine May” says:

“Such highly visible failure condemned their successors”—

Select Committees—

“to a very limited role for almost half a century.”

I place great faith in my hon. Friend the Member for Chichester that he will draw stumps on the exercise if there is any danger that the Joint Committee is going to collapse in such a welter of recrimination. First, it could not produce a decent report under such circumstances; and secondly, it would damage this House in a very serious manner.

I do not wish to give succour to Her Majesty’s Official Opposition, but I note that the consequence of the Marconi scandal was the passing of the Tribunals of Inquiry (Evidence) Act 1921 when, following a subsequent scandal that engulfed the Government, it was decided that there had to be an alternative means of conducting a judicial inquiry outside Parliament with a judge, and that is how that format came into being.

The report by the Salmon royal commission on tribunals and inquiries, which was produced in the 1960s and is still the bible of how tribunals and inquiries are conducted, said that it would be “a retrograde step” to resurrect the format of a judicial inquiry within Parliament. Among the drawbacks listed by Lord Salmon were that Committees were composed of Members representing the relative strength of parties in the House, that parliamentary Committees do not hear counsel—something that has been suggested today—that some of, if not all, their members will have no experience of taking evidence or cross-examining witnesses, and that witnesses might not enjoy the same absolute privilege as in a tribunal set up under the Act. Those are the dangers that we have to guard against when we vote for the motion.

As I say, I am going to support the motion, but I add one other caveat. I would be grateful if the Minister will confirm that the Government will not present any objection to providing the resources—the money—that the Joint Committee will need to carry out its functions. We cannot have this new Committee raiding the staff and resources of other Committees. I think that if the inquiry is confined to matters of policy and recommendations for legislation rather than trying to settle the internecine disputes that we have seen on the Floor of the House this afternoon, then it can function with the support of the Opposition, but if the Government want it to happen it must have the necessary resources, which may be substantial. I would also recommend recalling a senior Clerk who has recently retired instead of raiding a Clerk from another Committee, because otherwise all our work will be disrupted.

16:14

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

The sole argument advanced today by the Chancellor as to why there should not be a thorough, comprehensive, judge-led inquiry is that it would not report quickly enough. Despite the enormous bluster and noise of this debate—I very much agree with the hon. Member for Harwich and North Essex (Mr Jenkin) about that—that argument has been overturned by the Leader of the Opposition’s proposal for a two-tier inquiry, with the section on LIBOR to report by the end of December and the second part, which is the more important part, to report within 12 months.

We have to answer the question that has not been answered: why are the Government so coy about a genuinely independent inquiry? Is it because of their fears over what a Leveson-style inquiry into banking might expose? After all, the City, which is a pretty hard-nosed institution, does not give half the Tory party’s total income to it year after year for nothing. It expects, and undoubtedly gets, a great deal in return. Is that why the scams that repeatedly tumble out of the City under the false pretence of financial innovation, such as the mis-selling of private pensions in the 1970s, which has not yet been mentioned, and the recent mis-selling of payment protection insurance and credit default swaps, have always been treated so lightly?

Is that why the Vickers recommendations, which were already weak since the City will always get around Chinese walls by regulatory arbitrage, have been watered down further through the lobbying of the banks? The crucial rise in capital ratios was initially set at 4%, which is certainly the minimum that is necessary. That was reduced by the Chancellor to 3% and even that feeble reform has been postponed, almost unbelievably, until 2019.

[Richard Fuller (Bedford) (Con)]

I appreciated the right hon. Gentleman’s support for my efforts in January to secure a Back-Bench debate on criminal prosecutions in financial services. He asked why Government Members want a parliamentary inquiry. Does he not accept that our constituents have a visceral attitude towards the misdeeds in the financial services sector, and that one problem with a judicial inquiry is that it is the equivalent of a snooze button and the people disengage? A parliamentary inquiry would not suffer that fate.

[Mr Meacher]

I think the exact opposite is true. The Leveson inquiry has aroused and maintained intense public interest. Yesterday’s Treasury Committee sitting showed what happens on such occasions. Unfortunately, it became very personalised about what each Member had been saying and drew attention to the degree to which Bob Diamond was not put under serious threat. There are therefore very good reasons for a judge-led inquiry.

Is the close political-financial nexus that exists in this country the reason why the demands of Germany and France for a financial transactions tax have been swept so cavalierly under the carpet by the Prime Minister and the Chancellor? Is that why the pressure from Germany and the US to wind down the egregious tax avoidance that is largely centred on Britain’s Crown dependencies has been flatly rejected by the Government at the behest of the City?

Why are the complex derivatives that lay at the heart of the crash in 2008-09 being retained by the Government within the ring fence? Why has the incestuous relationship between the credit rating agencies and those whose creditworthiness they are supposed to be assessing been left untouched by the Government, when it allowed junk derivatives to be sold around the world with a triple A rating? What is the answer to all these questions? I think that they are very significant. Why has the colossal scandal of tax avoidance on the industrial scale of £42 billion a year, in which the City is so intimately involved, been ignored so unscrupulously?

I shall give an example. The Government set up the Aaronson group to consider the issue, led by a lawyer who has always represented the tax avoidance industry and never Her Majesty’s Revenue and Customs. On the first page of its report last November, that group said that a general anti-avoidance rule was not necessary. It produced the preposterous proposal that if there were such a rule, HMRC would have to seek the permission of an external body before it could be used. It gets worse, because there would have to be a majority of tax avoidance industry representatives on that body. Not surprisingly, the Government have accepted those recommendations in full. That shows the inordinate lengths to which they will go to protect the City by appearing to do something but in reality elaborately constructing a paper aeroplane in the sure knowledge that it will not fly. Those are just some of the reasons, and I believe a lot more remain hidden, why the Government do not want a judge-led inquiry at any price. They are exactly the same reasons why a systematic, wide-ranging inquiry is now so necessary.

I agree with many Members that in the last analysis, this is not about personalities or even about the corrupted culture of banking. It is much more about the deeply flawed structure and role of banking in Britain. The banks are far too big, and the big five control up to 90% of the money supply, which is far too much. We need smaller, more specialised banks that focus on key areas such as infrastructure, relational banking like that in the German mittelstand, the knowledge, science and research and development industries, the green economy, small and medium-sized enterprises and all the rest.

Above all, we need to regain public control of the money supply, which was privatised as a result of deregulation in the 1990s, so that—this is the crucial point—the nation’s financial resources are focused not on the banks’ interests of profiteering from overseas speculation, tax havens and property, in which they specialise most of all, but on the national interest of putting the nation’s resources primarily into industry, manufacturing and export. That is why the whole House should unite behind the Opposition’s motion.

16:19

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

In 1993, I joined Warburg’s as UK economist. One of the first things I recall is visiting the chairman of the bank, Sir David Scholey, in his office with my entry cohort. He said to us that what the bank had that mattered most was its reputation, that capital would always flow to good ideas and that if we did not have great amounts of capital, that was not a problem because we had our client relationships. He said that we must always remember to put our clients’ interests first, never our own.

My first boss was George Magnus, the chief economist at Warburg’s, who is still active. I remember him saying to me that we should never talk our book, and that we were there to be objective. He said that we should never be particularly proud if we got something right or concerned if we got something wrong, but that we should be proud of the integrity of our way of thinking. When I was given a bonus, I expressed gratitude. The culture had not yet become that we should look upset in the hope of more next time.

Only when I went to do an MBA at Columbia university in New York did I realise that the fact that I had become a rated analyst was of personal value to me and that I could perhaps have gone to another bank and got more money. When I came back from America, the position here had changed. We had the regulatory system of the FSA, and I was more involved in advising retail banks.

One case that I worked on for a substantial time was that of a retail bank merging with an insurance firm. It was clear to me that to treat customers fairly in merging the compliance function, as I was tasked to do, we had to focus on how that insurer might sell products to the bank’s customers. There was nothing wrong with that per se—that, along with stripping out cost, was the rationale for the merger—but it clearly brought risks, and we needed a function that would stop inappropriate sales to customers for whom they were not correct. Yet the main issues in dealing with the FSA were a turf war between the bank and the insurance regulator and a vast amount of time spent on box-ticking compliance. The question is not just whether the system is over-regulated or under-regulated, it is about the quality of the regulation.

I then became a lawyer—I am both a qualified barrister and a solicitor—when I worked on bank recapitalisations and FSA litigation. I served as a judicial assistant to the vice-president of the Court of Appeal. The motion asks for a judge-led inquiry. I have enormous respect for our senior judiciary, but they have almost entirely been judges and lawyers—they have not worked in financial services industries and are not, as hon. Members are, representative of wider society.

On LIBOR, two separate things happened with Barclays. First, there was market abuse—we will see what happens in respect of other banks. Because the two mid-quartiles of LIBOR were measured, it was thought there could be no gain by giving a low or high response, but there was collusion by so many players that there was market abuse, and the FSA was asleep on the job.

I would encourage hon. Members to think about the second Barclays aspect in terms of the perspective of the time. The British Bankers Association says that LIBOR

“is not necessarily based on actual transactions”.

Banks are asked a question:

“At what rate could you borrow funds, were you to do so by asking for and then accepting inter-bank offers in a reasonable market size”?

We should note that the question refers to “offers” rather than “an offer”, but the BBA goes on to say:

“Therefore, submissions are based upon the lowest perceived rate at which a bank could”

borrow. It also says that “reasonable market size” is not defined and that

“it would have to be constantly monitored and in the current conditions would have to be changed very frequently.”

Whitehall was therefore using Barclays reports for a purpose for which they were not designed. It was looking not at LIBOR, but at one particular bank’s reports, which were quite possibly compiled by a junior person, in an incredibly difficult market position. Therefore, if Barclays reported a higher rate than other banks, it might be that it had different perceptions of “reasonable market size”, or it might not ask the offered rates because the market had frozen. Which banks were asked and how are those considerations to be reported? The banks are not being asked: “What are your bid and offer rates?” They are being asked: “What do you perceive one of your competitors might offer you were you to ask?” In the context of the financial crisis, that is potentially different from the market abuse I have described.

We should also consider the UK in the international context. We have a huge banking industry in this country. If a regulator says that much of it is socially useless, people might reply, “Yes, but the employment and prosperity of many people in the country depend on it.” How do we clear it up so we can offer a market and export our financial services to the world sustainably and in a way that will keep our reputation? Hon. Members can rail and bash the bankers for the bust we are suffering—that is quite fair and proper—but we must accept that the bankers also gave us our boom. Our borrowing and extra spending was based on candyfloss, and on a boom that the bankers created. They are as responsible for what we enjoyed in the boom as they are for the bust.

[Mr Jenkin]

Is my hon. Friend saying that wrong regulation rather than under-regulation robs the system of discipline, and that we want a more capitalist, self-disciplined system rather than more bad regulation?

[Mark Reckless]

Elements of such regulation have been backed, but we must look at the quality of regulation. We can have a market system in which people are clear what the regulation is, or a system in which the Government run regulation and bail everyone out, making the taxpayer responsible. We were betwixt those two separate models. Some parts of the market but not others were regulated, and people put stress and reliance on LIBOR that it was never designed for, which led to much of the problem.

We cannot take what the regulators say as Gospel. Many say that Barclays accepted that the Bank of England and Paul Tucker had not told it to lower the rate. Barclays was let off tens of millions in fines because the regulators agreed that, but the regulators have a vested interest—people might ask why they were asleep on the job in the earlier phase, and what LIBOR was doing in 2008-09. Hon. Members should consider what reliance Ministers or officials at that time put on LIBOR—we should ask what LIBOR said about Barclays, why the Government were trying to push Barclays into a bail-out it was trying to resist, and why there was such reliance on that rate.

[Mr Jenkin]

My hon. Friend is making a very interesting speech. Is he saying that because it was widely known that the Government were prepared to rescue the banks, the self-discipline that liability for bankruptcy provides in a banking system was abandoned and the whole market was distorted?

[Mark Reckless]

For the calculation of LIBOR, I wonder whether it had been abandoned for RBS and Lloyds HBOS—as it became—while Barclays continued operating in a market context. The BBA now says that banks have to quote on the basis of an unsecured, unregulated, non-Government-supported rate, but I do not know whether that was the definition it gave at the time. That would have been a concern.

In conclusion, Members of Parliament, representing their constituents, have the necessary range of experience to have a reckoning, as a society and a nation, with what has happened with our banks, to assess the costs, as well as the benefits that we enjoyed, and to consider how to move on and put the matter behind us. I know, from my experience on the Home Affairs Committee, that we can have a non-partisan Committee that can reach across. We have people with the necessary experience and independence of mind. We can get together a group of people to come up with a report that downplays partisanship, to find out what went wrong and to learn the lessons for the future.

16:31

[Austin Mitchell (Great Grimsby) (Lab)]

It is good that the debate has come to a calmer and more sensible level. The start demonstrated exactly why the House is incapable of conducting an impartial inquiry. With that degree of partiality and the petty debating points made by the Chancellor, it would be impossible to conduct a serious inquiry into banking.

Let us remember that we are talking not about who said what to whom in 2008, but about the professional standards of bankers. The Government have made a big mistake in trying to shift the blame for the LIBOR manipulation on to my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) and the previous Labour Government. It is inconceivable that a system of manipulation that lasted five years and which Bob Diamond—the man paid £20 million a year to know what was happening in his company—did not know about could have been caused by a word on the telephone from my right hon. Friend, my right hon. Friend the Member for Morley and Outwood (Ed Balls) or anybody else.

We have so far been silent on the real cause of these difficulties and manipulations. I refer to the problem of deregulation, which has made all this possible. The deregulation here—the big bang—was followed in the United States by the repeal of Glass-Steagall under Bill Clinton. That was the 1937 legislation that wisely enforced the separation of the utility, trading arms and the merchant-banking, casino-gambling arms of the banks. It made distinct entities of them. After its repeal, banks here and there began to come together, with the trading arms subordinated to the gambling-casino, merchant-banking activities, and that set the tone and the ethics.

The result was the end of the old neighbourhood banking system of friendly bank managers in cupboards advising us on what to do with our money and providing money for mortgages and small businesses. All that went, and we had the spectacle of the kind of gambling made possible by all these inventive processes, such as the slicing and dicing, and parcelling out of debt, securitisation, derivative gambling—a form of gambling without gambling tax—sub-prime mortgages and now LIBOR manipulation.

All those practices were made possible by the new ethics of the merchant banks. A new greed entered banking, and the only ethic at the top was greed. If people such as merchant bankers have too much power, it follows that they will abuse it. It follows that if they have too much power, they have to be regulated. It was the repeal of regulation and the passion of both parties—the Tories were more passionately anti-regulation than we were, but we still deregulated too much—that created the opportunity for this to break out into the mess that it did.

We have had a whole series of manipulations. I came across another one in 1992, when a young American trader with American Express bank came to me and said that points were being skimmed off foreign exchange transactions. Points that should have gone to the owner of the fund—the customer—were being taken by the dealers for themselves. We are talking about only a couple of points—one or two points—but added up over a long period, it came to huge sums of money, given the enormous numbers of transfers being made. Everybody pooh-poohed it. I took that trader to Eddie George, the Governor of the Bank of England, who told him, “No, it wouldn’t happen here. We’ve inspected the bank. Nothing like this is going on,” but it just was not true. It was going on, and now in America there is a lawsuit against New York Mellon bank for £2 billion that was skimmed off by traders in foreign exchange transactions. If that is going on in the States, it is going on here, and the only way to deal with it is through quite simple regulation to require time-stamping of all trading transactions.

Similarly, the ethics of the banks can be dealt with more effectively not, as Vickers puts it, by ring-fencing their two functions, but by driving them apart totally. That way, the neighbourhood banks—the local banks, the trading banks—can return to their old priority of serving the customer, the locality and local businesses, providing money for them and their transactions, while the merchant banking can continue its gambling elsewhere, I hope in a way that is more restricted by legislation and less prone to simple cheating. That is the only way to deal with these issues.

In conclusion, we have heard a lot of arguments about whether we should have a judge-led inquiry or a parliamentary inquiry. A parliamentary inquiry would be nice—it would allow us to play Perry Mason for a while and get a few headlines—but ultimately people will not have faith in it, because the Government have a majority and we have seen how they would react to the situation already. There is therefore no point in setting up an inquiry that people will not have faith in. We need a full and fair inquiry—a judge-led inquiry—to know what is going on and to tell the people.

16:37

[Priti Patel (Witham) (Con)]

Many good and relevant points have been made from the Government Benches already, so I want to make just three brief points.

In any debate on the banking sector, it is vital to remember the importance of financial services to the UK economy. I say that as someone who represents a constituency in Essex. Thousands of my constituents work in the City of London, and I can assure the House that they are not criminals. They are not the type of bankers who should be vilified; they are, of course, hard-working, law-abiding, tax-paying individuals, who help to contribute to that £100 billion to the UK economy and that £63 billion in taxes to the Exchequer. We should remember that we are world leaders in financial services, and it is wrong to vilify the entire sector for the sins of the few. It is because the overwhelming majority of City workers, including those from Essex, take such great pride in their work that the scandals currently rocking the financial sector are so damaging, not just to them and their jobs, but to the reputation of UK plc and our financial services sector full stop.

That is why it is important for us all to consider seriously the professional standards of the financial sector and the banking industry in a sober and considered way in this House. Today’s debate has been incredibly lively, as well as quite partisan, but I would like to pay tribute to my hon. Friend the Member for Chichester (Mr Tyrie), the Chair of the Treasury Committee, for bringing sanity back to the debate. As my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) said, although many issues need to be addressed right now, we have to look at the role of Parliament, the role of Select Committees and the ability of parliamentarians to scrutinise these issues in the right and proper way.

I think we would all agree that any criminality or wrongdoing that has hampered the fair functioning of the financial markets thus far must be fully investigated. Those who are found guilty should face stern punishment. In my view, there should be an unprecedented crackdown on those who lied and cheated, but we should not be demonising everybody in the City. It is our job as legislators to review what has gone wrong, to examine the wrongdoing, and, where possible, to legislate to reduce the prospect of serious misdeeds ever happening again. That is why a parliamentary inquiry led by a Joint Committee of both Houses is the most appropriate way to proceed. We have heard arguments in favour of that option today.

We have also heard about the abilities of parliamentarians. We have been elected to this House not only because of our backgrounds and our judgments. We have been elected to bring our experience to the fore, to articulate and to challenge, to be advocates and to be significant interrogators. We have heard evidence of hubris today, but it is important that we get on with the job. We need to find out why the regulatory system is broken. Vested interests have been mentioned on a number of occasions. We now need to get on with the job and fix this in the shortest possible time frame.

Nobody should be playing at party politics now. If we do that, it will take longer to clean up the City and even longer to bring in new regulations and laws. On that basis, I welcome the inquiry. It is incumbent on us all to get on and repair the damage that was done in the past by all those who have been involved in bad legislation and bad regulation. We need to restore the reputation of our financial services sector.

16:41

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I suspect that we are concentrating on how we can improve the system for businesses, rather than for the banks. I want to concentrate on some of the activity that has been drawn to my attention by my constituents. Small businesses are hurting at the moment, and some of them are reluctant to come forward because they are embarrassed at finding themselves in such a fiasco. Those people are running businesses that are in severe financial difficulties because of the activities of the banks.

To a certain extent, I agree with the Chair of the Select Committee, the hon. Member for Chichester (Mr Tyrie), and others who said that the vast majority of people who work in the finance and banking sector are decent, hard-working people. Many are not on particularly large incomes. Talk of the bonus culture tends to concentrate on the Bob Diamonds of this world, but many of those people on low incomes depend on their bonuses to get by. There is no doubt, however, that the business is full of wide boys and spivs.

I have seen e-mails spanning a period of time involving a company called Guardian Care Homes. That company has been successful in some of its prosecutions. For Bob Diamond to say that he did not really know what was going on in his organisation is complete and utter nonsense. For two months, The Daily Telegraph trailed the activities involving Guardian Care Homes.

I also want to mention an issue that was drawn to my attention some 18 months ago. I spoke to the Chairman of the Select Committee—I am sorry that he is no longer in his place—one evening after a Division, and expressed my serious concern to him about the sale of hedges and swaps. According to my inquiries, Barclays appears, a number of years ago, to have set up a specific section to target and home in on leisure facilities, caravan sites and the like. In July 2005, one of my constituents was approached by Barclays and asked whether he would go back to banking with it. He was offered a loan, as well as two swaps to protect him against fluctuations in interest rates. Over a short period of time, the value of his assets climbed. The bank then approached him and asked him to consider some of its hedges.

I want to thank the Financial Secretary to the Treasury, who is in his place, for providing some of the FSA’s findings on these matters over the past couple of days. The manner in which some of these banks have been operating is absolutely unbelievable. If I could not see it in writing myself or hear what constituents were saying, I would not have believed it, as there has been 100% hedging of some of the loans offered.

This time last week, I met another constituent who also operates in the leisure and caravan sector. He is a partner in two small businesses, running two caravan sites in my constituency and two in a neighbouring constituency. His bank—not Barclays bank, incidentally—pulled him in and encouraged him to have a look at another three caravan sites that were on the market. The guy was not that keen, but he went away and considered the proposal, and came back to the bank to say, “Yes, I might be interested in a loan.” He was offered the loan, but only on the basis that he took out more swaps.

That sort of activity has been going on, but I really do not know how many people out there have been caught up in it. It is interesting to note that the Financial Services Authority’s letter to Financial Secretary says:

“During the period 2001 to date, banks sold around 28,000 interest rate protection products to customers.”

What does that mean? How big is the scale of this? That is particularly important if compensation has to be paid. There is a serious concern that if compensation is paid, it could bring banks down. When it comes to protection, people are looking for answers.

[Sheila Gilmore]

Does my hon. Friend agree that it is not just businesses, but some individuals who have been led into over-borrowing and so forth? These people have been affected, and it appears from polls reported today that 55% of them think there should be an independent judicial inquiry to get to the bottom of these issues.

[Mr Brown]

Let me tackle that quickly. Yes, during the last couple of days, I have received more than 30 e-mails from constituents, saying that they want a proper inquiry. Here we are in this Chamber, but we all have to stand outwith it. What will people have witnessed here this afternoon? Partisanship. I understand that we can all get dragged into it, but I have to say that people have no faith in this place. On both sides of this House, we see ex-bankers and ex-financial advisers. Quite honestly, Madam Deputy Speaker, if you were to ask me, “Would you trust these people?”, my answer would have to be no. [Interruption.] If we seek a genuine answer, this problem needs to be tackled by being placed in the hands of someone else. [Interruption.] Conservative Members should calm down. I have listened to the hon. Member for Rochester and Strood (Mark Reckless), who used to be in the business, and to others. It could be due to my ignorance, but I have to say that financiers and bankers could be from another planet. They know the ins and outs, but as the FSA has said, when the issues are complex, it hides what is going on.

[David Mowat (Warrington South) (Con)]

I was neither a banker nor a financial adviser in a previous life, but given the hon. Gentleman’s points, it seems to me likely that amendments will be required to the Financial Services Bill, so should we not proceed with that as quickly as possible? Can he think of a better way of getting into a position to action that than setting up a Joint Committee that can identify the requisite amendments and get them ready for January? That seems to me to be the point the hon. Gentleman is making.

[Mr Brown]

The point I am making is that the people of this country will have faith only if this matter is dealt with in a truly independent manner. That means it needs to be done through a judicial system.

The local business man who initially approached me had four businesses operating in four different parts of the country. The bank put so much of a squeeze on him as he chopped and changed these swaps and hedges that it ended up forcing this guy to sell three of his businesses, one after another, to repay it. I highlight to the Government Front-Bench team that the bank has now moved in administrators on the basis that the man owes it £1.4 million. That debt includes a charge of £900,000 as a break fee or cancellation for those swaps and hedges. That is a phenomenal charge; it is just breathtaking. There has now been an admission of mis-selling. I have tried to contact the administrators to say, “Back off, you’re taking this business down”, and I wonder how many others out there are in a similar position.

I say to Ministers that it is important for us to put the system right, as a House, as an Opposition and as a Government. We need to stamp on banks now to get them to stop some of the activity in which they are engaged. They are taking businesses to the wall, administrators are running rife, and we sit back and just allow it to happen. That is not acceptable.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

I shall call the last speaker now. The winding-up speeches must start at 4.55 pm, so I ask that speaker to resume his seat then.

16:50

[David Rutley (Macclesfield) (Con)]

Many years ago, when I was at business school with my hon. Friend the Member for Bedford (Richard Fuller), I took a summer job in Wall street. I shall never forget the occasion on which I was interviewed by a certain individual who sat with his feet up on his desk, wearing big red braces, smoking a huge cigar, and chewing gum. The interview was for a job in leveraged buy-outs. Before even introducing himself, that individual said to me, “David, how greedy are you?” I do not remember what my response was, but in my head it was pretty clear: “Not greedy enough to take this job.”

My interest in investment banking evaporated pretty quickly after that experience of outrageous behaviour and outrageous remarks. Behaviour of that kind on the part of a few bankers has led to investment banking in particular, but banking across the board to some extent, being given a very bad review by many of our constituents, and it has failed to build the trust that is so badly needed.

I went on to spend most of my career in retail, much of it at Asda, building its financial services business. There was a stark difference between supermarkets and banks when it came to levels of trust—and that was back in 2002; I hate to think what the difference is nowadays. Every day the supermarkets had to go out and compete for the right to earn the trust and loyalty of their customers, so that they would shop there every week. The lifetime value of those shopping baskets was vital. The supermarkets knew that if they captured that loyalty, it would lead to profits on the bottom line. In banking, by contrast, the focus is so much on short-term profit that the banks lose sight of the customer side of the equation. That was brought home to me starkly when I spent a couple of years working for Barclays before the election, trying to address some of the effects of the credit crunch on its business.

My work in retail financial services highlighted the need for change, and also how difficult it is to bring it about: to break with accepted norms, and to move on from rules of the game that people have previously regarded as being quite acceptable. The LIBOR-fixing scandal has highlighted the desperate need for root-and-branch change in investment banking. That change is needed, and it is needed sooner rather than later.

It is hard to believe that it is five years since the collapse of Lehman Brothers, and five years since we saw the queues outside Northern Rock. The public expect change, and they expect it quickly. It is for that reason—the need for urgent action—that I support the call for a parliamentary inquiry. We cannot wait until 2015 or 2016 to secure the answers and, more important, the solutions. A properly resourced parliamentary inquiry with full access to papers, officials and Ministers, with evidence given under oath, could make much-needed progress.

[Mr Cash]

Does my hon. Friend agree that we could also adopt the system applied to hybrid and private Bills, with a cross-examination carried out by a fully forensic Queen’s Counsel, so that we could get to the root of what is really going on? Could we not have specialist advisers on the Committee as well?

[David Rutley]

I am not familiar with that approach. As a former member of the Treasury Committee, however, I should like to say that I have worked with my hon. Friend the Member for Chichester (Mr Tyrie), and that I have a huge amount of respect for his knowledge and experience in Treasury-related matters, and also for his independence of mind and personal integrity.

[Richard Graham (Gloucester) (Con)]

Does my hon. Friend agree that what our constituents really want is a recognition of what went wrong, swift action to prevent this from happening again, and then work to restore trust in this sector, which is so important to the country? As Lord O’Donnell said, the public will not want us to kick this into the long grass.

[David Rutley]

I completely agree. It is so important that we drive for urgent action that I hope Opposition Members will reconsider their stated position and vote with us this evening in support of a parliamentary-led—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I asked the hon. Gentleman to conclude his remarks by 4.55 pm and that is now the time. The winding-up speeches will now start.

16:54

[Ms Angela Eagle (Wallasey) (Lab)]

Today’s debate—especially the beginning of it—makes the case more eloquently than I ever could for a forensic, judge-led inquiry, free from charges of partisan political game-playing of the type in which the Prime Minister and, even more disgracefully, the Chancellor have engaged since last Monday. Anyone genuinely wishing for cross-party agreement on the approach to be taken in an inquiry into this incredibly important industry would not have conducted themselves as they have since last Monday. However, since then we have had a more nuanced and calm debate, which I was not expecting after the beginning we had. I am glad that temperatures have cooled.

As I said last week when news of the LIBOR fixing scandal first broke, the potentially criminal behaviour that has been uncovered at Barclays is truly shocking. We also know that other banks are certainly involved, and that investigations are currently being conducted by regulators across three continents. This should not be an occasion for petty party-political points scoring, therefore; it should be a matter of the utmost concern on both sides of the House. Our constituents want us to concentrate on getting to the bottom of this and putting it right, and that is what this debate should be about.

Today, we have a choice between a Government motion proposing a tightly drawn, limited parliamentary inquiry and a motion, supported by all the Opposition parties, proposing an independent, forensic, two-part, judge-led inquiry, with the first part reporting by the end of 2012 on the scandal surrounding LIBOR, and the second part reporting within a year, looking at the wider issues of culture and practices in the banking industry.

The House must today consider whether the scale of misconduct in the banking industry justifies a judicial inquiry, rather than a quick parliamentary examination. In deciding which approach is more appropriate, we need to consider the following questions. Are there issues of culture and practices across the industry that need to be forensically examined? Does the scale of misconduct in the banking industry threaten the future prosperity of the UK if problems are brushed under the carpet and the situation quickly returns to business as usual? Is the culture of multi-million pound bonuses for bankers as a reward for high-risk, complex trading—a culture that took root in the 1980s—something we should worry about? A moment’s consideration reveals that the answer to all those questions is yes.

[Mark Reckless]

rose—

[Ms Eagle]

I will give way to the hon. Gentleman, but I ask him to remember that I only have 10 minutes.

[Mark Reckless]

The Opposition motion says we need a judge to examine forensically the culture of banking. Is the culture of banking really susceptible to legal analysis in that way?

[Ms Eagle]

With expert advice, certainly. That is therefore the approach we must choose.

The banking industry does not want a judicial inquiry; it wants—a multi-billion pound—business as usual. We saw that in its response to the Vickers commission on reform. Top banking executives lobbied hard to protect the status quo, and the Chancellor caved in, but the British people want a judicial inquiry, because they are sick to death of bankers taking mega-bonuses while refusing to lend to small business—we have heard about some instances of that—or to support struggling households. They are angry that greed and irresponsibility in the banking sector led to the credit crunch and they are angry about the real suffering it has inflicted. They want change, not the status quo. They do not want business as usual.

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

I am grateful to the hon. Lady for giving way. Does she recognise the anger among the public, which warrants swift action? We will completely lose their confidence if we wait years before legislative changes are brought about. Does she not recognise that the public demand immediate action?

[Ms Eagle]

The public demand action that will be effective, and that is calm and considered.

A year ago, this House had to decide the best way to get to the bottom of practices in the media. The House made the right choice then. It decided that a judicial inquiry was the best way to get to the truth, to get to the bottom of what had gone on, and to produce recommendations on how culture and practices could be improved. In that instance, the Prime Minister said that the best way of getting to the truth was

“a judge-led inquiry with Ministers answering questions under oath where all the documents have to be revealed and the whole thing is pursued properly by a team of barristers who are expert at finding out the facts”.—[Official Report, 30 April 2012; Vol. 543, c. 1251.]

I am frankly baffled about why the Prime Minister thinks that the best way to get to the bottom of what went on at News International is a judicial inquiry, but the best way to get at what has happened in banking is anything but. It is the wrong choice. Why is the Prime Minister doing what the banking industry, rather than the country, wants him to do?

Let us consider the two options before us today: a parliamentary inquiry or a judge-led inquiry. The Inquiries Act 2005 requires the panel to be independent. This is especially important when there are allegations of the involvement of Whitehall and the Bank of England. The Act ensures transparency and guarantees due legal process. Its enforcement powers are clear and set out in statute, and it can draw upon expert skills and resources to complete its task.

In its 2004-05 report, the Public Administration Committee observed that Committees are not ideally suited to conducting specialised investigations into particular events because of perceptions of partisanship—we have had a little bit of that today—and the limits of ongoing co-operation which could reasonably be expected from Government, and because their evidence-taking procedures are not well suited to drawing out the truth from witnesses. I agree with that assessment. Because of the extraordinary tone adopted by the Prime Minister and the Chancellor, this inquiry has already been poisoned by political partisanship—a point recognised, to his credit, by the hon. Member for Chichester (Mr Tyrie).

A parliamentary inquiry would be dependent on support from Treasury officials who are answerable to obviously partisan Ministers. The rules for parliamentary Committees are in a state of flux; they are obscure and potentially difficult to enforce. A judicial inquiry, as the Prime Minister has said, would have a team of barristers and experts in their field to get at the truth. It is for those reasons that the House rightly chose to set up the Leveson inquiry. Although the Culture, Media and Sport Committee did a good job in examining conduct at News International, it had some obvious limitations. First, the Committee’s powers were insufficient to get at the truth, a matter that is currently being considered by the Standards and Privileges Committee. Secondly, the Culture, Media and Sport Committee was unable to agree a unanimous report and split on party lines, diluting its effect. A judicial inquiry would command widespread public support because of the requirement on those involved to act in a non-partisan way. This House made the right choice in opting for a forensic, judge-led inquiry. It should do so again today.

The Prime Minister has made the wrong choice. The Government first opposed holding any inquiry at all.

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

Will the hon. Lady give way?

[Ms Eagle]

No, because there is only a minute left.

With no consultation with Opposition parties, the Prime Minister announced a tightly drawn parliamentary inquiry. He first opposed a parliamentary vote, only then to give way. Over the last three days, on every day, at every stage, the Prime Minister has made the wrong choice.

This inquiry will have a Government majority, so far as we can see, because the Prime Minister’s guiding principle has been partisan interest, not the national interest. From day one, the Prime Minister, the Chancellor and their parliamentary outriders—we have heard from some of them today—have smeared their way around this issue with innuendo and noise, in order to cover up and make it as partisan as possible.

The Government had a choice this week, but they made the wrong one. They have rejected an independent inquiry to get to the truth of what has gone on in the banking industry when we could have had all-party agreement. They have rejected the opportunity to work on a cross-party basis and instead have sought to maximise narrow partisan interests. The result was the start of our debate today. The Government have rejected the opportunity to begin the work to reshape our banking industry so that it plays a positive role in Britain’s economic future and trust is restored, but I hope that Government Members will see sense and join us in the Lobby today. These issues are too important to be dealt with as the Government suggest and the British public will not be satisfied with anything less than a full, forensic and judge-led inquiry.

17:05

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

The debate got off to a difficult start and those watching it might have been driven to the conclusion that this was not the forum for a rational debate about the ethics and conduct of banking. Of course, the Government motion proposes a joint parliamentary inquiry, and those who have served on Select Committees and Joint Committees know that such inquiries are conducted in a far calmer atmosphere than the rather heated beginning of our debate, particularly if they are tempered by the presence of those from another place. My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) made that point in his compelling speech.

I hope that Opposition Members read, if they did not listen to, the speech from my hon. Friend the Member for Chichester (Mr Tyrie), who has said that he is ready to serve as Chair of the Committee if it goes ahead. He made it absolutely clear that he was not interested in a witch hunt, that his inquiry would be forward looking, that the objective would be to get banking in better shape quickly and that he wanted a broad-based inquiry including participation from Opposition Members. I hope that Opposition Members will be reassured by his speech.

My hon. Friend also asked for an assurance about resources from the Treasury. In his statement on Monday, my right hon. Friend the Chancellor made it clear that the Treasury would be happy to give resources to the Committee.

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

Will the Leader of the House give way?

[Sir George Young]

Let me make a little more progress.

I am also grateful to my right hon. Friend the Member for Haltemprice and Howden (Mr Davis). In a thoughtful speech, he made the point that the gap between the two forms of inquiry was narrower than many had implied, particularly so far as powers were concerned. He also reinforced the imperative of reaching a unanimous conclusion, which often happens with Select Committees of the House. Indeed, he drew on his own experience on the Public Accounts Committee. My right hon. Friend cast some doubt on the December target, but my hon. Friend the Member for Chichester seemed content with it.

I hope that Opposition Members will listen to what the hon. Member for Dundee East (Stewart Hosie) said. He is a signatory to motion 2 on the Order Paper and made it clear that if that motion was not carried he would not oppose motion 3. That is the right approach if we are to resolve the issue this afternoon.

I am grateful, too, to my hon. Friend the Member for Caithness, Sutherland and Easter Ross (John Thurso), who made the point that the gap between the two sides was not quite as wide as the rhetoric at the beginning of our debate implied. He underlined the urgency of making progress, particularly if we are to catch the legislative train that is going through the House in this Session.

The right hon. Member for Oldham West and Royton (Mr Meacher) asked why the Government were against the inquiry proposed by the Opposition. My right hon. Friend the Chancellor set out in his speech the timetable for public inquiries and that was one reason why we did not think that that was the right way forward.

My hon. Friend the Member for Rochester and Strood (Mark Reckless) made an interesting speech explaining the difference in culture that had occurred in the City, a point also made by my hon. Friend the Member for Macclesfield (David Rutley), who was put off a career in the City by being asked the question, “How greedy are you?” One only has to look at him to realise that the answer is not at all, as he has the figure of a pipe-cleaner.

My hon. Friend the Member for Witham (Priti Patel) spoke on behalf of the thousands of people who work in banking who were not responsible in any way for what has occurred but whose reputations are now tarnished by the actions of a minority. She spoke on behalf of the hard-working majority in our banking services and supported the parliamentary inquiry.

Many of the contributions underlined powerfully the need for urgent action to put out the fires that are threatening to engulf one of our leading financial institutions and to prevent further wrongdoing at the heart of banking. Banking employs more than 1 million people, and it generates £63 billion in Exchequer revenues and 8.9% of our gross domestic product.

I do not think that there is any disagreement between the Government and the Opposition on what we need to do, which is to sustain a strong, vibrant, transparent and more accountable financial sector in the UK that commands international confidence. Although we are united on the direction of travel, there are clearly differences on the choice of vehicle and its speed. We favour a cross-party Joint Committee of both Houses that is accountable to Parliament; in operation before the summer recess; equipped to navigate the legal minefield of criminal investigations; and well positioned to produce recommendations that can be implemented through legislation that can be introduced in this Session. The Opposition, as we have heard, prefer a more costly public inquiry led by a judge and run by Queen’s Counsel and other lawyers that would coincide with and perhaps undermine other regulatory proceedings operating on a time scale that cannot easily be controlled.

Those who support the first motion should listen to what the former Cabinet Secretary Lord O’Donnell said in the debate in the upper House on Tuesday:

“I was involved very much in setting up the Leveson inquiry, and my experience of judge-led inquiries is that you have to be incredibly careful about tying them down to specific issues and timetables.”

That is what the Opposition are seeking to do. He continued:

“What people have said they want from this specific inquiry means that it will grow bigger and take longer or that it will be incredibly superficial”.

Lord O’Donnell was not alone in expressing those concerns. Two other former Cabinet Secretaries voted against the Opposition’s proposals, and even Lord Eatwell, the Labour Treasury spokesman said:

“I am supportive of the idea of a Joint Committee moving forward to deal with the specific implications and consequences of the LIBOR element—what Mr Tyrie refers to as the ring-fence proposals.”—[Official Report, House of Lords, 3 July 2012; Vol. 738, c. 617-623.]

Some hon. Members have claimed that a parliamentary Committee will be unable to rise above the political fray. However, we all realise that a Committee report pushed through on party lines will quickly be devalued. Others have suggested that a parliamentary Committee would lack the inquisitive force of an inquiry barrister. I want to make it absolutely clear that a Joint Committee will have what it needs to carry out an inquiry including, if it wants them, resources for counsel. If we establish a Joint Committee we are fortunate to have more than 1,000 Members in both Houses with the necessary expertise to hold an inquiry. The advantage of a parliamentary Committee is that it is in a position to ensure that the recommendations are carried forward—something that we cannot have with a judge-led inquiry.

A number of my hon. Friends have made the point that today’s debate has not just been about the conduct of the banks. To a lesser extent it has been about the capacity, reputation and relevance of parliamentary institutions to rise to the challenge. I have to say to those who resist a parliamentary inquiry that I have more confidence in the ability of Parliament and its Committees to rise to the challenges that confront us this afternoon than all those who say we are the wrong people to do this.

The hon. Member for Wallasey (Ms Eagle) did not make clear—and neither did the shadow Chancellor—whether, if motion 2 is defeated and motion 3 is carried, the Opposition will participate in the inquiry. I very much hope that if motion 2 is defeated the whole House will support motion 3. I hope that all parties will nominate those with the qualities needed, of whom there are many throughout both Houses, to the Joint Committee, and I hope that we can show the country that we have the ability and self-confidence to discharge the responsibilities placed on us and address the central issue at stake today—restoring confidence in the UK’s banking industry.

Question put.

17:14

Division 44

Ayes: 239

---

Labour: 226
Scottish National Party: 5
Democratic Unionist Party: 2
Plaid Cymru: 2
Social Democratic & Labour Party: 1
Conservative: 1
Independent: 1
Green Party: 1

Noes: 320

---

Conservative: 277
Liberal Democrat: 43

17:28

The Deputy Speaker then put the Question necessary for the disposal of the business to be concluded at that time (Order, 4 July).

Professional Standards in the Banking Industry (No. 2)

Motion made, and Question put,

That, in the opinion of this House, a joint committee of the two Houses ought to be established into professional standards in the banking industry.—(Sir George Young.)

17:28

Division 45

Ayes: 330

---

Conservative: 277
Liberal Democrat: 44
Scottish National Party: 5
Plaid Cymru: 2
Democratic Unionist Party: 1
Green Party: 1

Noes: 226

---

Labour: 223
Democratic Unionist Party: 1
Social Democratic & Labour Party: 1
Independent: 1

[Ed Balls]

On a point of order, Mr Deputy Speaker. The Government have won their vote. The Chair of the Treasury Committee will now chair a narrow inquiry based on the remit that he set out in the House this afternoon. The Opposition respect the hon. Gentleman and will work with him, but we have some real concerns about the membership and secretariat of the Joint Committee, which we hope he will address.

This afternoon’s debate, and particularly the devastating interventions of the Attorney-General, exposed serious questions about the scope of the inquiry—[Interruption.]

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. The House must listen to this point of order in silence.

[Ed Balls]

It is clear that there is a wider set of questions, on matters from mis-selling to small businesses to the wider culture and practices of the banking industry, that are outside the scope of the inquiry set out by the Chair of the Treasury Committee and, in our view, cannot be properly addressed by any parliamentary Committee. In our view, the case for a full, open, judge-led public inquiry is stronger at the end of this afternoon, and we will continue to press that case.

It is our view that the Chancellor and the Prime Minister have made a grave error of judgment, and any time future scandals emerge, people will ask why we in this country are not having the full, independent public inquiry that our country needs.

[Mr George Osborne]

Further to that point of order, Mr Deputy Speaker. I welcome the Opposition’s agreement in principle, as I take it, to take part in a joint parliamentary inquiry into what has happened. I suggest that the usual channels now work on the membership of that inquiry and that the Front-Bench teams and my hon. Friend the Member for Chichester (Mr Tyrie) discuss any concerns that Opposition Front Benchers have about resourcing, the secretariat and so on. What everyone now wants to do is get a resolution that all parties can agree on, which we can bring to the House before it rises, so that we can get the Joint Committee up and running, get to the bottom of what went wrong in our banking industry and with the LIBOR scandal, and make the changes needed to legislation to ensure that it never happens again. I would welcome the Opposition’s support in doing that.

[Mr Tyrie]

Further to that point of order, Mr Deputy Speaker. I think the whole House, and actually the whole country, will welcome the engagement that appears to be taking place across the Dispatch Boxes. I reiterate that I will do whatever the House asks me to do, but I believe it is worth my trying to chair the Committee only if it has the full support of all the major parties in the House of Commons.

[Mr Deputy Speaker]

I am grateful for all three points of order, and the Chair has nothing to add.

Business of the House (11 July)

Thursday 5th July 2012 Commons Chamber

Motion made, and Question proposed,

That at the sitting on Wednesday 11 July—

(1) the Speaker shall put the Questions necessary to dispose of proceedings on the Motions relating to Sittings of the House and September Sittings not later than two hours after the commencement of proceedings on the first Motion; such Questions shall include the Questions on any Amendments selected by the Speaker which may then be moved; the Questions may be put after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply; and

(2) notwithstanding the provisions of Standing Order No. 20 (Time for taking private business), the Private Business set down by the Chairman of Ways and Means shall be entered upon at the conclusion of the backbench business on that day, and may then be proceeded with, though opposed, for three hours, after which the Speaker shall interrupt the business; the business may be entered upon after the moment of interruption; and Standing Order No. 41A (Deferred divisions) shall not apply.—(Mr Heath.)

17:44

[Mr Christopher Chope (Christchurch) (Con)]

Before hon. Members go home, they might wish to interest themselves in whether we have Divisions after 7 o’clock next Wednesday, or whether we should arrange our business to ensure that any Divisions are before or no later than that time.

The motion is highly relevant to that question and perhaps I can elucidate its implications. The first part of the motion puts a timetable on the length of the debate on the eight motions on the Order Paper relating to sittings of the House and September sittings. We might find that, in addition, amendments to those eight motions are tabled. I do not know how much interest there is among Members of the House in the subject, but it would be premature to curtail the debate to two hours. Why is it not possible to trust hon. Members to debate sittings of the House for as long or as short a period as they think is reasonable, having regard to the issues and the Procedure Committee report?

My first concern is that the first part of motion 4 limits the debate on the motions relating to sittings of the House and September sittings to two hours. In business questions today, the Leader of the House said that, immediately after debates on sittings of the House, there will be a debate on a motion on VAT on air ambulance fuel payments, which is one of the debates we were hoping to have today, but was squeezed out by the change of business. The motion is supported by a very large number of right hon. and hon. Members and there is a lot of interest in it, so I anticipate that the debate will last for up to three hours, which was the original time allocation. However, I would have thought that the motion would not cause controversy, and that the House would not divide on it.

Under today’s business statement, we could have the first debate on the sittings of the House, followed by a three-hour debate on VAT on air ambulance fuel payments, and then, under the terms of the second part of motion 4, a three-hour debate on private business. Under Standing Order No. 20, on time for taking private business, traditionally and by convention, there has been a three-hour slot allocated to private business, so that the hon. Members concerned with it know exactly where they stand—what the issues are, and when the debate will begin and end. There is quite a lot of subject matter in the private business set down for Wednesday, and I would have hoped that it would be possible to debate it during the time normally set aside for it, namely between 4 pm and 7 pm.

It is important that hon. Members who want to involve themselves in any Divisions should be able to do so at a convenient hour, but if motion 4 was not carried this evening, we would have unlimited time to discuss the sittings of the House—the House could be responsible in its own way for how long that went on. After that, we would have the debate on the private business, unless the sittings of the House debate finished before 4 o’clock, in which case we could start the debate on VAT on ambulances, which could continue either at 7 o’clock or earlier, if the private business did not take the full three hours. That would prevent the problem of people being kept behind.

I say that because I and a few colleagues are what one might describe as specialists in holding promoters of private business to account. We like to ensure proper scrutiny. On several occasions, however, motions not dissimilar to this one have been allowed through, because none of us wants to be unnecessarily awkward. As a reward for allowing such motions to pass, however, the Chief Whip and other Whips have briefed against us, saying that, “Colleagues are being kept back because of the hon. Member for Christchurch or the hon. Member for this constituency or that constituency”—I will not mention their names, because it might embarrass them, but they might wish to participate in this debate.

If we pass such a motion, then, the people indulging the business managers by agreeing to the motion find themselves effectively being put in the dock if the business of the House goes on much later than one would normally expect on a Wednesday.

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

Is it not true that the private business set down for consideration on Wednesday has been kicking around for several years? In some cases, it dates back to the 2007 Session. It could hardly be described as a matter of urgency.

[Mr Chope]

My hon. Friend makes a good point. I am sure that points like that—if not identical to it—will be made when we discuss the private business motions, because in essence they are motions on whether the House should agree with the other place that private Members’ Bills that, as he says, have been hanging around in the House for a long time should be revived, or whether the promoters should be held to account for the enormous delays.

Some of the Bills relate to peddlers. We know that since those Bills first began five or more years ago, the Government have announced that they will introduce separate provisions relating to peddlers. I will not go into the merits or otherwise of those particular Bills, because you would rule me out of order, Mr Deputy Speaker, but the question of whether they should be further considered or should lapse owing to how long they have been kicking around needs to be debated. I anticipate that the people saying they should no longer be heard might want to put the proposition to the vote, and I suggest that the voting take place at 7 o’clock on Wednesday rather than much later.

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

It occurs to me that there is a certain incongruity in extending Wednesday when the House will just have voted on the sitting hours. We will have adopted hours and then immediately have suspended them for private business. Does my hon. Friend agree that that is rather peculiar?

[Mr Chope]

I agree with my hon. Friend, who, as so often, gets to the nub of the issue and the inconsistencies in the line taken by the business managers. Of course, we do not yet know what line officially they will take towards the sittings of the House, except that, judging by the motion, they think it desirable that we do not all have a say and that the debate be limited to two hours. I had not anticipated that we would have the chance to begin a debate on this important subject this evening.

[Bob Blackman (Harrow East) (Con)]

Does my hon. Friend not agree that the scope of the private business to be debated on Wednesday—provided it is given time—is extremely narrow and that it will be a challenge, even for the ingenuity of those who hold such Bills to account, to come up with a debate lasting three hours?

[Mr Chope]

I hear what my hon. Friend says, and if he is right, that is all the more reason why we should not support this motion, because otherwise those of us who wish to debate the private business, including him, will find ourselves hanging around in the House until a three-hour debate about VAT for air ambulances has been completed. Our entitlement under Standing Orders to have our business debated between 4 o’clock and 7 o’clock will have been taken away from us, which would be very unfair.

[Bob Blackman]

We cannot anticipate the House’s decisions on the motions dealing with the sittings of the House. There may well be only two Divisions, which would rapidly truncate the voting following that debate and enable the business to move forward much more swiftly. If that were to happen, the series of Divisions that my hon. Friend has alluded to would not take place.

[Mr Chope]

We can speculate as much as we want to about what might or might not happen, but my experience in the House leads me to suppose that we always ought to look for the unexpected to happen on such occasions. We do not yet know how many amendments will be tabled to the sittings of the House motion or how contentious the debate will be on whether we should continue to have September sittings. It might all go through on the nod, in accordance with the primary suggestions of my right hon. Friend the Member for East Yorkshire (Mr Knight), the Chairman of the Procedure Committee, but it also might not. I have heard rumours about what might be the consensus emerging among Members, and my hon. Friend the Member for Harrow East (Bob Blackman) might have heard contradictory rumours, but essentially there is a strong onus on those who want to change the sitting hours of the House to put that case and to argue it successfully against those who would say that they have made their arrangements for this Parliament on the basis of the sitting hours that were already laid down at the end of the previous Parliament.

[Mr Nuttall]

On the other side of the coin is the danger of having urgent questions or ministerial statements on that day. Indeed, I was present at business questions earlier, when the Leader of the House was not able to give an absolute assurance that that would not be the case next Wednesday.

[Mr Chope]

That is another issue. We do not know: there may be very good reasons why Mr Speaker would allow an urgent question as a result of what happens on Tuesday. We cannot anticipate that, which is why we should make it clear that the Standing Orders of this House make specific provision to allow for three hours for private business. Standing Order No. 20 specifies those hours as being between 4 o’clock and 7 o’clock on Wednesdays. If the private business does not take as long as those three hours, we can then get on to the following business sooner. If the issue of VAT for air ambulances comes up for debate before 4 o’clock, it can be adjourned at 4 o’clock and then resume as soon as the debate on the private business is concluded. For many years that has been the standard procedure. It is only during this Parliament that the Leader of the House and his deputy have started playing games with those of us who are concerned to ensure that we can hold those who bring forward private Bills and private business properly to account.

I have been very indulgent and tried my best to explain the situation to colleagues who have been told by the Whips that they must stay until late at night because I have initiated a debate on private business that has gone on longer than it would have done if we had not conceded such motions. Frankly, I am fed up. Why should I be blamed for keeping the House late, when the situation is the direct responsibility of motions brought forward by the Leader of the House and his deputy? I am keen—

18:00

The debate stood adjourned (Standing Order No. 9(3)).

Ordered, That the debate be resumed tomorrow.

sittings of the House

Ordered,

That, on Tuesday 17 July, the House shall meet at 11.30 am and references to specific times in the Standing Orders of this House shall apply as if that day were a Wednesday.—(Mr Heath.)

Female Genital Mutilation

Thursday 5th July 2012 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Jeremy Wright.)

18:00

[Jane Ellison (Battersea) (Con)]

Thank you, Mr Deputy Speaker, for giving me the opportunity to speak again on this important and topical issue. The Under-Secretary of State for the Home Department, my hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone) and I have been here before on a Thursday evening.

In April this year, a Birmingham dentist, Dr Omar Addow, told undercover reporters from The Sunday Times that female genital mutilation was

“not allowed in this country”.

He also said:

“These are very private and secret things...It must be confidential but I think it’s better you go to Africa...I can give you some medication...I can help you.”

The same report quoted Mohammed Sahib, an alternative medicine practitioner from Barking, east London, offering to carry out FGM on a 10-year-old girl for just £750. The actions described by those men are illegal under this country’s law, as the House will know. Under the Female Genital Mutilation Act 2003, which built on the Prohibition of Female Circumcision Act 1985, it is illegal to take girls abroad for FGM or to facilitate that process in any way. The 2003 Act extended extraterritorial protection to all UK residents and citizens. However, it seems that those legal protections are still being flouted and thousands of young British girls every year face the prospect of becoming victims of a serious and violent form of child abuse.

I am glad that the dentist, Dr Addow, and the doctor who referred the reporters to him, Dr Mao-Aweys, were arrested and that their respective professional bodies are investigating the matter. As an aside, though, I would question why it took a newspaper to expose that activity. Why was it not on the police’s radar, or that of local health officials? Or is it the case of “where there’s a will, there’s a way”? I will return to the key role that must be played by front-line professionals later in my speech.

Members will be aware of my interest in female genital mutilation and of the all-party parliamentary group on the issue, which I chair. I am grateful to the many Members who have taken an interest in the subject over the past year. I have spoken before about this barbaric practice still being carried out across the world and I believe that it is still being practised on girls who live in this country.

The World Health Organisation defines FGM as any

“procedure that intentionally alters or causes injury to the female genital organs for non-medical reasons.”

The WHO and the United Nations also recognise FGM as a human rights violation. I will not go into great detail about the devastating effects of FGM—I have covered those subjects before—but it results in girls, usually under the age of 10, facing a lifetime of pain and many significant physical and mental health problems. Today, I want to focus on those girls who are most at risk of being taken overseas in the long summer holidays by their families to have FGM inflicted on them—the theory being that the holiday break gives the girls time to “heal” before returning to school in September.

There are many who downplay the issue or deny that FGM is a problem in the UK, and trying to eradicate a practice that is shrouded in such secrecy and to establish the evidence base for one’s arguments is, by definition, difficult. However, I believe that some girls in the UK are at risk of suffering FGM, and I would like to offer the House some facts from which that conclusion can reasonably be drawn.

The last comprehensive study into FGM prevalence in the UK was carried out in 2007, and was itself extrapolated from the 2001 census figures based on settlement in the UK from FGM-practising regions of the world, such as east Africa. That study has become the main source of statistics for debate on FGM in the UK ever since. Although we need a fresh comprehensive study, it should be noted that the Forward study has been peer-reviewed in the past six months by a panel of European experts and its methodology remains robust. The study’s figures also received an update in the report on harmful cultural practices, “The Missing Link”, commissioned by the Greater London authority last November.

We cannot precisely determine the persistence of FGM as a cultural practice in the communities that have resettled in the UK. Some reports have found a falling away of the practice, while others have found an aggressive re-commitment to it among diaspora communities. However, we know from freedom of information figures obtained by media organisations last year that the number of women seeking treatment for FGM has increased in recent years. The London Evening Standard reported that, in 2010, 442 women in 11 London NHS trusts sought treatment for FGM and related complications, often associated with pregnancy and childbirth—a 30% increase on 2007. This would suggest that, even if—and it is a very big if—the percentage of girls and women having had FGM is falling in the UK, the increased volume of migration from practising countries and regions would still mean that there is a net increase in the number of women and girls with, or at risk of, FGM. This is of particular concern as the UK has seen significant migration from Somalia, where World Health Organisation estimates put FGM percentage prevalence in the high 90s, and where the most extreme form of FGM is widely practised. I highlight Somalia for a reason: Puntland, a large region in north-east Somalia, has recently passed a law that indemnifies families who inflict sunna-type FGM on their girls, even if the girls die as a result.

Over the last year, I have attended conferences held by health practitioners, including midwives, gynaecologists and obstetricians who have illustrated that more women were presenting for childbirth with FGM, many of them then asking to be reinfibulated—that effectively means sewn back up—or coming in for the birth of a later child, with clear evidence of reinfibulation after the birth of their earlier children. This does not support any conclusion that there is a rapid rate of abandonment of this practice in the UK, and these women’s daughters should be considered at risk.

Although, regrettably, there have been no prosecutions for FGM-related crimes in the UK in the last 25 years, people have been successfully prosecuted and convicted in other comparable European countries, most of which have significantly smaller communities from FGM-practising regions than the UK.

In the light of the evidence I have presented, I hope the House will agree it is reasonable to conclude that a substantial number of young girls living in Britain today are at risk of becoming victims of FGM. I will focus my remaining comments on what more we can do to reduce that risk.

I want to be clear—I have said this before—that this is not about picking on one culture or another. Just as we celebrate cultural diversity in our country, however, we cannot shy away from difficult issues because of cultural sensitivities. Proper regard for people’s cultural heritage has become warped by over-sensitivity, and harmful cultural practices have not always been challenged as strongly as they should have been. The feedback from health professionals at the conferences I have attended is that they do feel constrained and they worry about deterring patients from presenting. Some teachers I have spoken to, although charged with safeguarding these children, were completely ignorant of FGM and some admitted their guidelines were, at best, embryonic. Most conversations with front-line professionals quickly come round to cultural sensitivity.

Even a recent detailed report on the Somali community in a particular London borough did not contain a single mention of FGM, or even an allusion to it, despite the fact that it is probably the most serious health issue faced by women in the British Somali community. The authors said that community leaders were very sensitive about the issue and did not want it mentioned. This is an oft-repeated pattern, and it will continue as long as we—politicians are the worst offenders here—continue to address issues affecting women and children in minority communities via their community leaders who are overwhelmingly male and often very socially conservative.

We have to ask ourselves what we care about more—the sensitivities of community leaders or the health and well-being of our children? And they are our children. We do not affirm their equality in our country by denying them the protection of our laws and the excellent safeguarding guidelines that exist but are not routinely implemented.

I have mentioned the last comprehensive study into FGM prevalence by Forward. Although still robust, it needs updating, and in my Adjournment debate speech last November, I asked the Minister to consider funding a national study into FGM prevalence. I commend her and thank her for funding, and therefore making possible, the two-day preparatory research workshop co-ordinated by Equality Now. I know she is considering its findings. Although many of the recommendations relate to other Departments—in particular, the Department of Health—I hope she will commit to work with colleagues to respond positively to the workshop.

I am also very pleased to see that the Home Office has worked with the Southall Black Sisters to produce the excellent “Three steps to escaping violence against women and girls” guide, which includes FGM. Will the Minister tell us how this is being used, how wide is its distribution and whether it has been sent to local education authorities and/or head teachers by the Department for Education? The chief medical officer wrote to all GPs and other health professionals in May this year with some excellent guidance on treating FGM and protecting at-risk girls. I feel that something similar is needed for schools.

Helping parents to protect their own children is also important. Work done by the charity Forward in 2009 found that some women from at-risk communities were reluctant to cut their daughters and felt that the pressure to do so had diminished in the UK. One reason that was identified was that those women no longer had to deal with pressure from extended family members, particularly grandmothers. That is especially relevant in the context of tonight’s debate about girls who risk being taken abroad for the long summer holidays, where they and their parents may be exposed to such family pressure for extended periods.

The parents who do not want to cut need to be supported in resisting the pressure to inflict FGM on their young daughters. Simple measures such as the “health passport” which was introduced in the Netherlands last year, and whose introduction is being considered here, could go a long way towards empowering parents to stand up to family pressure. Can the Minister update the House on any progress towards the introduction of a “health passport” for England and Wales before the school summer holidays? If that cannot be done this year, I hope that it will definitely be done next year.

I understand that the Minister met a delegation of young people in Bristol yesterday to talk about what could be done about FGM. Can she also update the House on their views about the best way in which they feel they can safeguard their own health? No doubt she will join me in commending the work of the Bristol safeguarding children board and that of key professionals such as Nurse Jacalyn Mathers, who have done excellent work to tackle FGM. Much can be learnt from the work in Bristol across many Departments, and I am sure that the Minister will have details of their action plan. The Mayor of London’s Office for Policing and Crime is also developing a pilot initiative, which the all-party group will follow with great interest.

Will the Minister join me in encouraging MPs with at-risk girls in their constituencies to ask the right questions in the next few weeks when they visit schools? They should ask head teachers, as I have, whether their staff know the signs to look out for, and are clear about what to do if they suspect that a girl is at risk. Health and education professionals must be alert to indicators that FGM may be about to happen. Those include talk of and requests for extended holidays, preparations for so-called special ceremonies, and requests for travel vaccinations or anti-malarial medication. The British Medical Journal recently carried helpful guidance to doctors on the subject.

Has the Minister had any conversations with other Departments about the heightened risk of FGM at this time of year? For example, has she had—or could she have—any discussions with the Foreign and Commonwealth Office’s excellent forced marriage unit, with a view to learning from its experience of safeguarding UK minors overseas?

In February this year, the Minister assured me during Women and Equalities questions that she would undertake to ensure that UK border staff read the safeguarding guidelines. Perhaps she can update us on whether that has happened. While on the subject of borders, may I commend the work of the charity Children and Families Across Borders, and ask the Minister to consider the comprehensive plan that it has prepared to identify and track at-risk girls? It is too late for that to be done this year, but the project could make a big difference in the future.

Let me quote again from the article which was published in The Sunday Times in April:

“‘It is not possible, we cannot do that’, one man said. ‘The only advice I can give you, if you can, if possible, take your sister or your daughter to another country that allows… it’s no problem... You know in this country you have to fight for... your cultures. They don’t like your cultures.’”

Well, Mr Deputy Speaker, FGM is not culture; it is child abuse. We must stand firm on that point and match our words with action, and I very much hope that further action will result from this debate. We must work together to put additional practical barriers in the way of those who, this summer, are planning to blight the life of a child with a blade. If we can save only one little girl from that fate, the House will have spent its time well this evening.

18:14

[The Minister for Equalities (Lynne Featherstone)]

I congratulate my hon. Friend the Member for Battersea (Jane Ellison), and thank her for again raising the important subject of female genital mutilation. She works tirelessly on this important agenda, and I entirely agree with her that genital mutilation is an unacceptable form of abuse against girls and women. We know that at this time of year, just before the start of the school holidays, girls are at much greater risk of being taken abroad for the purpose of FGM.

My hon. Friend asked a number of questions, and I shall try to deal with all of them. Let me begin by saying that preventing FGM is at the heart of the Government’s ambition. This summer, leaflets and posters, staff fact sheets and training videos about FGM have been distributed to all children’s centres in London by the Metropolitan police to raise awareness among those who work with parents and children in affected communities. The police are also refreshing their training for officers throughout London, reminding them of their role in safeguarding women and girls at risk of FGM. This awareness-raising is something we can all do, to ensure all front-line staff are able to respond to victims. Although there is not much time left before the summer holidays, I will encourage all MPs to write to their local schools, raising this issue and pointing out that schools should look for signs of potential risk, especially at this time of year.

[Heather Wheeler (South Derbyshire) (Con)]

Will my hon. Friend also highlight that this is not just an Africa problem? I went on an all-party group trip to Indonesia, and how the Indonesian Government deal with it is fascinating. There is localism in Indonesia’s 17,000 islands, and in islands where there is strict sharia law they hand out clean tissues and good medical equipment, but they do not ban the practice. This is a problem in countries across the world, therefore.

[Lynne Featherstone]

It is a bit late to be taking new steps before our schools break for the summer, but I will get out whatever messages are possible in whatever way I can.

Home Office staff will attend a conference in Nairobi this month, training consular staff—who are the first responders to forced marriage and FGM cases—in how to respond effectively to reported cases abroad. A year on from launching the FGM multi-agency practice guidelines, we are continuing to challenge and tackle this appalling crime.

Additionally, the Department of Health continues to ensure that health professionals are able to respond to women and girls at risk, and it has focused on communications, which will extend throughout the summer period. A short film about FGM will be launched for the NHS Choices website. The film will be available to the public and is aimed at raising awareness among families, young girls and all professionals who may come into contact with girls and families who may be at risk.

In May, the Under-Secretary of State for Health, my hon. Friend the Member for Guildford (Anne Milton), who has responsibility for public health, wrote to the royal colleges and NHS agencies, encouraging them to raise awareness of FGM among professionals. It is shocking that many of them still do not know enough about it, even though so much information is available. The Health Department’s chief medical officer and director of nursing, with the support of the royal colleges, wrote to health professionals drawing their attention to FGM and the multi-agency practice guidelines.

My hon. Friend the Member for Battersea raised the issue of Puntland, Somalia. The recent legislation on FGM in Puntland needs to be understood in the context of a broader ongoing political and constitutional process—however frustrating that is—which means that it would not be helpful for us to challenge it at this time. A number of key players in Puntland are working towards the abandonment of FGM, although I acknowledge what my hon. Friend said about that not being successful.

[Jane Ellison]

I am well aware that the British Government made significant efforts before this legislation was passed, and that this issue was raised at the Somalia conference. I just wanted to highlight why girls from that region in particular might be at risk, as the culture is still very prevalent there.

[Lynne Featherstone]

I think I must have misunderstood my hon. Friend’s point. We have been working there, and a number of key players in Puntland are working towards making progress as well, including the President himself, religious leaders and UN agencies. I have recently begun to question our work with leaders in communities and countries where such practices are so embedded, however. The Somalia FGM taskforce, of which the UK is an active and vocal member, is of the view that working to support these individuals, and working with the diaspora, is the best approach to supporting the abandonment of the practice.

I am pleased to be able to say that there are encouraging developments on the international stage. During my visit to Ethiopia in April, I met Dr Bogaletch, a founder of KMG—Kembatta Women’s Self-Help Centre. She has worked in Ethiopia since 1997, with the goal of creating an environment where the rights of women are recognised. It has managed to mobilise communities to review long-held beliefs critically and honestly, allowing the communities themselves to question the practice and empower individuals to ignite change. I met her recently when she came over to this country, and she is going to supply us with the tools and the pathway—the route that she uses in communities. Her work is very interesting. I do not know whether it is directly transferable to the diaspora here, but there may be something in it. Although we are trying to make progress with prosecutions, progress is agonisingly slow, so we should leave no stone unturned.

What I want to highlight today is the incredible social change that young people themselves are driving forward. My hon. Friend mentioned the young women from Bristol, I believe.

[Jane Ellison]

indicated assent.

[Lynne Featherstone]

Yesterday, I had the pleasure of meeting a group of inspiring young women who are working on projects run by Daughters of Eve and Integrate Bristol, speaking out against FGM. They are dedicated girls, and with the support of Home Office funding have written a stage play that tackles FGM. They are using poetry to address FGM, which is quite clever because it is less head-on and does not arouse the anger that they face in some other contexts. They are leading peer-mentoring workshops to educate others about FGM, and they are preparing to deliver a national conference. Their innovation, passion and dedication to educate others demonstrate the power of community activity. They are not scared to stand up as women and speak out to protect others. Such qualities and action are vital to ensure a safer future for the next generation, and their work is truly inspirational. Of all the people I have met during discussions about tackling FGM, those young women were particularly inspiring. If they are a sign of things to come—if only we could clone them or multiply them—change will come. They are the agents of change and offer great hope that we can move forward.

In the next few months I intend to organise a round-table meeting to understand what methods are working and what more we need to do. I want to have a very open discussion with some of our key partners in the work on FGM. Have we, for example, been taking the right approach in asking leaders in communities that practise FGM to be the agents of change themselves? As someone recently pointed out to me, would we ask rapists what to do about rape? We have to temper such views with a recognition that we do need to work with communities. At this round table, I want to take a very fresh look with all our key partners, such as social workers and the police. I will focus the meeting on how we create a step change in approach in order to engage communities in the UK. We need this now in order to progress the good work being done across the country.

My hon. Friend works tirelessly on this issue, I am putting a lot of effort into it, and Members on both sides of the House take it seriously. Progress is good but slow, given the size of the population where this practice is prevalent.

My hon. Friend raised the issue of updating the evidence base in the UK. Learning from international development was not the only commitment I made to this House in November. I am also committed to looking at updating the statistical and quantitative evidence base. My hon. Friend made the powerful point that the records are outdated, even if the methodology is still robust. As she mentioned, the Home Office funded the organisation Equality Now to carry out a small methodological workshop. I have just received the final report from Equality Now, and I would like to take this opportunity to thank it for all its work. I have noted the recommendations, which my hon. Friend has said she supports, and I have asked officials to convene a meeting with Equality Now to ensure the findings are fully discussed with the Home Office, colleagues across government and other interested organisations.

My hon. Friend asked me about the leaflets produced by the Home Office and Southall Black Sisters in February. The leaflet was translated into 12 languages and has been distributed to more than 30 embassies in the UK and to asylum screening units for women and girls claiming asylum in the UK. The document can also be found on the Home Office website and we are happy to speak to the Department for Education to try to ensure that LEAs and education professionals are aware of the document.

In November, I also committed to look at the use of the document used in Holland.

[Jane Ellison]

I just want to emphasise that I do not think that the message is getting through to teachers.

[Lynne Featherstone]

I am grateful to my hon. Friend and I could not agree with her more. I have some idea how we might approach the subject and I am happy to talk to the Department for Education. Schools are the right place to deal with this and at the moment the message is not getting through.

My hon. Friend mentioned the health passport, which is an information leaflet about the legislation relating to FGM for use by families and girls when they travel abroad. After careful research, I am pleased to announce that we will develop something similar and test it within the next year.

[Jane Ellison]

Hear, hear.

[Lynne Featherstone]

I congratulate my hon. Friend, as she is the one who brought up the idea.

In the UK, we propose that the document, which we will call a “Declaration against FGM”, will state that FGM is a criminal offence, including when a British citizen is outside the UK, and what the penalties are for anyone found committing or aiding the offence. Additionally, it will include important advice and contact details for help and support. We hope that it will be an additional tool for families and girls who travel abroad that will clearly state the UK position. It will also complement the refresher training being given to consular staff over the summer and all consular staff will be aware of it.

Once again, I thank my hon. Friend for securing the debate and for her continued determination to bring the subject to people’s attention.

Question put and agreed to.

18:26

House adjourned.