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Oral Answers to Questions
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Simon Danczuk (Rochdale) (Lab)
1. What his policy is on the protection of green-belt land.
Dr Alan Whitehead (Southampton, Test) (Lab)
10. What his policy is on altering green-belt boundaries.
Mr Dominic Raab (Esher and Walton) (Con)
14. What steps he is taking to protect the green belt.
The Secretary of State for Communities and Local Government (Mr Eric Pickles)
The green belt is an important protection against urban sprawl, providing a green lung around towns and cities. The national planning policy framework delivers the coalition’s agreement to safeguard the green belt. Inappropriate development should not be approved in the green belt, and boundaries should be altered only in exceptional circumstances.
Simon Danczuk
As we all know, Rochdale is surrounded by some of the most beautiful countryside in the United Kingdom—[Interruption.] Can the Secretary of State assure me and residents of Rochdale that we will not have to swap some of our green-belt land for house building?
Mr Pickles
For a moment I thought the hon. Gentleman was going to put that to the vote; I would have been on his side.
The Planning Inspectorate looked at Rochdale metropolitan borough council’s core strategy, and as the hon. Gentleman will know, consultation ends next Monday. It was extended to allow consideration of the proposed release of 55 hectares of green-belt land on the South Heywood development, but that has now been excluded from the core strategy. The inspector looked at the proposed removal of that area from the green belt, tested the council and found that plans for making such an exception were not sufficiently robust. If hon. Members have any doubts about the importance of the green belt, they should see the hon. Gentleman, who can testify to the policy’s stringent nature.
Dr Whitehead
As the Secretary of State will be aware, on 2 September the Chancellor said that local authorities should swap parts of green-belt land for other land to encourage housing development. In light of what the Secretary of State has said today, will he clear up the confusion about what is and is not green-belt land by firmly repudiating what the Chancellor said on 2 September?
Mr Pickles
What I have said is absolutely compatible with what the Chancellor said; there is no difference between my views and those of my right hon. Friend. We have said from the Dispatch Box that a proportion of the green belt is former brownfield land—a disused quarry, for example, or a scrap yard—and the national planning policy framework envisaged careful consideration of those boundaries. Does it not make sense to get those kinds of sites back under development, and protect and enhance the green belt?
Mr Raab
I understand that the Government want to legislate further to streamline planning as part of their economic growth strategy. Elmbridge in my constituency is 57% green-belt land. Will the Secretary of State confirm that the proposed legislation will not contain any new proposals that might weaken protection of green-belt land, and, critically, that planning inspectors will have no right to trump local democratic decision making?
Mr Pickles
I have good news for my hon. Friend. Based on calculations, it is not 57% green belt, but 60%.
Mr Pickles
It is as the right hon. Gentleman says.
Of course we are not looking to affect my hon. Friend’s constituency. The green belt is immensely important. It is a green lung and prevents major conurbations from bumping into one another.
Steve Baker (Wycombe) (Con)
Will my right hon. Friend take steps to diminish planning inspectors’ powers over those who are democratically elected?
Mr Pickles
My hon. Friend must have come across some grumpy planning inspectors. By and large, they are there to introduce the national planning policy framework, and to ensure that decisions are made in accordance with it. Local democratically elected representatives have a duty to look to the well-being of their constituents not only now, but in future. There must always be a balance, but the green belt remains very safe.
Natascha Engel (North East Derbyshire) (Lab)
Will the Secretary of State guarantee that he will not alter the definition or designation of green belt?
Greg Mulholland (Leeds North West) (LD)
North Leeds, too, has some of the most beautiful green belt, which is hugely important to the whole city. I welcome the Secretary of State’s clear statement today, but does he acknowledge that developers continue to target attractive greenfield sites while brownfield sites exist that are desperate for development, and that that needs to be addressed?
Mr Pickles
My hon. Friend will recall the national planning policy framework, which makes it clear that previously developed areas should be given development priority.
Gareth Johnson (Dartford) (Con)
2. What steps his Department is taking to support local high streets.
Peter Aldous (Waveney) (Con)
6. What steps his Department is taking to support local high streets.
The Minister for Housing (Mr Mark Prisk)
In response to the Portas review, the Government are taking positive action to help our high streets. That includes strengthening local civic leadership through town team partners and business improvement districts, revitalising local markets and backing small businesses.
Gareth Johnson
My local high street in Dartford has successfully applied to become a Portas town, which has encouraged a large number of organisations such as NCR to consider putting help and expertise into Dartford. Does the Minister agree that such a proactive response, particularly from local councils, will help to ensure a successful future for our high streets?
Mr Prisk
I entirely agree with my hon. Friend that strong civic and local business leadership is vital. That is why we are enabling more than 300 towns to form town team partners. I hope right hon. and hon. Members will support their local town team partners so we can ensure that our high streets can compete in future.
Peter Aldous
The Lowestoft town team are getting to work on implementing the plans set out in their successful Portas pilot bid. The town centre was enhanced in the summer by Lowestoft college’s short-term lease of an empty shop. Does the Minister plan to encourage landlords to carry out more lettings of that nature?
Mr Prisk
Absolutely; we need to encourage that kind of innovation, and I commend what has happened in respect of Lowestoft college. That is why we have a £10 million high street innovation fund to help those with the highest vacancy rates. We need to get those empty shops back into use, whether as pop-up shops or as in my hon. Friend’s example. It is very important to tackle that aspect of the problem.
Mr David Crausby (Bolton North East) (Lab)
Does the Minister accept that as long as local authorities charge excessively for car parking, customers will simply choose to shop out of town and our town centres will continue to die? What can he do to encourage them in these difficult financial years not to charge for short-term car parking?
Mr Prisk
The hon. Gentleman is right to highlight this issue. That is why we have removed the floor that underpinned the minimum charging for car parking. We encourage local authorities in his constituency and elsewhere to think carefully about the rate of charges so that our high streets can compete with out-of-town shopping centres and others.
Ann Coffey (Stockport) (Lab)
Thriving street markets offering local produce and community and specialist stalls attract shoppers to town centres and high streets, and encourage independent retailers to start new businesses. Does the Minister agree that it is important that councils remember the important contribution that markets make and include them in any future town centre initiatives?
Mr Prisk
I agree entirely with the hon. Lady. I am a big fan of local markets—they are where we can get fresh produce and where our small start-ups can begin—so I endorse entirely what she says. In the summer, of course, we tried to revive our markets locally, and we will continue that work. I hope that all hon. Members will play a part in that.
Lorely Burt (Solihull) (LD)
Shirley town centre partnership in my constituency was unsuccessful in bidding for the first tranche of funding to be a town team partner. I am ever hopeful, however, that it will win an award under the second tranche. What really impressed me was the ingenuity and quality of the ideas that Shirley and—I am sure—other town centre partnerships have come up with. Could the scheme be extended, should beleaguered high streets that have put forward these great ideas miss out on the second tranche?
Mr Prisk
I can see that there is no better advocate for Shirley than the hon. Lady. I encourage her to continue her work. There are opportunities available, including the high street innovation fund—the £10 million fund to help high streets themselves change—and I encourage her to get more involved.
Paul Goggins (Wythenshawe and Sale East) (Lab)
One of the major obstacles to the development of high streets and the surrounding areas are the derelict buildings that were once local landmarks but which are now simply eyesores. I am thinking of buildings such as the Church Inn and the Tatton Arms in Northenden in my constituency. Some of these buildings are in such a poor state that the owners no longer have to pay business rates. Will the Minister consider introducing a derelict premises tax levied at 150% of business rates and payable until the owner brings forward proposals for development?
Mr Prisk
There is a far better way of doing that. The £10 million high street innovation fund is deliberately designed to bring empty homes back into use. That is what a number of local authorities are doing. I am afraid that wanting yet more taxes is the sort of knee-jerk reaction that we can expect from the Labour party.
Chris Skidmore (Kingswood) (Con)
3. What plans he has to increase the powers of local authorities to tackle unauthorised development.
Andrew Griffiths (Burton) (Con)
19. What plans he has to increase the powers of local authorities to tackle unauthorised development.
The Secretary of State for Communities and Local Government (Mr Eric Pickles)
The Government take the problem of unauthorised development very seriously. In August, I issued new guidance to local authorities that set out the strong powers councils and landlords have to remove illegal and unauthorised encampments, such as Traveller sites, protest camps and squatter sites, from both public and private land. Provisions in the Localism Act 2011 that came into force on 6 April this year have strengthened councils’ powers to tackle unauthorised development.
Chris Skidmore
I welcome the Government’s stance on unauthorised development, which will help to strengthen the protection of areas such as the Kingswood green belt, after Labour’s regional spatial strategy aimed to build 10,000 houses on it. Will the Minister confirm that the Government will honour their commitment, as set out in the national planning policy framework, to protect and preserve the Kingswood green belt, and assure my constituents that the green belt is safe?
Mr Pickles
We strengthened the green belt provisions regarding unauthorised development when we issued the changes to the Travellers guidance. I can assure my hon. Friend that we regard the buffer between Bristol and Bath as extremely important, which is also how we regard the co-operation between authorities to ensure adequate housing provision.
Andrew Griffiths
The Secretary of State will know that between 2000 and 2009, the number of unauthorised Traveller camps built on Travellers’ own land but tolerated by local authorities increased fourfold. What are the Government doing to tackle that soft-touch approach by some town halls and to protect the people forced to live next to them?
Mr Pickles
It is often a question of local authorities not entirely understanding the powers they have. That is why I hope that my hon. Friend will welcome the guidance that we issued last month explaining a range of measures, including pre-emptive injunctions to protect vulnerable land; possession orders; police powers to remove unauthorised camps; temporary stop notices; powers of entry, planning contravention notices; licensing rules; and enforcement notices to remedy breaches of planning rules. Everybody in this country should be treated equally. It is unacceptable that planning authorities readily take enforcement action against the settled population but have been reluctant to do so against Travellers.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Will the Secretary of State clear something up? A lot of people in my constituency and up and down the country now believe that what used to be unauthorised development will become authorised, in the sense that anyone will be able to build a hideous extension to the house next door, abutting their property, and not have to go through planning, which could blight many people’s homes up and down the country. Can he clear that up?
Mr Pickles
I certainly can. I hope that the hon. Gentleman, when faced with such ignorance, will say that there are existing powers to prevent neighbours from doing such things. There is a 2-metre limit and rules on taking up no more than half the garden. It seems to me that he is simply scoffing at the aspirations of ordinary people.
Roberta Blackman-Woods (City of Durham) (Lab)
I welcome the new planning Minister, the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), to his post. I understand from comments that he has made that he is in favour of “chaos” in place of a properly functioning planning system. Will the Secretary of State confirm whether that is now Government planning policy and, if so, how they plan to tackle unauthorised building, welcome much-needed development and deal with green-belt issues?
Mr Pickles
I feel like Bertie Wooster asking someone to look at Jeeves, saying, “Look at that noble forehead. Look at that cranium. All that thinking that took place for all those years.” It is not surprising that my hon. Friend the Under-Secretary is bursting with ideas, and he now has an opportunity to deliver the national planning policy framework.
John Penrose (Weston-super-Mare) (Con)
As part of dealing with unauthorised development, will the Secretary of State consider narrowing the number of occasions when authorisation is needed, where it is safe to do so? Specifically, in his response to the consultation on allowing hotels to convert to residential use without planning permission, will he bear it in mind that many people in the hospitality sector would relish the extra flexibility and freedom that that would bring? It would free up investment and clear the way for faster and more vigorous regeneration of high-quality, good-value hotel stock.
Mr Pickles
We have indeed been looking at ways in which we can ease up the use classes to ensure that development takes place. It is our aim to see vibrant buildings that enhance the community, not ones that are rotting and left for no purpose.
Stella Creasy (Walthamstow) (Lab/Co-op)
4. What assessment he has made of the effect on people in employment of plans by local councils to implement the localisation of council tax support.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
An impact assessment is on my Department’s website. These welfare reforms will create stronger incentives for councils to get people back into work and to play a part in clearing the budget deficit.
Stella Creasy
Will the Government give an assessment of how many more working people they expect to borrow from legal loan sharks as a result of these changes?
Brandon Lewis
None; every local authority is responsible for delivering growth in its area. With this plan, we have given local authorities the tools and the power to be part of driving economic growth, getting more people into work and ensuring that work pays.
Julian Smith (Skipton and Ripon) (Con)
I welcome my hon. Friend to his new position. Will he clarify in further detail the guidance to councils that have high numbers of pensioners in their communities?
Brandon Lewis
I thank my hon. Friend. He is right to highlight the issue of pensioners. We are protecting all their current rights.
Helen Jones (Warrington North) (Lab)
I welcome the Minister to his new post. As councils begin to consult on their schemes, it is clear that poor working families will have to pay between 15% and 30% of council tax, when previously they paid nothing, leaving many with a choice between paying the bill and buying food. Is that what he meant when he said on his blog:
“This government is rewarding those who work”?
Does it not say all we need to know about this Government that they are introducing a tax rise for the poorest working people on the same day that they are introducing a tax cut for millionaires?
Brandon Lewis
The hon. Lady seems to be making a spending commitment of about half a billion pounds. I am not sure whether that has been approved by the shadow Chancellor. We are ensuring that local authorities have real choices over how they manage the reduction. They can look at a range of areas, including providing more efficient services to the front line. We are looking to ensure that local authorities play their part in economic growth and in getting more people into work in their communities.
Helen Jones
If the Minister will not listen to us, perhaps he will listen to his own Tory councillors. Surrey councillors say that the scheme penalises claimants who go out to work. The Secretary of State’s county council says that it has major implications for some of the most vulnerable members of the community; the Foreign Secretary’s council says that the scheme is unfair; and the Prime Minister’s council thinks it is so bad that it is refusing to implement it at all. Is that not because they know that this is Pickles’s poll tax and it is heading for disaster?
Brandon Lewis
The simple fact is that the scheme is giving local authorities the power to have local decision making over their budgets. Through the consultation, we will see a range of different options, which we will receive towards the end of this month. The scheme is making local councils part of their economic growth programmes, so that we see more people into work and ensure that it always pays to work.
Jeremy Lefroy (Stafford) (Con)
5. What steps his Department is taking to support first-time buyers.
The Minister for Housing (Mr Mark Prisk)
The Government strongly support home ownership. That is why we are now investing an extra £280 million in the Firstbuy scheme. That will help another 16,500 first-time buyers, and is in addition to our Newbuy programme and the reinvigorated right to buy.
Jeremy Lefroy
I welcome that response. What advice can the Minister give to my constituents in Stafford who are looking to buy their first home about accessing cheaper finance through the funding for lending scheme?
Mr Prisk
My hon. Friend is absolutely right that we need to increase the availability of funding, and that is what the funding for lending scheme does, in terms of both availability and cost. We all need to encourage people to look again at the mortgage market, both through that scheme and through the Firstbuy scheme and the new home programmes. This is real help for home buyers.
Kelvin Hopkins (Luton North) (Lab)
In some areas owner-occupation is declining as a tenure. One factor in that decline is the thousands of working-class people forced to sell their homes to pay for long-term care. When will the Government face up to the fact that if they want to sustain owner-occupation, they will have to do something about paying for long-term care as well?
Mr Prisk
It is true to say that home ownership fell to a record low under the last Labour Government. That is a record that the Opposition need to bear in mind. The long-term funding question that the hon. Gentleman raises is important. However, the money we are putting in—the £10 billion for new rented homes and the £19.5 billion for affordable homes—is something that, sadly, we did not see when the last Labour Government were in office.
Simon Hughes (Bermondsey and Old Southwark) (LD)
Will Ministers look at the idea of helping first-time buyers by allowing local authorities, particularly in cities including London, to designate areas where people should not be allowed to buy residential housing unless it is for their personal use?
Julian Sturdy (York Outer) (Con)
7. What steps he has taken to allow local authorities to tackle inappropriate development on gardens.
Mr Marcus Jones (Nuneaton) (Con)
15. What steps he has taken to allow local authorities to tackle inappropriate development on gardens.
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
This Government acted immediately in June 2010 to scrap the guidance that classified gardens as brownfield land and encouraged developers to build on them. The new national planning policy framework enables local authorities to resist garden grabbing.
Julian Sturdy
I thank the Minister for his response and welcome him to his new position.
In the rural areas of York Outer, garden grabbing has caused great concern, with communities feeling that they have no say over this form of development. Will the Minister confirm that the Government will continue to empower local residents to stand up for their areas?
Nick Boles
Yes; the Government have already taken important steps to empower local people, through neighbourhood plans and the community right to buy. I hope that some of the communities that my hon. Friend represents so ably in and around York will take advantage of them.
Mr Marcus Jones
I welcome my hon. Friend to his new place.
Garden grabbing has been a scourge across the country over a number of years, eroding the character of many local communities against the wishes of local people. Does my hon. Friend agree that it is important that local communities are involved in the planning process at the earliest possible opportunity and that neighbourhood planning is an important way to ensure that communities develop in line with the views of local people?
Nick Boles
I share my hon. Friend’s enthusiasm for neighbourhood planning. It is a matter of regret that Nuneaton and Bedworth council, which is of course Labour controlled, has not yet taken the opportunity to give people in his constituency a real say over the future of their communities.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
May I draw the House’s attention to my interests in the register?
I welcome the Minister to his new post. Will he explain how the recently announced relaxation of planning consent for back garden extensions, which will allow individuals to build on up to 50% of their gardens without having to secure planning consent, is compatible with the objective of preventing inappropriate and undesirable development in gardens?
Nick Boles
I have the greatest possible respect for the right hon. Gentleman, who was a diligent Housing Minister, but he will understand the difference between allowing developers to build blocks of flats on gardens and allowing property owners to extend their property because their children are getting older or because their old mum has come to live with them. It is a classic position of his party that it completely fails to understand —and, indeed, sneers at—the aspirations of normal people who just want to put a little bit extra on their house.
Mike Gapes (Ilford South) (Lab/Co-op)
Will the Minister have a word with the Secretary of State and ask him to get on a train that will take him from his constituency through Shenfield to Ilford, so that he can see how the Tory-Liberal council in Redbridge is not enforcing the existing legislation preventing people from having unauthorised development in their back gardens?
Nick Boles
The hon. Gentleman has done a fantastic job of drawing that matter to the attention of the House and of the nation, and I am sure that he will be able to put pressure on his local authority to follow the law.
Stuart Andrew (Pudsey) (Con)
8. What plans he has to require that all brownfield sites within a local authority should be developed before planning permission is granted to build on green belt land.
Hugh Bayley (York Central) (Lab)
11. What plans his Department has to bring forward proposals to encourage commercial development on brownfield sites.
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
The national planning policy framework encourages local authorities to reuse brownfield land that is not of high environmental value. It also maintains strong protections for the green belt, making it clear that most forms of new development are inappropriate in the green belt.
Stuart Andrew
I welcome the Minister to his new position.
My constituents are concerned about the threat to the green belt, particularly as councils seek to fight the five-year land supply provisions. Additionally, we are seeing an unprecedented number of applications for development of land classified as “protected area of search”—PAS—land and greenfield land, as developers take advantage of that period. What support can the Government give to residents in my constituency who are trying to save those sites and who want the brownfield sites to be developed? As this is the Minister’s first Question Time at the Dispatch Box, may I invite him to come to my constituency to see how important that land is, and to meet members of my residents groups?
Nick Boles
I would be delighted to visit my hon. Friend’s constituency. I know that he has worked tremendously hard with the Rawdon Billing Action Group and with Save Kirklees Knoll to ensure that those precious green spaces are not developed in the future. I can assure him, for now, that there is nothing to stop Leeds city council maintaining the protection of green-belt land in its local plan.
Hugh Bayley
York has some important brownfield developments, including part of the Nestlé factory site that is surplus to requirements, as well as a former British Sugar factory site and York Central, a huge site next to the station. What are the Government doing to ensure that Growing Places money is delivered to help to develop that kind of site?
Nick Boles
We have allocated £330 million to this, but I would point out to the hon. Gentleman that his city council has not had a formally adopted local plan for 40 years. I hope that he will join me in pressing his colleagues on York city council to get on with it and to draw up such a plan, because that would give his constituents much more influence over the development in their area.
Mr James Gray (North Wiltshire) (Con)
Will the Minister accept a simple truth—namely, that when offered the choice between building on a greenfield site or a brownfield site, a developer will always go for the former? Counties such as Wiltshire have no green belt as such, but they nevertheless have some of the finest rural countryside in England. That countryside has no official protection. Will my hon. Friend confirm to the House that this Government stand for protecting areas such as Wiltshire against unreasonable development?
Nick Boles
This Government want to protect the most beautiful countryside in Wiltshire and across the country, but we also believe that it is for local people, through local authorities, to decide exactly which sites should be developed. I am absolutely sure that my hon. Friend, through his local authority, will be able to protect the green spaces that his constituents enjoy.
Bill Esterson (Sefton Central) (Lab)
If the Minister is serious about this, he needs to stand up to his right hon. Friend the Chancellor of the Exchequer, who has said that he is opposed to the development of 1,500 homes in the so-called Wilmslow Vision in his constituency, while being quite content for large-scale development of the green belt to take place in the rest of the country. Does the Minister think that the Chancellor is a nimby?
Nick Boles
I hope you will forgive me, Mr Speaker, if I duck that last question, but I am very happy to clarify the position. It is indeed very simple—there are certain sites within the green belt that are currently brownfield, and it is important and right for local authorities to try to bring them forward for development. Not all the green belt is beautiful green fields. Some of it is, as was said earlier, a quarry or has some other brownfield use. It is important to focus on bringing those sites forward first before thinking of anything further.
David Morris (Morecambe and Lunesdale) (Con)
9. What the average change was in band D council tax between 1997-98 and 2009-10.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
The average change in band D council tax between 1997-98 and 2009-10 was 105%.
David Morris
I congratulate my hon. Friend on his new position. Does he agree that this enormous increase in council tax has not yet corresponded with improvements in services under previous Governments? Is that not just another example of an inefficient Labour Government heaping taxes on people yet giving them very little in return?
Brandon Lewis
My hon. Friend is correct to say that this is one of the taxes that the previous Government forced up while still running up record debts and deficit for this country. I am pleased to say that over the last couple of years, this Government have overseen council tax freezes that have led to a fall of 4.4% in real terms.
Mr Clive Betts (Sheffield South East) (Lab)
Surely the Minister will have noticed the difference. Under the last Government, the poorest people of working age paid lower increases in council tax because of the operation of the council tax benefit system. Under this Government, the poorest people of working age will pay the highest increases in council tax because of this Government’s changes to the council tax benefit system. How can the Minister possibly describe this Pickles tax as fair?
Brandon Lewis
Under the previous Government, welfare under the council tax benefit system rose from £2 billion to almost £4.5 billion—more than the amount spent on health, education and defence. It was right to do something about that and to fix the economic mess left by the previous Government.
Helen Goodman (Bishop Auckland) (Lab)
12. What steps he is taking to assist local authorities to make provision for children's outdoor play facilities.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
It is for local communities and their representatives to provide local play facilities, which should be based—according to our national planning policy framework—on an up-to-date assessment of need. Increased flexibilities given to local councils will help in delivery.
Helen Goodman
I welcome the hon. Gentleman to his new position. He obviously does not know about Fair Play for Children’s survey of local authorities, which has shown that spending on children’s play has fallen by 50% more than spending on adult leisure services. That is deeply unfair and is not good for children’s health. Will the Minister take some action to improve the situation?
Mr Foster
The previous Government introduced a scheme and, notwithstanding the financial difficulties created by their economic policies, we were able to continue that scheme until the deadline imposed by the hon. Lady’s Government. She will also welcome, I very much hope, the new flexibilities for local councils, the new designation of green space, the way in which local councils will be able to use the flexibilities for playing field protection, the new right to bid and, of course, the £2 million given to Play England.
Justin Tomlinson (North Swindon) (Con)
Children’s outdoor play facilities are indeed essential, as is the provision of usable open space for Jumpers for Goalposts —all too often compromised by the last Government’s high-density housing rules. What measures is the Minister taking to ensure adequate provision in new developments?
Andrew Gwynne (Denton and Reddish) (Lab)
Surely the Minister should be aware that many local authorities made great use of section 106 agreements in order to secure capital investment in children’s play facilities. Why is he making it more difficult for councils to do that?
Mr Foster
The most important thing is to get this country’s economy running again so that local councils can have more funds to provide these facilities. The changes in regulations relating to section 106 will bring forward much-needed new development to help get the economy going again—something the hon. Gentleman’s Government failed to do.
Sir Bob Russell (Colchester) (LD)
I congratulate my right hon. Friend on his deserved appointment. We share a birthday, and it is good to know that experience can triumph over the cult of youth. As is customary on these occasions, may I ask whether the Minister will visit my constituency?
John Mann (Bassetlaw) (Lab)
13. What assessment he has made of the effect of the introduction of the community infrastructure levy.
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
It is early days for the implementation of the levy, which is currently being charged by only six councils. We have asked developers and local councils to report on how it is operating, and to suggest how it might be refined and improved.
John Mann
Under Labour, tax on development was only for developments of 15 properties or more. Under this Government, single properties are being taxed twice, which means that the CIL alone is over £20,000 per property in the north of England, and three or four times that in the south. What is it about aspiration, and people wanting to buy a plot of land and build a house, that this Government are so much against?
Nick Boles
Regulations were drawn up to stop councils using section 106 and the community infrastructure levy to take two bites at the cherry, but we are aware of concern about the position. I know that the hon. Gentleman is better at harrying Ministers than almost anyone else in the House, and I have no doubt that he will continue to harry me, and my officials, to ensure that the CIL supports growth and the infrastructure that underpins it.
Kate Green (Stretford and Urmston) (Lab)
16. What recent representations he has received from local authorities on his plans for the localisation of council tax benefit.
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
Earlier this year the Government consulted on funding distribution, and we are currently consulting on arrangements for local precepting authorities. We intend to respond to the outcome of both consultations in the autumn.
Kate Green
(Stretford and Urmston) (Lab): According to the Institute for Fiscal Studies, nearly 50% of adults receiving council tax benefit are also receiving a disability-related benefit. What steps will the Minister take to ensure that councils take account of the public sector equality duty in devising localised systems?
Brandon Lewis
The Government have given some guidelines to local authorities. I shall be happy to provide the hon. Lady with a copy, but obviously we are ensuring that local authorities have the power to decide locally what is right for their communities.
Amber Rudd (Hastings and Rye) (Con)
Can the Minister reassure me that under the localisation plans, old-age pensioners will be protected from any discount or other changed arrangement involving their council tax benefit?
Brandon Lewis
Absolutely. We have established protection for all pensioners’ rights.
Chris Williamson (Derby North) (Lab)
I welcome the Minister to his post. I am sure he is aware that local government leaders say that this policy is inefficient, bureaucratic, unjust and unworkable, and I can confirm that many are referring to it as “Pickles’s poll tax”. The Conservative chairman of the Local Government Association has said that councils
“can either cease helping the working poor, or continue to support them by taking money from other services or putting up council tax.”
What does the Minister think councils should do?
Brandon Lewis
I think it important for councils to realise that they are part of the economy of their area, to do what they can to inspire economic growth in order to get more people into work, and to make decisions for their local communities that are right for those communities.
David Mowat (Warrington South) (Con)
17. What assessment he has made of the potential benefits of the new homes bonus to Warrington.
The Minister for Housing (Mr Mark Prisk)
For the period 2011-13, Warrington is receiving nearly £2.4 million of new homes bonus funding. It recognises increases in the housing stock of over 1,000 new build and conversions, and the fact that more than 170 empty properties have been brought back into use.
David Mowat
The Minister will be aware that many councils, such as Warrington, are under severe pressure as they do their bit to reduce the legacy of debt that we have inherited, but does he agree that the bonus represents a valid way of taking money into the town hall and preventing cuts in other areas?
Mr Prisk
I entirely agree with my hon. Friend. In contrast to the Labour party’s top-down approach, the new homes bonus rewards areas as new homes are built. That means that it enables councils and communities to invest in things that matter to them, rather than Whitehall’s imposing on them what we think that they ought to have. There is a big contrast between the last Government and this one.
Jeremy Corbyn (Islington North) (Lab)
18. What steps he plans to take to increase the supply of council housing.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
We have clear plans to increase the supply of affordable housing, including that provided by councils. We are investing a total of £19.5 billion of public and private money in an affordable homes programme, to deliver 170,000 new affordable homes through registered providers, including local authorities. I hope that the hon. Gentleman will join me in welcoming our announcement of a further £300 million, combined with our loan guarantees, to deliver a further 15,000 affordable homes and bring an additional 5,000 empty properties back into use.
Jeremy Corbyn
Will the Minister join me in congratulating my own local authority and other Labour-controlled authorities that have managed to build council housing at the present time? Will he also recognise that until now, council tenancies have been the most secure form of tenancy in the country and have provided a stable home for many families, and that that is the best way out of the housing crisis? Will he stop using the word “affordable” and start talking about council housing at fair rents?
Mr Foster
What I will do is tell the hon. Gentleman that during the last three years of the Labour Government, the number of social houses fell by 421,000. I hope that he is delighted that the number of completions of social houses in his constituency has gone up significantly in the last 12 months, and that he will welcome the additional funds we are making available—funding that his local authority failed to join in with when the Homes and Communities Agency offered it.[Official Report, 16 October 2012, Vol. 551, c. 1MC.]
Mr Tobias Ellwood (Bournemouth East) (Con)
Bournemouth council’s policy of allocating its limited accommodation to those with a link with the community is being undermined by landlords being directly approached by London councils that are effectively outsourcing their own waiting lists to Bournemouth. Many such people arrive with a lot of antisocial problems. Does the Minister think that this growing practice is right?
Mr Foster
No, I do not, and we have put in place a number of measures that we hope will provide protection, but the crucial thing to remember is that the powers relating to affordable social homes have now been given to the Mayor of London, who is very clear that over the next few years he will deliver at least 55,000 additional properties, which I hope will ease the situation.
Alison Seabeck (Plymouth, Moor View) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Communities and Local Government (Mr Eric Pickles)
I have laid before the House a statement on the work of my Department over the summer recess. Today, we announced to the House that £25 million will be made available for local enterprise partnerships. Over the last week, integration has been at the forefront of my diary, including backing the Holocaust memorial appeal and its work in organising student visits to Auschwitz; speaking to the Faiths Forum For London, which brings together different faiths and creeds; and visiting Hampshire to see how the Government’s funding is helping Gurkha veterans and their families, supporting those who have fought for Queen and country and who are proud to call Britain home.
Alison Seabeck
I draw the House’s attention to my indirect interests, as are previously on record.
Sadly, it appears that the Secretary of State is paying little more than lip service to the statement he made on planning last week. Can he explain why my constituents, who are now going to have to live 150 metres away from a waste to energy plant, are being treated differently from those in Norfolk? The Secretary of State has called in a waste to energy plant in Norfolk; he has not called in the one in Plymouth, despite the fact that it covers three authorities and should therefore be of regional importance.
Mr Pickles
I looked very carefully at the hon. Lady’s representation, but we call in only where there are national and regional implications. None of the statutory undertakers has requested that it be called in. Ultimately, this issue should be dealt with by local people.
Anne Marie Morris (Newton Abbot) (Con)
T2. The Heart of the South West local enterprise partnership has done a truly excellent job, but the small team running it faces an uphill battle accessing funding streams and preparing bids in time. Clearly, the Secretary of State has anticipated my question because he has given a partial answer, but can he provide some more detail? What assurances can he give me that those LEPs will receive the support they need moving forward to enable them to become successful?
Mr Pickles
I pay tribute to the work my hon. Friend has done through the all-party group, which produced an excellent report. I am sure she will be pleased that we are releasing £25 million. We are making some initial money available, but we need to be absolutely clear that LEPs are there to enable local authorities to come together and to share powers and sovereignty, so the majority of this money will be on the basis of match funding. We are not going to fund LEPs if local people do not value them, but if they do and they are prepared to put resources in, we will match that funding.
Hilary Benn (Leeds Central) (Lab)
May I join others in welcoming the new ministerial team to their positions? Local decisions about planning have been the foundation of our system for at least two generations, but on 6 September the Secretary of State, the only survivor of the reshuffle, astonished everyone when he announced legislation to hand over this power to the Planning Inspectorate in cases where he thinks local councils’ decisions are not up to scratch. We all want speed, but when it comes to quality why does he think that he should decide what good decisions are, rather than locally elected councillors?
Mr Pickles
I have to say that that was an extraordinary intervention from a former Minister who looked to build 10 eco-towns right in the middle of our green belt and gave a number of powers to someone in my position to intervene in the running of local authorities. Our approach builds on a basic right—an applicant has a right to appeal on the basis of non-determination; it simply builds on that and is there to help local authorities. In most cases, this is about where local authorities simply cannot cope, which is why we are urging mergers with adjoining authorities’ planning departments and why they will always find a friend to local planning in myself.
Hilary Benn
That was, if I may say so, not an example of muscular localism, but rather a lot of waffle. The truth is that the Secretary of State cannot explain how this legislation will work—I suspect that that is because No. 10 has only just thought about it; he has not yet clarified whether it will apply to planning applications for housing, and Government Members might like to ask that question. His Conservative colleague, the Local Government Association leader, Sir Merrick Cockell has called the plans
“a blow to local democracy”.
Is it not the case that the Secretary of State is no longer in control of planning policy? Are not a lot of local communities up and down the country going to be very angry when they discover that he has taken away from them the power to decide on planning applications locally?
Mr Pickles
Again, I admire the right hon. Gentleman’s pizzazz on this matter. However, we are not imposing eco-towns on the green belt and we are getting rid of the spatial strategies, subject, of course, to a proper review of the environmental assessment, which seems to be inconsistent with the position he sets out. We are there to simply help local authorities. If he is worried about me imposing something on the green belt of Essex, let me assure him that Stansgate abbey is absolutely safe.
Mr Laurence Robertson (Tewkesbury) (Con)
T4. Given that the Department’s figures show that almost 1 million houses in England are either empty or have planning position but are not yet built, does the Minister agree that there is absolutely no need for any councils to be building on green belt or greenfield, or in flood-risk areas?
The Parliamentary Under-Secretary of State for Communities and Local Government (Nick Boles)
There is, in the new national planning policy framework—a phrase I find extremely hard to say—a clear instruction or suggestion that local authorities should prioritise brownfield sites. There are also very clear protections for the most special green space. It is, of course, for local people, through their local authorities, to decide what balance to strike between development and protection. However, the national policy has not changed and is very clear.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
T3. I welcome the new fire services Minister to his place. He follows a class act in that role—the hon. Member for Bromley and Chislehurst (Robert Neill). Will the new Minister reassure us that he will continue the good work being done with the Department for Education to reduce the number of fires in schools and, specifically, to promote the introduction of fire sprinklers in new schools and their retrofitting in old ones?
The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
I thank the hon. Gentleman for his kind words, and I fully endorse his comments about my predecessor, who did an excellent job. I am fortunate to follow in the footsteps of someone who did such great work in moving this issue forward. The hon. Gentleman rightly says that education about fire and fire safety is hugely important, and it is an area in which I intend to continue the good work of his good self and my predecessor.
Paul Maynard (Blackpool North and Cleveleys) (Con)
T7. Does the Housing Minister agree not only that Firstbuy has enabled 16,500 more first-time buyers to own a home but that it underlines our commitment to the aspiration to home ownership—an aspiration that the Labour party, when in government, treated with total contempt?
The Minister for Housing (Mr Mark Prisk)
My hon. Friend is absolutely right. The Labour Government sought to strangle schemes such as right to buy; indeed, I understand the TUC has now voted to remove that right for council tenants. I trust that when the shadow Housing Minister responds, he will be able to tell us whether he agrees with his ex-friends. The Government are absolutely committed to supporting home ownership through Firstbuy and NewBuy. We are proud of that; it is a commitment that will last.
Natascha Engel (North East Derbyshire) (Lab)
T5. The bedroom tax is forcing many people to apply for much smaller council houses. What is the Department doing to ensure that local authorities such as North East Derbyshire have the money to build smaller homes?
Mr Prisk
We are of course, together with others, putting some £19.5 billion into the affordable housing programme. However, we need to bear in mind the other side of the coin, namely people who face overcrowding while others live on their own in three or four-bedroom properties. I have no problem with the new size criteria; indeed, there are choices, such as taking in a lodger, that could actually help people to maintain their property.
Paul Uppal (Wolverhampton South West) (Con)
May I highlight the installation of temporary telecommunication masts on an emergency basis? In the Tettenhall area of my constituency, one of those masts has been put in on an emergency basis, with no consultation and no notice, which has caused unnecessary distress, unease and concern among residents and my constituents.
Nick Boles
There is provision for local authorities to erect mobile phone masts in an emergency where existing coverage has been threatened, but of course they will want to give adequate notice to local people of anything they are doing so that people are not too surprised by developments on their doorstep.
Mr Iain Wright (Hartlepool) (Lab)
T6. Hartlepool borough council derives 17% of its business rates from a single company—the nuclear power station. From April 2013, the safety net threshold will be insufficient to match the financial risk, which will increase as the station comes to the end of its operational life. Will the Secretary of State look at the issue urgently to ensure that Hartlepool does not yet again miss out financially?
Brandon Lewis
Yes, we will and I will liaise with the hon. Gentleman on the issue.
Mr John Leech (Manchester, Withington) (LD)
The Secretary of State has already assured the House that additional permitted development rights for home owners will be restricted in conservation and other sensitive areas. Can he assure me that sensitive areas will include those subject to article 4 directions, and also those where family housing has come under attack from insensitive over-development of houses in multiple occupation?
Mr Pickles
I think we can do better than that. We are going to be consulting on the matter, and my hon. Friend will get an opportunity to make a contribution.
Helen Goodman (Bishop Auckland) (Lab)
T8. Given that homelessness increased by 26% in the past year, why did Ministers think that the right policy response was to increase conservatory building and reduce the amount of affordable housing by changing the section 106 agreements?
Mr Pickles
I think the hon. Lady—I hope not deliberately—misunderstands what we are trying to do on 106. It can be a great help in delivering housing, and in some parts of the country that is exactly what it does, but in other parts it is actually a hindrance to delivering social housing, because unrealistic targets mean that if there is a 50% target, 50% of nothing remains nothing. That is why we have been so successful in dealing with progressive local authorities to renegotiate deals and deliver social housing.
George Freeman (Mid Norfolk) (Con)
Is the Secretary of State aware of the role of Highways Agency holding objections in holding up growth? The beautiful market town of Wyndham in my constituency is threatened with a wave of inappropriate applications because just up the road the Highways Agency has sat for more than a year on a holding objection for 1,200 homes in Hethersett. Will my right hon. Friend agree to look into that for me?
Heidi Alexander (Lewisham East) (Lab)
T9. The Government recently announced that they would allow developers effectively to plead poverty in their section 106 agreements in order to get out of building affordable homes. Can the Secretary of State tell me how many affordable homes will not be built as a result of those changes, bearing in mind that the National Housing Federation estimates that 35,000 new affordable homes are built through the process each year?
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
As my right hon. Friend the Secretary of State has pointed out, if we do not take these steps many of the developments will not take place. Nevertheless, if we go ahead with the schemes, as we hope to do, we estimate that around 10,000 affordable homes might be lost through section 106 agreements, which is why we have put in place a funding scheme that will provide more than 15,000 additional properties and bring a further 5,000 empty properties back into use. We will get double what was going to be lost.
Mr Mark Spencer (Sherwood) (Con)
Is the Secretary of State aware that Newark and Sherwood Homes in my constituency is threatening its tenants with eviction for displaying a poster requesting not to have election literature delivered? Is it not unprecedented for a housing authority to step into the democratic process like that, and will he talk with the Electoral Commission about the matter?
Mr Pickles
That seems to me to be treating tenants as some 19th century mill owner might have treated his workers. It is entirely inappropriate that tenants should be refused their democratic right to display a poster. I urge the returning officer to look into the injustice immediately.
Dame Joan Ruddock (Lewisham, Deptford) (Lab)
There are 18,500 families on the council waiting list in my borough, but they cannot afford to buy the new homes that the Minister wishes to put on the brownfield sites in my constituency. He ought to understand what an insult it is to my constituents that the section 106 agreements, which could have brought community gain, will not be in place in Lewisham.
Mr Pickles
I hope that the right hon. Lady understands that if that development does not take place, she will get no social housing at all. Part of the problem she has is that she thinks that, just because an agreement has been reached, houses will be built. She needs to be realistic and understand that under her Government, nearly 500,000 social houses were lost, and that is a disgrace.
Philip Davies (Shipley) (Con)
I thank the Secretary of State and the planning inspector for upholding Bradford council’s decision to reject a wholly inappropriate development in Micklethwaite in my constituency, but will the planning Minister explain on what basis the Secretary of State, who had not visited the site, disagreed with some of the points for rejecting the developer’s appeal against the planning inspector, who had visited the site?
Nick Boles
My hon. Friend will be aware that the Secretary of State and the planning Minister act in a quasi-judicial capacity when making these decisions, so I am afraid that I cannot comment on the individual case, but I will be happy to talk with him separately to understand the background to it.
Educational Provision
(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Ian Paisley (North Antrim) (DUP)
I am still in shock after being accused of being silent.
I wish to present a petition in the names of my constituents from Ballymena primary school, where my father was educated more than 80 years ago; from Moorfields primary school, where I received the highest vote in my constituency; and from St Patrick’s and St Brigid’s primary school in North Antrim. Some 572 children have signed the petition.
The petition states:
The Petition of teachers and pupils of St. Patrick’s and St. Brigid’s Primary School, Ballymena Primary School and Moorfields Primary School in the constituency of North Antrim,
Declares that the Petitioners believe that the promise made in 2000 to get every child into school by 2015 should be fulfilled; notes that with just three years left before the deadline, a surge of new energy is needed to give 67 million children the chance of an education; further notes that at the start of the race over 110 million children were missing out on school and although by 2008 this had dropped to 75 million, in 2012 the race has stalled; further notes that the number of children out of school has stayed at 67 million for two years; and that this number has fallen by 50 million over the last 10 years, but if we continue at the current rate of progress 48 million children will still be out of school by 2015; and notes that from those currently missing out on an education, one third of the children have a disability, 60% are girls and half of the world’s ‘out of school children’ live in communities where the language used in schools is different from that used at home.
The Petitioners therefore request that the House of Commons urges the Prime Minister and the UK Government to raise educational provision with other world leaders at forthcoming international meetings and to make suggestions for further action before time runs out on the promise made in 2000 to get every child into school by 2015.
And the Petitioners remain, etc.
[P001119]
Changes to the Criminal Injuries Compensation Scheme
(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
I wish to draw Members’ attention to my entry in the Register of Members’ Financial Interests as a member of the Union of Shop, Distributive and Allied Workers.
The petition relates to changes to the criminal injuries compensation scheme and I am presenting it on behalf of more than 700 USDAW members who believe that innocent victims of violent crime should continue to be compensated through the criminal injuries compensation scheme for all level of injuries. Many USDAW members—shop workers—have direct experience of being assaulted in the course of their employment.
The petition states:
The Petitioners therefore request that the House of Commons urge the Government to ensure that proposed changes to the Criminal Injuries Compensation Scheme are not proceeded with.
Following is the full text of the petition:
[The Petition of members of Usdaw,
Declares that innocent victims of violent crime should continue to be compensated through the Criminal Injuries Compensation Scheme for all level of injuries and in accordance with the scheme currently in operation; further that the Petitioners believe proposed changes to the scheme will result in taking 30,000 innocent victims of criminal assault out of the scheme altogether, or significantly reduce their right to compensation; and that many Usdaw members have first-hand experience of what it is like to be a victim of violence and compensation which was awarded through the Criminal Injuries Compensation Scheme which was a lifeline to them and their families after going through a very difficult period financially and emotionally.
The Petitioners therefore request that the House of Commons urge the Government to ensure that proposed changes to the Criminal Injuries Compensation Scheme are not proceeded with.
And the Petitioners remain, etc.]
[P001117]
Sedgefield Library Hours
(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Phil Wilson (Sedgefield) (Lab)
The petition is signed by more than 1,250 residents of Sedgefield who are concerned about the reduction in the number of hours that their library will be open. They want an increase in the number.
The petition states:
The Petition of residents of Sedgefield,
Declares that the Petitioners are opposed to proposals to reduce the opening hours of Sedgefield Library from 39 hours a week to 20: further declares that while the Petitioners recognise the need to make cuts, the Petitioners believe that such a drastic cut will undermine community services and leave a huge gap in the welfare of both adults and children, as Sedgefield Library is at the heart of the community; and declares that the Petitioners believe that 30 hours of opening each week would be more appropriate for what is one of the most used libraries in the county.
The Petitioners therefore request that the House of Commons urges the Government to review the level of cuts in funding to Durham County Council so that the Council can look again at the proposed reduction in the opening hours of Sedgefield library and to look at what else can be done to maintain library opening hours at a suitable level.
And the Petitioners remain, etc.
[P001118]
Afghanistan (Force Protection)
(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Mr Denis MacShane (Rotherham) (Lab)
Since the House last met, two men from the Yorkshire Regiment—
Mr Speaker
Order. I apologise for interrupting the right hon. Gentleman, but at this stage all he has to do—we look forward to hearing his mellifluous tones erelong—is request a statement on this important matter. We will not have to wait long to hear his views.
Mr MacShane
(Urgent Question): To ask the Secretary of State for Defence if he will make a statement on the security of UK soldiers in Afghanistan.
The Secretary of State for Defence (Mr Philip Hammond)
I know that the House will wish to join me in paying tribute to the bravery of those who have been killed in action over the past few days in Afghanistan: Lance Corporal Duane Groom of 1st Battalion Grenadier Guards, who was killed in action on Friday 14 September by an improvised explosive device; and Sergeant Gareth Thursby and Private Thomas Wroe of 3rd Battalion the Yorkshire Regiment, who were killed in action on Saturday 15 September 2012. I know that the House will also want to send its collective best wishes to those who were wounded in the actions over the weekend.
The security of our deployed forces in Afghanistan, or anywhere in the world, remains a defence priority. The safety of our service personnel is an issue that all in the Government and the military chain of command take extremely seriously. In recent days, we have again been reminded of the difficult and challenging environment in which our armed forces operate.
Our servicemen and women are doing vital work protecting the UK from the threat of international terrorism. Our strategy is clear. We are mentoring and training the Afghan army and police to deliver security to their own people. This will allow our forces first to withdraw into a support role and then to come home. The Taliban hate this strategy and seek to wreck it through insider attacks. They aim to disrupt the collaboration with Afghan forces, which is at the heart of our strategy. We cannot and will not allow the process to be derailed.
Our partnering with the Afghan national security forces involves risk, but it is essential to success. At 15.45 local time on 15 September, an Afghan local police patrol returned to their checkpoint in Nar-e Saraj from an independent patrol, with an extra trooper who they apparently believed belonged to a neighbouring checkpoint. The UK “guardian angel” conducting overwatch at the checkpoint stopped the extra man, who claimed to have injured his foot and requested medical assistance. A medic was duly called. Unfortunately, the ALP trooper then fired a burst of small-arms fire, resulting in the two UK personnel killed in action. All our losses in Afghanistan are tragic, but the pain feels all the more raw when the incident undermines the trust our forces have built with the Afghans as they work towards our common goal.
I was in Afghanistan last week, and the insider threat was at the top of my agenda in meetings with Afghan leaders and with UK and international security assistance force commanders. I recognise that we cannot eliminate the risk entirely, but I was reassured that President Karzai and the rest of the Afghan Government and military hierarchy clearly recognise that confronting and defeating this threat is pivotal to the future success of the campaign. The Afghan Government, ISAF and the UK national contingent commander have taken significant steps to tackle the threat. We are all united in the view that we cannot let these few terrible incidents derail the steady progress in preparing the Afghans to take responsibility for their own security and thus secure our long-term objectives.
The weekend also saw a significant and well co-ordinated attack on Camp Bastion. The base is one of ISAF’s main sites in southern Afghanistan and acts as the main UK operating base in Helmand. It is a base the size of Reading with a perimeter fence nearly 40 km long. It is difficult to defend a site of this size—a challenge made all the harder when faced with a suicidal enemy. The attack began just after 10 pm local time on Friday night, when approximately 15 insurgents penetrated the camp at one point of the perimeter fence to the eastern side of the main runway. They were dressed in US army uniforms and armed with automatic rifles, rocket-propelled grenade launchers and suicide vests. They attacked coalition fixed and rotary-wing aircraft parked on the flight line, aircraft hangars and other buildings. Six US Marine Corps Harrier jets were destroyed and two were significantly damaged. However, at no stage did the attackers get near to the accommodation areas where the vast majority of the international forces reside.
UK and US forces responded to the incident. The UK Force Protection Wing quick reaction force, which is made up from 51 Squadron the RAF regiment, deployed immediately and engaged the insurgents, killing 14 and wounding one, who has been taken into custody. Two US Marine Corps service members were killed and 13 coalition personnel—12 military and one civilian—were wounded in the attack. None of the injuries is considered life-threatening. There is no denying that this is a significant incident. Immediate measures have been taken to enhance protection of the base and a full investigation is under way, led by the deputy commander of ISAF, UK General Adrian Bradshaw, to ensure that lessons are learned and that such a perimeter breach does not happen again.
Our force protection posture, including the protection of our bases, is routinely assessed and kept under constant review by military commanders to reflect the situation on the ground. I am sure the House will understand that for operational reasons I am unable to discuss force protection measures in fine detail.
Mr Speaker
Order. There is understandably much interest in this urgent question, but the House will be conscious also that there is a statement by the Secretary of State for Education to follow, and I have to take account of the likely level of interest in that and in the subsequent business. I intend to run the urgent question for approximately half an hour from now, but there will be a premium on brevity from Back Benchers and Front Benchers alike.
Mr MacShane
Thank you, Mr Speaker, for granting this urgent question, which has allowed the Secretary of State to make a full statement. Since last the House met, as the Secretary of State has recorded—I exchanged some words with him about my question before asking it—two men from the Yorkshire Regiment and one from the Grenadier Guards have died.
My question is simple: why, why, why are we still allowing our soldiers to be sacrificed to no evident purpose? Just after the Prime Minister entered No. 10, he went to Afghanistan and reported to the House. I urged him then, and I think he agreed, that elected Ministers had to take back command and control from the unelected military-Ministry of Defence nexus that had dictated policy. Since then, 146 British soldiers have died, more than one for every week for which he has been in office. They have died in an unwinnable conflict for an unattainable end, to no strategic benefit for our country. It does no honour at all to those who have sacrificed their lives to heap more bodies on the funeral pyre. Dulce et decorum est pro patria mori—or pro Britannia mori—is, again, the old, old lie.
I am not urging scuttle. I am urging a drawback to a position in which our men will no longer be killed before they can come home. We have done all the good that we can do. It is time to say, “It’s over.” Frankly, if any more of our brave young boys of barely 20 die, their mothers, fathers and families will ask, “Why, why, why?” The Secretary of State is an honourable man, as are my Front-Bench colleagues. None of us wants to be where we are, but it is over, and we will have no answer if any more of our people are sacrificed.
Mr Hammond
I thank the right hon. Gentleman for his question and for the measured way in which he has made his point. I remind him that we went into Afghanistan to protect our own national security and ensure that the territory of Afghanistan could not be used by international terrorists to mount attacks on our towns and cities and those of our allies and partner nations. We have announced our intention to end our combat role in Afghanistan at the end of 2014, but to protect our legacy and ensure the continued achievement of our goal of denying the territory of Afghanistan to international terrorists, it is essential that we complete the task of training the Afghan national security forces and increasing their capability so that they can take over the burden of combat as we withdraw. That is what we intend to do, and we will not be deterred from it by these attacks.
Mr James Gray (North Wiltshire) (Con)
It has been a terrible weekend indeed, and all our hearts go out to the families and comrades of the people who have been killed. None the less, I stood in mourning as 300 bodies were carried down the high street of Royal Wootton Bassett in my constituency, and it seems to me that we would dishonour their memory if we were simply to say that because of this terrible weekend, we must now pull out somehow or other. We have been sent there to do a job, and we must do that job and leave with our heads held high.
Mr Hammond
I completely agree with my hon. Friend. I think none of us disagrees with the proposition that we now need to extract ourselves from the combat role in Afghanistan. We have set out a timetable for doing that and a clear strategy for replacing the role that our forces play with ever more competent and capable Afghan national security forces. That is the strategy, and we will continue to deliver it.
Mr Kevan Jones (North Durham) (Lab)
I begin by joining the Secretary of State in paying tribute to Sergeant Gareth Thursby and Private Thomas Wroe, both of 3rd Battalion the Yorkshire Regiment, and Lance Corporal Duane Groom of 1st Battalion the Grenadier Guards. Our thoughts and prayers are also with those who were wounded over the weekend. Although we in this House take decisions concerning national security, it is the actions and bravery of such people that determine the safety of our country.
Labour Members have been consistent in our support for the mission in Afghanistan, and we will ensure that the best course of action is taken for our forces and for the stability of Afghanistan. The increasing frequency of green-on-blue attacks demands a response of proportionate strength. I start by saying, then, that we welcome the measures that have already been announced regarding recruitment and vetting, and agree that Britain’s resolve should not be shaken by recent events. Green-on-blue attacks are not new, and it is a concern that additional measures were not put in place earlier. When the issue was raised in March, the then Minister for the Armed Forces, the hon. Member for North Devon (Nick Harvey), said that
“we have changed our procedures in the light of events”.—[Official Report, 26 March 2012; Vol. 542, c. 1148.]
Events have proved that any changes that were made were clearly insufficient. I therefore invite the Secretary of State to confirm that he has confidence in the new measures, and that they are making a lasting difference.
What does the Secretary of State consider to be the principal motivation behind the attacks? To what extent does he believe that they are co-ordinated by the Taliban? That is not to be taken as a given, but it should be taken into consideration as we advance the political process. Do recent events change the Secretary of State’s view that it may be possible to draw down further troops in 2013, as he articulated in recent press articles? When will he be in a position to give the House the details of those withdrawals?
The House will want to know if there has been an assessment of the security lapse at Camp Bastion, and the measures that have been taken to enhance security there and at bases throughout Afghanistan.
As ever, we offer our support to our armed forces and the Government’s mission, which remains a national priority.
Mr Hammond
I am grateful to the hon. Gentleman for the Opposition’s continuing, unstinting support for the strategic objectives in Afghanistan, which are very much in the UK’s national interest.
I should make it clear that, as we understand it at the moment, the attack on Camp Bastion was not an example of a green-on-blue attack. Our current understanding is that Taliban operatives dressed in US army uniforms were responsible, so that attack should be distinguished from the earlier attack, which killed the two members of the Yorkshire Regiment at the Afghan local police base.
The hon. Gentleman asked about my confidence in the new measures that have been taken. I have confidence in them, but they will not all have an immediate impact. The ANSF has grown quickly and it is clear, with the benefit of hindsight, that some of the vetting processes that were used during that fast expansion phase may not have been entirely adequate, so a re-vetting process is now being carried out. Sixty individuals have already been expelled from the Afghan national army, and hundreds more are under investigation.
The hon. Gentleman asked about the motivation for the attacks. I believe that there are four groups of attack motivators. Infiltrations, which the Taliban organise, are certainly going on. There is radicalisation, and last week’s events, with the distribution of the inflammatory video across the Muslim world, did not help. Some attacks are clearly motivated by personal or cultural factors in a society where relatively petty disputes are routinely resolved by resort to violence. Some of the attacks are by Taliban operatives, who have stolen or obtained uniforms.
The hon. Gentleman asked about my comments in Afghanistan about draw-down profile. Military commanders on the ground are telling me, in sharp contradistinction to what I was hearing from them only four or five months ago, that they now believe that their force requirements during 2013 will allow scope for draw-down from current numbers in 2013 on our way to our objective of complete draw-down by the end of 2014.
Several immediate actions have of course been taken on Bastion security: increase of patrols in depth outside the wire; full manning of all watchtowers; increased patrolling inside the base; and additional deployment of intelligence, surveillance, target acquisition and reconnaissance assets. Notice has also been given to a number of settlements that have grown up close to the wire that they will be removed so that we have a clearer field of fire outside the base perimeter.
Mr Speaker
Order. To accommodate the maximum number of colleagues, I appeal to hon. Members to put single, short supplementary questions, preferably without preamble.
Sir Menzies Campbell (North East Fife) (LD)
I shall try to meet your stricture, Mr Speaker.
My right hon. Friend has painted a sombre picture. Vigilance will obviously be extremely important in endeavouring to prevent such issues from arising again. Will he give the House an assurance that, if extra resources are necessary, those, too, will be provided?
Mr Hammond
If additional equipment is required, commanders will ask for it; they are never backward in coming forward when they think they require additional equipment. My initial assessment is that the issue is not one of resources but about rethinking our posture to deal with the enemy’s change in tactics, which is itself a response to the success of the partnering programme with Afghan forces.
Mr Peter Hain (Neath) (Lab)
Does not this terrible tragedy reveal a central fault line in the Government’s strategy, the same one that was apparent in the Government whom I served—namely, the inability to engage beyond President Karzai’s Government to the wider fiefdoms at local and regional level, and to the Taliban themselves? Until that is done—until a political strategy is successfully pursued—our forces will continue to be attacked, killed and maimed in this fashion, and that cannot be right.
Mr Hammond
I agree with the right hon. Gentleman that the long-term solution to the problem in Afghanistan must involve a political solution, and the pressure is very much on Afghan political leaders, and those in neighbouring countries, to bring that progress about. In the meantime, our task is to ensure that Afghan national security forces provide the security envelope within which any such political settlement can be deployed.
Mr John Redwood (Wokingham) (Con)
Given the extensive training that is already carried out over several years, why not end combat duties for our troops now, let the Afghans learn the remaining lessons by experience, and get most of our troops home for Christmas?
Mr Hammond
My right hon. Friend is ignoring the realities of the situation on the ground. UK trainers and mentors have a dual role with Afghan forces. Not only do they enhance the preparedness of those forces, they act as a bridge to enablers such as indirect fire, and helicopter and medical support, which are still necessarily provided by ISAF forces. We have a clear plan to draw down our engagement over two years, and we are steadily withdrawing from combat. To give my right hon. Friend an example, at the beginning of the current six-month tour, we operated 81 separate patrol bases, checkpoints and forward operating bases in Helmand province. That number is now down to 34. We are withdrawing quite quickly from the combat role, but we have a job to do and we will carry on doing it.
Derek Twigg (Halton) (Lab)
Is this not an example of the folly of giving the enemy notice of when we are going to withdraw before reaching a political solution? I have a specific question for the Secretary of State: was there any evidence of inside help for the insurgents who attacked Camp Bastion, particularly from Afghan nationals?
Mr Hammond
There is no evidence of inside support, but the insurgents clearly had knowledge of the lay-out of Camp Bastion and its flight line area, and that will be one of the key issues that the inquiry under General Bradshaw will be pursuing.
Julian Smith (Skipton and Ripon) (Con)
I thank the Secretary of State for his kind words about my constituent Sergeant Gareth Thursby. Does he agree that his widow, Louise, and children, Joshua and Ruby, can be proud of the work done by Gareth Thursby and his colleagues to protect our national security?
Mr Hammond
Indeed they can. As I said, our work in partnering, training and mentoring Afghan forces necessarily involves risk. Those brave servicemen put themselves in harm’s way in order to carry out that vital work, and we will be eternally grateful to them for that sacrifice.
Mr David Winnick (Walsall North) (Lab)
The soldiers are indeed brave and I pay tribute to those who died. Is the Secretary of State aware that hardly any Members on either side of the House believe that the security of our country depends on military involvement in Afghanistan? It is an unwinnable war. The Taliban will not be defeated and the troops should come home as quickly as possible.
Mr Hammond
I disagree with the hon. Gentleman’s analysis. When we end our combat role in Afghanistan at the end of 2014, it is likely that it will not be an entirely peaceable country. The point, however, is that ISAF and Afghan national security forces are containing the insurgency and, critically, denying the use of Afghan territory to international terrorists. That is the bottom line for the UK’s national security. If we turn the clock back 10 years, Afghanistan was the principal base for international terrorists who sought ungoverned space from which to plan their attacks on the west.
Mr John Baron (Basildon and Billericay) (Con)
Last Thursday, in a statement on Afghanistan by the Secretary of State for International Development, the importance of nation building was stressed. When visiting troops in Afghanistan, the Secretary of State for Defence rightly made the point that our troops’ lives should be put in danger not for the sake of nation building, but only to protect British security interests. Which is the Government view? The importance of the distinction is that the first requires defeat of the Taliban, whereas the second does not.
Mr Hammond
I am not sure I agree with the last part of my hon. Friend’s analysis. Building the capacity of the Afghan state is and has been an important part of winning the overall battle. Afghans in Helmand in particular are now enjoying substantially better health, education and transport services, and access to justice, than they enjoyed a couple of years ago. There is lots of evidence to show that that reinforces their tendency to support the Government and diminishes their tendency to support the insurgency. It is clear to me that building the capacity of the Afghan Government is an important part of the overall equation, but our forces are there to protect our national security. That is their principal task and the basis on which we should judge the wisdom of their engagement.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Given the number and increasing incidence of green-on-blue attacks, is the Secretary of State confident about the security of our troops post-2015, when they will be in Afghanistan in non-combat roles?
Mr Hammond
The hon. Lady will know that we have not yet made any commitment beyond the commitment to lead the Afghan national officers academy just outside Kabul. We have made no further commitment to troops beyond 2014. The National Security Council and the Cabinet will reach that decision in due course. There is no need for us to make a decision at this time.
I should also say that there are a significant number of green-on-green incidents as well as green-on-blue incidents. Afghan national security forces—this is partly a cultural issue—regularly turn their guns on one another. It is not clear that this is entirely about ISAF forces being singled out; a cultural issue is asserting itself.
Dr Julian Lewis (New Forest East) (Con)
The Secretary of State knows my concern that, after the end of the combat role, any mentoring teams left in Afghanistan will become top targets for the enemy. Is this vulnerability one of the reasons that the US is beginning to take seriously the idea of long-term containment using strategic bases? Will our Government begin to take that idea seriously too?
Mr Hammond
Clearly, the US is looking at long-term containment using strategic bases precisely because it recognises the importance of denying Afghan territory to international terrorists. As I said in reply to the hon. Member for Birmingham, Edgbaston (Ms Stuart), we have made no decision yet on a post-2014 presence in Afghanistan. Clearly, one factor that will influence us is decisions taken by other ISAF member states.
Paul Flynn (Newport West) (Lab)
Congratulations to the Minister, who is saying that there is no way we can allow our soldiers to risk their lives when there is no British interest involved. That is the situation since al-Qaeda was defeated in Afghanistan. When our soldiers are killed by their allies, it is not warfare, but murder. We should take the decision to bring our troops home, as the Canadian and Dutch Parliaments have—their troops have been home for two years. The French are going home early, as are the New Zealanders. There is absolutely no reason we should not do what the country wants and bring our brave soldiers home by Christmas.
Mr Hammond
There are lots of reasons we should not and could not bring our brave soldiers home by Christmas. We have a legacy in Afghanistan, and it has been won at a great cost. Four hundred and thirty British service personnel have given their lives, and we intend to protect that legacy—[Interruption.] We intend to protect that legacy by ensuring that the UK’s national security interests are protected in future by training and mentoring the Afghan national security forces to take over the role we are currently playing—[Interruption.]
Mr Speaker
Order. Hon. Members should not shout, but I look to a very senior figure on the Treasury Bench not to get over-excited. I knew the right hon. Member for Rayleigh and Wickford (Mr Francois) when he was a very calm and rational 23-year-old. Now he is 48 he should be even more calm and rational. That is what we want to see.
Mr Edward Leigh (Gainsborough) (Con)
Can we not just be calm and rational, and concentrate on our national interest, which is our own defence? Given that the old Liberal Imperialist dream of making Afghanistan safe for democracy is dead and that, after 2014, the Taliban will be in control of large areas of the country, why do we not concentrate on our national security, on the use of special forces and drone attacks to keep the heads of the Taliban down, and not pretend that we are in there to fulfil our national destiny of promoting democracy in Afghanistan? It will not happen.
Mr Hammond
I have said very clearly that the role of British forces there is to protect Britain’s national security interests. In my judgment, and that of the Government and the military command, that will best be achieved by ensuring the capability of what is now a substantial Afghan security force to hold the ground after 2014, and to contain the insurgency—I do not live in a world where I imagine the insurgency will be defeated by military means—and to create the space for an inclusive, or semi-inclusive, political solution.
Dan Jarvis (Barnsley Central) (Lab)
I send my condolences to the families of the fallen soldiers from the 3 Yorks.
Will the Secretary of State give an assurance that all possible measures are in place to ensure the most effective vetting of those who seek to serve in the Afghan national security forces? I appreciate the difficulties and complexities of this specialised work but seek his assurance that sufficient resource has been made available to ensure that, where possible, those intent on causing our soldiers harm are not given the opportunity to do so.
Mr Hammond
I can give the hon. Gentleman that assurance. The Afghan Government have doubled the number of National Directorate of Security investigators assigned to the Afghan national army and introduced processes of re-vetting Afghan soldiers returning after going AWOL and of re-vetting soldiers when they return from prolonged periods of leave. Our commanders in theatre tell me that, on every occasion, they have accepted concerns expressed by allied commanders about individuals and have, without hesitation, detained them and begun an investigation. We are satisfied that the Afghans are doing everything that needs to be done on their side; we are taking further measures on ours.
Bob Stewart (Beckenham) (Con)
In his statement, the Secretary of State suggested that we were rethinking our posture. Could we rethink our posture towards those responsible for the mentoring, reduce the number of young officers, non-commissioned officers and soldiers at the front line involved in mentoring, and restrict it to command and control at kandak—battalion—level? That would, at least, stop some of our men being put into danger?
Mr Hammond
I understand my hon. Friend’s point. One of the issues that will be considered is the appropriate level at which to do it. At the moment, we are mentoring at kandak and tolay company level. We certainly keep these issues under constant review. I remind him, however, that we are not only mentoring army units; Afghan local police units also have to be trained. The Afghan local police and uniformed police units constitute an extraordinarily effective force against the Taliban. He has my assurance, however, that we keep these matters under constant review.
Keith Vaz (Leicester East) (Lab)
Can we do more to protect those working with British forces? Twenty one Afghani interpreters have been killed in the past five years, and 90 seriously injured. Can we better protect not only those in Afghanistan but those who come to this country, such as Mr Hottak, a constituent of mine, who should not have to wait a year and a half for his asylum claim to be considered?
Mr Hammond
We have a programme for the protection of Afghans working for UK forces, particularly interpreters, and are working on a programme to ensure their protection post-2014, when we withdraw from our combat role.
Martin Horwood (Cheltenham) (LD)
The coalition’s path towards handover to the Afghan forces is right. One of the most important contributions that the Afghan forces can make is to counter-intelligence. Has the Secretary of State received any assurances from Mr Karzai and his Government that effective Afghan counter-intelligence is being developed?
Mr Hammond
The Afghans are developing capabilities such as counter-intelligence, but they are still, at this stage, heavily dependent on ISAF support for technical advice and technical enablement. The strategic plan envisages that that support will continue for another two years as we draw down from the combat role.
Mrs Madeleine Moon (Bridgend) (Lab)
The attack on Camp Bastion showed a new level of sophistication and skill on behalf of the Taliban. May we have an assurance that there will be close monitoring of Taliban infiltration of our security forces, so that access to uniforms, for example, is protected in order to prevent this sort of attack from taking place in the future?
Mr Hammond
The attack was a sophisticated one, but I have to say to the hon. Lady that it is not that difficult for someone to cut through a fence and attack what is on the other side of it when they have absolutely no intention of getting out alive. Most of the sophisticated operations that we are involved in are based on protecting our own forces. All these people clearly expected to die; there was clearly no plan for extracting them after the attack.
On the question of uniforms, I believe that the people involved in the attack on Friday night were wearing US army uniforms. It is probably fanciful to suggest that we can create a situation whereby US army uniforms or a passable imitation of them are not fairly freely available.
Jason McCartney (Colne Valley) (Con)
Eighteen-year-old Private Thomas Wroe attended the high school in my home village of Honley, and I pass on my sincerest sympathies to his family and to that of his Yorkshire Regiment colleague, Sergeant Gareth Thursby. Will my right hon. Friend assure me and all the families that everything is being done within the Afghan high command to change its recruitment procedures in order to eradicate these cowardly insider attacks on our forces?
Mr Hammond
As I have said, we believe that the Afghans are doing everything that is appropriate. They have done everything we suggested that they should do, so we have no complaints at all. I can tell my hon. Friend that President Karzai has made it clear at the highest level to his military commanders and his Cabinet that this is a pivotal issue and that they have to resolve it and step up to the plate.
Chris Bryant (Rhondda) (Lab)
Is it not the case that in every military campaign where the departure of troops has been preannounced, it has been as dangerous to leave as it was to arrive in the first place? Will the Defence Secretary make it absolutely clear to military leaders in the field that they need to do everything in their power to ensure force protection as we leave?
Mr Hammond
Of course. Our military commanders are absolutely clear that force protection is our No. 1 priority and that it will remain so during the draw-down. As the hon. Gentleman rightly suggests, during the draw-down of a force there is a very careful balance to be struck between the speed of extraction and maintaining adequate force protection. Much of the debate taking place inside the military about the trajectory of draw-down is about how to maintain adequate force protection during that period.
Mr Tobias Ellwood (Bournemouth East) (Con)
Our military are doing an incredible job, which is being made all the more difficult by these insider attacks, which have increased from three ISAF deaths in 2008 to 51 this year. Will the Secretary of State comment on reports that suggest that the policeman who killed the two British soldiers was actually related to a Taliban leader? What is being done by the Afghan recruitment process to make sure that this does not happen in the future?
Mr Hammond
I have seen no intelligence myself to suggest that the policeman in question, who was killed, was related to a Taliban leader. I am afraid that the facts of life in Afghanistan, with its huge extended families, mean that we will often find that members of the security force are distantly related to people who are on the other side of this fight. That is just the nature of the country.
Mike Gapes (Ilford South) (Lab/Co-op)
The Secretary of State referred to the need to hold the ground after the combat role has ended. Is he really confident that the Afghan national forces will be able to hold the ground in the Pashtun-populated areas, including Helmand, once we have left?
Mr Hammond
The indications are that the Afghan strategic plan is to hold the ground in the crucial areas—the major towns, the major routes of communication and the major economic areas, including the Helmand valley. The assessment of our military commanders on the ground—I have no better information than that—is that they are likely to be able to do so, with some compromises at the margins.
Penny Mordaunt (Portsmouth North) (Con)
I can understand hon. Members wanting to bring our troops home, but does the Secretary of State agree that those who have given their lives have not done so in vain? They have protected our national security, as is their prime purpose, and enabled an entire generation to access education for the first time, giving that country the best chance of peace and prosperity. Given its history, that is in our national interest.
Mr Hammond
The presence of our troops over a prolonged period has done two things. It has stopped international terrorists using Afghanistan, and has thereby protected our homeland security. It has also created the space in which the Afghan Government have begun to deliver the kind of services that a civil Government are expected to deliver in the 21st century. Helmandis have enjoyed better health care, better transport systems, better justice and better education. That is a major step forward and will stand Afghanistan in good stead for the future.
Jim Shannon (Strangford) (DUP)
I thank the Secretary of State for his statement. I associate myself and my party with the expressions of sympathy for the families who have lost loved ones in Afghanistan. Early indications show that the weapons used by the terrorist insurgents were proximate to the fence that surrounds Camp Bastion. Will the additional measures that he mentioned include the introduction of CCTV cameras, so that security can be improved around Camp Bastion?
Mr Hammond
A number of sophisticated surveillance devices are in operation and additional surveillance capabilities have been deployed over the weekend. I cannot comment, for obvious reasons, on the detailed nature of those surveillance methods, but I assure the hon. Gentleman that additional surveillance of the perimeter fence is now in place.
Rehman Chishti (Gillingham and Rainham) (Con)
Does the Secretary of State agree that the use of drone strikes, which has killed many civilians, needs to be reviewed?
Mr Hammond
The use of unmanned aerial vehicles to conduct strikes is always the subject of careful scrutiny before it is authorised. There are circumstances in which that is the most appropriate way of executing a target in Afghanistan. I agree that it is better to use manned aircraft or ground forces when it is practical and can be done without undue risk to coalition forces.
Andrew Stephenson (Pendle) (Con)
On 26 March this year, my constituent, Lance Corporal Michael Foley, was killed in a so-called green-on-blue incident in Helmand. I was observing a training exercise with British troops over the weekend when the latest tragic news broke. Although public respect and support for our armed forces are possibly at an all-time high, many soldiers feel that there is a lack of understanding among the public of the dangers that they still face. Will the Secretary of State say what he is doing to increase public understanding of the varied and vital role that our armed forces are still performing in Afghanistan, especially as we move away from combat operations?
Mr Hammond
My hon. Friend is right. My contribution, I hope, is to talk about it at every available opportunity, including in this House.
Exam Reform
(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for Education (Michael Gove)
With your permission, Mr Speaker, I should like to make a statement about the future of examinations in our schools.
The examination that the overwhelming majority of young people sit at 16—the GCSE—was designed with the best of intentions. It sought to broaden the numbers engaging in academic study and to prepare for an expansion of further and higher education. In the years since it was established, we have undoubtedly seen improvements in our education system. Those who are responsible—heads, teachers, parents, students, and reformers such as Kenneth Baker and Andrew Adonis—deserve our praise.
However, the GCSE was conceived and designed for a different age and a different world—a time before majority participation in higher education and a world where information technology was in its infancy. When the GCSE was first taught, the school leaving age was still 16, state-planned economies dominated half the globe and the internet was a work of science fiction. Now that we are raising the education participation age to 18, now that nations that were slow developers 20 years ago are outstripping us economically, and now that ways of learning have been so dramatically transformed in all our lifetimes, it is right that we reform our examination system. We know that the old model—the ’80s model—is no longer right for now. We know that record increases in performance at GCSE have not been matched by the same level of improvements in learning. While pass rates have soared, we have fallen down international league tables.
We know that employers and academics have become less confident in the worth of GCSE passes because they fear that students lack the skills for the modern workplace and the knowledge for advanced study. We know that children’s achievements are not properly recognised, with even the hon. Member for Liverpool, West Derby (Stephen Twigg), an Education Minister in the last Labour Government, admitting that there was grade inflation under that Government. We know, most recently and most tellingly, that changes made to GCSEs under the last Government—specifically, the introduction of modules and the expansion of coursework, or controlled assessment, in schools—further undermined the credibility of exams, leaving young people without the rigorous education that they deserved. Only last week, the OECD reported that in the years up until 2010, our education system had still not been reformed fast enough to keep pace with the best in the world.
Critical to reform is ending an examination system that has narrowed the curriculum, forced idealistic professionals to teach to the test and encouraged heads to offer children the softest possible options. We believe it is time for the race to the bottom to end. We believe it is time to tackle grade inflation and dumbing down, and we believe that it is time to raise aspirations and restore rigour to our examinations. This Government have already taken steps to improve vocational qualifications. Following on from the Wolf review, we have ensured that there is proper assessment, more rigorous content and tighter quality controls on vocational courses. We are also reforming post-16 funding to improve the education of those taking vocational courses. Today marks the next stage in radical exam reform, to equip children for the 21st century and allow us to compete with the best-performing nations in education.
We want to ensure that modules—which encourage bite-size learning and spoon-feeding, teaching to the test and gaming of the system—go, once and for all. We want to remove controlled assessment and coursework from core subjects. These assessment methods have, in all too many cases, corrupted the fair testing of students. We want to ensure that children are tested transparently on what they—and they alone—can do at the end of years of deep learning. Where individual practical work needs to be assessed in specific subjects, we will be flexible. However, we cannot have a system where some students enjoy an in-built and unfair advantage over others because of exam design. We also want to end the current two-tier division of exams into foundation and higher tiers, which condemns thousands of students to courses that explicitly place a cap on aspiration.
Critically, we will end the competition between exam boards, which has led to a race to the bottom, with different boards offering easier courses or assistance to teachers, in a corrupt effort to massage up pass rates. We will invite exam boards to offer wholly new qualifications in the core subject areas of English, mathematics, the sciences, history, geography and languages. In each subject area, only one exam board will offer the new exams. The independent exams regulator will assess all the exams put forward by awarding bodies. The winner will be the board that offers the most ambitious course, benchmarked to the world’s best, informed by academic expertise and capable of both recognising exceptional performance and allowing the overwhelming majority of students to have their work recognised and graded fairly. We plan to call the new qualifications in core academic subjects English baccalaureate certificates, recognising that they are the academic foundation that is the secure basis on which further study, vocational learning or a satisfying apprenticeship can be built. Success in English, mathematics, the sciences, a humanities subject and a language will mean that the student has the full English baccalaureate.
Some will argue that more rigorous qualifications in those subjects will inevitably lead to more students failing, but we believe that such fatalism is indicative of a dated mindset—one that believes in a distribution of abilities so fixed that great teaching can do little to change them. We know that great teaching is changing lives even as we speak. We know that we have the best generation of teachers and head teachers that we have ever had. Their excellence—combined with the reforms and improvements to education that this coalition Government are making, through improved teacher training, greater freedoms for head teachers, and the growth of academies and free schools—will mean more students operating at a higher level. So, even as exams become more rigorous, more students will be equipped to clear that higher bar. Indeed, we are explicitly ambitious for all our children and we believe that, over time, we will catch up with the highest performing education nations and that a higher proportion of children will clear the bar than do so now.
We expect that everyone who now sits a GCSE should sit this new qualification, but there will of course be some students who will find it difficult to sit the exams, just as there are some students who do not sit GCSEs at the moment. We will make special—indeed, enhanced—provision, for those students, with their schools being required to produce a detailed record of their achievement in each curriculum area. That will help them to make progress subsequently, and we anticipate that many of those students will go on to secure English baccalaureate certificates at the age of 17 or 18.
These reforms are radical, so we will consult widely. Their introduction will require careful preparation, so we propose the first teaching of the new certificates in English, maths and the sciences in September 2015, with other subjects following. To ensure that the benefits of this more rigorous approach to the English baccalaureate subjects are felt across the whole curriculum, we will ask Ofqual to consider how the new higher standards could be used as a template for judging and accrediting a new suite of qualifications, beyond those subjects, to replace the entire suite of GCSEs.
The changes will also require us to consider afresh how we hold schools accountable, so we will consult widely on replacements for existing league tables, and we are determined to find even better ways of recognising those schools that add value and help the poorest. We also wish to recognise the best vocational, as well as academic, qualifications in a fair and rigorous fashion.
After years of drift, decline and dumbing down, we are at last reforming our examination system to compete with the world’s best. Just as we were left with a legacy of mismanagement, poor incentives and wasted talent in economic policy by the last Government—which this coalition is turning round—so we were left a dysfunctional legacy in our examination system. This coalition Government are now bringing modernisation, so that we can have truly rigorous exams, competitive with the best in the world, making opportunity more equal for every child. That is why I commend the reforms to the House.
Stephen Twigg (Liverpool, West Derby) (Lab/Co-op)
I thank the Secretary of State for sending me an advance copy of the statement. I appreciated having an hour to consider it, although considerably more advance notice was given to readers of The Mail on Sunday yesterday. It is deeply disappointing that, once again, the Secretary of State’s plans for GCSEs have been leaked to the press before being presented to Parliament. Head teachers to whom I have spoken to today are angry, and rightly so, that issues affecting the lives and opportunities of their pupils have been drawn up by Ministers in secret and then leaked to selected media outlets without proper parliamentary scrutiny or consultation with parents, teachers and pupils.
Last week, the Secretary of State appeared before the Education Select Committee. The Conservative Chairman of the Committee said that he was “flabbergasted” by the fact the Secretary of State was not aware of the ministerial code regarding leaks. So, let me ask the right hon. Gentleman: will he today condemn this further leak and reassure the House that he did not authorise it?
The plans that were leaked yesterday look somewhat different from those leaked in June. Can the Secretary of State explain those changes? Does he not really want to introduce plan A, which, according to The Daily Mail in June, would consist of O-levels and CSEs? Is that why he is delaying implementation until 2017? An unnamed source in The Mail on Sunday said that if
“pupils simply aren’t up to taking the new exam they may be forced to find a different option.”
Is that the reason for delaying the implementation of the new system until 2017? The only other plausible explanation is that the Secretary of State has already lost his first battle with his new Minister of State, the Minister for Schools. Is this a Trojan horse preparing the way for a two-tier system, or a cave-in to the Liberal Democrats?
Thousands of young people have been failed because the Secretary of State refuses to sort out the grading fiasco of this year’s GCSE English exams. Opposition Members have called for fairness. The right hon. Gentleman has tried to claim today that he will sort out the credibility of GCSEs in five years’ time, but why should anyone believe what he says today when he has failed so miserably to deal with the GCSE fiasco this year? I urge him to get a grip and to call an independent inquiry so that we can get to the bottom of this mess.
Labour is absolutely committed to rigour and raising standards, but this proposed new system does not reflect the needs of society and the modern economy. Moderate Conservatives, such as the former Education Secretary Lord Baker, have set out their views. Earlier today, Lord Baker said that the best system
“does involve coursework. It involves project work. It involves working in teams...We mustn’t lose that from the education system. Otherwise we’ll be denying a huge opportunity for many young people today”.
I agree with Lord Baker. Surely our system should value skills as well as knowledge. Does the Secretary of State really want to remove all coursework from these core subjects? Is he saying that rigorously assessed field work in geography will not count? Is he saying that an extended essay in English simply will not count? I think that approach is totally out of date, and it is typical of a Government who are totally out of touch with modern Britain.
Schools today do need to change. The education leaving age is rising to 18 and we need to face the challenges of the 21st century. I simply do not accept that we achieve that by returning to a system abolished as “out of date” in the 1980s. Instead, we need a system that promotes rigour and breadth, and prepares young people for the challenges of the modern economy. Nearly a year and a half on from Professor Wolf’s report, not enough is being done for vocational education. What does this new system do to ensure that all young people are studying English and maths until they are 18? How does it help the 50% who do not go on to higher education? How does it help the bottom 20% who are most at risk of becoming not in education, employment or training?
In the 1980s, when the GCSE was introduced, there was cross-party support and extensive consultation. If the right hon. Gentleman really wants a reform that will last, I suggest that he shelve these proposals and start a genuine consultation. Ahead of today’s announcements, what has he done to consult employers; what has he done to consult education experts; what has he done to consult head teachers?
Does the right hon. Gentleman envisage all these changes being implemented in all of what he has identified as the core subjects from 2017? Will he set out the cost implications of his proposed changes? He has just said, and I think I am right in quoting him, that some “will go on to secure English baccalaureate certificates at the age of 17 or 18.” Surely the new standard should be one that any well-educated 16-year-old can achieve. Opposition Members will not support changes that work only for some children. We need system-wide improvement and change that enjoys genuine support from the world of education and from employers. The truth is that these plans do not meet those challenges: they are out of date, out of touch and have been drawn up in secret. Above all, they have been launched amidst a fiasco surrounding GCSE English. The Secretary of State has come before us today with a plan for 2017, but the reality is that he has failed to produce a plan to sort out the fiasco of 2012.
Michael Gove
I am grateful to the hon. Member for West Derby—[Interruption.] The hon. Member for Liverpool, West Derby (Stephen Twigg), yes. I am grateful for his questions.
The hon. Gentleman’s first point was about the secrecy with which these plans have been drawn up. He then went on to complain that they had been shared with the second-best selling tabloid and the second-best selling Sunday tabloid in our country, as a result of which millions have had an opportunity to comment on them. Which is it? It cannot be the case simultaneously that the plans were drawn up in secret, and that they stimulated a widespread debate.
It would have been helpful if the hon. Gentleman had engaged with what we had announced today rather than engaging with what he had hoped we would announce, for his own reasons. He asked us what we would do in order to deal with the students—the weakest 20%—who were currently unable to secure good GCSE passes. We had explicitly said that we expected more students to be able to secure good GCSE passes, and that for those who did not, we would provide enhanced support and an assessment giving an all-round view of how they had done, enabling them then to take examinations at the age of 17 or 18.
The hon. Gentleman asked us what we would do for students who wanted to take examinations in English and maths at 17 or 18. We had explicitly said that students who could not secure a good pass in those subjects at that age would be offered the new certificates so that they could make the progress that they wanted to make later. He asked us what we were doing to deal with the problems that we had inherited with GCSEs which were dysfunctional this year and which had caused students suffering. We are explicitly addressing the problems with modules and controlled assessment that were introduced by the previous Government, and making sure that as a result of those changes, students will never again face the difficulties that they face this year as a result of dysfunctional examination design.
The hon. Gentleman asked about the cost of these qualifications. Getting rid of modules, coursework and controlled assessment means that less time will be spent on sitting and resitting examinations, and more time can be spent on teaching and learning. Schools will save money, and they will be able to reinvest that money in high-quality teaching, high-quality learning, and the stretching of every child.
The hon. Gentleman was faced with his own test today. He was faced with an opportunity to embrace the reform that has been outlined on this side of the House, and he flunked that test by making clear that he would engage in blind and partisan opposition. He asked us to build cross-party support for these proposals, but the best minds in the Labour party have already endorsed them. Conor Ryan, former special adviser to the right hon. Member for Sheffield, Brightside and Hillsborough (Mr Blunkett) and to the former Prime Minister, Tony Blair, has said that there are good ideas in what the coalition Government are doing. He has said that it is right to end competition between exam boards—the hon. Gentleman did not address that issue. He, Conor Ryan has also said that it is right to have more rigour at the top, and the hon. Gentleman did not address that argument either. Conor Ryan has also said:
“More rigorous GCSEs, particularly for top achievers, do not have to place a cap on ambition for many other students.”
That is another argument that the hon. Gentleman failed to address.
There will be an opportunity for the hon. Gentleman to resit this test. There will be an opportunity during our consultation for him to rethink his blind opposition to this progress. I hope that we can count on him to reflect on the decision that he made today, and decide that he will join this side of the House in delivering better, more rigorous and more inclusive qualifications.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
I congratulate my right hon. Friend on his statement. He will be unsurprised to know that I fully support his proposals. The current structure of our school exam system, in which exam boards compete with one another for a market share, has meant a year-on-year incremental reduction in the academic rigour of GCSEs, a narrowing of the breadth of the curriculum examined, and an increase in the predictability of the exams themselves.
May I ask my right hon. Friend to go one step further and address the issue of school textbooks, so that we can encourage publishers to move away from textbooks that are a step-by-step guide to passing a GCSE and towards textbooks that are rich in knowledge of the subject, encourage pupils to read beyond the confines of passing the exam, and provide greater scope for academically able children to flourish?
Michael Gove
I thank my hon. Friend for his kind words. Let me first take this opportunity to say that, during his two and a half years in the Department for Education, he did more than anyone else to ensure that rigour was injected back into our education system—[Interruption.] I shall ignore the graceless remarks from the Opposition Front Bench.
I want to underline my gratitude to my hon. Friend for doing such an exemplary job, from the introduction of the phonics test at the end of year 1 and the reform of key stage 2 tests to ensure that spelling, punctuation and grammar were properly marked, to the groundwork that he carried out in this examination reform. Future generations of teachers and pupils will be grateful to him. His comments on exam textbooks are very well made, and I believe that the reforms we are making to eliminate the race to the bottom will provide room for education publishers to do just what he hopes they do: to enhance the quality of textbooks.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab)
I hope that the Secretary of State will stop maligning my former special adviser on these occasions. When I inherited the brief in 1997, my Conservative predecessor involved me in preparing the Dearing inquiry and in setting up the Qualifications and Curriculum Authority, which the Secretary of State has abolished. Is it not time to stop the chest banging and belligerence—the sheer, artificial anger about the past—and to agree to collaborate in the interests of parents, pupils, head teachers and teaching staff? That way, we can reach a consensus on a way forward for agreed improvement in rigour and on a qualification fit for the 21st century, rather than adopting the current approach, which is, “We know best, you know nothing; we’re going to do it.”
Michael Gove
I am grateful to the right hon. Gentleman for his contribution, and I am sure the whole House will note with approval his conversion to a style of politics in which he abjures machismo and chest beating. It is entirely our intention to seek to work with everyone who wants to ensure that our examination system can be better. That is why we are having a consultation process over the next few years—to ensure that we can have an examination system that suits all students.
The right hon. Gentleman was kind enough to refer to his former special adviser, Mr Conor Ryan. Far from maligning Mr Ryan, I wish to embrace him, just as he has embraced these reforms in a spirit of bipartisan consensus and progressivism.
Dan Rogerson (North Cornwall) (LD)
I welcome the consultation that the Secretary of State has said will take place on the proposals he has set out today. There is wide agreement on the issue of single exam boards, and I welcome the fact that he is looking at more rigorous examinations and reform of the performance tables, which schools have had issues with in recent years. I also welcome the fact that there will be some form of recognition and means of progress for those who are not yet ready to sit the test at the age of 16. He will know that Members on these Benches had concerns about any return to a two-tier system, so we particularly welcome that being ruled out in these proposals.
In the consultation on coursework and the abolition of controlled assessment, will the Secretary of State listen carefully to the responses, so that, if arguments are made in favour of it in certain circumstances and subjects, we can ensure that all students get the opportunity to demonstrate the best of their abilities?
Michael Gove
We will listen to the profession, in order to make sure that these reforms are implemented effectively. It was implicit in the hon. Gentleman’s question that there are some subjects outside the current English baccalaureate—for example, art and design—for which, by definition, practical work would need to be recognised, hence the flexibility I said we would apply in my statement.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
May I push the Secretary of State a little on the level and depth of the consultation he is suggesting? He will know that many people of good will on both sides of the House, and outside it in the education world, want reform and change, but they are willing to work with him to get change fit for the 21st century. Many competitor nations are moving to a system that looks at 14 to 19 in a very different way, and the crucial turning point in education for many of those economies is 14, not 16; 16 is becoming rather redundant. If the Secretary of State is genuine about consultation, many of us on the Opposition Benches will work with him, but not if he is too fixed and too belligerent about today’s announcement.
Michael Gove
Again, I am grateful to the hon. Gentleman for arguing that we should take a less belligerent tone, but I could not help feeling that those remarks would have been better addressed to his Front Benchers rather than ours. It is in that spirit that we will work with others to identify best practice internationally. [Interruption.] I think we have had another outbreak of belligerence from some of the more rumbustious elements on the Opposition Front Bench. Of course we are happy to work with the profession, hence the period of consultation on which we are now embarking, but we want to make sure that it is informed by evidence, and the evidence is that the highest-performing jurisdictions ensure that there is an academic core that students follow to the age of 16. There is growing concern in other countries that premature specialisation at the age of 14 actually condemns some students to a lower place in a two-tier system that perpetuates the social division that I know the hon. Gentleman and I want to end.
Andrew Percy (Brigg and Goole) (Con)
I know from my time in the classroom that there is no doubt that the exam system has been undermined, with young people forced on to courses for the benefit of the school. However, I say to my right hon. Friend that there is a place for coursework in examinations, particularly in history and geography, the subjects I used to teach. In addition, some pupils simply do not test well because they are not supported at home in the same way that more privileged children may be. What will my right hon. Friend do to support those young people, generally from poorer backgrounds, who struggle with exams?
Michael Gove
I was talking this morning to the head teacher of Burlington Danes academy, Sally Coates—[Interruption.] She is embracing these reforms, as most enlightened head teachers are, and I suggest that the hon. Member for Liverpool, West Derby (Stephen Twigg) have a word with her before it is too late and his position leaves him even more exposed in the educational world. The point she made to me is that, contrary to my hon. Friend’s suggestion, coursework and controlled assessment often work to the benefit of middle-class students, whose parents can better support them, and actually the form of examinations we are putting forward is better designed to support students from poorer backgrounds to show what they can do, rather than simply to show what their parents have achieved.
Mr Frank Field (Birkenhead) (Lab)
Would parents be correct in drawing from the Secretary of State’s statement that he will ensure that the weakest students are helped so that they enter a single exam and that he will not tolerate a second-tier exam for those weaker students? Although parents will be relieved that students are not asked any more to complete coursework, does he not accept that some coursework does enable students to manage their time better and to improve their skills? Should that not be reflected in his new system?
Michael Gove
The right hon. Gentleman makes two very important points. On the first, we are perfectly clear that we are moving towards a single-tier system and away from a split, two-tier system. One of the points that the Opposition Front-Bench team have refused to engage with or acknowledge is that we have a two-tier system now, with foundation and higher-tier examinations at GCSE which force students who enter the foundation tier to accept a cap on aspiration. It is a disgraceful situation, which was never addressed when they were in office.
On the second point, which the right hon. Gentleman rightly makes, about the importance of coursework and controlled assessment, I would say, as I said in response to the hon. Member for North Cornwall (Dan Rogerson), that there are specific subjects outside the existing English baccalaureate, such as art and design or design and technology, in which students can demonstrate practical skills effectively through work that is not examined during a time-limited examination period. However, there are real problems with coursework and controlled assessment in core academic subjects.
Karen Lumley (Redditch) (Con)
I welcome my right hon. Friend’s announcement today, but will he look at strengthening vocational qualifications, as they are so important to young people in my constituency?
Michael Gove
My hon. Friend makes a good point. One of the things that I am delighted by is that, under the leadership shown by the Secretary of State for Business, Innovation and Skills, the number of apprenticeships has increased. In addition, thanks to the work put in place by the former skills Minister, my hon. Friend the Member for South Holland and The Deepings (Mr Hayes), we have seen a growth in the number of university technical colleges and studio schools. The Wolf report, which has also been referred to, has set us on a path where we can ensure that high-quality vocational qualifications are offered to all students who believe that that is the right course for them.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Under the Secretary of State’s proposals, it seems that the experimental generation who will have gained qualifications in 2016 will have either two different qualifications or none. I am not clear—perhaps the Secretary of State could provide an answer—as to whether there will be an age cap on achieving the English baccalaureate. What happens to those who do not get that grade?
Michael Gove
I see no age cap, and I stress that one of the things that has been very encouraging during the course of today is that a number of schools have suggested that they would like to pilot this qualification even earlier than the planned start date. I hope that we can build up a degree of consensus behind exactly what it is that we propose to introduce and that the schools that are enthusiastic about it are able to make sure that students who do not get a good pass at 16 have the chance to do so at 17 or 18.
Mr Rob Wilson (Reading East) (Con)
May I welcome the Secretary of State’s statement and congratulate him on being a real education reformer? He will know that introducing an exam with higher standards that rejects grade inflation will mean more schools failing to meet the minimum standards. Does he agree that it is better to know the failures in our schools and put them right? Does he agree that it is better to know the details?
Michael Gove
I do not believe that there is a necessary link between making sure that exams are more rigorous and more schools failing. My experience of all highly successful schools is that they use outside encouragement to do even better, and higher standards set from the centre as an opportunity to raise their performance, but I agree that greater clarity and honesty about how students and schools are performing is an absolute precondition for improving outcomes for everyone.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the Secretary of State understand that increasingly educated parents and investment in schools are the driving forces for increasing results at GCSE, and does he not realise that abolishing GCSEs will discredit the qualifications of everyone under the age of 50, and the likely qualifications of those taking GCSEs over the next five years, thus devaluing the currency of education in Britain and shooting a hole in the economy?
Michael Gove
The currency was devalued by decisions taken by the Government the hon. Gentleman supported from the Back Benches. The currency was devalued by the introduction of modules and by the extension of controlled assessment. It is not just me taking that view; it is the view taken by business organisations and school teachers themselves. The things that contribute to improvement are Governments committed to raising the bar, head teachers liberated to do a superb job and two parties coming together to make sure that we modernise our examination system in a genuinely internationalist way. If the hon. Gentleman wants to be part of that process, we will welcome him; if he wants to carp from the sidelines, sadly, history will leave him behind.
Andrea Leadsom (South Northamptonshire) (Con)
Does my right hon. Friend agree that it is not just good for children but essential for our country that our exam results are internationally competitive? An example where we have badly fallen behind is in the EU: although we are 12% of the population of the EU, and back in the ’70s we represented 12% of the EU Commission, now we have fallen to around 4%. One of the key reasons is that we are not good enough at speaking bilingually to compete in that essential area.
Michael Gove
My hon. Friend makes a good point about the importance of language learning. Under the previous Government, the proportion of students who were studying modern languages at GCSE fell, but under this Government, it is at last beginning to rise. On Friday, I had the opportunity to congratulate the Lycée Charles de Gaulle on its bilingual extension, and 60 years of successful Anglo-French teaching. Later this year, I shall visit the first new bilingual primary free school, which is in Hove. The growth of language teaching as an integral part of an all-round academic education is central to what the coalition Government wish to achieve; it is an area where we diverge from the previous Government. Vive la différence.
Nia Griffith (Llanelli) (Lab)
The GCSE fiasco this summer showed the danger of rushing in change, so will the Secretary of State not only hold serious consultation with business but serious piloting of the type of question that can be tackled by the least able and also stretch the most able? That is a real challenge.
Michael Gove
I agree that it is important that we have the sort of questions in examinations that can simultaneously test the most able and ensure that all students feel that their hard work is recognised, but when the hon. Lady talks about examinations being introduced without sufficient consultation or thought, and refers to this year’s GCSE problems, I am afraid that was an examination designed by the Labour party, introduced by the Labour party and there are people—[Interruption.]
Mr Speaker
Order. The hon. Member for Cardiff West (Kevin Brennan) makes more noise chuntering from a sedentary position than he does strumming on his guitar, and I am bound to say that the noise is not as melodious.
Michael Gove
Mr Speaker, I have nothing to add to your excellent judgment from the Chair.
Dr Julian Lewis (New Forest East) (Con)
Does my right hon. Friend accept that the publication of grades rather than of actual examination marks makes examination results easier to massage and manipulate? Will he therefore consider the publication of actual marks in any future new examination results?
Michael Gove
My hon. Friend makes a very good point. One of the things we want to encourage in the consultation is thoughtful reflection on how we can properly record the level of achievement that each student has secured. His point is a very valuable contribution to the debate.
Siobhain McDonagh (Mitcham and Morden) (Lab)
As a new member of the Education Committee, I am particularly disturbed by some of the language the Secretary of State uses. Certainly in my constituency, the real-life chances of kids, particularly those previously in the bottom schools, were transformed with the introduction of city academies by Lord Adonis and the former Prime Minister, Tony Blair. I should like to hear the Secretary of State say good things about great sponsors such as the Harris Federation and the Church of England, because they seem to be missing from this picture.
Michael Gove
I am a huge fan of the hon. Lady, one of the last surviving Blairites in the Labour party. I am tempted to say, looking at the hon. Member for Stoke-on-Trent Central (Tristram Hunt), that together they are perhaps the last breeding pair of Blairites on the Labour Back Benches. All I will say is that I never lose an opportunity to celebrate the work of the Church of England and Lord Harris, whose 70th birthday party I was delighted to attend on Saturday in order to raise a glass to everything he has achieved for young people in the hon. Lady’s constituency and elsewhere.
Mr Speaker
We are always pleased to learn about the Secretary of State’s social engagements.
Jane Ellison (Battersea) (Con)
I very much welcome my right hon. Friend’s statement, and his words about academic rigour will be welcomed by many schools in my constituency, not least Bolingbroke academy, which opened today. Will he be looking to learn from exam systems from other parts of the world that are generally acknowledged to be very rigorous?
Michael Gove
My hon. Friend makes a very good point. One of the problems with the debate in this country, as the Deputy Prime Minister points out in an excellent article in today’s Evening Standard, is that it has tended to be introspective and backward-looking. My hon. Friend is right that we need to look outward and forward to those countries that have the best-performing education systems.
Mr Ronnie Campbell (Blyth Valley) (Lab)
May I press the Secretary of State further on the kids who leave school with nothing, the kids who are on the street corners, on methadone courses, drinking cans of beer, or going down the road of crime. We all have them in our constituencies; we have all seen them. What about those kids? Why are they being left on the shelf?
Michael Gove
The hon. Gentleman’s passion does him credit, but it is thanks to some of the changes introduced by people such as Lord Adonis and carried on under this Government that we are addressing problems in constituencies such as his. It is as a result of the new academy that has opened in Blyth that children are at last enjoying a more rigorous education of the kind they deserve. It is a relentless focus, through academies, free schools and improved examinations, on improving education for the very poorest children that marks out this coalition Government, and the additional money that the pupil premium provides will ensure that those children who are poorest, and about whom the hon. Gentleman cares most, benefit the most.
Fiona Bruce (Congleton) (Con)
I welcome the Secretary of State’s statement, and it will also be welcomed by Eaton Bank academy, which I had the privilege of opening on Friday. With reference to the teaching of languages, may I ask that the assessment of verbal skills during the examination process includes a genuinely spontaneous conversation with an independent external assessor so that those skills can be realistically assessed on the part of students?
Michael Gove
My hon. Friend makes an excellent point. One of the problems we have had with languages is not just the decline in the number of pupils taking them—the result of changes made by the previous Government—but insufficient rigour in the way speaking and translation have been assessed. We aim directly to address that.
Julie Hilling (Bolton West) (Lab)
One head teacher in my constituency contacted me to say that he went to bed in 2012 but woke up in 1956, and I know that manufacturing employers in my constituency are equally outraged by the Secretary of State’s proposals. Why did he not consult broadly with educationists and employers before coming forward with these proposals, and how will he ensure that young people end up with a qualification that is fit for the skills needs of the future?
Michael Gove
I am grateful to the hon. Lady for her point, but she invites us to consult. As I have pointed out, we are launching a consultation today, but we cannot launch a consultation on any proposals. Perhaps she is inviting us to launch a consultation on whether we should have a consultation on some ideas that someone else might think of before we can actually come forward with our own. It seems to me that she wants to have her consultation and eat it at the same time.
Sir Tony Baldry (Banbury) (Con)
Is that not the point my right hon. Friend is making? First, this is a genuine consultation, which will take some time, and head teachers and others should submit their views in it. Secondly, this is not being rushed—the first of the exams under any new system will not be taken until 2017—so a little less synthetic anger and a little more constructive comment would probably do us all well.
Michael Gove
As is so often the case, my hon. Friend hits several nails squarely on the head in quick succession. It is our intention to ensure that the consultation is long enough to take into account the views of head teachers, academics and others, and head teachers have already welcomed many of the steps we are taking and want to engage positively with the Government. I hope that the Opposition do likewise.
Nic Dakin (Scunthorpe) (Lab)
The noble Baroness Thatcher, the former Prime Minister, said when she scrapped O-levels that she was doing so because they represented a cap on social mobility. Is today’s announcement a return to terminal norm-referenced exams and that cap on social mobility?
Mr John Leech (Manchester, Withington) (LD)
I welcome any changes to qualifications that will better prepare young people for the transition to A-levels, because the gulf between GCSEs and O-levels is too great. However, may I caution the Secretary of State to bear in mind that there is also a huge gulf between O-levels and A-levels, so any changes must take us forward and better prepare us for transition rather than just be a return to the past?
Michael Gove
The hon. Gentleman makes a very good point. Exactly as he points out, one of the real problems with the GCSE course is that teachers say that it is poor preparation for A-levels. In some cases, GCSE English and maths is poor preparation for the workplace as well. I entirely agree with him, and I hope that over the course of the next few months we can work to ensure that that chasm is closed.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
I welcome the reform plans as regards an end to endless resits and competition between examination boards, but I am not convinced of the year zero approach to coursework, nor that this might not lead to a two-tier system. May I gently say to the Secretary of State that this is not the way to develop public policy in this area? In Hong Kong, this kind of major reform took 10 years of open public debate. I fully understand that he wants to butter up the Rothermeres, but the examination system deserves better than a series of squalid leaks to The Mail on Sunday.
Michael Gove
I am grateful to the hon. Gentleman, particularly for the fact that in 30 seconds he said considerably more that was sensible and coherent than his Front Benchers managed in their allotted five minutes. I am also grateful to him for showing a degree of leadership in welcoming many of the changes that we have made. I take his point about coursework and controlled assessment. I said earlier that in some subjects outside the academic core, such as art and design and design and technology, we can see the need to assess practical endeavour. However, I remain to be convinced, given the terrible problems that we have seen with coursework and, this year, with controlled assessment, that it is right for academic subjects.
Craig Whittaker (Calder Valley) (Con)
Employers in Calder Valley often complain to me that young people leaving school and being presented to them for jobs cannot read or write properly and have poor social skills. Can my right hon. Friend tell employers out there in the UK how the new reforms will change that and enable young people to be more job-ready?
Michael Gove
My hon. Friend makes a very good point. There is a consensus among business organisations, from the Federation of Small Businesses to the CBI to the Institute of Directors, that the current GCSE offer is inadequate and that we need reform. Particularly on literacy and numeracy, in our consultation paper issued today we make it clear that we would like GCSE English and mathematics to include sufficient rigour so that employers can be guaranteed that students are properly literate, properly numerate, and ready for the workplace.
Paul Blomfield (Sheffield Central) (Lab)
Does the Secretary of State accept that a one-size-fits-all final exam is not the best way of assessing talent across the whole ability range in core subjects, and that it is no preparation for a world of work in which no employer would dream of appointing or evaluating staff on the basis of a single closed paper?
Michael Gove
I am grateful for the hon. Gentleman’s question, but he seems to be inviting me to move towards a two-tier system because he believes that one size would not fit all. I reject the view implicit in his argument that the overwhelming majority of our students are not capable of doing what they do in other jurisdictions in showing at the age of 16 that they have mastered the core academic subjects and are ready for further study and the world of work.
Miss Anne McIntosh (Thirsk and Malton) (Con)
May I press the Secretary of State on how the enhanced provision for the least academically gifted will be delivered in rural areas? He is aware that North Yorkshire is one of the most underfunded of local education authorities. What particular provision will be made to the schools in question?
Michael Gove
I am aware that North Yorkshire has particular challenges, not only as a result of funding but because of the dispersed nature of the population. I hope that North Yorkshire, like other areas of the country, has benefited from the additional funding for the poorest students through the pupil premium. Although there is not an absolute correlation between poverty and low achievement, it has certainly been an entrenched feature of our system in the past. I hope that the additional resources and the other changes that may well be brought in will ensure that those students continue to do better under this coalition Government.
Angela Smith (Penistone and Stocksbridge) (Lab)
One of the most important aspects of my work as a teacher of GCSE English was the formal assessment of the speaking and listening skills exhibited by students—skills that are vital for young people as they go into the workplace. Will the Secretary of State clarify whether the assessment of speaking and listening skills will be excluded from the English examination system post-2017?
Michael Gove
I read with interest the work that was done looking at some of the weaknesses in the current English GCSE, and the controlled assessment of speaking and listening was one of the areas in which there were the greatest problems in ensuring effective marking by teachers assessing their own students. I agree that effective speaking and listening is essential to a broad curriculum, but when it comes to ensuring that speaking, listening and every other skill is assessed properly, we need to move away from the model of the past.
Sir Peter Bottomley (Worthing West) (Con)
My right hon. Friend can expect some representations on the expression “baccalaureate”, which originally came from an English degree at age 21 and a university course, is now a European system for 18 or 19-year-olds and will in future be provided to 16-year-olds who qualify in the core subjects.
As well as the public examination and certification system, we ought to encourage people to pass standards and get grades in their academic and other school subjects in the same way as they can in music and sport, to allow those who are achieving things to have that recognised. They can then get add-on tuition and develop.
As a last point, may I say that my right hon. Friend ought to look at the sub-editors of his article in the Evening Standard? The first four times he used the word “both”—meaning the coalition, presumably—were unnecessary, and the fifth time, the word “We” would have substituted for the first four words of the sentence.
Michael Gove
My hon. Friend has just completed an eloquent application for the post of chief examiner at whichever exam board is successful in securing the franchise. I will ensure in future that any article that is penned by both the Deputy Prime Minister and I—or should that be me?—passes through my hon. Friend’s blue pencil before it appears in the Evening Standard. I take his point about sport and music, which both need to be better recognised in modern schools.
Bill Esterson (Sefton Central) (Lab)
I do not think any hon. Member is arguing against the need for improvements in the GCSE system. However, it must be a mistake to move back to rote learning at the expense of problem-solving and the encouragement of the applied skills that are needed in the workplace and generally in life, which benefit both children and the economy in a competitive world. From what the Secretary of State has said, it seems that we face a system that will be to the benefit of the few who are good at exams but at the expense of the many who excel in other ways.
Michael Gove
I am grateful to the hon. Gentleman for his points. He says that no one in the House will oppose improvement to GCSEs, but I am afraid the Opposition Front-Bench team have done precisely that. They have made no constructive proposals of their own; they have merely defended a discredited status quo and sought to create partisan dividing lines.
On the hon. Gentleman’s point about rote learning, I would say that it is encouraged in the current system by the modular approach and the way in which examinations are currently designed—[Interruption.]
Michael Gove
Thank you, Mr Speaker.
Well designed examinations ensure that people have not just the knowledge but the skill and deep understanding to show that they have been well taught. The best head teachers have argued for that view, and I am happy to embrace it.
Alun Cairns (Vale of Glamorgan) (Con)
The statement by the Secretary of State is excellent news for pupils in England. The way in which GCSEs have been discredited over the past decade or more has been completely unacceptable. Pupils in my constituency and across Wales, however, will still be subject to the same failed model of GCSEs. Will he do everything possible to encourage his counterpart in Wales to engage in the process and bring about either the same model as in England or one as close to it as possible, and to stop scoring party political points?
Michael Gove
I am grateful to my hon. Friend for making his point. As someone married to a Welsh girl, it grieves me that the Welsh education system went backwards under Labour, and it grieves me even more that every objective assessment of what has happened under Labour in Wales shows that education has improved more quickly and effectively in England than in Wales. I hope that the Education and Skills Minister in Wales will embrace the progressive reforms that the coalition Government have put forward. He now has an opportunity to show that he is ready to operate in a constructive fashion.
Alison McGovern (Wirral South) (Lab)
Which businesses did the Secretary of State consult before making his announcement today?
Michael Gove
I looked at everything that had been written by the Confederation of British Industry, the Institute of Directors and the Federation of Small Businesses, and in so doing, I could see the widespread view among business that we needed to reform GCSEs. I look forward to hearing from individual businesses about their views of specific aspects of the reform. However, among businesses, there was a universal view that examinations had been discredited and dumbed down under the previous Government and that, at last, the nettle was being grasped.
Nigel Mills (Amber Valley) (Con)
I welcome the statement. What can my right hon. Friend do to ensure that students in the next five years also obtain qualifications that are well regarded by prospective employers?
Michael Gove
One thing that the coalition Government have done is allow schools that are concerned about the quality of GCSEs, particularly the modular nature of some GCSEs, to teach the IGCSE. I visited a state school in Hertfordshire on Friday, where a mathematics teacher told me that she hoped that we would adopt a system that was more similar to the IGCSE, because that would help inject greater rigour into the process. I was able to reassure her that we were learning from best international practice and that I would encourage all schools to consider how the IGCSE might be an appropriate preparation for the changes that we hope to introduce.
Diana Johnson (Kingston upon Hull North) (Lab)
I would like rigorously to test the Secretary of State’s statement. To assist me, will he provide the evidence base for the policy that he has announced to assure me that it will benefit young people and this country’s economy?
Michael Gove
Yes, I would be happy to share with the hon. Lady the work that has been done by the university of Durham, the Royal Society of Chemistry, Ofqual, Ofsted and King’s College London, all of which have pointed out the way in which the current model of GCSE examination needs to change. I would also be happy to share with her best practice in every successful education jurisdiction, which stresses a broad curriculum of the kind that the English baccalaureate aspires to provide.
Mr David Nuttall (Bury North) (Con)
I thank the Secretary of State for his statement. Does my right hon. Friend agree that, to reassure everyone of the rigour of the new exam, no pupil should be regarded as having passed it unless they achieve a mark of at least 50%?
Michael Gove
I take my hon. Friend’s point. When I was re-reading Mike Tomlinson’s report into what went wrong with A-levels under the last Labour Government, I noted that he made the point that it is very difficult for the public to understand how exam boards convert raw marks into particular scores and then particular grades. It is an opaque process that impedes understanding. I think that my hon. Friend the Member for New Forest East (Dr Lewis) made the point that greater granular detail about attainment can help us all understand how marks are awarded. The simplicity that my hon. Friend the Member for Bury North (Mr Nuttall) wants is not always available to us, but we should aspire to it.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
Employers in places such as Birmingham tell me that new industries, particularly social media and the computer programming and gaming industry, often look for aptitude in such skills as programming and coding. They say that none of the current examination systems reflects that sort of aptitude. Will the Secretary of State’s reforms to the examination system take those areas into account, accommodate new skills and provide a test for them?
Michael Gove
The hon. Lady is right. In January, in response to the Livingstone-Hope review, I announced that we would disapply the current ICT curriculum, which did not provide the sorts of skills that the hon. Lady mentions, and that we would develop new computer science specifications. That announcement was widely welcomed, and I have been working since then with Ian Livingstone, Microsoft and others to ensure that we can provide people with the coding skills with which they were not provided in the curriculum that we inherited.
Henry Smith (Crawley) (Con)
I seek reassurances from my right hon. Friend that students who have been diagnosed with dyslexia will be afforded the additional time and appropriate assistance needed during a more rigorous exam process.
Michael Gove
My hon. Friend makes a characteristically acute point on behalf of those students who labour under the disadvantage that comes from having special educational needs. We want to ensure that all students are capable of sitting the examination and that, if they have a particular disability, or live with a condition such as dyslexia, appropriate support is provided.
Andrew Miller (Ellesmere Port and Neston) (Lab)
During the consultation, will the Secretary of State listen carefully, particularly to the engineering industry, which is concerned about the artificial divides that have crept in between vocational and academic qualifications? We all need to develop some practical skills—even the Secretary of State needs to learn how to use a left-handed screwdriver. In doing that work, will he also listen to those who are worried about the lack of continuous professional development in the teaching profession because of the pressures in the curriculum?
Michael Gove
I am painfully aware, as are the British School of Motoring and the Department for Transport, of the need continually to improve practical skills, and as a result of my failure in that area I have had recourse to expert engineers on more occasions than I care to remember. The hon. Gentleman makes an important point and we must ensure that the academic qualifications in maths and the sciences for which students study to age 16 are preparation for the vocational courses that follow, including in engineering. The point about continuous professional development was well made, and we will ensure that that is a priority of the new chief executive of the Teaching Agency.
Lorely Burt (Solihull) (LD)
Under the existing GCSE system, too many of the most vulnerable children leave school with nothing. What arrangements will be made for children with special educational needs?
Michael Gove
The hon. Lady makes a good point. In every nation, a small percentage of students—perhaps 5% or 6%—live with such severe special educational needs that it is difficult for them to secure access to an academic curriculum by the age of 16. We must ensure that those young people have a full and rounded statement of what they have achieved at age 16, so that they, their parents, and potential employers know that they have talent and real ability. Although that talent may not be recognised through an academic curriculum, it can be recognised in the world of work and deserves to be applauded. We want to work with specialists in the field of special educational needs to ensure that that achievement is recognised and, where appropriate, for those students to secure EBacc certificates in English and mathematics at a later stage.
Alison Seabeck (Plymouth, Moor View) (Lab)
Children in homes that are not connected to the internet—largely those in disadvantaged areas—are likely to fall one grade behind other children, so tackling rather than increasing poverty must be a priority. Does the Secretary of State agree that working with families in those children’s early years is more important than waiting until they fail at 16 and hoping to sort things out in the two years that follow?
Michael Gove
I absolutely agree and would say two things. First, the efforts being made to improve access to broadband across the country will help to ensure better internet access for every family. Secondly, improving education in a child’s early years is critical. That is why we are extending the number of hours of pre-school learning available for disadvantaged two-year-olds, and why we are ensuring that the early years foundation stage is more rigorous.
Andrew Bridgen (North West Leicestershire) (Con)
My right hon. Friend the Secretary of State will be aware of the investigation by The Daily Telegraph into the conduct of exam boards last year. One examiner was recorded as saying that the exam in question had so little content he was surprised it got through, and other examiners were caught telling teachers which questions to expect in that year’s exams. Will the Secretary of State assure the House that the reforms will end the ludicrous situation in which exam boards compete with each other in a race to the bottom to offer the easiest exams to schools?
Michael Gove
My hon. Friend is to be congratulated on the clarity of his question and the cogency of his argument, as is The Daily Telegraph on the public benefit that accrued from its investigation.
Paul Flynn
I was sitting elsewhere.
May I congratulate the Secretary of State on learning his Welsh lesson, even if he has proved himself a rather slow learner? My constituents can enjoy the benefits of the Welsh baccalaureate now, rather than wait until 2017. Will the Secretary of State learn another lesson from Wales by studying what happened with Leighton Andrews’s decision to award fair results to those who were cheated by the mismarking in the English exams?
Michael Gove
There is a lot to admire in Wales, including the hon. Gentleman. I do not, however, admire the way that the regulator and the Education and Skills Minister are one and the same, and we must separate decisions taken by politicians from those taken by regulators. That is the approach taken in England, and I think it is better.
David Rutley (Macclesfield) (Con)
I welcome the commitment of my right hon. Friend the Secretary of State to ensuring an absolute focus on genuine educational attainment, rather than grade inflation. Will he reassure the House by confirming that the planned consultation exercise will focus not only on course content but on how the new exams will be implemented to ensure maximum possible success?
Michael Gove
Yes. My hon. Friend makes an important point and we will do everything we can to ensure that the consultation includes not only content but method of assessment and support for teachers.
Neil Carmichael (Stroud) (Con)
I welcome the statement, chiefly because it builds on the English baccalaureate, and also because it reflects the important conclusions of Professor Alison Wolf’s report. However, may I stress the importance of ensuring that further education colleges, universities, sector councils and representatives of business communities are consulted, because their views are pivotal? My right hon. Friend will find that they are also supportive.
Michael Gove
I am grateful to my hon. Friend, whose commitment to the FE sector is well known. He is absolutely right: no reform of examinations at 16 can succeed unless we listen to the best voices in further education.
Stuart Andrew (Pudsey) (Con)
Bottom of the class again!
Businesses in my constituency tell me time and again of their concerns about standards and their confidence in them. Members may find it hard to believe, but I was not the most academic pupil. I am therefore particularly interested in how best we can help such students. Guiseley school in my constituency has done excellent work on encouraging pupils into engineering and on working with local businesses to determine their needs. Will my right hon. Friend assure me that while he is introducing the changes he will put equal emphasis on creating opportunities for those less academic pupils and on encouraging partnerships such as the one that Guiseley school has established with local businesses?
Michael Gove
I am grateful to my hon. Friend, who makes a characteristically acute point. It is absolutely right that we should ensure that all students, of whatever ability, can progress at the age 16 either to the world of work if it suits them, or to further and higher education. We need to work with business to ensure that that can happen.
May I express my sympathy for him in finding himself the final person to be called? As it says in the King James Bible, which, of course, has been distributed free to every school under this Government, the first shall be last and the last shall be first.
Points of Order
(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text
Mrs Madeleine Moon (Bridgend) (Lab)
On a point of order, Mr Speaker. Prior to the House going into recess in July, I pressed the Leader of the House on keeping local Members informed of the sale of their Remploy factories into the third sector. I was promised that that would be done. I have since written to the Department for Work and Pensions on 6, 7 and 13 September asking for information relating to the sale of my Bridgend Remploy factory. I have received no reply to any of those letters.
My understanding is that a final decision on the sale will take place either today or tomorrow. As a matter of courtesy, should not the Department for Work and Pensions respond to local Members’ letters and keep them informed of job losses—for me, it potentially means the loss of the jobs of 45 disabled people—so that we can work closely with bidders to ensure that our factories are kept open and that workers have the opportunity to continue the work they so enjoy?
Mr Speaker
I am grateful to the hon. Lady for her point of order, to which I make two points in response. First, Ministers should always reply in a timely fashion to letters from hon. and right hon. Members, as they should to questions from them. Secondly, I would say to the hon. Lady that if she has been assured that she will be kept informed in advance of announced decisions, that commitment should obviously be upheld, whether it was made on the Floor of the House or elsewhere. The Leader of the House is not present, but I would imagine that he is within the precincts of the Palace, and would very much hope—[Hon. Members: “The Deputy Leader of the House is present.”] The Deputy Leader of the House is here and we are extremely grateful to him. He has heard the message and will have digested it already by now, I feel sure.
Henry Smith (Crawley) (Con)
On a point of order, Mr Speaker. I hesitate to raise this matter as a point of order, but I would appreciate your advice. I have been extremely concerned about the near-monopoly situation whereby prepaid envelopes are supplied to Members of Parliament without any competition. I have been in dispute—or my office has been in dispute—with Banner, suppliers of prepaid envelopes, for an extremely long period, with no resolution. It has got in the way of helping to deal with constituency correspondence, and I would appreciate your advice.
Mr Speaker
The hon. Gentleman has raised an important point, but it is not one immediately for the Chair. I advise him to contact either the Administration Committee or the Finance and Services Committee, and if he is unsure and genuinely hesitating about which of the two should be his preference, he could always be bold and write to both.
Paul Flynn (Newport West) (Lab)
On a point of order, Mr Speaker. In the exchanges earlier about Afghanistan, reference was made to the three soldiers who have died since last Thursday. I believe it appropriate that the House also remembers the others who have died in the past few years. They are: Guardsman Jamie Shadrake, 1st Battalion Grenadier Guards, aged 20, from Wrexham; Lance Corporal Matthew David Smith, Corps of Royal Engineers, aged 26, from Aldershot; Lieutenant Andrew Robert Chesterman, 3rd Battalion the Rifles, aged 26, from Guildford; Warrant Officer Class 2 Leonard Perran Thomas, Royal Corps of Signals, from Cardiff; Craig Andrew Roderick, 1st Battalion the Welsh Guards, aged 22; Guardsman Apete Saunikalou Ratumaiyale Tuisovurua—
Mr Speaker
Order. It is with some reluctance that I interrupt the hon. Gentleman, but he will understand that I cannot know how long is the list that he plans to read out. I want to say politely to him—because he deserves this response—that I have not forgotten the exchange that he and I had on, I think, the first or second day back in September, when he raised with me his view that there should be a formal oral recording, periodically, of lives lost, and asked me to look into the matter. I said that I would, and I am doing so, and I think it wise to proceed on the basis of consultation. I intend to speak very soon to the Leader of the House, the shadow Leader of the House and various others about the matter, and then to revert to the hon. Gentleman. I intend him absolutely no discourtesy, and naturally I intend no discourtesy to the deceased whose names he was planning to read out, and I hope that in return he will do me the courtesy of allowing me briefly but properly to reflect on how to take this matter forward. If he would be good enough to leave it there for the day, his generosity of spirit would once again have got the better of him.
Paul Flynn
You will recall, Mr Speaker, that I have in the past read out the names of the 179 men and women who died in the Iraq war and the names of more than 200 of those who have died in the Afghan war. By a deliberate decision, this is now banned in the House, and the only protest that I can make against that attempt to disregard and show a lack of respect for the fallen is to continue reading out this list, until we reach an obvious conclusion—
Mr Speaker
Order. Would the hon. Gentleman be good enough to take his seat? I note what he has said, but I say to him and the House that I intend no discourtesy to anybody. In all fairness, we cannot make policy on the hoof. I understand his impatience for what he regards as a satisfactory resolution of this matter, and I hope that such a resolution, in whatever form, can be achieved. Meanwhile, however, we have to operate in accordance with some norms and practices, one of which is acceptance of the decisions of the Chair. I was happy to let him proceed for a short period and to read out some names, and he has done that, but it would not be right today to have a long list read out, without regard to what decision the House might reach. I shall reflect and consult on the matter, and I undertake to him, in full view of the House, to return to him and the House very soon. I hope that that is fair for today.
Mr Speaker
I am extremely grateful to the hon. Gentleman for his forbearance and courtesy.
If there are no further points of order—surely the appetite has now been exhausted—we come now to the main business.
Infrastructure (Financial Assistance) Bill
(12 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (Danny Alexander)
I beg to move, That the Bill be now read a Second time.
We are introducing the Bill because a number of key infrastructure projects in this country that are close to starting construction are being held back as a result of the difficulties they face in accessing finance. These difficulties are not because of poor commercial or economic viability of projects, but because of temporary capacity constraints in debt markets and significantly longer lead times to secure lending commitments. Accordingly, we are expediting this Bill so that we can provide the necessary financial assistance as quickly as possible and provide confidence to the markets that the Government will be in a position to do so. Once Parliament approves the Bill we will be able to complete formal negotiations with project providers over financial assistance, which we would like to do as quickly as possible to prevent costly and unnecessary delay. I therefore thank Opposition Members and the Opposition’s Front-Bench representatives for agreeing to expedite the Bill.
The measures that the Bill will make possible—financial assistance to infrastructure and housing projects worth tens of billions of pounds—have received widespread support, particularly from the business community. They are supported, for example, by the Confederation of British Industry, which says that our approach
“marks a big step towards unlocking the…investment needed to renew our national infrastructure,”
and that our proposals
“will provide a much-needed tonic for the construction sector, getting diggers on site and people into work. It will make a difference to households across the country.”
Mr Denis MacShane (Rotherham) (Lab)
I support the main thrust of the Bill, but on Sunday last week I drove my son to start his studies at Edinburgh university and the A1 between Newcastle and Edinburgh, which is a single-carriageway road, was clogged up with tractors and hay balers. It is extraordinary that, in contemporary Britain, the access road to one of our main capital cities belongs to the back of beyond in Bangladesh. Can we do anything to dual-carriageway that road? It is close to the Chief Secretary’s constituency as well as mine.
Danny Alexander
I think that my constituents in the highlands would say that describing it as close to my constituency might be a misuse of the word “close”, but none the less I recognise the right hon. Gentleman’s point. I gently observe that his party had 13 years in office to deal with that project, although I mean no disrespect to him in saying so.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Will the Chief Secretary give way?
Danny Alexander
Let me answer the intervention made by the right hon. Member for Rotherham (Mr MacShane) and then I will gladly take a further intervention. I will deal with them one at a time, if I may.
I certainly will pass on the right hon. Gentleman’s concerns to the Department for Transport, which is aware of the matter. I have received representations from Members of all parties in the north-east of England about that particular project.
Mr Robinson
On road projects that would be advantageous, such as the one mentioned by my right hon. Friend the Member for Rotherham (Mr MacShane), is the Chief Secretary aware that not a single one of those announced in the autumn statement has yet got under way?
Danny Alexander
I would point out to the hon. Gentleman that one of the announcements in the autumn statement was about local authority major projects. He will know, for example, that the Kingskerswell bypass is under constructions, that the A164 Humber bridge to Beverley improvements are under construction, and that the east of Exeter scheme improvements to the M5 junction 29 are under construction. I could carry on, but I will save the rest of the list for further interventions.
Danny Alexander
I will give way one more time and then I will make some progress.
Kelvin Hopkins
The fact is that public sector investment fell by 29% between the last year of the Labour Government and this year, and that it is forecast to fall further to 32%. Given that borrowing money is as cheap as it has ever been, surely the decision is just a matter of reversing what the Government have been doing.
Danny Alexander
The hon. Gentleman will know that the headline plan set out by the previous Chancellor and Government included cuts to capital spending that were substantially greater than those being implemented by this Government.
Danny Alexander
I will gladly take another intervention after responding to the hon. Member for Luton North (Kelvin Hopkins). He will know that the low interest rates to which he has referred are in part a consequence of the fiscal credibility that this Government have established. It is precisely because we wish to use the strength of this country’s balance sheet which comes from that credibility that we are able to announce this guarantee scheme, which I will go on to describe in a moment. However, I shall take an intervention from the shadow Chief Secretary first.
Rachel Reeves
The right hon. Gentleman will be aware that the Office for Budget Responsibility has forecast that the previous Labour Government’s plans would have led to £6.6 billion more investment in infrastructure than that planned by this Government over the next three years. Will he confirm those numbers?
Danny Alexander
That is not my understanding of the position. In 2010, we added a little more than £2 billion in every year of the spending review to the capital headline figures set out by the previous Government. We added to that further in last year’s autumn statement by switching some money from current spending to capital spending, precisely because of the value that we ascribe to infrastructure projects.
In addition to the CBI, the proposals are supported by the British Chambers of Commerce, which said:
“Business will appreciate the pace with which the government is moving to put its new housing and infrastructure guarantees in place”.
They are supported by the National Housing Federation, which speaks for registered social landlords in this country. It said:
“This can play an important role in helping reduce development risk, boost returns and attract investors once the development is complete.”
John Howell (Henley) (Con)
I wonder whether my right hon. Friend has seen the survey that was published today by the CBI and KPMG, which shows that 97% of business leaders see the planning system as a big turn-off to allowing infrastructure to go forward.
Danny Alexander
I did see that survey. I note that it was conducted before the Government announced the guarantees plan. However, a subsequent snap-shot poll showed a widespread welcome from the business community for the Bill. My hon. Friend will know that we have made significant changes to the planning system, including in the announcements last week, that relate directly to the threshold for infrastructure projects. Those will allow more projects of a slightly smaller scale to go through the national process, rather than getting tied up in local processes.
Danny Alexander
I will take one more intervention, then I will make some progress.
Geraint Davies
The right hon. Gentleman will know that there are schemes in America where, with the support of pension funds, the private sector builds houses on land provided by the public sector. That provides a mixed asset with social and private housing, and a revenue stream for the public sector at no cost to it. When such schemes are available, why are the Government instead saying to the private sector, “Forget about social housing for a while. Just build private sector housing”? That will have a long-term impact on the demography of an area.
Danny Alexander
The hon. Gentleman, with the greatest of respect, has misunderstood the Government’s message. Part of the guarantee programme will extend the benefit of Government guarantees to housing associations, to enable an additional 15,000 affordable properties to be built. That is why it has been welcomed by the National Housing Federation, which speaks for housing associations in this country. Housing associations recognise that they will benefit from the guarantee, because it will reduce the cost of finance and help them to build many more homes for the sadly limited amount of money that is available to this country at the moment.
The plans are also supported by the Home Builders Federation, which said:
“Government now clearly understands the constraints on delivery and has outlined action to address them.”
The Government are committed to delivering a sustainable, private sector-led recovery that is balanced across industrial sectors and geographical regions; to moving away from an economy focused exclusively on the south-east of England, which is reliant on financial services and unsustainable debt, towards an economy supported by a wide variety of industries across the United Kingdom; and to making the UK one of the best places in the world to do business, attracting foreign investment and promoting our exports. To achieve that vision, the Government are committed to delivering world-class infrastructure, thereby giving firms access to the communication and transport networks that they need, wherever in the UK they happen to be.
Roberta Blackman-Woods (City of Durham) (Lab)
Will the right hon. Gentleman give way?
Danny Alexander
I am going to make some progress, but I will come back to the hon. Lady.
We want to allow Britain to compete on the world stage. Our national infrastructure plan sets out an ambitious but credible road map for delivering on that vision. There is a pipeline of £200 billion of upcoming investments in major necessary projects, most of which will be delivered through the private sector. In addition, we want to see billions of pounds of investment in housing and infrastructure to support our public services.
Even in more favourable circumstances, raising the private finance that is necessary to deliver on those goals would be a challenge. Given the disruption caused by the instability of international markets and the eurozone, and its adverse effect on capital markets, it is clear that decisive action is necessary to enable these projects to be delivered. The Bill will allow us to take that action and to bring forward the investment that is required.
Roberta Blackman-Woods
Will the right hon. Gentleman explain why it has taken so long for the Government to recognise that additional investment in infrastructure is needed if the economy is to grow?
Danny Alexander
Again, I do not agree. By looking at the way we use capital moneys across Government, the decisions we took in the 2010 spending review have enabled us, for example, to devote more capital moneys to the Department for Transport for investment in our transport infrastructure over these four years than our predecessors were able to devote over the previous four years. The same could also be said of communications and broadband infrastructure. This Bill is a major development along that road. Labour could have put in place a guarantee scheme at any point in the previous 13 years, but it chose not to.
Andrea Leadsom (South Northamptonshire) (Con)
I have a business breakfast club in my constituency. A group of business people told me recently that the big challenge for them is not being able to move into decent premises so that they can expand and the inflexibility of the system. Can my right hon. Friend tell me whether there is anything in the Bill for those businesses? Surely they are the real engines of growth, operating at the sharp end of our economy.
Danny Alexander
By offering guarantees to a wide range of infrastructure projects that might otherwise be delayed because of lack of access to finance—thereby bringing those projects forward, or in some circumstances accelerating them—the Bill will, I hope, help to ensure that the businesses my hon. Friend is describing can access the quality of infrastructure they need to deliver their growth plans. In that sense, I think the Bill will make a big difference.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
I have been listening carefully to what the Chief Secretary has been saying. I understand the argument in principle, but he has been short on specific illustrations. He will know that the national infrastructure plan identifies a significant number of schemes. Can he now tell us which schemes that are currently stalled and not proceeding he would anticipate getting the go-ahead as a result of the Bill being passed?
Danny Alexander
I have a good deal more detail to get to in my speech, and I shall do so as soon as I have got through the various interventions that have been made. However, I shall not list individual projects before we have agreed guarantees for them, for the very good reason that it would be wrong to set out in this House those projects that could potentially benefit from the Bill, as doing so could either disturb the commercial position of some of the finance that has already been secured or undermine the discussions that we are engaged in to put in place such guarantees.
Joan Walley (Stoke-on-Trent North) (Lab)
When the Minister gives the details of where the investment will be going, will he tell the House what regard will be given in the decision-making process to the Climate Change Act 2008 and the work of the Committee on Climate Change? It would be short-termism and completely the wrong way to go about the policy if, for example, his infrastructure investment locked us into greater use of carbon rather than reduced use.
Danny Alexander
The hon. Lady makes an important point. Of course, the Bill will not discriminate between projects on policy grounds. We have set out some criteria, which I shall come to, but there are many energy projects—particularly in the renewables field—that are being brought forward in this country as a result of that framework and the policies that have followed from it. Some of those projects may well fall into the category that needs the support from the guarantees that the Bill will provide. In that sense, the Bill should give us an extra tool to ensure that the renewables investment that we need can go forward in a timely fashion, which I hope she would welcome.
The House will know that the Treasury already has wide powers under common law, not limited by statute, to issue guarantees, make loans and give other financial assistance in support of infrastructure. In some cases, Secretaries of State have statutory powers to support infrastructure; in others, they would need to rely on common law powers. However, many Members will also know that there is a long-standing convention, dating back to 1932, that the Government should not rest significant and regular expenditure under common law powers on the sole authority of general supply legislation. Accordingly, in order to offer the support that we want to see, the Government need Parliament’s authority to incur expenditure in connection with agreements to provide financial assistance and to pay out on liabilities, should they be called on to do so. Today we seek authority for the Treasury, or the Secretary of State where appropriate, to incur up to £50 billion of expenditure in connection with giving financial assistance to infrastructure across the UK.
Hazel Blears (Salford and Eccles) (Lab)
In drawing up the agreements for such significant expenditure, what account will the Chief Secretary take of the Public Services (Social Value) Act 2012, so that we can secure a social, environmental and economic impact from such contracts—in particular, through employment and training opportunities for young people—and ensure that the money makes a difference on the ground in our communities?
Danny Alexander
The right hon. Lady is referring to an important piece of legislation, which, generally speaking, will have been taken into account in the process of giving consent to a project. The guarantees will be offered to projects that meet a number of criteria, one of which is that they already have the necessary consents in place to get going within 12 months. The objective is to bring forward and accelerate the development of infrastructure, and it would be inappropriate to impose additional obligations on people delivering projects. This is about enabling projects that are already slated to happen to get going quickly.
Mr Robinson
This is a huge sum of money that the Treasury is undertaking to guarantee. I cannot imagine what some officials must think about it, but I know that there will be a strong case for ensuring that all guarantees are immediately and unconditionally added to the public sector borrowing requirement. Is it the case that any guarantee will be counted as public expenditure and be part of the PSBR?
Danny Alexander
It is good to hear from someone on the Labour Benches who thinks that £50 billion is a lot of money, given the freedom with which the Labour Government borrowed such sums during their time in office. The hon. Gentleman will know that these guarantees will not score to the PSBR, except to the extent that one makes an assumption about them being called, which causes a bit of immediate public expenditure. It is only at the point at which a contingent liability is called on that it scores as public spending. He will also know, because I suspect that he was involved in these matters when he was a Minister at the Treasury—
Danny Alexander
If the hon. Gentleman will let me finish my answer, I will give way to him again. He will also know that we recently obtained the agreement of Members on both sides of the House to introduce a new process known as the whole of Government accounts. That process, in addition to covering the national accounts that relate to immediate expenditure, also reports on off-balance-sheet expenditure of all sorts. Contingent liabilities of the kind that might be entered into under the Bill will be reported in the normal way.
The hon. Gentleman will also observe that the Bill includes significant reporting requirements. These will require the Treasury—or the Secretary of State, where appropriate—to report to the House in circumstances in which guarantees are issued under the terms of the Bill. I hope that that satisfies him—but perhaps it does not.
Mr Robinson
There was a long-standing Treasury tradition—I do not know when it was last breached, or whether it has been discarded—that a guarantee was counted as expenditure when it was given, not when it was called. The Bill seems to provide yet another easy way for the Government to find some off-balance-sheet expenditure in a way that they swore not to do.
Danny Alexander
I am advised that that is not correct, but if the hon. Gentleman wishes to enter into correspondence on the matter, I shall gladly follow it up.
Dan Rogerson (North Cornwall) (LD)
I am pleased that the Government are doing more to build on the work that they have done to invest in infrastructure and to encourage investment for other projects. I hope that many hon. Members visited Cornwall over the summer. If so, they might well be familiar with the Temple to Higher Carblake stretch of the A30 on Bodmin moor, which is not dualled. The road on both sides of that stretch is dualled. Local proposals have been made to come up with funding that can be put with Government funding to take the dualling scheme forward. I hope the Chief Secretary will ensure that this legislation will help to unlock local sources of funding to take such projects forward.
Danny Alexander
I had the pleasure of spending some time in Cornwall earlier this year, and of driving down that stretch of road. I understand the case that my hon. Friend makes. It has been made to me by Cornish colleagues from both coalition parties, and we will of course look sympathetically at any requests that might be made. It is always welcome to see local funding coming forward, and to see a local area taking responsibility for what it wants to do.
Charlie Elphicke (Dover) (Con)
The way in which the guarantees will be structured will be incredibly important for the planning by the financiers who wish to unlock these important projects. Will this involve credit support for the land or undeveloped infrastructure, credit support for the development finance piece, or credit support for the off-take or use of the infrastructure at the end of the day?
Danny Alexander
As I shall explain, we are not seeking to circumscribe unnecessarily the nature or structure of the guarantees, either through the Bill or through the announcements that the Government have made. We are willing to have discussions with those involved in projects that meet the criteria that have been set out, and it might well be that different structures of guarantee will be appropriate for different projects. I do not wish artificially to circumscribe the flexibility of the scheme in advance of the discussions with the individual projects. I am sure that those involved in the projects will be well able to have discussions with Infrastructure UK about the nature of the guarantee that would suit them best.
I was explaining the convention that the Government should not rest significant expenditure under common law powers on the sole authority of general supply legislation. Accordingly, to offer the support we want to see, Government need Parliament’s authority to incur expenditure in connection with agreements to provide financial assistance and to pay out on liabilities should they be called upon.
Today we seek authority for the Treasury to incur up to £50 billion of expenditure in connection with giving financial assistance to infrastructure across the UK. That financial assistance might take the form of guarantees, loans, indemnities or other support backed by public funds. It could be used—
Danny Alexander
I am going to make some progress; I will come back to the hon. Gentleman later.
It could be used to support investment in utilities, transport, other infrastructure for the provision of economic and social public services or housing.
Danny Alexander
No. I am going to make some progress.
The Bill does not affect any existing authority to incur expenditure that might already have been conferred on a Secretary of State; nor will it cover expenditure by a Secretary of State that can properly rest on the authority of annual supply legislation, without requiring specific statutory authority.
Where costs connected to the guarantee are incurred by the Exchequer that cannot reasonably be absorbed by the funds already provided by Parliament and where it is not possible to seek authorisation of Parliament for the additional expenditure—for example, because the House is not sitting—the Bill allows provision to be made from the Consolidated Fund. This is to cover the commercial reality of situations in which payments need to be made very quickly following an unforeseen obligation. Without this provision, any guarantee could lack commercial viability.
Danny Alexander
I am going to make some progress; I shall take some more interventions later.
The Government intend to offer assistance in the form of guarantees, although the Bill makes provision for other forms of assistance that we intend to use only where unforeseen urgent provisions are required. We believe that up to £40 billion of investment in infrastructure could be brought forward or accelerated under the UK guarantee scheme, using the powers in the Bill. That will help to deliver core infrastructure that supports growth, to improve the UK’s energy, transport, water, waste and telecommunications, and it includes about £6 billion-worth of public-private partnership projects delivering essential public service infrastructure. We will issue guidelines and scrutinise proposals to ensure that any proposal that receives an infrastructure guarantee is nationally significant, financially credible, good value for the taxpayer, requires a guarantee to get under way and is ready to start within a year.
Danny Alexander
I am going to make some progress, as I say, but I will take some more interventions at a later stage.
Since the projects we expect to back will be structured to minimise the potential of losses to the Exchequer, there will be minimal impact on public sector net borrowing as a result, except in the extreme circumstance that a guarantee is called upon or other forms of financial assistance are provided. We intend to levy a commercial charge for the services received by infrastructure providers, ensuring that companies pay a fair price for the benefits they receive, and that the taxpayer receives a fair price for any risk being taken. We also plan to use these powers to support up to £10 billion-worth of investment in housing.
Danny Alexander
Now might be a good time to give way to the former Minister for Housing.
Mr Raynsford
I am grateful to the Chief Secretary for giving way, although this intervention is not on a housing matter, but relates to his earlier comment about “schemes of national significance”. As he will know, this was part of the original blueprint, yet I searched in vain through the fine print for any definition of “national significance”. Is the absence in the Bill of any such reference to nationally significant schemes a significant omission, or not? If not, how are the Government going to ensure that their objective of supporting schemes of national significance is met?
Danny Alexander
It is not an omission from the Bill, which puts in place broad and permanent powers to issue guarantees for infrastructure projects. The Government expect that under the UK guarantee scheme, which will be the first manifestation and use of the Bill’s powers, nationally significant projects will be the sorts of projects able to apply. That means projects listed in the national infrastructure plan or other such projects as may come forward, but the Bill gives a broader authority to the Treasury to issue guarantees in other circumstances. What I am describing is how the Government intend to use the powers in the Bill.
Danny Alexander
I will give way to the hon. Gentleman, who has not intervened in the debate so far.
John McDonnell
On that specific point, I hope that the right hon. Gentleman is going to deal with clause 1(2)(b), which is one of the provisions defining the range of facilities that will be funded in this way. It refers to
“railway facilities (including rolling stock), roads or other transport facilities”.
Will he clarify whether those “other transport facilities” include airport expansion and runways? Although the third runway at Heathrow, or perhaps elsewhere, is not listed in the national programme and will not be brought forward in the next 12 months, there are no sunset clauses, so this Bill could be used to that effect.
Danny Alexander
The hon. Gentleman is right: there is no sunset clause. That is because we think that it is important to introduce these powers, not just for now but for the future. By circumscribing the financial limit of the extent of the powers and also by establishing strong requirements for reports to be made to Parliament, we can ensure that Members continue to be informed on how they are used. As the hon. Gentleman says, no such proposals are on the table at present, but in principle, should a major infrastructure scheme arise in the transport sector but be unable to attract the necessary finance because of conditions in the funding markets, it could be eligible in the future. However, that would be a decision for the Government of the day.
Henry Smith (Crawley) (Con)
Will my right hon. Friend join me in congratulating London Gatwick Airport Ltd on the £2 billion that it is investing in the upgrading of the facility, including the rail infrastructure?
Danny Alexander
The hon. Gentleman has cited the airport that I use most, apart from Inverness airport, because it services Inverness. I probably use it a couple of times a week. I have observed the investment programme, and it is certainly improving the facility. We hope that that improvement will continue.
Joan Walley
I am grateful to the Minister for giving way a second time. Does he agree that it is important for the Bill to provide for proper environmental impact assessments? Given that consultation is taking place in the House now that the Government have got rid of the regional spatial strategies, there is a requirement for us to ensure that environmental impact assessments take place. Will the Minister explain how that is linked with the requirement in clause 3?
Danny Alexander
I think it important for legislation to contain provision for appropriate environmental impact assessments, but this Bill is not the proper place for such a provision. Such assessments will have already taken place as part of the consenting process. As I have said, the Government will offer guarantees only to projects that can get under way in less than 12 months and have secured the relevant consents.
Kelvin Hopkins
Private companies in Britain are sitting on a cash surplus of £700 billion, but they are, in effect, on investment strike. They will not invest because the economy is depressed and they see no possibility of a profitable return. Is it not the case that only the Government can drive us into growth again, and that the Government must take the lead to unlock that money for the private sector?
Danny Alexander
One of the things that the Bill will do, which I hope the hon. Gentleman will welcome, is help to generate private investment in this nation’s important infrastructure, which has suffered from under-investment for so many years. Perhaps that is the answer that he was seeking.
The Government will use their hard-earned fiscal credibility to pass on lower costs of borrowing to support the long-term delivery of new affordable and private rental homes. We plan to issue debt guarantees for a private rental housing scheme and the affordable housing scheme to give institutional investors the assurance that they need to invest in housing. Under those schemes, the Government would enable providers who commit themselves to investing in additional new-build rented homes to raise debt with a Government guarantee. Housing proposals will be scrutinised and approved on the basis of presenting low-risk, high value-for-money investments.
As with UK guarantees, there will be a minimal impact on public sector net borrowing, as the developments we expect to back will be structured to minimise the potential losses to the Exchequer. For the private rented sector guarantee, we intend to levy a commercial charge to reflect the benefits that companies receive and to cover the risk taken by the taxpayer.
The actions made possible by the Bill would provide enormous benefits across the UK. We expect the boost to housing construction, combined with our recently announced planning reforms, to generate about 140,000 jobs in the construction sector, and the infrastructure unlocked through UK guarantees could provide hundreds of thousands more. However, this is not just about a near-term boost. The projects that go ahead as a result of the action that we are taking will provide major long-term benefits for individuals, firms, households, and the whole UK economy. They could help businesses to take better advantage of 21st-century technology by improving broadband and mobile speed and connectivity. They could help businesses to connect with consumers, employees and each other, and allow workers to gain access to new job markets by improving our major ports, airports and corporate centres, and the transport links between them.
Damian Collins (Folkestone and Hythe) (Con)
I am grateful to my right hon. Friend for giving way. He is being very generous with his time.
The planning system has an important part to play. Two years ago, the local authority gave Lydd airport, which is in my constituency, permission to expand. A private investor is willing to pour in millions of pounds so that the work can start immediately, but the decision is still locked up in the planning system awaiting the Secretary of State’s approval. Is there any advice that my right hon. Friend can give his colleagues in the Government that might make it easier for people to invest in the kind of infrastructure that he is describing?
Danny Alexander
The Secretary of State will have to make a decision in the normal way. I am sure that he will have heard my hon. Friend’s comments, and I shall ensure that they are passed on.
Danny Alexander
I must make some progress, but I will give way again later.
Housing guarantees, alongside a wider package of housing and planning reforms, will contribute to the construction of up to 70,000 homes, including affordable housing, and opportunities for first-time buyers to get on to the housing ladder. That will ease conditions in overcrowded and overpriced residential areas, and will enable people to locate near to jobs.
The steps that we plan to take, and which the Bill enables us to take, will help more companies in a wide range of sectors to grow and flourish, not just in the south-east of England but throughout the UK, and will give more people access to a wider range of opportunities. The benefits will also be felt in Scotland, Wales and Northern Ireland. The UK’s hard-won fiscal credibility should benefit the whole of the UK.
Danny Alexander
I have a bit more to say. I have been generous with my time, but I must now make some progress. The hon. Gentleman’s Front-Bench colleagues are becoming restless.
The Bill will enable major infrastructure projects to secure finance regardless of where they are based. We will work closely with the Northern Ireland Assembly, the Welsh Assembly Government and the Scottish Government to ensure that the authority conferred on the Treasury or the Secretary of State by the Bill can be used effectively to help to deliver for people in Scotland, Wales and Northern Ireland.
I shall now give way to the hon. Member for Swansea West (Geraint Davies).
Geraint Davies
In certain areas of Wales—such as Swansea, part of which I represent—the cost-benefit ratio is not always as strong as it might be. Will the Minister support, for instance, super-connectivity for Swansea, given that it has been granted to Cardiff, and better links to Cardiff airport? Passenger numbers are not great at present, but that is simply because the infrastructure has not been there in the past.
Danny Alexander
I hear the case that the hon. Gentleman is making. We have made important announcements recently, particularly in relation to rail links in and to Wales, which I hope he welcomes. I will not support specific projects that may be in gestation, but we will work with the Welsh Assembly Government, who are principally responsible for such proposals. If there are projects for which a guarantee is appropriate, we will consider that very positively in the light of the representations made to us.
As the hon. Gentleman will know, great interest has already been expressed by investors and those involved in projects since the UK guarantees idea was launched six weeks ago. Since then, about 40 companies and project sponsors have come forward, responsible for projects worth well over £5 billion and covering high-priority investment in areas such as energy, transport, water, waste and telecommunications. Detailed discussions are already taking place with, for example, those involved in the Mersey Bridge Gateway project, which is considered to be one of the world’s top 100 infrastructure projects. We have also indicated that we would be willing to consider a guarantee relating to the green deal.
There should be no doubt that the Government are in a position to deliver this policy, and the investment it will unlock, only because of the decisive action that we have taken to reduce the deficit, and the credibility that that has secured for this country. When we came to office, the UK taxpayer was paying interest rates comparable to those of Spain and Italy. Were that still the case, the course of action that we are taking now would be impossible. Because we made tough decisions to regain control of our public finances, we now enjoy interest rates of only about 2%. That is the result of a responsible approach to spending and a credible long-term commitment to regaining control of the public finances.
Despite those tough decisions, we are already spending more on critical transport and communications infrastructure directly as a Government than was spent at the height of the spending boom. We are providing £18 billion-worth of rail investment, supported by the spending review, and a further £9.4 billion of infrastructure enhancements for the rail network was announced in the summer. Ten super-connected cities—the hon. Member for Swansea referred to super-connectivity—will enjoy ultrafast broadband and high-speed wireless connectivity as a result of Government investment, with funding set aside for a further 10. We are also focusing on how we can reduce burdens and keep costs low so that investment, whether public or private, goes as far as possible.
Last week we announced a package of measures to reduce burdens on business still further, including the reform or removal of more than 3,000 regulations to reduce their impact. That constitutes the most ambitious action ever proposed by a modern British Government to set business free. Our spending plans have prioritised capital spending that supports balanced sustainable growth across the country, and our efforts to reduce burdens on businesses mean that investment has gone even further. That approach is producing results despite difficult conditions. More than 1 million private sector jobs have been created under this Government, and this year we rose from 10th to eighth in the World Economic Forum rankings of international competitiveness. The Bill could allow us to unlock even more investment without placing material additional burdens on the public finances, enabling the Treasury to support infrastructure delivery so that we can make better use of private sector finance, skills and incentives, while also managing exposure to the taxpayer.
Under the previous Government, the UK fell in the infrastructure world rankings from seventh in 1998 to 33rd in 2009—behind Namibia, Slovenia and Cyprus. We are now up to 24th and taking the necessary steps to make the further improvement this country needs. There can be no argument with the view that we are delivering far more than under the plans we inherited from our predecessors.
The Bill contains appropriate safeguards and checks to ensure transparency and accountability to Parliament for actions taken under it. It imposes an upper limit on the amount of expenditure that the Treasury and Secretary of State may incur, which can be increased through affirmative resolution. It also requires the Treasury to update the House regularly. In answer to a point that was made earlier, where expenditure is charged on the Consolidated Fund, the Bill requires the Treasury as soon as practicable to lay a report before Parliament specifying the amount paid. Any expenditure or contingent liabilities will be reported in the whole of Government accounts.
Charlie Elphicke
One of the key sensitivities is that one does not want a guarantee to end up like quantitative easing, whereby guarantees are issued and nothing actually comes out the other end. To what extent and how will the Treasury monitor the situation, to ensure that this is a results-based guarantee that brings forward such projects and really makes them happen?
Danny Alexander
I am not sure I accept my hon. Friend’s characterisation of quantitative easing. One of the strengths of the tight fiscal policy that this Government have run and will continue to run is precisely that it allows the monetary activism that we have seen in this country and, indeed, in other parts of the world. However, he is right that the purpose of the Bill is to enable infrastructure projects to come forward quickly. That is why one of the key criteria by which we will decide whether to issue a guarantee to a particular project is that it can get under way within 12 months of the guarantee being issued, and that it has the necessary consents in place. This is about bringing forward projects now; it is not about offering guarantees now for projects where nothing will happen for many years to come.
Stella Creasy (Walthamstow) (Lab/Co-op)
Many Members will want to follow where the public money is spent, and we should consider the role of the Public Accounts Committee in understanding these measures. Will the Minister say a little more about when a liability will go on to the balance books, and the impact of the value for money assessment of the Public Accounts Committee of any of these projects? What will be the impact on those decisions and on any future liability that might be incurred?
Danny Alexander
Of course, the Public Accounts Committee will be able to undertake scrutiny in the normal way. Clause 3 sets out detailed reporting requirements to Parliament for the guarantees, and the PAC will want to scrutinise such matters. As I was explaining earlier, these contingent liabilities will be reported through the whole of Government accounts process, which is the appropriate way to report such things. They will manifest themselves as public spending only as and when the liabilities are called, or where an assumption has to be made about the likelihood of a guarantee being called; otherwise, they are contingent liabilities, as the hon. Lady will well understand.
The Bill contains measures that will support growth, jobs and families, all at minimal expected cost to the taxpayer. It will support the UK’s construction sector by providing access to finance for financially credible, high value for money projects. It will unlock the investment that the UK needs to make it one of the best places in the world to do business, and to support sustainable growth balanced across sectors and regions.
Rachel Reeves (Leeds West) (Lab)
We will not oppose the Bill on Second Reading, but we do not think it remotely adequate to meet the scale of the challenge we now face: the longest double-dip recession since the war, record levels of youth and long-term unemployment, dangerously low levels of business investment, and as a result, deficit reduction way off track, with borrowing up by a quarter this year. The longer this situation continues, the higher the price for businesses, taxpayers and working families in the future: permanent damage to our long-term productivity and competitiveness, and billions of pounds in additional unplanned Government borrowing.
The Opposition have been urging the Government to act and we have repeatedly identified infrastructure investment as an urgent priority. However, this is not the plan it purports to be. The Prime Minister said that he would “cut through the dither”, but he has simply created another distraction—a fig leaf for their own inaction; a peashooter where we needed a big bazooka. At a time when we need to be bold if we are to boost business confidence, to come out with something half-hearted and hesitant risks making things worse.
Before proceeding, I would like to apologise for that fact that, as Mr Speaker and the Chief Secretary to the Treasury are already aware, I cannot be present for the winding up of this debate.
Let us remind ourselves of the background to the Bill. Over the summer, we learned that the UK economy had entered its third quarter of negative growth—the longest double-dip recession in British post-war history. Unemployment remains unacceptably high; youth and long-term unemployment is a national disgrace; and headline employment figures conceal endemic under-employment. Record numbers are working fewer hours than they want to, and record numbers are trapped in temporary work. The Chancellor’s promise of expansionary fiscal contraction has come to nothing.
A Government who proudly proclaimed on page 1, paragraph 1 of their coalition agreement that eradicating the deficit and securing the recovery were their No. 1 priority are now midway through their term of office. What do they have to show for themselves? They have an economy that is smaller than when the Government’s measures began to take effect and, at the last count, £150 billion in additional debt—a figure that is likely to rise further, with borrowing up by a quarter this year. As the former US Treasury Secretary writes in this morning’s Financial Times,
“the reality is that the primary determinant of fiscal health in both the US and UK over the medium term will be the rate of growth. An extra percentage point of growth maintained for five years would reduce Britain’s debt-to-GDP ratio by close to 10 percentage points whereas austerity policies that slowed growth could even backfire in the narrow sense of raising debt-to-GDP ratios and turning debt unsustainability into a self-fulfilling prophecy.”
Hazel Blears
Would my hon. Friend describe this as plan A, plan A-plus, or plan B? [Interruption.]
Rachel Reeves
From a sedentary position, my hon. Friend the Member for Nottingham East (Chris Leslie) suggests “plan F for fail”, and I could not agree more. I wish this was a plan B, but I do not think it is. It is more words, when what we require is action. Yet the Government do not listen to the evidence—they just plough on with a plan that everybody else knows has failed.
Charlie Elphicke
Can the hon. Lady clear up a bit of confusion? Today, she wrote in The Guardian that the Labour party would fix all this with a bankers bonus tax to build new affordable homes. However, it seems that this tax has been spent a number of times. Back in March, the Leader of the Opposition said it was going to be used to fund the young unemployed. Which is it?
Rachel Reeves
The bank bonus tax is being used to do two things: first, to create 100,000 jobs for young people; and secondly, for the construction of 25,000 new affordable homes. The Opposition believe that the priority right now is construction and getting young people back to work. The Government believe that the priority is a tax cut for the bonuses. That just shows how out of touch this coalition Government are.
Nothing better illustrates the long-term costs of this Government’s short-sighted complacency than the shocking shortfall in infrastructure investment. If we want to build a productive, competitive economy for the future, we need to invest in the road and rail systems that keep this country moving; in the energy supplies that power our industries; in the information and communication networks that turn ideas into real innovations. With study after study confirming Keynes’s original insight—that construction projects can maximise the multiplier effects of new investment, creating skilled jobs in the construction sector as well as in engineering and design—there is no better time than now.
Instead, we have had from this Government countless speeches, statements and strategy documents. People are asking, “Where is the delivery?” As the CBI is asking, where are the diggers on the ground? When are we going to start turning blueprints into bricks and mortar? It was the Prime Minister who said,
“This autumn, the government is on an all-out mission to unblock the system and get projects underway”.
That sounds promising—until we realise that he said this a year ago. Since then, what have we seen? None of the road building projects in the autumn statement package have begun construction. The number of housing starts is down on 2011. Planning applications are taking longer to approve. I agreed with the Prime Minister when he said:
“In terms of job creation today, getting construction projects off the ground is critical.”
But in the year since he told us that barely one in 10 of the projects listed in the Government’s construction pipeline have moved forward to procurement or construction, and almost as many of them have moved backwards. Total UK construction output is down by more than 10% and last week’s jobs figures showed that the number of jobs in the construction sector has fallen by 89,000, bringing the total number of construction jobs lost since this Government came to power to 120,000.
The Deputy Prime Minister has promised that support for infrastructure and other private sector projects from the regional growth fund would offer a
“boost to business, which will jump start growth and create jobs that last in the places that really need it.”
That sounds like just what we need, but that was said a year ago. We know that since then just £60 million of the promised £1.4 billion has been released to businesses, creating barely 5% of the 37,000 jobs promised.
The Chancellor of the Exchequer announced £20 billion in new infrastructure investment to be funded by the pension funds—that was a year ago. We now know that this scheme will be launched next year, with funds amounting to only a tenth of what was promised back then. As the failure of this Government’s promises increases, their rhetorical displays have become ever more strident. Two weeks ago, in response to questions from my right hon. Friend the Leader of the Opposition, the Prime Minister said:
“If we look at what is planned by this Government, we see that between 2010 and 2015 we will be investing £250 billion in infrastructure.”—[Official Report, 5 September 2012; Vol. 549, c. 230.]
It is true that the national infrastructure plan sets out £250 billion-worth of projects— would government not be easy if you were judged only on what you had planned? If we look instead at what has been delivered, we see that the picture is rather different. The Office for National Statistics shows that new infrastructure orders since the second quarter of 2010 average less than £2 billion a quarter. At this rate, it will take not five years but more than 30 years for the Government’s grand plan to be delivered. The latest construction output figures released last week show that progress is slowing, not accelerating. It is no wonder that the director general of the British Chambers of Commerce has described the national infrastructure plan as
“hot air, a complete fiction”.
Geraint Davies
My hon. Friend will know that the Prime Minister boasts of an extra 1 million jobs in the private sector. Does she agree that many of those jobs are where people are moving into part-time work having lost full-time work? It is wrong that the Government penalise people who are now working less than 24 hours but used to do more, by cutting their working tax credits by £3,750. The Government are saying, “Get some more work” but these people have just come down from full-time employment.
Rachel Reeves
I thank my hon. Friend for that intervention. He will know that there are 1.42 million people working part time who wish that they were working full time. As of April, about 200,000 families lost support through working tax credits because they could not find the additional hours that they need to still be eligible for that extra support to help them when they are in work; that support helps them to avoid poverty.
It is no wonder that people are asking whether they can have faith in anything the Government are saying, given that in every area we see dither and delay. In communications, the Government have put back the 2012 broadband target to 2015 and may not meet that new deadline. In house building, recent statistics show that new housing starts are down by 24% on a year ago. In waste management, the plan promised for spring this year will now not be delivered until the end of 2013. In energy, the CBI has warned that policy changes such as the cuts to feed-in tariffs have been
“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy”.
In transport, we still await the long-promised national policy statement on transport networks and aviation, and tough decisions on airport capacity have been kicked into the long grass. Instead of the drive, decisiveness and clarity of vision that businesses are crying out for, what do we get in sector after sector? We get dither and delay; we get initiatives and announcements driven by the desire to hit headlines rather than to deliver results.
The Bill—the Government’s latest scheme—is a strange piece of legislation. It is being fast-tracked through Parliament, with the justification that the situation is immediate and urgent. However, given this need for speed, we are bound to ask whether legislation is necessary, particularly given that, as the House of Commons Library note explains, such commitments
“do not typically require…legislation”.
The UK guarantee scheme at the centre of the Bill was first announced by the Prime Minister in a speech in May. It was re-announced by the Chancellor in a speech in June. The press release came from the Treasury in July. It is therefore hard to resist the conclusion that the Bill is designed more to create the impression of activity and delivery than to get real results in the quickest way possible.
However, the Opposition’s biggest concern with the Bill is that it is simply inadequate to meet the challenge we face. Many in industry are sceptical that it will make any difference. Even where it is taken up, the tight criteria of economic and commercial viability may mean that it amounts to only a deadweight subsidy, aiding projects that would have gone ahead in any case. The best anyone has been able to say for it is that it might help some schemes at the margin, but that is hardly commensurate with the challenge we face.
The schemes that have been most frequently mentioned as strong candidates for assistance are those the Government have announced are going ahead several times already. Let me cite one example, which the Chief Secretary mentioned in his speech. Earlier this month, he said:
“Detailed discussions are already taking place with the Mersey Bridge Gateway project”.
We certainly welcome progress, but many may experience a strange sense of déjà vu, given that a year ago the same project was announced by the then Transport Secretary, who noted that although some transport plans are long term, this one could be
“implemented more quickly…creating jobs when they are needed most.”
What happened in the past year? It is no wonder the Government are gaining a reputation for more talk than action. As the director general of the CBI said today,
“firms fear initiative overload and are becoming impatient with delivery, leaving many companies still sceptical about the overall impact on investment.”
Mr William Cash (Stone) (Con)
Does the hon. Lady accept that this Bill is, in effect, pure Keynesianism? If she had the opportunity to read Nicholas Wapshott’s recently published and excellent book on the arguments between Keynes and Hayek, she might conclude that elements in this hoped-for infrastructure programme carry with them the germs of really serious difficulties if we pursue a policy of pure Keynesianism and do not take into account the arguments of Friedrich Hayek.
Rachel Reeves
I look forward to reading the book that the hon. Gentleman mentions, but I do not think that the Bill is pure Keynesianism—that would be doing things that Labour Front Benchers are recommending, such as introducing a temporary reduction in VAT, a tax on bank bonuses, genuinely bringing forward infrastructure investment and a national insurance holiday for small businesses. Those are the things that would kick-start the economy, get people back to work and get the deficit down in a sustainable way, because there would be more people in work and more businesses succeeding, unlike what we have from this Government, which is £150 billion of additional borrowing because more people are on welfare and fewer businesses are succeeding.
Kelvin Hopkins
I compliment my hon. Friend on her excellent speech and may I say that Friedrich von Hayek has caused more damage in this century and the last than any other economist in the history of the world? Nevertheless, she is absolutely right; this is about a supply-side measure which is not Keynesianism. Assisting and providing a little bit of investment with a little bit of Government subsidy is not Keynesianism. Keynesianism is direct spending to create demand in the economy. The private sector will not create demand. Only government can restore the demand where there is the vacuum at the moment.
Rachel Reeves
I thank my hon. Friend for that intervention. Of course he is agreeing with something that the Business Secretary said, which is that the real problem in the economy is a lack of demand. Supply-side measures will not do very much to help with that. When the Chief Secretary was asked in intervention what projects would be supported by this Bill he could name not one. That is the problem; this is a guarantee scheme, but we do not know what it guarantees. This is a project to help infrastructure investment, but we hear no announcement about which infrastructure investments will go ahead that would not have done previously. No wonder businesses and Members are sceptical and no wonder we are still in recession, if this is as good as the Government can get.
We will not oppose the Bill, but nor will we allow the Government to use the scheme as a substitute for the real plan that the economy and businesses so desperately need. Instead of devoting themselves to the task of getting our economy moving again, the Government have put before us an infrastructure investment guarantee that guarantees no infrastructure investment—fast-track legislation that has had the effect of getting the scheme stuck in the slow lane. The Government are preoccupied with distracting us from their fundamental failure and inaction, but people’s patience is wearing thin. We have had enough of initiatives and announcements: no more excuses, no more evasions—the Government need to get serious.
Two years ago, we warned that the Government’s economic plan would choke off recovery, shatter business confidence and add to borrowing, and that it would make it harder, not easier, to balance our books and pay our way in the world. A year ago, we called on the Government to bring forward infrastructure investment; we called for a bank bonus tax to fund the construction of 25,000 new affordable homes and to deliver a programme of youth jobs. If the Government had taken our advice then, just think how much progress we could have made by now.
Jane Ellison (Battersea) (Con)
Before the hon. Lady reaches the end of her speech, perhaps she will comment on this point. If all the things that have not been done are so bad, why did Madame Christine Lagarde say that she shivered to think what would have happened had the Government not taken the action they did?
Rachel Reeves
Olivier Blanchard and the International Monetary Fund have been saying for a year that if growth does not materialise the Government should think again. How much longer do we need to be in recession? How much longer must we have rising youth unemployment and rising long-term unemployment before the Government act? The IMF now forecasts that the economy will shrink this year and will barely grow at all next year. That is evidence that the Government need to rethink their strategy, and it is a shame that they have not heeded the advice of the IMF.
Geraint Davies
Does my hon. Friend agree that the reason consumer demand is so awful is that the Chancellor announced that 700,000 people in the public sector would lose their jobs? People in the public sector do not know whether it will be them or their neighbour, or whether it will be this year or next year, so they are saving not spending. That is why there is no growth.
Rachel Reeves
I thank my hon. Friend for that intervention. It is not just people in the public sector; people in the private sector, particularly in construction, which has shed 120,000 jobs since the Government came to power, are also worried about their jobs and futures and about how they will get the money to feed and house their families. There is real concern and a real lack of confidence among households and businesses.
This summer showed that things could be done differently. The Olympics showed what can be achieved with an inspiring vision—the right combination of public, private and social enterprise, with the nation united behind it. We delivered on time and on budget, and it was a perfect platform for Britain at its best. Let us hope that the Olympics provided a much-needed boost for our economy, but the lesson to learn is not that we can now rest; if we really want to seize the economic opportunities before us and build a better future, we need to repeat that effort on a much bigger scale, with a nationwide plan for jobs and growth. Let that be the lesson for today and let us get to work on laying the foundations of the economy we need to build for the next generation. Let us have a Government who follow up their rhetoric with real action.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the next speaker, I inform the House that the limit on Back-Bench speeches will be nine minutes.
Mr Crispin Blunt (Reigate) (Con)
I fear I shall use them, Mr Deputy Speaker.
I am grateful for the welcome I received from my hon. Friend the Member for Northampton South (Mr Binley), who said how glad he was to see me. It has taken me 15 years to arrive on the Government Back Benches and this is my first speech as a Back Bencher for more than eight years. I enjoyed the fact that the first constituent to seek my help after I was relieved of my responsibilities as one of Her Majesty’s Ministers was a gentleman who needed assistance at an employment tribunal in a case of unfair dismissal. I was able to look him squarely in the eye and tell him that he had to take whatever he got from the employment tribunal, and once that was done, he must put matters behind him and get on with the rest of his career and his life. I have every intention of doing that, and enjoying the freedoms of the Back Benches.
It was interesting to follow the Gatling gun-like delivery of the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves), who rattled through her speech. When I sat on the Opposition Benches, I heard similar speeches from colleagues about Government announcements that were made but not immediately delivered. When they relate to infrastructure, things take a tiresome amount of time.
I wondered about the economic analysis that underlay the hon. Lady’s critique. What kind of economic la-la land are the Opposition living in that they think the financial markets would have confidence in underwriting the Government’s debt if it continued to be managed by Labour? They had got us into the most appalling trouble by May 2010. It took the formation of the coalition and the urgent need for all Ministers to attend to their departmental expenditure to drive down debt so that the Chief Secretary could deliver credibility to the financial markets and our nation could continue to enjoy borrowing rates that are at an historic low. The difference between us is that if Labour had been in charge, we should probably have been enjoying borrowing rates something like those of Spain, which would be costing us £40 billion a year in the extra interest charges we would have to pay on the monumental national debt that was built up under the previous Government.
Having achieved a level of market confidence, it is absolutely proper that we now look to capital expenditure. That is why in principle I welcome the Bill and the fact that under the so-called Baldwin convention the Government are seeking specific authority for capital expenditure of this type. However, better explanations are required of the detail.
Hugh Bayley (York Central) (Lab)
If business confidence in the previous Labour Government was as bad as the hon. Gentleman suggests, it would have been reflected in interest rates, yet in fact when his party came to power we had interest rates at a record low. I acknowledge that they have continued at that level, but it was a record low that his party and the coalition Government inherited from Labour.
Mr Blunt
That would be fine if the markets had not entirely discounted the prospect of the hon. Gentleman’s party being retained in office in 2010. It was perfectly clear that Labour was being sent firmly through the exit door. I assure the hon. Gentleman that if the markets felt there was any chance of the former Prime Minister and his henchmen remaining in office, we should have faced a quite different picture.
Having just held a Ministry of Justice portfolio, I turn to the subject of prisons, which are mentioned in the Bill as a potential source for capital expenditure. There is a case for measures that enable capital expenditure on prisons. There is a very strong case, which I shall continue to press from the Back Benches, for building new prisons, not to increase the number of prison places but to modernise the prison estate and make it fit to deliver rehabilitation, work and security at a sensible, affordable price in a prison infrastructure for the 21st century.
Oakwood prison offers an example. It was built with running costs of more than £10,000 a prison place less than other category C training prisons of its type. With capital expenditure at about £100,000 per prison place, one can easily see the rough order of magnitude in a 10% return on that scale of investment. If we then take into account the fact that we could sell off the old prison sites, that we will not have to deal with the accumulated maintenance deficit in the older parts of the prison estate and that we will get much better implementation of policy in prisons that are built with work, security and rehabilitation in mind, we can see that the case for including prisons in the Bill is extremely strong.
I am, and will remain, an advocate of wholesale reinvestment in our prison estate. It means new prisons that will be more efficient and older ones closing so that we end up with the estate we should have for the 21st century. There is currently a competition process for nine prisons, the second such round of competitions—eight are currently in the public sector and one is in the private sector. All the bids I have seen, from both the public and private sectors, show the enormous benefit of competition in coming forward with better ideas on how to run our prisons.
At this point it would be appropriate to pay tribute to the officials in the Ministry of Justice and to Michael Spurr and all the people at the National Offender Management Service with whom I have had the privilege of working over the past two and a half years. I put on record my gratitude to them and, as prisons are in the Bill, to Peter McParlin, chairman of the Prison Officers Association, the biggest trade union representative in the Prison Service. In an era of considerable change in the service, I commend the constructive relationship and dialogue I had with him and with other union officials and staff, including those from the National Association of Probation Officers.
I turn from my former responsibilities to the application of the Bill to my constituents. Reigate plays host to some serious national infrastructure. We have two prisons, but we are adjacent to Gatwick airport, the M25 runs through the middle of the constituency, and the London to Brighton main line is another key piece of infrastructure. The constituency has been under constant developmental pressure throughout my time as Member of Parliament. The borough of Reigate and Banstead has more than met the housing targets imposed by the previous Administration. It is not housing we are short of; it is infrastructure. For example, we are woefully short of primary school places, the M23 has yet to be finished and brought to an end at the Hooley interchange, and there needs to be a reorientation of the railway line that cuts across the London to Brighton main line and runs between Guildford and Tonbridge.
I share the criticism of others about the delay in the decision over the future of airport capacity in the United Kingdom. For me, the answer is blindingly obvious: we need an airport in an estuary that can operate 24 hours a day and that has the capacity to deal with the primary needs of the United Kingdom, which is to have a proper hub airport. That has been fairly obvious since people were looking at Maplin Sands about 50 years ago. Frankly, it is about time we got on and made the decision. I seriously regret its being put off for another three years.
I will conclude by expressing my concern about housing appearing as infrastructure in the Bill. I do not think that housing is infrastructure. The financing of housing should come from other mechanisms. I hope that my right hon. and hon. Friends will understand my concern about housing appearing in the Bill in conjunction with the Chancellor’s remarks about the green belt and the potential threat to it. I will be examining the Bill very carefully.
John Healey (Wentworth and Dearne) (Lab)
I am glad that I was in my place to hear the hon. Member for Reigate (Mr Blunt) make his first speech from the Government Back Benches. He was a very serious Minister and brought a very serious mind to his brief, as he has done in this afternoon’s debate.
I see borrowing guarantees to help fund investment in Britain’s infrastructure as a good, if overdue, use of the power of government. It is creative, innovative and active government, if it works. Using the strength of the public balance sheet to underwrite private investment makes sense, especially at a time when public funding is limited and private bank lending is constrained. It should improve the credit rating of, and attract investors to, infrastructure projects, and I see those as two key tests for the policy and the legislation before us.
I welcome the Bill and want it to work. The country needs it to work. However, I say to the Minister and to the Chief Secretary, who is no longer in his place, that there are two big questions behind the Bill that, even after his long speech this afternoon, remain unanswered. They are about urgency and clarity. The value of the legislation and the Government’s borrowing and funding commitment will be felt when the first project is chosen, the guarantees are in place and the work begins. When will that be? As always with a new policy, the devil is in the detail. We have no detail and we have no idea how the arrangements allowed for in the Bill will work. The Government have already asked for expressions of interest for funding and borrowing guarantees but have published no guidance. When will that be done?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. May I make a quick point? The hon. Gentleman is making a lot of interventions and obviously wants to speak later in the debate. If he moves down the list of speakers, I presume he will understand why.
Geraint Davies
You have many very good points, Mr Deputy Speaker.
Does my right hon. Friend agree that, given that the Building Schools for the Future programme was in place and ready to go before the Government cancelled it, it would be a good idea to reinstate it and get productivity through our children as well as through the construction industry?
John Healey
My hon. Friend is right, and I hope that he gets a chance to make a speech. I will move on in a moment to some of the changes in policy and cuts since the general election that have made infrastructure projects and that sort of investment harder, not easier.
There are big causes for concern behind the two big questions I mentioned. First, there are questions and concerns about speed and how serious the Government are about getting infrastructure work going. It is almost a year since the Prime Minister promised
“an all-out mission to unblock the system and get projects underway”.
It is almost two years since the Government published their first national infrastructure plan and almost two and a half years since they set up Infrastructure UK in June 2010 in the Treasury. Most seriously, since the Government’s second infrastructure plan in November 2011 the economy has shrunk by nearly 1% and Britain has become one of only two G20 countries in a double-dip recession.
On the point of concern about clarity and simplicity, the Infrastructure Investor journal recently conducted a survey of 200 industry investors. Lack of finance, poor regulation and procurement weakness are all problems they face, but some 60% said that confusion and lack of clarity from the Government are a far greater disincentive. What matters most is confidence in the pipeline of projects, often based on clear Government policy decisions and commitments. The Government are failing that test over big projects and policies such as High Speed 2, aviation capacity and power generation. Their record on other policy decisions that at first sight have nothing to do with infrastructure is also making it harder to put in place the funding required. The abrupt change and then change again in the solar feed-in tariffs, the benefits reforms and cuts, the tripling of student tuition fees, creating “core and margin” university course places, and the rebanding of renewables obligation certificates have all changed the risks and the costs of long-term capital—so much so that a senior figure in the industry recently said to me: “Investors are now asking for the first time how you can price in public policy risk.” The guarantee scheme needs to be flexible and straightforward. The devil is in the detail, and Government revel in the detail. Is every Department going to introduce and run its own scheme with its own rules? Who in Government will be accountable for the programmes and the problems on the guarantees?
On housing, let me take issue with the hon. Member for Reigate, because the Chief Secretary and the Government are right and he is wrong. I welcome its definition as infrastructure. It is basic to people’s lives and to a good society, and central to wider economic growth and to productivity. Above all, it is a long-term good. We are still getting rent from Bevan’s post-war council housing a long time after the cost of the capital to build them has been paid.
I am looking to the Government for reassurances on four questions, especially in relation to housing. First, the Chief Secretary said that he did not want to prescribe and would not circumscribe the stages of projects that credit guarantees can support. The Treasury has said that guarantees can cover key project risks including construction, performance and revenue risk. Will that apply equally to housing as to the other categories set out in clause 1(2)? Secondly, some housing associations already have a presence in the capital markets and can raise finance in their own names, so will such organisations with significant project proposals be able to push ahead without the creation of any intermediary or aggregator?
Thirdly, the best housing developments are mixed and help to support mixed communities. The Government have said that the guarantees will support private and social housing. Will those building new homes be able to source guarantees for both sectors from the same fund scheme? Fourthly, I expect that security requirements will be part of the arrangements for the borrowing guarantees. Will developers building homes be able to provide the security on completion of those homes rather than in advance? If the Government want these guarantees to work, and to work rapidly, to boost housing, jobs and the economy, they need to provide answers and reassurance on all four points.
The Chief Secretary mentioned the 1932 Baldwin agreement, which emphasises that where financial liabilities that last beyond the term of one Government or one financial year are introduced, they should be backed by specific legislation. I believe very strongly that improved long-term infrastructure should be a shared endeavour of all parties, because infrastructure projects do not fit neatly within the political cycles and are damaged by the chopping and changing of Government policy.
Kelvin Hopkins
On my right hon. Friend’s point about infrastructure investment covering more than one Government and different parties, there was a time, when I was young, when Conservative and Labour Governments used to compete on the number of council houses they could build during their term of office. We should get back to that kind of arrangement.
John Healey
I do not think I have ever heard my hon. Friend advocate competition in any circumstance on any policy before, but I am happy to say that he is right, and I support him. I hope that we may get back to those days. Just before the election, when I introduced the local authority new-build scheme, which boosted and supported local council housing for the first time, we had very strong bids and very strong support from 73 councils, including many Conservative councils that wanted to build council homes but were not, until then, getting support from Government to do so. They are certainly not getting that support now.
Since the election, this Government have done too little for too long on new infrastructure. This Bill could make an important difference. It deserves all-party support, and the Government will get it if they get this right.
Graham Evans (Weaver Vale) (Con)
It is a pleasure to see you in your place, Mr Deputy Speaker, and I am grateful for a chance to contribute to this debate. I welcome the Bill, which clearly shows that the Government are serious about growth, about rebalancing the economy, and about investing in infrastructure, especially in the north of England.
I want to start by addressing some of the bleating from Labour Members. It is easy for them to criticise the Government, but what infrastructure projects would they deliver? It is difficult to see what policy they have on anything. Their blank piece of paper remains blank, as far as I can tell. I am very concerned about what appears to be Labour’s thinking on investing in infrastructure. At last year’s “March for the Alternative”, when asked where Labour would make the £14 billion-worth of cuts that it said it would make that year, the party’s deputy leader, the right hon. and learned Member for Camberwell and Peckham (Ms Harman), explained that it would
“hold back on capital investment”.
Given that the total level of capital investment planned is far less than the amount that Labour says it will cut, and given that it has failed to specify any other areas for cuts, one might be entitled to assume that the right hon. and learned Lady intends to scrap all capital investment. Nobody seems to know whether this is official Labour policy; even Labour Members do not know. Perhaps they will take a more middle-of-the-road approach and scrap only half the schemes in the national infrastructure plan. However, it appears that, at the very least, Labour’s deputy leader wants to do the very opposite of what this Bill is designed to achieve.
Investing in Britain’s infrastructure is essential for delivering growth and ensuring the long-term competitiveness of our economy. Such projects can in themselves create thousands of new jobs and generate huge numbers of orders for hundreds of businesses. The benefits of the completed projects are almost impossible to quantify, but they include improved road, rail and communication links, and more reliable, clean and affordable energy supplies. They can help to bring people, money and ideas into parts of the country that desperately need it. They make Britain a more attractive place for people to do business in, and bring even more jobs, talent and energy to our shores. Infrastructure projects in the right locations can help to rebalance our economy away from dependence on the City of London and towards more manufacturing, perhaps in places in my constituency such as Runcorn or Northwich.
A lot of exciting infrastructure projects are planned which will bring huge benefits to my constituents in Cheshire. I could happily drone on for hours about High Speed 2, but today I wish to focus on other projects so will simply re-emphasise that HS2 is essential if we are going to solve the west coast main line capacity challenge. The northern hub rail plan will dramatically improve connectivity between northern cities such as Manchester, Liverpool, Leeds and Sheffield. It will also make life considerably easier for a huge number of commuters, improving the rail network and easing road congestion. Such improvements do not just make our cities more attractive places to do business and encourage external investment; they help to improve the quality of life for many of our constituents too.
Another vital piece of infrastructure that I hope will benefit from the Bill is the Mersey gateway project. The fact that this project is going ahead at all is a testament to the Government’s commitment to Runcorn, Merseyside and the north-west region as a whole. Despite years of hand-wringing, the Labour Government failed to approve the bridge. I remember that in the period immediately after the general election there were many fears that it would never happen. Thankfully, those fears were misplaced and this Government have come through. For those Members who are unaware of the scheme, allow me to explain. The project is about building a much-needed extra bridge across the Mersey between Runcorn and Widnes. We have the Silver Jubilee bridge, which is past its best. If it were ever to collapse—heaven forbid!—we would be in real trouble. The new dualled three-lane bridge and associated link roads will form a major new transport route, improving links from the Liverpool city region, north Cheshire and the wider north-west to the rest of the country. Combined with the new enterprise zone at Daresbury, the project will help to bring many new businesses and jobs to Runcorn and the wider north-west.
I am pleased to support the Bill, which will help to finance important infrastructure projects and allow work to commence on them as soon as possible. I hope it receives the support of the whole House, because that will tell the world that we are investing for the future and that Britain is open for business.
Hazel Blears (Salford and Eccles) (Lab)
It is a pleasure to follow the hon. Member for Weaver Vale (Graham Evans). I thought the beginning of his speech was unusually partisan. He is normally a man who seeks consensus, and I hope that for the benefit of the north-west region we can agree today about what is important.
Members of all parties welcome the Bill, but it is frankly too little and too late, to reformulate what is now an established mantra. It is the product of two pretty much wasted years. There has not just been wasted investment, which could have started to move the country forward, but the result of the delay has been far too many wasted lives, particularly in my constituency and among young people. I hope that the Bill will not be a mirage, as the regional growth fund has been—I will come to that a little later.
The Chancellor can call the Bill plan A, plan A-plus or plan A-plus-plus, and we can call it plan B—I do not really care. However, it shows real acknowledgment by the Government that cuts alone will not get us where we need to be so that our economy can start to fire, people can be employed and we can produce the growth that our country so desperately needs. It is too little, too late, but it is certainly welcome.
The reality of our economy is stark. It shrank by 0.5% in the second quarter, we are back in recession and growth has flatlined for the past two years under the coalition. In the north-west, unemployment was more than 9% between April and June. Only in the north-east and Yorkshire is the figure higher. Employment has to be our top priority, because we are in danger of seeing another lost generation of people who cannot get into work. Long-term unemployment is at a 16-year high and the number of people working part time has gone up by 2% in the past year. Many people are desperate for full-time work but simply cannot find it. In my constituency, 2,350 young people are currently unemployed, of whom 1,500 have been unemployed for up to six months, nearly 500 for between six and 12 months and 360 for a year or more. We all know from our previous experience what happens when a generation feels that it has no hope for the future. We have seen the impact that it has on our communities, so we need to get moving.
The regional growth fund, which was heralded as something that would provide investment in infrastructure and jobs, particularly in the north-west, has been an absolute disaster. It simply has not worked. After two years, only 88 of the 236 offers of funding—a third—have been finalised, and just £60 million out of what was going to be £1.5 billion has got to the front line. Some of the projects carried a cost of more than £200,000 for each additional job created. In short, the scheme has been too expensive and too lengthy, and the National Audit Office has said that the administration of it has been pretty much a disaster. If this infrastructure programme has any of the same qualities, it will not achieve what the Government, and certainly the Opposition, want it to.
Where should the Government focus their support? Certain areas are crying out for attention. I disagree with the hon. Member for Reigate (Mr Blunt), because I think housing is a key part of our infrastructure. In Greater Manchester we have 100,000 people waiting for homes, and we have 25,000 empty homes, including 6,000 in Salford. I do not just want new build; I want us to be able to refurbish those homes, which people are desperate to occupy. The sooner we can do that, the better.
Let us be careful, however. Reforms to the planning system have been discussed over the past few weeks, but we have to build not just houses but communities. We have seen what happens when we build houses on barren estates without putting in place schools, shops and leisure facilities. The use of section 106 agreements will be reduced, and we will not have the community infrastructure levy. I am seriously worried that we will just have a lot of boxes, which do not make communities. That must be taken on board in the changes to the planning system.
Mr Blunt
I have heard the remarks that the right hon. Lady and the right hon. Member for Wentworth and Dearne (John Healey) have made about housing, but housing is not infrastructure in any strict sense of the word. Infrastructure is there to support the people who live in that housing and the businesses in which they work. Does she accept that if we bring housing into the definition of infrastructure, we reduce that definition ad absurdum? I completely accept her points about the importance of building communities, but that should be addressed in a proper housing and planning strategy. Infrastructure, in a proper sense of the word, is different.
Hazel Blears
I understand the hon. Gentleman’s concern about his local green belt. If he can encourage his party’s Front Benchers to invest more in brownfield sites in the north-west, where we can build communities, I will take on his housing allocation tomorrow to ensure that we can house our people.
Mr Brian Binley (Northampton South) (Con)
May I introduce Northampton into the discussion of brownfield sites? We could build between 35,000 and 40,000 houses on brownfield sites there, and I would rather do that than destroy our green belt.
Hazel Blears
The hon. Gentleman obviously supports a Labour policy, which has always been to build on brownfield sites. If he is at all tempted to come over to our side of the Chamber, I am sure he will be welcomed.
The public and private sectors need to work together to make investment effective. When we started to develop Salford Quays 15 years ago, the city council bought the site for £5 because it was a liability rather than an asset. Now we can see what the public and private sectors working together have made happen in that area. The ratio of private to public sector investment there is 9:1, because the £50 million of public sector investment drew in £450 million from the private sector, creating 15,000 jobs and the fabulous developments at MediaCity. Peel Holdings has just submitted its phase 2 planning permission application for further development in four phases over the next 20 years, which will bring at least another 15,000 jobs to the area. If the Government are looking for projects to fund, MediaCity is up and running as a fabulous example of what can be achieved when the public and private sectors work together.
On that point, bids are now in for superfast broadband from cities across the country. Salford’s bid went in this morning, and MediaCity is a well placed platform to provide the developments that are envisaged through the superfast broadband programme. When the Economic Secretary winds up the debate, will he indicate his warm welcome for Salford’s bid, and hopefully his support for it?
As the hon. Member for Weaver Vale said, transport is a pressing need. We welcome the northern hub, but why do we not build High Speed 2 from the north down towards London? That would mean that the initial investment would go into the areas of greatest need and highest unemployment, where planning permission may well be easier to obtain than in more controversial areas. I have talked to some of the companies involved in the construction of High Speed 2, and they feel that it would be a very good idea to do that rather than to build from the south to the north, as always happens with such projects. Perhaps the Economic Secretary could indicate his support for that idea as well.
I am delighted that the Government are going to review aviation capacity in the south-east, but why not consider Manchester airport and our regional airports across the country? Why can we not have other hubs to provide us with the connectivity that we will need? The north-west is a confident area with great business people and local authorities that want to get on with the job. When I was Secretary of State, we made the 10 local authorities in the Association of Greater Manchester Authorities area the first city region with powers over planning, housing, transport and skills, to try to ensure that we could draw in inward investment. In Victorian times we had that type of confidence about our economy, and we can do exactly the same thing now to get our young people back into work.
I am worried about where the Government are going with the planning system. When I took the Planning Bill through the House three or four years ago, the whole point was to have national planning policy statements so that we could get major infrastructure projects through the planning system more quickly in the days when it took seven years to get a power station and 10 years to get a major railway interchange. The Conservative party and the Liberal Democrats fought the Bill tooth and nail because it provided for too much of a national plan and did not have the localism that they wanted. They cannot have it both ways. They must recognise the need for national policy to get infrastructure through.
The same is happening with housing policy. We are tearing up planning policy statements, some of which were made only three or four months ago, and we have talked about localism and going along with what local people want. However, when that does not suit, the policy seems fragile indeed. We tear up at our peril a planning framework that has been in place for 50 years, trying to get the balance right between development and local communities.
The Bill as it is currently worded represents a huge missed opportunity. The criteria in it for the projects make no mention of how the funds will be spent. In an intervention, I referred to the Public Services (Social Value) Act 2012. If we spent the money so that we got social value as well as infrastructure projects, had local procurement, employed local people and got extra impact for the expenditure, we could have a transformational effect on some of the poorest communities in our country.
When we built MediaCity, we had conditions about using local labour and had twice the number of jobs that building the Olympic site provided. By including conditions in the Bill on training, apprenticeships, local procurement and local supply chains, we could make a huge impact on those areas of the country such as the north-west, where unemployment is shockingly and unacceptably high. I say to the Government: “Think again about this massive infrastructure programme, and spend the money wisely and well.” We could thus ensure that we made a difference to the lives of those young people who are being betrayed and let down by the Government.
James Morris (Halesowen and Rowley Regis) (Con)
I support Second Reading. It has become a cliché to say that, in terms of the global economy, the world is getting smaller. Modern communication technologies and better transport links have made it relatively simple to do business across the world. It is therefore a sad irony that in our national economy, the gap between the south-east and the rest of the country has, in many ways, grown wider.
Like the rest of the west midlands, the black country, part of which I represent, enjoyed little benefit from the artificial boom that the previous Government created. Gross value added in Dudley and Sandwell fell from 88% of the national average in 1997 to just 74% in 2008. While Labour’s boom may have passed the west midlands by, people and businesses in the black country certainly felt their share of the pain caused by Labour’s bust.
As we work towards recovery, it is essential that we address the regional imbalances that have held back large parts of the country, preventing the economy from achieving its full potential. As the Prime Minister said, we cannot afford to rely on just a few industries and a few regions. I believe that the Bill will help create the essential infrastructure that we need to unlock private investment and help transform our regional economies.
As Dieter Helm of Oxford university wrote in 2009:
“Few would choose to locate in Britain because of its infrastructure”.
Professor Helm went on to describe Britain’s infrastructure as
“not fit for the digital age”.
Addressing that obstacle to growth in the context of the overriding need to tackle the record deficits built up by the previous Government is key to getting the economy back on a sustainable path. In particular, we need measures to stimulate investment in the transport infrastructure that will bring our cities closer together and closer to business centres overseas.
As someone who has set up businesses in London and who now works closely with businesses in the west midlands, I know from personal experience that too great a premium is placed on businesses being based in London. For many new businesses, and particularly for inward investment in Britain, London almost becomes a default location because of the proximity to major clients and the ease of travel to major cities abroad. Overseas investors are much more likely to invest where there are global links relevant to their businesses. If we want to rebalance our economy, we need to make sure that those global links are easily accessible from our regional centres.
The media recently got worked up about whether London needs greater airport capacity and where it should be. I recognise many Members feel very strongly about that, whichever side of the argument they may take. However, for many of my constituents—and for the businesses I meet—the issue has very little relevance to them, their jobs and the future of their companies. By focusing so strongly on Heathrow and other London airports, we risk giving the false impression that London is the sole gateway to Britain.
Instead, we should invest in transforming our regional airports into world-class facilities, linking our major cities with business opportunities around the world. I know that my hon. Friend the Economic Secretary will recognise the importance of Birmingham international airport to the west midlands region, mid-Wales and parts of the north-west.
The Bill would allow for the fiscal credibility achieved by the Government’s policies to be used to support major infrastructure projects of national significance. Without wishing to put words into the Minister’s mouth, I can think of few projects that would be of more truly national significance than the expansion of international air services at Birmingham airport. Building a second runway there would increase spare capacity at Birmingham to 50 million passengers a year.
In the short term, that project could be expected to create or sustain 50,000 jobs, providing a significant boost to the construction sector and associated industries. In the medium term, by acting as an additional hub airport, it would help relieve some of the pressure on Heathrow. Most significantly, it would transform the midlands as a place to conduct international business, creating effective and efficient transport links to emerging markets around the world without the need to go via London.
High-speed rail will help bring our major cities closer together as places to do business, linking the midlands with London, the north-west and Yorkshire to build a network for growth. Expanding Birmingham airport would connect that network to markets around the world, making the midlands a more attractive place to do business and helping address the regional imbalance that has held back the economy for far too long.
I know that Members of all parties will have their own priority projects—schemes that could make a big difference, but are being held back by lack of credit. The Bill will make it possible to unlock private investment in the projects that our communities and our economy desperately need. It is hard to imagine a more worthwhile use of the benefits gained from the hard work of tackling the deficit—and hard to imagine a greater contrast than with the Labour party’s commitment to over-tax, overspend and over-borrow. While Labour Members’ dogmatic attachment to the failed policies of the past would lead to higher interest rates—hurting businesses and families, and making it even more difficult and expensive to secure credit for investment—the UK guarantees programme uses the resources and economic credibility of Government to underwrite essential investment and support exports.
I am pleased that the Government have decided to fast-track the Bill so that the measures can be implemented and the benefits delivered quickly and effectively, and I am glad that the Opposition will support the measure. Our constituents will not look kindly on those who choose to put political posturing ahead of this much-needed action to boost the British economy.
Mr Geoffrey Robinson (Coventry North West) (Lab)
I am pleased to follow the hon. Member for Halesowen and Rowley Regis (James Morris), a fellow west midlands MP who sits on the other side of the House. I did not, however, agree with much of what he said, and certainly not about the Government’s great success in reducing borrowing. Figures from the last quarter of this year show that £6.9 billion more was borrowed than in the previous quarter. However, now is not the time to go into such matters.
Although we could question the need for this Bill, its focus is rightly on increasing infrastructure expenditure in the UK. I do not, therefore, want to enter into the rather arcane and intricate argument about whether housing is infrastructure investment. The point was made in a nutshell when it was said that after the war, there used to be competition between the parties over who could build more houses. I do not like to admit it, but I think Harold Macmillan showed the way by building 300,000 houses in one year. He found a way round the problems that the present Prime Minister seems unable to get over—of course, that building was coupled with a boost to the economy, increased spending power and confidence. Once a house is built, it still needs to be sold and people still need to buy it. That point was raised by my hon. Friend the Member for Luton North (Kelvin Hopkins) who has just left the Chamber. As he said, if we want successful infrastructure, we need demand in the economy.
It strikes me that this Government are one of the most incompetent in delivering their plans. They announce and reannounce plans again and again, yet they get nowhere. We need only look at what the Prime Minister has repeatedly said and what the director general of the British Chambers of Commerce thinks about that. As far as I am aware, the director general is not a political fan of the Labour party, yet he has called the national infrastructure plan “hot air” and “a complete fiction.”
I remember the Prime Minister saying in this House that there is nothing wrong with the Government machine or the way they are organised, and that they must say what they want and make sure they get it. He has been saying that for a long time, but the situation gets worse and worse. He repeated that point recently, but we know that the more the Government repeat things, the more desperate they get. Now they have presented this plan for guarantees. Strictly speaking, we do not need such guarantees, but they are a sign that the Government want to do something and I would be the last person to stop that. Nevertheless, they are not doing anything yet; they are providing guarantees that could be there if needed.
Let us look at the national infrastructure plan. It is dedicated to projects of national significance that are critical for growth. How many projects in that plan have the Government delivered? Fewer than 20% ever saw the light of day. The Government are still asking businesses, “Where is the project? Where are the diggers?” but, of course, they are not there yet.
I hope we can manage to get some useful infrastructure projects under way, and I want to make two points. The first concerns a project that I am greatly in favour of, and the other a scheme I would like the Government to drop—HS2. I know that HS2 was begun by the Labour party; it is a bright idea, a lovely, high-profile project and all the rest, but it is simply not value for money. The Treasury must look at the return on it, which has gone from over £2 for every £1 spent, to £0.90—below the established Treasury allowance for a return on a capital project. It is not as if HS2 is a small capital project; it costs £17 billion for a line that will go from London to Birmingham—no further—and shave quarter of an hour off the time. With improvements to our national railway, we could get that journey down to an hour by having four tracks between Coventry—my own city that I am proud to represent—and Birmingham. That would take 10 minutes off the journey time, and eliminate many causes of delay. HS2 will cost a huge amount of money for an elitist project that will go up and down an already well-established corridor. Other reasons for and ways of dealing with the situation are much cheaper and involve a much better cost-benefit ratio.
Why are the Government going ahead with HS2? I do not understand. The Treasury has warned people, yet the Bill contains a guarantee of £50 billion and will allow £17 billion for HS2. No guarantee is needed—nothing at all—and the cost-benefit ratio has gone down and down. One can imagine what the Government have had to do just to maintain that ratio—they could not even keep it at £1 and it has reduced to £0.90. I hope that the Government will reconsider HS2 and put their foot down. After all, the Treasury should be the guarantor not only of how much we spend or the balance of spending, but for the return on that spending. The HS2 project does not stand up on any of those grounds.
The Prime Minister might be happy because he thought there was cross-party support for HS2. However, so much has he lost his self-confidence and the guts for the battle, he is prepared to commit to something only when he has cross-party support. Until there is cross-party support on Heathrow, he does not want to do anything. What has happened to this man? He has lost it; he has lost his bottle. Does he expect Opposition Members to come along and bail him out after what he has said about us and others? I do not get it. What world is he living in? I will not be part of that.
The Prime Minister does not want to face up to Heathrow. He says that we will discuss the issue in 2016-17—despite the urgent need to do so now—because he has not got cross-party support. He is steaming ahead—perhaps racing ahead is the right word for aircraft—with the one issue on which he has got cross-party support and about which he can do something. He can be seen to be acting by saying, “Oh, we’re fully committed to that.” I think it is pathetic. The trouble with the Government is that they never had competence and they have now lost their confidence. By introducing a Bill that we do not strictly need, they are—more intensively than ever before—trying to give the impression that they are doing something. I am sure that the Bill will be quite embarrassing for the mandarins at the Treasury. I cannot describe the problems that the Labour Government had to get one small, £2 billion guarantee not counted in their borrowing figures—although we should have counted it.
I am pleased to have spoken in this debate. We should press ahead with Heathrow. Even though I know that it is unpopular, the Government should have the courage of their convictions. I believe that we should stop HS2. Many projects are ready to go, and hon. Members cannot understand why they are still on the drawing board—or just off it—or have been discarded. This is a Government of shambles and without the conviction or the drive to remain in charge of the country.
Mr Brian Binley (Northampton South) (Con)
It is a pleasure to follow the hon. Member for Coventry North West (Mr Robinson), whose comments are always thought provoking. Today, they were also rather brave, which is not usually his style, but he is clearly moved by these matters.
I welcome the opportunity to debate this Bill. It aligns with the priorities of the electorate and, thankfully, sends a clear signal that the Government have, I hope, understood the importance of growth. We must accept that our nation’s infrastructure is nowhere near as good as it needs to be. A little more understanding of that point on the part of Labour Members, and of the fact that they did not do their job with regard to infrastructure in their 13 years in government, would not have gone amiss. As many hon. Members have said, infrastructure is vital.
International surveys now paint a gloomy picture, and most parliamentary postbags offer individual testimony to the day-to-day infrastructure inadequacies that hold our constituencies and businesses back, harm our competitiveness and the image we project to inward investors, and act as a drag on commercial development. Congested roads, expensive railways, imperfect utility markets, and vast tracts of the country with relatively poor broadband and other communications connections, all present substantial costs to the economy that impact disproportionately on small business and hold back the quality of life of the people we represent.
I therefore welcome the Government’s proactive approach, especially to HS2. I should also point out my gratitude for the money that is forthcoming for a new station in my constituency. We are delighted, but we are also leading the way in 15 projects to regenerate our town—recreating the structure and fabric—allied to a programme substantially to increase jobs for those not in education, employment or training.
However, local efforts take us only so far, which is why the national reach of the Bill is fundamental. In that context, the Bill is to be welcomed in principle, but it is easy to spot the problem that needs to be fixed: who will pay to upgrade our infrastructure, which is essential to how we better configure our economy? The Exchequer clearly has a limited appetite and capacity to fund the solution to those problems. There is also a legitimate question about the desirability of the Government being intimately involved. The comprehensive spending review conclusions were clear. Reductions in capital spending were relatively extreme—by 2014, capital spending will be almost a third of what it was in 2010. The arguments on the necessity for the public purse to play a diminished role are well rehearsed, but surely the Government can do better. A 3% reduction in revenue expenditure would enable us to maintain capital spending at 2010 levels throughout the period of the comprehensive spending review. Is that truly impossible?
In the absence of public money, we also need to find ways to attract alternative forms of investment. However, in a failing financial market, that is not easy to accomplish. Previous efforts to find a solution to that dilemma do not have a happy history. Most recently, the private finance initiative has been subject to the robust critique that, under it, the private sector takes the rewards of risks borne by the Exchequer. Originally, PFI was supposed to encourage the private sector to bear risk as well as provide funding, but sadly, that target somehow lost its way. What is the point of the taxpayer funding PFI projects when the Government can borrow in the money markets far more cheaply? Does PFI not just create a very high price, to be borne by future taxpayers, merely so that the Chancellor can pretend he is not borrowing money? That is what we had under the previous Government; if we have it again, it will be just as much of a nonsense.
Infrastructure investment must be seen as enabling growth, but we should moderate the claims that we make about the scheme. It is not a silver bullet. Infrastructure development cannot be delivered quickly. The Bill is a strategic enabler to facilitate the growth needed for decades and generations to come; to position ourselves in a more comfortable place to compete in an ever-more challenging global market; and to strengthen the ability of small businesses to get the access to the market that they so badly need to thrive.
The coalition has not been short of such initiatives, which include the publication of the national infrastructure plan last year. However, that only reaffirms that our approach should be a cautious one. The proposals raise many questions. What will be the impact of the Bill on the programme, cost and timetable for the schemes in the plan? How does the Bill sit alongside the infrastructure costs review programme, which promised potential benefits of between £2 billion and £3 billion? What analysis has the Minister conducted to test the propensity of the market to engage with the type of support that the Bill could provide? If the Bill is to be fast-tracked, what confidence can the Minister give us that the measures will resonate with investors? Perhaps the Minister will answer some of those questions in his summing up, and I wish him well in that task—I believe it is his first visit to the Chamber in his new position.
Even if the Bill delivers—I hope it does—it will need to be accompanied by other measures. Infrastructure measures have relatively long lead times, but growth is needed now. Infrastructure alone is not enough. The Government could adopt a number of measures to stimulate private sector demand, which could deliver results far more quickly. The measures in the Bill provide a modicum of confidence that the medium and long-term predicaments are in the Government’s mind, but we need short-term measures to get consumers spending and small businesses selling.
I and a number of hon. Members have pressed for measures to stimulate private sector demand for some time. Alongside a proactive approach to export potential, that offers the best route out of recession. We have heard encouraging words from the Government of late, but we need action, and we need it quickly.
Whatever the long-term benefits of improved infrastructure delivery—which, I repeat, are vital—if the Government fail to deliver growth, we risk the country being dragged back into the dark days of increased public spending, financed by the reckless borrowing advocated by the Opposition. Let us never forget that the former Chief Secretary to the Treasury left the bill—a little note—saying, “We’ve run out of money.” Government Members know the score. We know that the previous Government borrowed £1 in every £4 spent, and this Government are desperately trying to get it down and have cut the deficit. Let me say this to the Opposition: the vision of another Labour Government is too horrific and expensive to contemplate. That is why we need growth now, so that we do not impose a burden on our children and grandchildren, which, frankly, would be immoral.
Chris Williamson (Derby North) (Lab)
We have had almost two and a half years of this Government pledging one thing and delivering another. As we have already heard from the shadow Chief Secretary to the Treasury, my hon. Friend the Member for Leeds West (Rachel Reeves), the reality of the Bill is different from the rhetoric. Although it hints at activity, everyone knows that, behind the hyperbole, Ministers are driven by a laissez-faire ideology that is resulting in economic indolence.
The Chief Secretary to the Treasury suggests that the Bill will trigger economic growth, but the backdrop to the Bill is the Government’s failed austerity programme, which is resulting in economic strangulation. The damage has already been done.
I suppose hon. Members should be grateful that Ministers are at least taking a few tentative steps in the right direction, but the Government’s economic incompetence has left a mountain to climb. The Bill hardly represents a damascene conversion. I know from personal experience that if I put half a tank of petrol in a diesel engine, I will damage the car. I cannot fix it by topping it up with a half tank of the right fuel. To make the car work again, I must repair the engine before applying the diesel.
That is a simple metaphor, but we need to speak in simple terms to help Government Members to understand the error of their ways. Let us remind ourselves that they are responsible for two and a half years of counter-productive and damaging cuts; two and a half years of hurting this nation’s most vulnerable people; two and a half years of sucking the lifeblood out of our economy rather than breathing new life into it; and two and a half years of destroying employment, creating a housing crisis, killing off opportunities for young people, devastating public services and driving forward a dangerous economic and social experiment. That is the Government’s legacy after just two and a half years.
Commendable though it might have been two and a half years ago, the Bill is in danger of being too little, too late. In any event, where is the guarantee that the Government will deliver on any of what is proposed in the Bill? Let us be honest: given the Government’s dismal track record to date, people are not exactly holding their breath in anticipation. We have already heard mention of the Government’s abject failure to bring about any of the road-building projects announced in the autumn statement. Promises to deliver on housing have been followed up with statistical proof that up and down the land there has been a dramatic fall in the number of new housing starts. Away from infrastructure, the Government have fared little better, having pledged to hand control to communities but then producing legislation taking power back to the centre.
Although the Bill would authorise the Treasury to incur costs in order to support infrastructure, please forgive me if I am a little hesitant in believing that it will yield many positive outcomes. That lack of clarity will continue to hinder true economic recovery. Half-baked legislation will not address the carnage left behind by the Government’s reckless ambition to shrink the role of the state. The British people are crying out for a fundamental change in direction from the Government. Plan A has been an utter disaster. For goodness’ sake, let us at least consider some of the alternatives. It is blindingly obvious to anyone with a modicum of common sense that only real investment will bring about the jobs and growth that the country desperately needs. That is the only way to extricate ourselves from the double-dip recession that Downing street has inflicted on the nation.
Labour has said it from day one; more and more political and economic commentators are saying it; and the public realise it too. It is only the stubborn, dogmatic attitude of this supercilious Tory-led Government that is holding Britain back. Unlike Labour’s five-point plan, the Bill is not joined up, is not part of a bigger picture and will not go anywhere near far enough to fix our economy. It is another example of the Government flattering to deceive, rather than delivering anything meaningful.
We need look no further than the plans to amend building regulations to facilitate the Government’s flagship green deal. It has been reported that the Prime Minister intervened to block the proposed changes, and that his intervention could prevent about 2.2 million homes from taking up the flagship green deal. And for what? So that a few more conservatories and extensions can be built with less control from local authorities. And that is supposed to drive forward construction. Do me a favour! Pardon my scepticism, but I would have rather put my money on insulating 2.2 million homes to help Britain’s builders get back to business, than on making it easier to build a few more extensions around the country.
The Government need to restore confidence by demonstrating that they are committed to investing in the economy, rather than playing around the edges, which, sadly, is all the Bill does. Of course we need to invest in infrastructure if we are to help our economy to recover, but we need to do so with much more vim and certainly more vigour than the Bill is capable of delivering. I am not fooled by it, and British people will not be fooled by it either. Actions speak louder than words, so the Government will be judged on their ability to grow the economy. They have failed spectacularly so far, however, and I regret that the Bill will do little to reverse the damage they have already done. I hope that I am wrong, but I do not believe that I am.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
I welcome the opportunity to contribute to this vital debate, because the Government are putting their money where their mouth is—long gone are the days of make do and mend. I have, dare I say it, a 12-year-old British-built, Japanese-designed Toyota that has done 199,000 miles. It deserves credit for lasting, but I am sure that with a newer model—which this Bill will be encouraging across the country—I would be using less oil and petrol. The point is that we need to get more bang for our buck when the Government spend taxpayers’ hard-earned money.
Sadly, there were too many examples of the previous Government’s seeming to throw money away without getting value for that money. Even the hon. Member for Liverpool, West Derby (Stephen Twigg), as reported by The Guardian in July 2012, suggested that they wasted money on school buildings—he did not regret that the buildings were built, I appreciate, but suggested that they got poor value for money. There was outcry initially, at the beginning of this Parliament, over the reduction in the amount of money available for Building Schools for the Future, but actually it was right to tell industry that we needed better value for money. For a scheme in my constituency, we had to go back to persuade the Government, and instead of the £31 million blank cheque—we should remember that at the start of this Parliament we were told that there was no money left—we managed to get a cheque for £18 million, and there will still be a good academy building built in my constituency. I consider that better value for money.
One of the biggest white elephants was probably the road sign project along the A14, signed off not long before the election and on which £70 million was spent. For a couple of years, there were no messages at all, and about three months ahead of the Olympics, one of the most helpful messages was still, “Plan your Journey Early for the Olympics”. It felt like a complete waste of money. It was probably symptomatic of a conversation I had with a senior Government adviser not long after the election, when he suggested that the best thing the Government could do was pay one lot of people to dig holes in the road, and pay another firm to refill them. Those were the exact words of the head of a senior government agency. I thought, “Oh my word, if that’s been the attitude and the level of desperation so far, no wonder we’re in this mess.”
The Bill is a great opportunity to consider areas where the Government are keen to develop infrastructure. One is telecoms. I am sure that everybody welcomes the money that the Government are giving to broadband in rural areas and for super-connected cities. I know that there are still one or two problems with state aid that the Government are working hard to solve, but it is vital that everybody in the country is connected to a good speed network, if not a superfast network, because it will help to diversify jobs and enable people to work from home. Every part of the country must be connected. That could help not only with wealth and job creation but with public service reform by enabling better value for money in the delivery of public services. That is something we all need to do.
I am conscious that the A143 in Suffolk, which is not in my constituency but which is still an important artery, is one of the roads nominated for improved mobile coverage. It is vital that we roll out that programme. The roll-out of 2G masts will also benefit 4G coverage, on which we need to keep pressing Ofcom to ensure that the auction goes ahead as soon as possible. I give credit to other telecoms operators that have already started to use their research and development to ensure that 4G can start to be rolled out on existing frequencies, and to Ofcom for allowing that to happen, despite the law suits that could have been launched because it was perceived to be unfair. It is right that every barrier to innovation in the use of infrastructure be removed.
In their update to the national infrastructure plan, the Government rightly refer to the preparations at Hinkley C. As a result of that work, a significant chunk of change has already been spent in the north Somerset economy. I hope that the same will follow in my constituency at Sizewell. I ask, however, that all Departments work together—I asked my right hon. Friend the Chancellor this the other day—and strain every sinew to enable these investment decisions by our partners, including EDF and others, and ensure that they can go ahead with certainty in respect of the next stages of development of nuclear power stations. I have not looked at the other projects, but I draw the attention of the House to the inquiry by the all-party group on off-gas grid that is about to be launched. At the moment, we are still not connecting enough people to the mains gas grid. Perhaps we should consider that as part of our inquiry in providing the Government with ideas.
I know that my hon. Friend the Member for Witham (Priti Patel) will speak adroitly about rail. There is no question but that we need to invest in the infrastructure of the east of England, which we all believe has the opportunity to become the California of Europe, with its diverse economic centres, its focus on research and development, innovation, manufacturing and software, and its position as a key link to London. One of the things that the Government have to do—I am sure that they will under the new Transport Secretary—is continue the journey towards how we reduce costs. Rail desperately needs to be done in a cheaper way. I do not have the time to tell a story about the amount of time and cost involved when three MPs tried to be part of the ground-digging at a platform with our county councillors. It was all done in the interests of safety when common sense would have dictated otherwise for something that should have been as simple as walking along a pavement. There are orders for rolling stock and other franchises, and we want to see some of that on the great eastern main line.
The A14 is a critical road connecting the midlands to the east of England. I know that the Government have been considering different options, but I would offer a word of caution. I do not think that many Conservative Members of Parliament are opposed to tolling for new capacity, but I am concerned, because we do not want the people of the east of England to end up as the sole pilots if those in other ports or key infrastructure areas throughout the country are not subject to potential tolling in the future. It is not just about the port of Felixstowe, in which Hutchison Whampoa has invested a lot of money, creating the deepest berths in the country and taking the biggest boats from around the world, but about ensuring that there is a level playing field when we introduce the plans, which I hope the Secretary of State will announce before the end of the year.
It is key that money is spent on assets that will be used. That may seem like a ridiculous thing to say and I may be a lonely voice, but business people regularly complain to me about empty property rates. I have been trying to persuade the Government that they should put their scarce resources—while allowing for some time to find new tenants—into assets that generate wealth, not assets that are sitting empty and not producing. That is a key point.
One of the most inspired decisions of the Government reshuffle was the appointment of Paul Deighton, the chief executive of the London Organising Committee of the Olympic Games and Paralympic Games who presided over the great delivery of the Olympics and Paralympics, of which we are all proud. He is certainly not a bulldozer—I see him as a bridge builder—but I notice that he has been given a remit to do whatever it takes to clear away not the cobwebs but the barriers, in order to make sure that the national infrastructure plan is delivered. The Government may also wish to take note of his friend, Sir John Armitt, the chairman of the Olympic Delivery Authority, which built the infrastructure that put in place as many small projects as possible, not just the big games in town. On that note, I am delighted to support the Bill’s Second Reading.
Roberta Blackman-Woods (City of Durham) (Lab)
It is always a pleasure to follow the hon. Member for Suffolk Coastal (Dr Coffey), but I am afraid that I do not share her lack of recognition of the value of investment made by the previous Labour Government or her optimism about this Government.
I am pleased to be able to participate in this debate, even though the Bill is overdue. The Government seem to have come very late to the idea that we need investment in infrastructure if the economy is to recover from a double-dip recession. I must remind Government Members that the double dip of the recession was caused by the failed economic policies of their parties and their Government. Having come late to the realisation that investment in infrastructure is necessary, will their Bill deliver what is needed?
We know that the Government are trying to rush the Bill through as fast-track legislation. Surely this is a panic measure. When the economic recovery is nowhere to be seen, the Government are trying to rush through the Bill to create the impression that they have a plan. That is further emphasised by the existence of the Bill itself; it is not entirely clear whether new primary legislation is really necessary to authorise such expenditure. It could be argued that the Bill is seeking to create an impression that the Government have a sense of direction, when in reality they do not.
The Bill as drafted raises a number of questions. It allows for financial assistance to be made available to a range of project types outlined in clause 1(2), but there is no guidance or indication whatsoever about how projects and areas of expenditure will be prioritised. The lack of guidance means that we have no idea, in a strategic sense, in which area the Government want to see investment. I am deeply concerned that the Bill and its consequences could fall into the same trap that has been set for the regional growth fund. There is no strategic direction to the investment in the RGF and, as we know, delivery has been incredibly slow—only about a third of round 1 projects in the north-east have actually received their money and we have no idea when some of the round 2 money will come through.
My right hon. Friend the Member for Salford and Eccles (Hazel Blears) highlighted in her excellent speech the problems with not addressing procurement issues. There are no such measures in the Bill and the absence of guidance means that we do not know whether any priority will be given to projects that demonstrate social value and that would enable jobs to be created in areas with high unemployment.
Clause 1(2)(c) notes that infrastructure includes health and educational facilities. Are we to understand from this that Building Schools for the Future projects, which are much needed in constituencies such as mine and which were pulled by this Government only two years ago, can now be resurrected? The same could surely apply to hospitals. If those projects are to be resurrected, how will local authorities go about doing so? There are a number of issues. Surely it is atrocious public policy to pull projects in 2010 and then seek to bring them back in 2012. It is also really bad economic policy.
Although the main thrust of the Bill is to underwrite loans to the private sector, clause 1(4) appears to sanction direct expenditure from the Treasury. Will the Minister clarify whether that is the case? What does he think the balance will be between guaranteeing loans and funding projects directly? We need that direct expenditure.
In my constituency, the number of claimants continues to rise month on month. The north-east is in particular need of investment, with a claimant rate in August 2012 of 7.9%, which is much higher that the UK average of 5.3%. We need good-quality infrastructure projects in the north-east because of its high levels of unemployment and because of the high level of job losses in the public sector.
The Prime Minister pledged that his Government would go on an “all-out mission” to get infrastructure projects under way, and the Chancellor promised to lay the foundations for future economic success, but unfortunately this Government have so far not delivered on their promises. The Chancellor said in his autumn statement that there would be £20 billion in new investment from the UK’s pension funds, but a year later there are no signs of the infrastructure we were promised or of the economic growth that we were told it would create. When challenged on their failure to carry through their promises, the Government admitted that only a small amount of investment would come from the UK’s pension funds and that the rest would be left to the private sector. Even that investment will not start until next year.
It is also not clear how much of the promised support will go into housing. The number of house building starts fell by 24% between the second quarter of 2011 and the second quarter of 2012. As well as having a negative economic impact, that will have worsened the housing shortage in many areas, including in my constituency.
The most recent construction market survey by the Royal Institution of Chartered Surveyors, which is for the second quarter of 2012, shows that infrastructure work loads in the north-east declined by 11%. That lack of investment can be seen across all sectors and across the UK. Similarly, public sector gross investment fell by 29% between 2009-10 and 2011-12. I am concerned about this matter because the north-east has seen the greatest drop in jobs in the construction sector, with a massive 30% loss. There have been job losses across the country, but the 4% loss of jobs in London contrasts very well—or very badly, depending on how one looks at it—with the loss of jobs in the north-east.
If the many stalled regeneration projects in my constituency are to start again, what we need from the Government is direct investment, and quickly. More than 2,000 young people in my constituency are out of work. That simply does not make economic sense. It is also a dreadful loss of talent. People who are leaving our universities with degrees in civil engineering are not able to apply their skills in infrastructure projects. It is time that the Government stopped using words and started taking action.
Priti Patel (Witham) (Con)
I welcome the opportunity to contribute to this debate. I congratulate the Government on showing their commitment to infrastructure investment in the UK by introducing the Bill.
For all the criticism from Opposition Members, it is worth reflecting on the fact that over 13 years—I say this as an Essex MP—there was next to no infrastructure investment in the county of Essex or even in East Anglia. I welcome the fact that the Government recognise that investment in infrastructure is vital in providing jobs, growth and long-term economic prosperity.
Despite our economy being one of the largest in the world and our having spent most of the last decade as one of the world’s five biggest economies by GDP, our infrastructure has been neglected. It is interesting to see where we stand in the international league tables. The World Bank’s logistics performance statistics place us 16th in the world, behind many other economies. Unless that tide is reversed, the consequences for our economy will be catastrophic. Poor infrastructure is not only a barrier to British-based businesses, but makes Britain less attractive for foreign direct investment, which leads to less economic growth.
Every £1 that is spent on construction generates an estimated £2.84 in total economic activity. It impacts across the supply chain through the multiplier effect. I therefore welcome everything that the Government are doing. Of course, any money that comes into the Treasury helps to bring down the deficit, finance the debt built up by the Labour party and pay for public services.
I am pleased that the Government have recognised the importance of infrastructure. That contrasts with what we witnessed over the previous 13 years. I believe that it was one of the most cataclysmic failures of the last Labour Government that they did not adequately invest in infrastructure when the economy was growing. As a result, we have been left with road, rail, airport, energy, port, water and digital infrastructure that is not fit for our country.
Hazel Blears
Does the hon. Lady recognise that during the period of the last Labour Government, 101 new hospitals were built, and that under the previous Conservative Government, not a single new hospital was completed in this country?
Priti Patel
Speaking for Essex, I do not recognise that. The county of Essex has had no infrastructure spending whatsoever. Despite Essex being the county of entrepreneurs, where thousands of new businesses are started each year, and despite it being a net contributor to the Treasury, Labour neglected it. Local and regional infrastructure in Essex failed to keep pace with national and local economic growth. That is no doubt one of the reasons why the electorate booted Labour MPs out of Essex, full stop, at the last general election. It is now a Labour-free zone.
Chris Leslie (Nottingham East) (Lab/Co-op)
Is not the Maltings academy in the hon. Lady’s constituency, which opened about a year ago, a significant piece of capital infrastructure? Surely she welcomes the investment in those new school buildings.
Priti Patel
I welcome that investment in infrastructure improvements, but it was something that I had to campaign and fight for as a prospective parliamentary candidate—not even a Member of Parliament. That says something about the priorities of the last Labour Government. My constituents look with confidence to this Government to take positive action to rebuild our roads and railways, to meet the ever-increasing demands of the growing population in the county of entrepreneurs.
I urge Ministers to consider some particular projects in Essex. The first area is rail, which was highlighted by my hon. Friend the Member for Suffolk Coastal (Dr Coffey). Commuters on the Greater Anglia franchise return £110 million a year to the Treasury on a profitable franchise, but face some of the longest delays and worst facilities in the country. For a modest fraction of the money that the Government receive from the franchise, the rail service could be upgraded from being one of the worst performing in the country to one of the best. We are lobbying the Government, in particular the Department for Transport and the Treasury, to hear our case on this. Local commuters, not only in Essex but along the route of the franchise, would welcome Government investment in the line.
Mr Brooks Newmark (Braintree) (Con)
Does my hon. Friend agree that an important piece of infrastructure to build would be a loop between Braintree and Witham? That is something for which I have campaigned for 10 years. That important link would help all those who commute from Braintree to London.
Priti Patel
My hon. Friend makes a valid point for our constituents. Branch lines are a vital part of our rail network for commuters. Let us not forget that Essex is growing. We now have more homes and commuters, so we desperately need that investment.
I also press Ministers to use the opportunity presented by the Bill to invest in the road network. Anyone who is familiar with Essex will know that the A12 and the A120 are vital economic links for the county. They are at the heart of Essex, connect London to Great Yarmouth and Hertfordshire to the port of Harwich, and pass Stansted airport. Their importance to the region cannot be understated. The A120 is the country’s 10th most dangerous road. It is regarded as such a vital economic link that it has been designated as part of the trans-European road network, yet it has not received the investment that it needs to deal with capacity, in particular for freight. Upgrading those roads would send out a powerful signal that Essex is at the heart of the economic engine room of our country and will continue to be so. It would support traffic going to our ports and airports, leading to more jobs, growth and prosperity in the county, from which the Treasury would benefit.
The Bill is about financing options. The debate has touched on the financing issues of the past, in particular with respect to the private finance initiative. I would welcome an insight into the Treasury’s thinking on the progress that has been made on alternative investment vehicles, including infrastructure bonds, direct foreign investment, pension funds and sovereign wealth funds. How can we strengthen our links with pension funds and sovereign wealth funds overseas to support infrastructure investment in this country?
I want to highlight the London gateway, in south Essex, as a good example of foreign direct investment. If the Minister has the opportunity, I would urge him to visit this amazing project, which is run by DP World, as it provides a clear insight into what can be done when foreign investors commit to building major infrastructure projects in Britain. Dubai Ports has invested in building one of the world’s leading deep-sea container ports. The level of job creation will be immense. The project is situated at the gateway to London, and although it came with some bureaucratic hurdles—that goes without saying with big projects—there are lots of insights that we can learn and benefit from when it comes to ambitious infrastructure investments.
This Bill has the power to transform our nation’s infrastructure beyond anything we have seen for a long time, whether it is through road, rail, planning or energy projects. I urge the Government and my hon. Friend the Minister to rule nothing out and to be ambitious in their thinking. Naturally, I urge Ministers to send a powerful message to my constituents and the county of Essex by effectively applying their commitment to infrastructure renewal and helping to get our county moving. It goes without saying that I support the Bill’s Second Reading.
Hugh Bayley (York Central) (Lab)
This Bill is a small but necessary step in the right direction. The hon. Member for Witham (Priti Patel)—and not just her, but many members of both coalition parties—has repeated the mantra, which we hear time and again, about Labour’s borrowing being the cause of all evil. They sound like a record stuck in a groove. It is not surprising that the public are losing confidence in the coalition parties. Two years ago they told the public that the Government were borrowing too much and that they would clear the deficit by the end of this Parliament in 2015. My party agrees that the deficit, which was necessary to stop the 2008-09 meltdown, has to be cleared, but we warned the coalition that if it cut too fast, it would snuff out growth, which would reduce tax receipts and increase the national debt.
Let us look at the debt figures. When the coalition came to power, the national debt stood at £779 billion. The latest figures, for July this year, show that in just over two years under this Government’s stewardship, the national debt has risen by 33% to £1,032 billion—above £1 trillion for the first time in this country’s history, as a result of the economic policies that the two Government parties have been pursuing, and this from a party that is worried about borrowing. There is no prospect whatever of the deficit being eliminated by the end of this Parliament. That was a brave promise, but one that will not be met. According to the Office for Budget Responsibility, the national debt is set to rise to £1,437 billion by 2015-16—getting on for double what it was when the coalition parties came into government.
Mr Newmark
But under the hon. Gentleman’s party’s proposals the national debt would be increasing by even more, so what is the logic in what he says?
Hugh Bayley
No, it would not, and that is the central fallacy. If we snuff out growth, we snuff out revenues and the Government spend more on benefits for people who are unemployed. If we promote growth, we increase the Government’s revenues and we are thereby able to reduce the deficit.
I would acknowledge that the UK went into recession in 2008. Labour policies, including our policy to go for short-term borrowing to jump start the economy, pulled the UK out of recession in the middle of 2009. By the time of the general election, under Labour there was a recovery that had delivered four quarters of growth. Since the general election, there have been three further quarters of growth and five quarters, under the coalition Government, in which the economy has been shrinking—quarter 4 in 2010, quarters 2 and 4 in 2011, and the first two quarters of this year. It is therefore quite clear to me that plan A has failed.
This Bill represents a U-turn, and it is a U-turn I welcome. I wish it had come earlier, but the Government are right to bring forward these proposals. However, if the Bill is to make a significant difference to growth, and therefore to the Government’s ability to reduce indebtedness, they will have to drive forward investment with real determination and vigour. I therefore have some questions that I would like to put to the Minister. First, last year, in 2011, the value of new orders in the construction industry was £46 billion. Clause 2(1) permits the Government to commit a further £50 billion to infrastructure, but I would like to know against what time scale they expect that level of investment to be committed. Are the Government going to commit to £5 billion in new orders for the construction industry—a 10% increase in round terms—in the year to come, or do they hope to commit the lot in one year and thereby double the level of investment? These are crucial questions. Will the Government provide a quantum change in the level of infrastructure investment in this country, or will they tinker at the edges?
My second question relates to clause 2(2), which we have already discussed a bit, which says that the £50 billion ceiling will apply to expenditure and contingent liabilities. However, despite the Chief Secretary’s clarification, I am still not quite clear whether the Government intend to count the full value of the loan guarantees against the £50 billion or a lower figure, tied to their estimate of a proportion of the guarantees which they expect would be drawn down in hard cash.
Thirdly, will the Government guarantee that their assistance will go to all regions, with extra help for those parts where infrastructure investment has taken the hardest hit? I have looked at the change in the value of orders for new construction in Great Britain between 2009 and 2011, and the figure varies enormously from region to region. In London, infrastructure investment in 2011 was up 18% on what it had been in 2009, in the last year of the Labour Government. In the south-east the figure was up by 6% and in the north-east it was up by 14%. However, in all other regions of England, as well as in Wales and Scotland, there was a decline, with infrastructure investment down 3% in the south-west, 9% in Scotland, 15% in the east midlands, 21% in the west midlands, 23% in the east of England, 31% in Yorkshire and the Humber and in the north-west, and 32% in Wales. Will the Government target money on those regions, including my region of Yorkshire and the Humber, that need help most?
Fourthly, clause 1(3) defines “provision”—the uses to which the £50 billion will be put—to include design and construction, as well as operation and repair. It looks to me as though the Government intend this new vehicle to be the substitute or replacement for the PFI model. If that is their intention, I would like the Minister to describe a bit more what the Government have in mind.
Fifthly, the Government’s national infrastructure plan, published in November last year, included flood defences and communications in its definition of “infrastructure”. We have heard that the Government would regard it as possible to use the resources that the Bill will make available to improve high-speed broadband, for instance, in rural areas such as north Yorkshire. However, flood defences are not mentioned in the Bill. I would therefore welcome a clarification from the Minister about whether flood defence schemes will be seen as infrastructure under the terms of the Bill, and therefore fundable from the £50 billion that is being set aside.
My final point relates to apprentices, a subject that I asked questions about when the Government first started to introduce measures to promote capital investment, in the autumn statement last year. The use of £50 billion of extra public money—or more, if the Government are successful in using their contribution to leverage in more resources from the private sector—to support infrastructure investment will provide a tremendous opportunity to boost the number of apprenticeships in the UK construction industry. We could end up with far more people being trained in the skills that our economy needs, now and in the future, and become less reliant on bringing those skills in from abroad. Will the Minister explain what conditions the Government will place in contracts for which they provide guarantees or loan finance to ensure that the contractors increase the number of apprentices they take on and train?
Neil Carmichael (Stroud) (Con)
Thank you, Mr Deputy Speaker, for calling me to speak in this important debate. This is a necessary piece of legislation, not least because we need to stimulate growth by showing that we are interested in developing our infrastructure. Such infrastructure investment has taken place in the past, but we need more, and it is important to understand what kind of investment is needed and how the process needs to unfold. We do not always remember that organisations involved in civil engineering, for example, want to see a little more confidence in the world of infrastructure investment, so that they can start to prepare for projects that are in the pipeline or that are urgently needed. We must recognise that some of those projects will stimulate further economic activity. Transport and energy are classic examples of sectors in which more investment is needed, as a stimulant to create even more exponential economic activity.
Let us take transport as an example. By investing in more transport infrastructure and ensuring greater connectivity, we give businesses a better foundation from which to grow. I know that from experience in my own constituency, where the news of the investment in the redoubling of the railway line between Kemble and Swindon on the Stroud to Swindon line has had an enormous impact. There is a real feel-good factor for the medium term in relation to the connectivity of my constituency. We need to see much more of that kind of signalling, and I welcome the thrust of the measures that relate to transport.
Another critical area whose importance we do not always recognise when we talk about investment is the energy sector. Again, the word “connectivity” is important, but we must also understand the need to provide a framework for the right kind of investment, as well as ensuring, as the Bill does, that guarantees can be put in place for those investments. For example, in the renewable energy sector, we need to think about the infrastructure required to get the energy from where it is created to the place where it will be used.
We must also encourage new technologies by providing the right policy platform to enable them to be developed and promoted. A good example is energy storage. In some sectors, we have the kind of technology that could make energy storage a realistic prospect. I have told the House before about liquid air, but I will tell it again. Liquid air provides a significant way of storing energy, but we need the infrastructure to achieve that. The Bill could provide the necessary encouragement for that to happen, and for an interest in energy to be developed.
Neil Carmichael
It is certainly not hot air. It is very cold. The technology is well worth looking into; it is all about the transfer of pressure.
The hon. Member for York Central (Hugh Bayley) talked about the proximity of the Bill to private finance initiatives and public-private partnerships, and I agree that that proximity exists. We need to learn lessons, however, from our experience of the more complicated and convoluted PFI schemes. We need more flexibility, and we need to give the public and private sectors the confidence to think, “Let’s get this done”. We need to generate a can-do approach, and the Bill will go some way towards achieving that.
Mr Newmark
Does my hon. Friend agree that the Government should not do all the heavy lifting when it comes to funding these projects? It is important that the private sector should play its role in ensuring that public projects get funded, and that it should act as a partner in any funding of infrastructure projects.
Neil Carmichael
My hon. Friend is absolutely right. The Bill provides a comfort zone for the private sector that will enable it to get involved and to work as a partner with the public sector to deliver the kind of infrastructure that we desperately need.
These arrangements have worked before; the Hoover dam was a good example. It involved hydro-electricity, a relatively modern form of energy, and it is still generating electricity today. No one would claim that it was a panacea, but it was certainly an example of the right kind of investment, and the right kind of relationship between the public and private sectors. We can look to other examples and say, “Yes, this is the way forward to enable the private sector to give comfort.”
In parallel to the Bill, we also need the appropriate policy frameworks to give the sectors a sense of the direction in which we are going. I have mentioned energy, but that applies to transport as well. For example, I hope that the Government will come up with a realistic solution to the question of airport capacity, and that we can be bold enough to recognise that more capacity is needed. We should be thinking big-time about some sort of solution in the Thames estuary or elsewhere. That solution should also include regional airports, and we need a policy framework and the necessary medium-term planning to allow all that to happen.
That brings me to local authorities. It is no good simply saying that we are entering happy times for investment if local authorities do not recognise that they have a role to play in delivering the necessary planning outcomes, and that they need to work together to determine where the most important infrastructure projects should be placed. There must be relationships between local authorities as well as within them if we are to deliver the desired outcomes.
The Bill will motivate the private sector to get involved; it should encourage those who are interested in infrastructure to feel that forward planning is taking place and that they should get involved in the process. I hope that the Government will continue to develop the idea that we need co-operation between the private and public sectors, and that together we will end up with some worthwhile outcomes.
Geraint Davies (Swansea West) (Lab/Co-op)
I am grateful to follow the hon. Member for Stroud (Neil Carmichael), and, indeed, my hon. Friend the Member for York Central (Hugh Bayley), who laid out some of the background. It is important to see the issue in context. We hear the mantra from Government Members that it is all somehow Labour’s fault that we are in this mess, but if we track back as far as 1997, we have seen all this before—mass unemployment so that money is spent on keeping people on the dole and there is no growth. From 1997 to 2008, we saw sustained growth, people in employment paying tax, ensuring that debt was kept down and service provision up.
Then, of course, in 2008, we saw the financial tsunami—due to sub-prime debt—washing our shores. Two thirds of the debt we eventually saw in 2010 was from the banking community; the other third was from the Labour Government investing beyond earnings to sustain growth. As was graphically described by my hon. Friend the Member for York Central, we had fragile growth going into 2010, but then the new Chancellor simply announced that he would cut 500,000 public sector jobs—it is now 700,000—so it is hardly surprising that people in the public sector thought that they might lose their jobs, resulting in less spending and more saving; and we have seen pay freezes as well. This has had a knock-on effect on consumer demand—hence we have zero growth.
In terms of the public accounts, reducing a deficit is, as with any business, about both increasing revenues and tightening savings, but the focus of the new Government has been almost exclusively on massive cuts and austerity measures. Instead of focusing on growth, we now see an imbalance and a belated attempt to try to pump-prime a bit of growth. I welcome that belated attempt, but enormous problems with consumer confidence remain, making it important that infrastructure investment is focused on productive capacity.
When it comes to public accounts, it is worth remembering that, as with any business, spending on infrastructure is not like revenue spending; it is spending on assets, building up the balance sheet of UK plc. That is why I would like the Government to think positively again about spending some of this money on something like our Building Schools for the Future programme. That was about building assets to increase the skills and human capital of Britain for the next 10 or 20 years. Instead, the Government are busy trying to price people out of universities with excessive fees. Their latest announcements have generated uncertainty among the business community about the future value of GCSEs and the whole route map of education. They are saying to people, “Well, you may have GCSEs or other qualifications that are the currency of education”, but what they have done is suddenly to devalue that currency.
The main issue for today is how to spend the money on infrastructure in a public accounts-effective way. Through their massive spending on procurement, the Government need to ensure that they are focusing as much as possible on small and medium-sized enterprises. I say that because SMEs tend to employ local people and they tend to pay income tax, corporation tax, VAT and so forth. If we look at the history of this Government’s procurement in England, we find that only 6% of the money is spent on SMEs, so the great majority of it is spent on large foreign companies that do not pay tax in Britain and often do not employ local people. In Wales, by contrast, over 60% of the procurement goes to SMEs, regenerating the money, and it is all one business. We need to think carefully about how this money is contained or otherwise leaked abroad.
If we are serious about building industrial infrastructure for jobs, we need to think about the wider tax regime as well. A day or so ago, I visited an aluminium manufacturer, Aleris, which melts down scrap aluminium. The Minister may know that the energy needed to produce aluminium from scrap is 4% of the energy it takes to produce it from raw materials. No surprise, then, that China buys 20% of our scrap, yet puts penal taxation on foreign countries attempting to buy their scrap. It is the same with Russia, where the marginal tax rates are at nearly 50%. In other words, there is a strategic awareness of the value of raw materials, so why are we now in a position where we send scrap to China, which comes back as manufactured goods so that China makes the money from it?
We need to think very carefully about how the tax system works in relation to infrastructure. Tata Steel, which I am going to visit next week, provides another example. It has said, quite rightly, that it is one thing to have a European tax on carbon emissions, but if that means that steel manufacturing leaves Europe, goes elsewhere and produces more emissions, is that a good thing? To superimpose the UK’s carbon tax makes things worse.
I would also like to see more support for transport in my local area, particularly Neath, Port Talbot and Swansea ports, so that they become recognised by Europe as a core port. That should trigger, in turn, the trans-national European transport funding available. We need to think carefully about how we engineer ourselves so that we maximise the money available from Europe. Indeed, next week, Swansea university is announcing a multi-million pound investment from the European Investment Bank, which will lever in private sector money. Rolls-Royce, BP and Tata are supporting this, as are the Welsh Government. The issue is how we work together to make the most of the money available.
I mentioned in an earlier intervention that I am in favour of spending on social housing and housing in general. As I said, there is scope for some facilities to come from the private sector. For example, it could do the building, with the public sector providing the land. That allows for joint ownership of assets and a mixture of social housing and private housing. Local authorities could provide social housing on that basis, and we benefit from the rental revenue streams created.
In Swansea, Neath and Port Talbot, we have pushed ahead with the concept of the city region, which has been encouraged by the Welsh Government. Again, it amounts to having a joined-up view—it is not just for public-service delivery to make efficiencies—and it also means a genuine joining up with the private sector. That is why I have been in talks with Hewlett-Packard, which has a skills cluster in Swansea and is keen to get the work from the Government in the form of outsourcing from the Department for Transport. That would have a strategic impact on the area, which would be much better than the contract going to, say, a German company that is also bidding for that work.
We need to think in the round about what is good for Britain. My hon. Friend the Member for York Central mentioned flood risk management; I used to be the chair of Flood Risk Management Wales. The flood defence in north Wales is a railway and part of the defence in south Wales is a road. There is talk of the Severn barrage; it would be a flood defence too if it were allowed to develop. We need to get out of the silo mentality and think about UK plc in order to do what we can to build a stronger future for us all. I shall leave it there. I am grateful to have been called to speak and I hope that some of my ideas will be taken forward.
Penny Mordaunt (Portsmouth North) (Con)
Let me explain to Members who do not know Portsmouth well that there are three roads leading to the island. Those who take the western road will enjoy a plum view of an area called Stamshaw and Tipner on the left as they head into the city. It is part ships’ graveyard and a dumping ground for disused troop carriers, part Ministry of Defence shooting range, part former dog track and part disused industrial site. Local people have been desperate for the area to be regenerated for decades.
Before I became a Member of Parliament I met one of the landowners, who was keen to invest in cleaning up the site and proceeding with plans to build more homes and community facilities. The council had written to him saying that it would not welcome the seeking of planning permission while it did not have a vision for the whole site, and that the issue of road infrastructure was still in question. He produced that letter for me. He then produced a second letter which had been written to his father in 1973 by the same local authority. Apart from the fact that the former letter had a jazzier logo on the header and an Arial font, and the latter had been typed on an old-fashioned typewriter, the letters were the same, almost word for word.
Local residents were fed up with having endless discussions about opportunities resulting in no delivery. That has changed now that the go-ahead has been given for the new motorway junction on the M275 at Tipner, as was announced in a statement last year. That has enabled the whole area to be regenerated. The new road will provide access to the development site, and will greatly reduce the impact of construction traffic on local roads. At present, the only access to the site is via narrow Victorian streets which are heavily and unavoidably used for street parking, servicing and local access,
Regeneration of the Tipner area would bring major benefits to Portsmouth, most notably the cleaning up of former industrial land and the creation of new open spaces, parks and waterside walks, and much-needed homes and jobs. The master plan for the area includes 1,600 new homes, 30% of which are to be affordable housing, 25,000 square metres of business accommodation for 1,500 new jobs, and a new hotel complex. The transport infrastructure will not just enable development to take place, but help to ease congestion and parking pressures which, in the most densely populated city in the UK apart from London, are considerable.
A new, additional bus priority lane on the M275 will improve public transport between Tipner and central Portsmouth, and bus reliability. As it will be an additional lane, it will not remove any capacity for general traffic. There will also be a new means of access to a park-and-ride site from the new motorway junction. That is all good stuff, and I am happy to report that work started this summer. The Homes and Communities Agency has begun the cleaning up of the land that it owns, along with some owned by the council, as the first phase of the scheme, and contractors have begun work on the old PD Fuels site off Twyford avenue as part of their work to clear and prepare the other three plots for development.
I have been struck by the ambition that exists in our city. Business has challenged the local authority to do more to enable the whole harbour to be developed and to make best use of MOD unused sites, creating a destination port for cruise ships and potentially achieving world heritage status. I have been impressed by the collaboration between the different sectors in the city and the emerging of a shared vision of the exploitation of the heritage and natural assets possessed by Portsmouth, as a deep-water harbour. I am very pleased by what the Government have done to remove obstacles in order to enable those complex partnerships to flourish, and especially pleased by the pragmatic steps that they have taken to enable us to use former MOD land. I urge the Government to continue to build on the pathways that they have created between the Treasury and English Heritage in that area in particular.
I have some sympathy with the Opposition, because the job of this Opposition is a difficult one. They do not have a plan themselves that they can articulate, and they cannot criticise the Bill or the investment that it would allow—investment that would come either directly from the public purse or from the private sector, the Bill serving as a catalyst in the latter case. Instead, they say that the Bill is not required. I would argue that good financial management and parliamentary scrutiny suggest otherwise. The Opposition are also in denial about the rate at which work is proceeding, and, in their criticism, are sending the message that Great Britain is closed for business.
In the coming years, £1 billion will be invested in Portsmouth through a pioneering partnership between business and civic leaders. That will be made possible by the infrastructure projects that the Government have announced. Members need not take my word for it: by happy coincidence, today’s edition of the Financial Times contains an article by James Pickford about that £1 billion investment, which includes the Tipner scheme.
The Opposition have no credibility in this regard. The infrastructure projects that I have described were not advanced under the last Labour Government. They promised a £200 million investment in school buildings for Portsmouth, and not a brick was laid. More peculiar still, when I submitted a freedom of information request to the Department for Education after I had become a Member of Parliament, asking what correspondence had taken place on that major investment project, I was told that none existed. I found that extremely suspicious: I had thought that at least a couple of letters would have been written. Let us not forget, as well, that Labour presided over a private finance initiative contract for our local hospital that provides very poor value for money for the local health economy and forced the closure of wards.
If we are to judge a Government’s infrastructure plan on the basis of value for money, return on investment and “cracking on with it”, the Opposition will not fare well. I urge them to show a little humility today, and, if not to reflect on their record—I realise that that might be painful—at least to support our communities in their ambitions. Portsmouth’s ambitions require both positive thinking and positive action, and I urge all political parties, their Members of Parliament and their councillors to get behind our communities’ plans for growth and help to attract that investment. The whole House should support this Bill.
Grahame M. Morris (Easington) (Lab)
I was hoping to open with some generous comments about the contributions from Government Members, and although I have agreed with some of them, I have found others that dealt with the Opposition’s view a little unpalatable. Make no mistake: our commitment is to jobs and growth, and to a credible plan to stimulate investment in infrastructure.
As my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) has already said, a number of sectors in our region could benefit considerably from investment in housing and construction. I did not quite understand the point the former Prisons Minister, the hon. Member for Reigate (Mr Blunt), was making in saying that housing should not be considered as infrastructure. It is absolutely vital. As many as 25,000 new jobs in the north-east could be created through low-carbon investment and a proposal from the North East of England Process Industry Cluster. We should also consider superfast broadband, communications and transport. Although we are not a direct beneficiary of High Speed 2, there is a plan to locate the train-builder, Hitachi, within County Durham, which could generate many thousands of new jobs.
In the time available I want to talk about the important and often neglected role of regional airports as part of our regional economic infrastructure. In the north-east, that is the Newcastle and Durham Tees Valley airports, which I want to thank, along with the Airport Operators Association, for their assistance in providing information. As Members will appreciate, airport infrastructure projects are generally entirely private sector funded. More than £100 million has been invested in new facilities and infrastructure at Newcastle airport since 2000. A terminal, a runway, instrument landing systems, an air traffic control tower, a fuel farm—all have been improved or replaced during the intervening period. More than £3.2 million has been spent on the terminal in the past year. Plans further to improve the airport include additional investment in the terminal, aircraft parking stands, freight offices and access.
However, this is not simply a question, as the Minister implied, of overcoming ownership and planning constraints. Other Government policies influence the ability to take forward infrastructure projects, one of which is investment in complementary infrastructure in other modes. Here, I am thinking of the importance of improving the A1 western bypass, which is seen as an obstacle to further growth at the airport. That would be of considerable benefit in terms of gross value added and improving journey times. I hope the Bill is an indication that the coalition now recognises the importance of aviation policy to the UK economy. We need to ensure that the UK can compete in both established and emerging markets. That requires investment in airport infrastructure, and not only to enhance connectivity right across the country; the UK needs vibrant, point-to-point airports and sufficient world-class hub capacity.
I do not propose to get involved in an argument about whether the right thing to do is to expand Heathrow; but it is absolutely clear that that is a decision for Government to make. It is up to the Government to decide where hub capacity, if it is to be increased, should be. As with all infrastructure improvements, there is a long lead-in time and people need certainty in order to invest in new facilities. The hon. Member for Halesowen and Rowley Regis (James Morris) suggested that an alternative would be to expand Birmingham airport, but I do not necessarily agree that that would be the best decision. However, the Government should consider the matter, as our regional airports are suffering as a result of this uncertainty.
These airports have considerable potential as engines of sustainable economic growth. As I mentioned, Newcastle airport supports 7,800 jobs, with more than 3,000 of those on site. The benefits go not only to Newcastle, but to the whole north-east region. The benefits to the regional economy are put at some £646 million. The airport contributes £57 million gross value added for tourism, it handles 4.7 million passengers a year and generates £48.8 million a year in air passenger duty from passengers flying from Newcastle. Aviation is a huge benefit to the UK economy, contributing about £50 billion, of which the Chancellor takes about £8 billion, as I understand it.
I wish to remind the Minister that the recent global crisis and the associated recession has caused the biggest fall in activity at UK airports since the 1950s. In the north-east region, the number of passengers at Newcastle airport has reduced from 5.5 million in 2007 to 4.7 million in 2012. Even more dramatically, the number for Durham Tees Valley airport has decreased from 1 million in 2005 to 200,000 in 2012.
As this is a Treasury Bill, it is reasonable to ask the Minister about the role of the Chancellor and the Treasury in the context of our regional airport infrastructure. Is this another case of perpetuating a north-south divide? I understand that passenger numbers at Heathrow, and indeed for much of the south-east, have recovered to their levels before the financial crisis. To use a northern expression, this seems to be a no-brainer. Why do the Government not see investment in airport infrastructure as a key driver of growth and jobs?
There have been notable critics of the approach being taken, and not necessarily from the Labour party. Mr Olivios Janovec, director general of the pan-European airport operators association, says that the UK has the worst aviation and aviation tax policies in Europe. Perhaps that is because of a lack of continuity; we seem to have had more Transport Secretaries and aviation Ministers than Chris Hoy has had gold medals, and I do not think that that has helped.
The Government are not doing enough to make regional airports flourish. There is considerable potential, and a major boost could be provided to jobs and growth in the north-east. That is important because the number of unemployed claimants in Easington in August 2012 was 3,307, or 9.9% of the economically active population. The number of claimants was up by 441 compared with the figure for the previous year and it was 14 higher than the figure for July 2012.
It is important that the Government examine what is happening on air passenger duty, as this country has the highest rates in Europe and possibly the world. It is a regressive tax that takes no account of people’s ability to pay. I also urge the Government to move ahead and recognise the important role of Government in stimulating demand.
Mr William Bain (Glasgow North East) (Lab)
The Chief Secretary today attempted to portray this Bill as a sign of the country’s economic strength, but instead these very limited and serially re-announced proposals are the strongest indicator yet of this Government’s weakness on jobs and growth. We should have had a Bill that put to work for productive investment the under-used corporate surpluses in this country and that brought forward more of the capital spending which has been back-loaded for later in this Parliament, but we have a damp squib set of proposals instead.
After two infrastructure plans have failed to deliver programmes on the ground, and after two failed attempts on bank lending—Project Merlin and the credit easing scheme—which have resulted simply in decline after decline in the pitiful rates of bank lending to small and medium-sized businesses over the past six quarters, the proposed plans could scarcely be more ineffective. The Government must know from the fact that two thirds of British businesses now believe that UK infrastructure will become weaker in the next five years that they must do substantially more to tackle the underlying issues that have diminished demand for bank lending, as well as its supply.
The Government pledged to grow the economy and cut national debt, yet in two years they have achieved the very opposite. Last week, Citigroup predicted that the Government’s borrowing will balloon by an additional £48 billion in 2015-16, a year in which the Chancellor is banking on 3% growth to come anywhere near his supplementary rule on debt falling as a percentage of national income. Citigroup also said that public borrowing may reach 90% of gross domestic product in the same fiscal year, as unemployment is much higher and growth is massively reduced from the original Office for Budget Responsibility predictions on which the Chancellor has staked so much of his fiscal credibility since June 2010.
Just a year ago, the Chancellor said that Opposition Members were joined only by the Hungarian communist party in believing that easing fiscal policy was necessary to create more output and more jobs in the economy, yet now the IMF, the OECD, the CBI and the British Chambers of Commerce all say that in the absence of growth the Government should change course on fiscal policy, and that in particular they should invest more in infrastructure. Even among the 20 leading economists who backed the Chancellor’s fiscal consolidation plan ahead of the 2010 general election, the New Statesman found only one who is now willing to support the Chancellor’s plans, and nine have urged him to change course and boost spending through increased infrastructure investment. As Roger Bootle said recently in his response:
“The key thing is to try and get the private sector to spend its money and that may require a bit of government spending to prime the pump.”
Oh that the Chancellor would listen.
We see from the latest British social attitudes survey, published today, that two years of the Chancellor’s reckless and self-defeating austerity has done more than anything else in the last decade to promote public support for additional public investment to boost the growth rate. As the chair of the Federal Reserve, Ben Bernanke, said on Friday:
“Monetary policy, particularly in the current circumstances, cannot cure all economic ills.”
Only this morning, Larry Summers, the former US Treasury Secretary, who knows a great deal about how to grow an economy while balancing a budget, called for slackening in the pace of fiscal consolidation in this country, saying that
“output lost from this British downturn in its first five years exceeds even that experienced during the 1930s.”
With evidence as powerful as that, what will it take for the Government to change course and boost infrastructure investment in a way that the Bill fails to do on the public side?
As the TUC has shown, for every £2 of cuts and tax rises imposed by the Chancellor, the deficit fell by only £1. His policy has failed even on its own limited and blinkered terms. We see 3.3 million people in our country in involuntary self-employment or part-time work because our economy is too weak to generate good numbers of effective full-time jobs. The TUC has also shown that with growth anaemic and consumer and private sector confidence at rock-bottom, by 2015-16 the Government could end up borrowing £175 billion more than predicted by the OBR in June 2010. It is the Chancellor who is now on the wrong side of the argument, and in failing to temper his austerity policies amid the continuation of weak demand with falling real wages and mass under-employment, he is now on the wrong side of history too.
Let me turn to the situation in Scotland. Tomorrow morning I will take part in a construction industry conference at North Glasgow college, which is opposite my constituency office in Springburn. There will be strong support for Government at all levels taking urgent action to support the construction sector. We face a social housing slump in Scotland, with a shortfall of 156,000 homes and according to Shelter Scotland a seven-year waiting list for a social rented property. In the second quarter of this year construction work fell in the rest of the UK by 6.14%, but in Scotland there was a drop of 8.91%. There was a 7% drop in Scottish output on repairs and maintenance, compared with the same time last year. Surely that provides the clearest support for the argument that the Opposition’s policy of cutting VAT to boost demand is the right one for jobs and growth at this time.
Ahead of their budget on Thursday, the Scottish Government, too, must bear their share of responsibility for a substantially weaker construction performance in Scotland than in the rest of the UK. In the 12 months to June this year the number of construction jobs in Scotland fell by 6,000, or 3.5%, compared with an overall UK average drop of 1.2%. Construction is doing worse under the policies that the Scottish Government are following. I must say that I am somewhat surprised; the Scottish National party is always very keen to show its support for shovel-ready policies, yet no SNP Members are in the Chamber today—perhaps an absence of shovel-ready speeches is the deficit they are struggling with today.
The SNP must also recognise that in following its plan to decouple fiscal policy from monetary policy it would be doing the very opposite of what Keynes said was necessary to counter a slump of such length and severity. With its potential plans to separate fiscal policy from monetary policy, emphasising short-term profit taking rather than long-term investment, through corporate tax cuts, it jeopardises long-term investment in infrastructure in Scotland.
The Government should change course now before they do permanent damage to the economy, to the living standards of ordinary people under the most unprecedented threat for 90 years and to the employment prospects of the long-term jobless and young people. The evidence is clear and the case for decisive steps now is overwhelming. If they do not act, they will be a Government who will be out of time, out of excuses and, at the next general election, will deserve to be out of office.
Stella Creasy (Walthamstow) (Lab/Co-op)
With every piece of legislation we are asked to consider in this House it is important to apply the test of why we are here. I believe that all Members across the House are here because they wish to improve the communities they represent and forward the causes they care about. The test for me tonight is whether this Bill will deal with the issues that my community and others across the country currently face.
The economic crisis across the nation cannot have passed anybody by. Given current levels of debt, disappointment and fear, many companies and families in our communities are struggling. When that happens, people look to their Governments as the first line of defence. Many of us in opposition fear that, in some of the ways the Government are approaching legislation, rather than being the home front, they seem to be saying, “Don’t panic, Mr Mainwaring.” I think that that is what we are seeing tonight. The Bill is designed to give the appearance that something is being done, but the critical question we must all ask is this: what is the something that needs to be done for the communities we represent?
Our communities are suffering from a toxic mix of several factors. First and foremost, there is a crippling lack of confidence in our country’s economic condition. The figure that should challenge the Government the most is the £750 billion-worth of assets that companies in this country are sitting on, which they have been stockpiling over the past four years. Frankly, companies in this country do not need credit; they need good reasons to spend. We have to give them those good reasons to spend credit and get demand going again.
When that demand is going, we know that that means jobs for communities such as mine, where there has been a stubborn 5,000 people out of work over the past year. It means tackling the long-term unemployment that is pock-marking too many of our young people. It means tackling the issues that my hon. Friend the Member for Glasgow North East (Mr Bain) mentioned, as people are having to work in different ways that do not suit their needs, setting up their own businesses and hoping against hope to make the money to keep a roof above their heads. It means tackling the low level of vacancies in our economy. It means tackling the third part of the trifecta of issues affecting the rising costs of living in our communities—families who are struggling with unemployment and wage freezes are also struggling with the increasing costs of transport, housing and food.
We have to ask ourselves whether the Bill will do more to advance the issues that people need to be advanced, and can be tackled, or will simply pass them by. We have to ask how it will help to restore our economy. We all understand the impact of choking off investment infrastructure, because we have seen it over the past two years. We have seen the fall in housing construction, which has resulted in 120,000 jobs disappearing from our economy. We have seen the dithering over our transport infrastructure, which has affected the discussions on aviation, high-speed rail, and, in my part of the world, London Transport, trains and electrification. We have seen the consequences for companies that are reliant on the internet and for communities who needed the broadband promise to have been implemented in 2012, not by 2015. We have seen decimated new industries that could offer great hope to our economy —in particular, the solar panel industry, decapitated by this Government through the choices they have made.
The Government have failed to understand the crucial link between the public and private sectors and the consequences of investment in one for benefits to the other. That is what the Bill must address. To give an example from my constituency—I am sorry that the hon. Member for Suffolk Coastal (Dr Coffey) is no longer here—Willowfield school was good to go under the Building Schools for the Future programme and is now finally being rehabilitated. Not only have the children in my constituency had to wait—and are still waiting—for the quality school environment that they need to achieve their potential, but young people who were out of work could have been put to work on building that school, which we all recognise we need.
It is a false economy not to see infrastructure investment as part of a growth strategy. I welcome the fact that the Government have now understood the potential that that has to make an impact on my community, let alone the other struggling communities across the country. It is also something that businesses would support. Two thirds of companies are worried about the standards of our local roads; 95% of them believe that congestion has impacted on their business; and a quarter feel that they have lost at least £1,000 in the past year alone because of problems with their internet connectivity. Most crucially, two thirds of businesses have no confidence that there will be improvements to address the problems, despite the Government’s proclamations.
The Bill must pass that test if it is to be part of the economic revival that our communities and our country need. Frankly, as many Labour Members have pointed out, it does not pass muster because of the restrictions that it places on spending. As the shadow Chief Secretary said, it is, in effect, deadweight funding for schemes that would get support in any case. I hope that Ministers will deal with that issue, because they have yet to identify the schemes that should receive funding—the so-called perfect schemes that have all the requirements in place and are good to go, but that for some mysterious reason are not moving forward. There is no clarity about when these projects might be chosen so that we know when and how they might make a difference. We might look to the national infrastructure plan, but we are already on version 2 and are promised version 3 shortly. One can understand why the businesses sitting on the £750 billion do not have confidence in the situation.
I encourage Treasury Ministers to think again about how they use the Public Accounts Committee. The Chief Secretary brushed off the argument that the PAC has an important role to play in value-for-money questions, especially in deciding what projects are invested in or what constitutes good value for money. As other Members have pointed out, there is lack of clarity about how the decisions on which schemes are invested in will be made, which Department will make those choices, and how the schemes will fit in with other spending priorities and, indeed, other priorities across Government.
I endorse the words of my right hon. Friend the Member for Salford and Eccles (Hazel Blears), who talked about the social value test and the importance of looking at investments in the round. We should not merely ask, “Can we get the road built?” We should also ask, “Can we get our young people back to work? Can we skill them up so that this money does not just pay back once but repeatedly?” That is the social return on investment that we should all look for.
Ministers also need to answer the question that occurs to many of us when we examine the current economic climate. One in four public sector organisations have reportedly said that they are planning to cancel investment projects in the next four months. If there is not clarity about which investment projects will be taken forward, when, and how that will be decided, what confidence can we have that the decision making process has not already corroded the possibility of those projects happening? Businesses that rely on work that they know is not going to come about will not get the comfort that the Bill should offer.
That is why the shadow Chief Secretary was right to talk about the Bill being a peashooter when we needed a bazooka. Frankly, it is a peashooter when we are facing a tank of a problem, because we know that there are worse things to come in our economy if the Government do not change course. We know that the cuts to benefits will kick in next year and that the cost of living will continue to rise as the cost of transport, energy and housing goes up. The impact of any investment that the Bill brings forward will not be felt for years to come, so it does nothing to address the challenges that my community and others around the country are facing now, about which I talked at the start of my speech.
I urge Ministers to consider what more they can do for the real wealth creators in our communities. We know that two thirds of jobs come from small businesses, so I make the same plea that I made in the Queen’s Speech debate for the Government to look again at what more they can do to help small businesses and unlock the money that is sitting in companies’ bank accounts, which could be invested in Britain’s future entrepreneurs. They should consider how we could use time-limited tax breaks to get our economy moving now, so that we can give real hope to families who are in debt.
We all want to get Britain back to work and reverse the current toxic cycle. I say that in a week when we have heard of one company doing fantastically successfully. It would not be a speech in the House by me were I not to point out that legal loan sharks are the one blooming industry in our country—we heard this week that Wonga’s profits are up 300%. We cannot have another year in which the only people doing well in this country are the legal loan sharks.
I ask Ministers not just to invest in infrastructure but to think again about what they can do for communities such as mine, Ealing North, Nottingham and Portsmouth. They should consider how they can bring jobs back to those communities, because the people we represent need and deserve nothing less.
Mr Nick Raynsford (Greenwich and Woolwich) (Lab)
I draw attention to my interests as declared in the register.
There has been a paradox in this debate. We have heard a series of speeches by Members on both sides of the House setting out a persuasive case for increased infrastructure investment. Many have highlighted particular schemes in their constituencies that are fundamental to the future of their areas. At the same time, however, the Chief Secretary was either unable or unwilling to identify a single project that was likely to benefit from the Bill. Despite all the hyperbole that we have heard from the Government about its benefits, no Member will be able to go home tonight any more confident that the schemes that they desperately want and need for their constituency will go ahead. That is the conundrum in the Bill. It is not a bad Bill, and I and the Opposition will not oppose it, but there is deep scepticism about whether it will deliver all that is expected of it.
There is no question about the need for increased investment in infrastructure. Construction has been hit more severely by the recession than almost any other sector of the economy. Output has been falling quarter on quarter for the past year, and the situation is worsening, not improving. The forecasters in the industry are deeply pessimistic. The Construction Products Association forecasts two more years of decline and states:
“Between now and 2014, total construction is expected to lose £10 billion as public sector construction activity falls away sharply. Although this has been expected for some time following the government’s deficit reduction plan announcements, the hoped for recovery in the private sector, which was expected to offset these falls, has not materialised.”
Experian’s latest forecast, which is significantly more pessimistic than the previous one issued in March, states:
“The prognosis for construction is significantly weaker than in March…Significant recovery is now postponed until 2015”.
The problem is spread widely through all sectors of construction—industrial, commercial, residential, health, education, housing and infrastructure. All are looking very fragile, and almost all are at levels of activity substantially below those seen before the credit crunch.
Ironically, infrastructure was the sector of construction that best withstood the initial impact of the recession. In part, that reflected the fact that investment in infrastructure schemes takes a long time, so schemes that are in place are likely to roll on for some time. Although I shall be critical of the Government in many ways, I pay tribute to them for agreeing to maintain investment in Crossrail because there was doubt about that when they came to office, and it would have been catastrophic if they had pulled the plug on that scheme. Of course, it is now a major part of the ongoing infrastructure investment that brings real benefits. However, the latest Experian report confirms that infrastructure is no longer an engine of growth, and its September forecast is much more pessimistic than the one in March about the future prospects for infrastructure.
Housing is equally badly affected. In the 12 months that ended in June, just 98,000 homes were started, compared with 109,000 in the previous 12 months, which ended in June 2011. That is a 10% fall in the latest year, and the most recent figures imply that the situation is worsening. The second quarter of 2012 showed just 23,500 starts, compared with 29,900 in the second quarter of 2011—a fall of 22%.
It is worth recalling that the Treasury set out the criteria in July for schemes to qualify for backing under the Bill as being: nationally significant; ready to start—“shovel ready” is the informal way of putting it; financially credible; dependent on a guarantee and not otherwise financeable; and good value for the taxpayer. As my hon. Friend the Member for Walthamstow (Stella Creasy) said in her excellent speech, that implies that the schemes are almost perfect, but not quite perfect enough to get funding on their own, which raises a question about why they are otherwise unlikely to succeed. Many commentators have made that point.
Let me consider the first criterion—“nationally significant”. I intervened on the Chief Secretary—I am glad that he is back in his place—to ask whether there was any significance in the fact that the first criterion in the Treasury list is not repeated in the Bill. He assured me that I should not read anything into that. I remain slightly puzzled because, looking at the breadth of the definitions in clause 1(2), I am astonished at what is included. Many schemes that are in no way nationally significant could qualify under those criteria. I am therefore a little surprised that nationally significant schemes, which, I am sure, we all support, are not precisely defined as one of the priorities in the Bill. The lack of clarity on that and on the schemes that are likely to qualify make it hard to believe that the new guarantees will provide a rapid response to the problem of delayed or stalled infrastructure schemes.
In July, Lord Sassoon said that there were £40 billion-worth of projects in the national infrastructure plan that could be eligible for support under the scheme. He expressed the hope that the first guarantees would be granted this autumn. We are now only days from the official start of autumn, and just three months from its official end. Can we feel confident that Lord Sassoon’s expression of hope will be realised? [Interruption.] It is a very flexible autumn.
On housing, I am sceptical about the very ambitious targets for new homes. I think that the Chief Secretary referred to the possibility of up to 70,000 homes being started as a result of guarantees facilitated by the Bill. If we consider what is happening in the private sector, the problem is not supply, but lack of demand because people are nervous about their jobs and the economy, and because of the tight lending criteria that most lenders apply. The idea that simply facilitating additional supply by increasing loans will be a solution is somewhat optimistic. In the social housing sector, there is already a relatively well developed market for housing association bonds. Indeed, the trade magazine, Inside Housing, suggested that
“offering underwritten paper brings in uncertainty when it comes to take-up.”
According to an article in the magazine on 7 September, Legal & General, one of the biggest buyers of social housing bonds, reportedly said that it
“‘may look elsewhere’ if government guarantees drove down the price of housing association bonds.”
Other questions are highlighted in the latest issue of Inside Housing from 14 September:
“The social housing regulator is concerned that some housing associations are mistakenly planning to use the government’s commitment to underwrite borrowing to fund existing development plans or refinance more expensive debt already on their books”,
and the regulator is worried that that may result in schemes being delayed that otherwise would proceed while housing associations look for possible alternative funding sources. All in all, there are serious question marks about the scheme, and the Government’s confidence in unleashing a great quantity of new infrastructure investment seems to be misplaced. Having said that, it is not a bad Bill and the Labour party will not oppose it. We are, however, sceptical about whether it will deliver what it promises.
Nic Dakin (Scunthorpe) (Lab)
I am pleased to follow my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), who, as always, spelt his argument out cogently and with great clarity. My hon. Friend the Member for York Central (Hugh Bayley) said, very precisely, that the Bill is a small but necessary step. He is right, but so is my hon. Friend the Member for Walthamstow (Stella Creasy), who said that the legislation is an inadequate response to the economic crisis. How right she is.
The Government inherited an economy that was growing, and they now preside over one that is shrinking. We have the third quarter of negative growth, a double-dip recession made in Downing street, and we are one of only two G20 countries in such a parlous position. Part-time working is at its highest level since 1992, and unemployment among women and young people is at an all-time high. My hon. Friend the Member for City of Durham (Roberta Blackman-Woods) made clear the waste and loss that can follow if young people do not get work when they leave the education system—a waste not only now but into the future.
Due to a lack of growth, the Government are on target to borrow more in five years than the Labour Government borrowed in 13 years. The economy badly needs growth now, and that requires demand. When I asked small businesses in my constituency what they needed, I was surprised by their response—a cut in VAT to stimulate retail sales. Labour’s policy to reverse last year’s damaging VAT rise for a temporary period would give spending an immediate boost and put cash in people’s pockets—£450 for a couple with children. People would spend that money in the high street, boosting businesses at the same time as helping struggling families and pensioners. Labour’s other policy of a one-year cut in VAT to 5% on home improvements, repairs and maintenance would also boost home owners and small businesses, and stimulate demand in the economy.
Large businesses and companies in my constituency say that infrastructure projects need to be brought forward as that would stimulate demand in the economy. They include Clugston Construction, which this year celebrates 75 years of business, and Tata Steel, which sadly had to lose 1,200 jobs this year owing to a collapse in demand for construction steel in this country, as well as in the rest of the world.
The problem is not new; it has been around for a long time. The other day, I was reading Hilary Mantel’s “Bring up the Bodies”, which has been shortlisted for the Man Booker prize. I was struck by Thomas Cromwell, musing on the situation:
“England needs roads, forts, harbours, bridges. Men need work...honest labour could keep the realm secure. Can we not put them together, the hands and the task?”
Thomas Cromwell’s fictional words, through the voice of Mantel, grasp the issue. [Interruption.] We may not need forts now, but we need all those other things. Having listened to what hon. Members have said, there are many projects across our constituencies where we could put hands to work and make things happen.
Local people who work in the construction industry tell me that work is drying up. It has been tough in the real world in the past two years, but as Building Schools for the Future projects are completed and run out, and even supermarkets slow down their investment in new projects, the order books are emptying. Sadly, many construction companies have gone out of business. That is what is happening in the real world owing to the lack of demand.
As a leading local industrialist said to me at the weekend, it is time to get on with things. He is a practical man. He said, “It’s time to get the diggers in the ground and cranes on the skyline. What we need is work. We need jobs now.” Bringing infrastructure projects forward and getting jobs done that need to be done will put cash in the pockets of construction workers, who will spend that money in the real economy and therefore provide jobs for other workers. As Thomas Cromwell said:
“Can we not put them together, the hands and the task?”
Putting the hands and task together is a win-win.
The Government’s record on infrastructure is not yet a pretty one. I hope the Bill helps bring projects forward and that it is not just another re-announcement. Let us look at the record. None of the road building projects announced in the autumn statement package have begun construction. The value of orders for infrastructure investment made by the private sector fell by a fifth—from £7.3 billion to £5.9 billion—from 2010 to 2011. Output in the construction industry fell by 3.9% in the second quarter of 2012. The number of house building starts is down since the start of 2011.
Alison Seabeck (Plymouth, Moor View) (Lab)
Does my hon. Friend have a sense that the Bill, although utterly laudable, promises jam tomorrow? We do not have the clarity that the construction industry needs for planning and getting new jobs into the industry.
Nic Dakin
My hon. Friend echoes my right hon. Friend the Member for Wentworth and Dearne (John Healey), who said that the Bill is a laudable measure, but insufficiently urgent in responding to the crisis with which we are confronted.
We need action now to create growth. We need deeds, not words. We need action, not dither. Indeed, the CBI said recently that 2012 should be the year to deliver on infrastructure to “translate ambition into action” and to ensure we get people working on infrastructure projects
“that will help deliver a long-term return for the UK economy in the decades to come.”
Many things need doing. We have heard about the houses that need to be built, and transport projects in all hon. Members’ constituencies would transform their localities. The A160 in north Lincolnshire badly needs upgrading. It will be upgraded, but why not bring it forward so it happens now, giving confidence to business and everyone?
The messages from the Government on low-carbon investment have been confusing—including on the change to feed-in tariffs and on renewables. They do not create the confidence necessary to encourage private sector investment and development, and the private sector is looking at the Humber in respect of developing such initiatives. We had a debate last week on broadband in which all north Lincolnshire MPs, on a cross-party basis, agreed that broadband projects and infrastructure should be brought forward.
We are not short of projects, we are just short of will. Money has been pumped into the banks in quantitative easing, but they have not lent to anybody. Would it not be better to give the money to a national investment bank that invests directly in companies and gets things going?
As many hon. Members have said, it is not clear to which projects the Bill would give the green light. The Chief Secretary said that there were ongoing discussions with individual projects, but was vague about what would and would not get the green light. It is time to stop dithering and time to start doing. There is much to do. Let us get on with it.
John McDonnell (Hayes and Harlington) (Lab)
This debate, on a Bill that most people agree with, has been fascinating. The last five speeches, by my hon. Friends the Members for Easington (Grahame M. Morris), for Glasgow North East (Mr Bain) and for Walthamstow (Stella Creasy), my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) and my hon. Friend the Member for Scunthorpe (Nic Dakin), are worth reading. They were superb. I do not usually follow the parliamentary convention of saying, “It is a pleasure to follow”, but it was a pleasure listening to their speeches. My hon. Friend the Member for Easington demonstrated a commitment to, and deep knowledge of, his constituency. My hon. Friend the Member for Glasgow North East set out the implications for Scotland and the overall economic situation. My hon. Friend the Member for Walthamstow was passionate about the problems and returned, as ever, to Wonga. My right hon. Friend the Member for Greenwich and Woolwich displayed his ministerial experience, while my hon. Friend the Member for Scunthorpe demonstrated his passion.
A succession of MPs have stood up and urged the inclusion of particular projects in the Bill. May I be a contrarian and suggest one that should not be included in the Bill—the expansion of Heathrow airport? I am worried because although the Bill is meant to account for ready-made projects—those on the drawing board and ready to be implemented over the next 12 months—there is no sunset clause. Furthermore, it can be renewed and additional sums can be bestowed simply by statutory instrument. Now, I am not a conspiracy theorist, but my constituents might start to believe in conspiracies: we had 12 months of intensive lobbying by the aviation industry; after that, the Chancellor expressed scepticism about existing Conservative party policy, which was against a third runway at Heathrow; then the Prime Minister announced a review of that policy by someone who was director of the CBI, which had lobbied for a third runway; and now we have a Bill that would go on the shelf as almost suitable for funding the expansion of Heathrow. It is no wonder, then, that my constituents are anxious about the attitude of the Government to that measure.
The measures in the Bill would perfectly suit Ferrovial, the Spanish company established by a fascist in the 1930s who made his profits as a result of contracts awarded to him by Franco. It would ideally suite Ferrovial to come forward and seek funding for the infrastructure expansion at Heathrow. I am sure it would be willing to pay for the tarmac, but not for all the infrastructure that goes with it, particularly the road and rail network needed to support a third runway. I fear that Ferrovial will come forward seeking Government guarantees to fund and back up the expansion. I say that because its construction company globally is in serious difficulties, or certainly is in doubt.
I give notice that despite the cross-party support for the Bill, which I also support, I will be moving amendments to ensure that the expansion of Heathrow is not part and parcel of it. I expect coalition support for that on the basis of the existing coalition policy, sworn in this Chamber by the Prime Minister, that the Government will not bring forward the expansion of Heathrow during the lifetime of this Parliament.
Stephen Pound (Ealing North) (Lab)
I am not entirely sure if Ealing North and Hillingdon constitute a coalition but, if it does, may I say that that coalition is solid and that we are as one on this?
John McDonnell
Interestingly, the coalition against the expansion of Heathrow has been cross-party up until now. If I remember rightly, the Government’s deputy Chief Whip committed to lying down in front of the bulldozers if it ever came about, and he was not moved in the reshuffle, so I take that as another commitment to opposition to the policy. I hope that the Government will support an amendment to prevent the Bill from being used to give guarantees on the funding of the expansion of Heathrow, certainly during the lifetime of this Parliament. We can then debate the matter with the subsequent Government.
Like everybody else, I am desperate for infrastructure investment in my constituency, which is suffering from a housing crisis on a scale not seen since the second world war. Housing should be included. The hon. Member for Reigate (Mr Blunt) argued for the funding of prison cells, but was not willing to argue that housing be funded. Housing my constituents is just as important as housing prisoners, given the housing crisis.
My schools also need to be renovated, because Hillingdon council pulled out of Building Schools for the Future at the last minute and pupils in my constituency are now being educated in crumbling schools. The buildings that are being built for new classes are portakabins, which are substandard for the long-term future.
On alternative energy, I want the green new deal to be implemented in my constituency as rapidly as possible. It has ground to a halt as a result of the Government’s measures on solar panels and on the funding of alternative energy in general.
As my hon. Friend the Member for Leeds West (Rachel Reeves) said, there has been an element of déjà vu to this debate. I remember Alan Milburn arguing in favour of private finance initiatives in 1997. We were told then that PFI was the solution to our infrastructure and investment problems and that it would transfer the risk from the public sector to the private sector. With the greatest of respect to a number of my hon. Friends, that did not happen. What we saw instead was profiteering at vast expense to the taxpayer and profligate expenditure that produced very little for the amount that we invested.
The bizarre thing about the plan under discussion, which will introduce another scheme to keep expenditure off the books and within the parameters set by the European Union with regard to public expenditure, is that it will transfer the risk back from the private sector to the public sector, so now the public sector will take all the risk for schemes. My hon. Friend the Member for York Central (Hugh Bayley) raised a number of detailed points that need to be answered and I have an additional question. If we look at the briefing paper for the Bill, we will see that it will also be able to fund revenue expenditure. Therefore, in addition to the capital expenditure, I take it that if some of these capital schemes go wrong, we will fund the revenue consequences as a result. There needs to be a detailed analysis—my hon. Friend the Member for Walthamstow mentioned the Public Accounts Committee—and it needs to take place now, before the next debate on this Bill. We are almost entering into another PFI-type situation whereby a grab of short-term resources will result in long-term costs.
That is all because no Government will grasp the real nettle, which is that there is no lack of resources in this country; the problem is that they are in the wrong hands and are not being used productively. The crisis in the economy was not caused by over-expenditure by the previous Government. The only time borrowing went up dramatically was when they had to bail out the banks and bring in large-scale quantitative easing. In fact, the level of public expenditure in relation to GDP just about met the John Major levels. The problem was that we never balanced that expenditure with an appropriate taxation regime. What we need to do now is introduce a fiscal package that includes a wealth tax, a financial transaction tax, land valuation taxation and measures to tackle tax evasion and avoidance, so that we can fund public expenditure and not have to create devices that in the long term will cost us more and produce so much less.
I regret that we may well be here in five years’ time—I do not look forward to it—as a result of this Bill, counting the cost as we did with PFI. Members need to consider the Bill’s detail as we move to the next stage, because it is the detail that will cost taxpayers dear and result in profligate spending and some abortive spending on some of the projects that have been mentioned tonight and that we all hold dear on behalf of our constituencies.
This has been an interesting debate, but I worry that when everyone agrees that we need to speed up and expedite the Bill, we will not give it sufficient consideration. That is what happened to the PFI legislation and we lived to regret it. I hope that we do not live to regret this Bill.
Chris Leslie (Nottingham East) (Lab/Co-op)
This has been a thorough debate on not just infrastructure, but the state of the economy in general. I am afraid to say that little light has been shed on the Bill’s details, although we have yet to hear from the Economic Secretary, whom I heartily welcome to his new post as a Treasury Minister. Perhaps he will illuminate matters for us. As things stands, it looks to be a curious little piece of legislation. My hon. Friend the Member for Coventry North West (Mr Robinson) said that the Government’s policies on infrastructure were embarrassingly thin. As most hon. Members have noted, there seems to be more spin than substance in this Bill. Perhaps that is why the Government ran out of people to speak in favour of it almost an hour ago.
It occurred to me that this legislation is perhaps a classic example from the book by the new Conservative party chairman, “How To Bounce Back From Recession”, which was written under the pseudonym Michael Green or Sebastian Fox—I cannot remember which. It is all about a presentational drive to be seen to be doing something. The Government cannot specify precisely what it is that they want to be seen to be doing, but it is definitely Shapptastic.
It is the lack of detail in the Bill that worries many people. My right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) questioned who will be given financial assistance and what will be defined as nationally significant infrastructure. My hon. Friend the Member for York Central (Hugh Bayley) questioned the time scale of the £50 billion for underwriting and guarantees. My hon. Friend the Member for City of Durham (Roberta Blackman-Woods) noted that the Government are coming late to the benefits of infrastructure, and have reannounced over and again the concept of UK guarantees. They were mentioned first by the Prime Minister in May and were reannounced in June by other Ministers. Only now are we getting the Bill that is supposedly necessary to underpin them.
There are dangers of making policy on the hoof in this way. However, for the time being, we will give the Government the benefit of the doubt that they will specify in Committee which projects they envisage need this level of support. We will seek safeguards for taxpayers’ money against losses that are not spelled out in the Bill, supported, I hope, by my hon. Friend the Member for Hayes and Harlington (John McDonnell), who mentioned this issue. We need to ensure, for example, that there is reasonable consideration of clawback provisions, which are normal contractual arrangements that might be needed to safeguard best value for the taxpayer.
It is unclear whether the Bill will aid social housing, particularly in parts of the country where the council housing stock has not been transferred to housing associations—those arm’s length management organisations —such as Leeds and Nottingham. I disagree with the hon. Member for Reigate (Mr Blunt) and think that housing should be considered to be part of our nation’s infrastructure. Opposition Members feel strongly about that.
There are other issues that the Minister needs to address. Will the Government run into state aid clearance issues if they are simply providing financial assistance to the private sector? Such contractual questions may come up. How will the Government overcome them?
My right hon. Friend the Member for Salford and Eccles (Hazel Blears) and my hon. Friend the Member for Walthamstow (Stella Creasy) pointed out that the Bill lacks any mention of social value. We need to leverage jobs and benefits for communities out of infrastructure schemes. The real and tangible economic consequences that should flow from infrastructure ought to be at the heart of this Bill.
One cannot look at this small set of clauses without wondering whether the Bill is sufficient for the task at hand. Guaranteeing private loans will not come close to addressing the scale of the infrastructure problems that we face because of this Government’s inactivity. It is not certain whether this technique will be successful. There are no details of which projects will be guaranteed or when they will be guaranteed. My hon. Friends the Members for Swansea West (Geraint Davies) and for Scunthorpe (Nic Dakin), among others, rightly emphasised that the country is crying out for infrastructure investment, especially to create confidence and to strengthen productivity and competitiveness in our economy.
The Government have a pretty woeful record on the delivery of infrastructure, but there has been a great deal of hot air. The hon. Member for Stroud (Neil Carmichael) spoke about the industries that he wanted to be supported in his constituency. Who can forget the Chancellor’s much-vaunted “The Plan for Growth”, which he said was
“an urgent call for action”?
He stated:
“If we do not act now, jobs will be lost, our country will become poorer and we will find it difficult to afford the public services we all want.”
Eighteen months later, that plan for growth is looking a little forlorn.
The Prime Minister himself said,
“this autumn the government is on an all-out mission to unblock the system and get projects under way”—
except, of course, he was talking about autumn 2011. My favourite was the rhetorical flourish from the Chancellor of the Exchequer, who, in his Budget speech 18 months ago, promised
“a Britain carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
Since then, the economy has, of course, shrunk into a double-dip recession.
The Government’s policies have not been helping; in fact, they have been harming. They have been causing more delay to projects that ought to be under way. My right hon. Friend the Member for Wentworth and Dearne (John Healey) talked about the risks that can arise from sort of the public policy vacillations that we have seen from the Government. He mentioned, for example, the uncertainties in planning policy, where a national planning policy framework was announced a few months ago, only for the Government to change their minds. They say they are going to suspend section 106 agreements, but they have not yet done so. A number of developers are saying, “We’ll hang back for the time being. We’ll wait rather than get on with applying for planning permissions right now.” We want the Government to make their minds up about how to move forward, but we have our concerns about their strategy.
In transport, we are still awaiting the long-promised national policy statements on transport networks and aviation, as my hon. Friend the Member for Easington (Grahame M. Morris) mentioned. In waste management, the national waste management plan was supposed to be announced this spring, but it will now not be finalised until the end of 2013. In low-carbon investment, the CBI has warned that policy changes such as the cuts to feed-in tariffs have been
“damaging to business confidence, with implications not just for immediate investment decisions but for longer-term trust in government policy.”
The Government have undermined or pulled the rug from under many infrastructure schemes. The same can be said of their approach to the green investment bank and broadband targets, which they have deferred, notwithstanding the strong campaign by my right hon. Friend the Member for Salford and Eccles for superfast broadband at MediaCity in her constituency, which she mentioned in her speech.
We need a renewed focus on the plans that the Government themselves put forward in their national infrastructure plan in 2011. None of the road-building programmes in that plan has started construction. Only one in 10 of the projects mentioned in it have moved forward, while one in 10 has moved backwards. House building starts are down 24% from the same period last year, and, on Friday, infrastructure data from the Office for National Statistics showed that the volume of new work was also down 24% on the same period last year. The statistics get worse and worse, not to mention the woefully inadequate approach to the regional growth funds, which many of my hon. Friends mentioned.
Indeed, the pace of capital investment under this Administration has slowed, contrary to the claims of the Government. The Office for Budget Responsibility’s forecasts show that under Labour’s public service net investment plans, investment would have been £2.7 billion higher than under the Government’s plans in the key year of 2010-11, £2.6 billion higher in 2011-12 and £1.3 billion higher in 2012-12. That is a difference of £6.6 billion over that three-year period between Labour’s trajectory on capital investment and the cuts implemented by this Government. That is something that even the hon. Member for Northampton South (Mr Binley) mentioned in his contribution. Reductions in capital expenditure have been relatively extreme, and I agree with him that the Government should certainly be doing better.
There are ways in which underwriting and guarantee schemes should be investigated. We do not oppose the Bill before us today, but we are a little cynical and sceptical, given the number of schemes that the Government have promoted with great flourish but then failed to deliver. My hon. Friends will remember the claim that they were going to reach into the pension funds of large fund managers across the country and take £20 billion of investment to help to support public infrastructure schemes. However, a year later we have seen only £2 billion secured, and again, it will not be forthcoming until 2013-14. Indeed, the Government’s chief construction adviser, Paul Morrell, said,
“there won’t be a barrel-load of funding coming in from pension funds for greenfield infrastructure. It’s not their business and I don’t know anyone who thinks it is.”
The Government promised a whole set of new revenue sources for new investors in the national infrastructure plan, but they have not been forthcoming. The Government have also been indecisive over the use of tax increment financing.
The Government also promised a new Cabinet committee, chaired by none other than the Chief Secretary to the Treasury himself, which was set up last year to “show decisive leadership”. A year on, we are still waiting for the Chief Secretary’s decisive leadership. I am sure that the Cabinet Committee meetings are extremely interesting, and it would be helpful if he could share with us some of the decisions that have been taken.
Businesses and those in the wider country are increasingly frustrated by the progress that this Administration are making. We have already heard quotes from key business figures. John Longworth, the head of the British Chambers of Commerce, has described the national infrastructure plan as “hot air” and a “complete fiction”. John Cridland, the director general of the CBI, has warned that
“firms fear initiative overload and are becoming impatient with delivery”.
Richard Threlfall of KPMG has said:
“Business confidence in our infrastructure is ebbing away”.
And we have only to look at the opinions of businesses across the country, as expressed to The Financial Times, to get a flavour of what is happening. It states:
“British business is fast losing any remnant of confidence in the government’s infrastructure strategy even though investment in transport, telecoms and energy has been at the heart of its growth plans since it came to power two years ago. Two thirds of British companies fear UK infrastructure will deteriorate over the next five years, according to a survey by the CBI…and KPMG”.
The Bill lacks not only substance but evidence that the Government understand what is happening in the economy and more broadly. My hon. Friends the Members for Glasgow North East (Mr Bain) and for Walthamstow made that point in their speeches. It contains nothing to address the lack of demand in the economy, and it proposes no change of direction to prevent the Chancellor’s tax rises and precipitous cuts from exacerbating the contraction in the economy. My hon. Friend the Member for Derby North (Chris Williamson) rightly pointed out the economic strangulation that the Government’s policies were exerting on the confidence and demand that ought to exist in the economy and more broadly. My hon. Friend the Member for York Central highlighted the five quarters of negative growth that have occurred on this Chancellor’s watch.
There is no recognition from this Administration that the lack of growth is resulting in a rise in welfare spending; it is up by 7% in the financial year so far compared with the previous financial year. We have also seen borrowing rise in the first quarter of this year, compared with the previous financial year. These proposals lack substance. We need immediate action rather than warm words. We will table amendments to the Bill, to test the Government’s commitment to their infrastructure plans. Either this Administration are ignorant of the causes of recession or they are wilfully ignoring our decline, for politically obstinate reasons. They are flailing around for initiatives, and they are racked by dithering, hesitancy and coalition divisions. We need action now; we cannot wait until the Chancellor’s Christmas statement on 5 December. The Bill is a fig leaf for their indecision. It is not an adequate substitute for action. Notwithstanding my welcoming the Minister to his new post, I would like to see whether the Prime Minister’s reshuffle and his appointment of this particular Minister have changed a single thing.
The Economic Secretary to the Treasury (Sajid Javid)
I thank the shadow Financial Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), for his warm words of welcome. This has been an excellent debate. It has highlighted the areas on which we agree—the importance of safeguarding the flow of investment into this country’s critical infrastructure, for example—as well as those on which we differ. I would like to thank those on the Labour Front Bench for backing the Bill so that we can get on with the important investment that this country needs. There have been some excellent contributions to the debate—I have counted 22 of them—and I will comment on them shortly.
First, I want to make one critical point. As my right hon. Friend the Chief Secretary to the Treasury said, the action that we are taking, which this legislation makes possible, is possible only as a result of the decisive action taken by this Government to deal with the economic mess that we inherited. In the decade before we came to power, Government debt had risen from £346 billion to over £900 billion; that represents almost a tripling of the national debt. That created the conditions for the severe economic crisis that we are all now suffering from, and mortgaged the future for our children and grandchildren.
Because of the lack of a credible plan from the Labour party, on general election day in 2010, 10-year gilts were 3.8%—the same as those of Italy and Spain. Because of the tough decisions we have taken, however, and the responsibility and credibility of our long-term fiscal plans, the UK is now a safe haven from the global debt storm. The 10-year gilt interest rates are now 1.9%—less than half what they were when we came to power. We are now in a position to unlock private sector infrastructure investment only because of the immense strength of the UK Government’s balance sheet.
Opposition Members seem to be under the illusion that this credibility has come at the expense of infrastructure investment, so let me clear up that misconception. We are spending more on transport and communications infrastructure than the previous Government decided to spend at the height of the boom. That is despite the fact that they ran deficits every year for eight years, including when times were good. Now that Britain is restrained and is responsible in the face of a global debt storm, we are nevertheless delivering the public investment that Opposition Members say they want to see, while we are making tough decisions and taking control of spending, such as welfare, where we can.
We announced £18 billion in retail investment in the spending review and a further £9.4 billion of infrastructure enhancements in the summer. In the Budget, we announced that there will be 10 super-connected cities across the UK that will enjoy ultra-fast broadband and high-speed wireless connectivity. On top of that immense investment, we now propose to unlock potentially billions of pounds of further investment from the private sector.
Let me deal with Back Benchers’ contributions to the debate. I start with one of the most thoughtful speeches, from my hon. Friend the Member for Reigate (Mr Blunt). This was the first time that I, as a new Member of Parliament, have heard him speak from the Back Benches. He made an extremely thoughtful speech, which was a great contribution to the debate. He suggested using the facility put in place by this Bill to invest in prisons, and I hope that that will take place. He also drew attention to the economic credibility that the Government have won, as did my hon. Friend the Member for Weaver Vale (Graham Evans).
A number of hon. Members referred to particular projects in their constituencies. For example, my hon. Friend the Member for Weaver Vale mentioned the Mersey Gateway project, while my hon. Friend the Member for Halesowen and Rowley Regis (James Morris) mentioned the Birmingham international airport, and the right hon. Member for Salford and Eccles (Hazel Blears) raised the issue of MediaCityUK and superfast broadband. My hon. Friend the Member for Witham (Priti Patel) mentioned roads in Essex as another example. Strong cases were made, and they were all duly noted. If the promoters of these projects have not already done so, they should start the discussion immediately with the UK infrastructure team in the Treasury.
There were a number of other good contributions. My hon. Friend the Member for Suffolk Coastal (Dr Coffey) raised an important point about how Labour’s investment in infrastructure paid very poor attention to value for money.
Some Labour Members made some interesting contributions. The first, from the right hon. Member for Wentworth and Dearne (John Healey), was thoughtful, and I welcome his support for the Bill. His experience as a former Minister shows. I believe that he was once a Housing Minister—he raised the issue of housing—and also a Minister in the Treasury. Indeed, I think he once held my job. The hon. Member for Coventry North West (Mr Robinson), who is not in his place, also raised the issue of housing. It was strange that he raised that subject—I think he was talking about whether the Bill should back investment in housing, but financing housing is something he has great experience in.
The right hon. Member for Salford and Eccles raised a number of important issues; I am pleased that she welcomed the Bill. The hon. Member for Derby North (Chris Williamson), who I do not see in his place, made a speech that would have fitted well with a Labour conference in the 1970s. For a moment I thought that I was listening to Derek Hatton. The speech made by the hon. Member for Scunthorpe (Nic Dakin) towards the end of the debate was in a similar vein.
The hon. Member for York Central (Hugh Bayley) asked a number of good questions. He asked, for instance, whether flood defences would be included. I am advised that there is no reason for them to be excluded, and we envisage their being part of the infrastructure that is being considered. I hope that that is helpful to the hon. Gentleman.
My hon. Friend the Member for Portsmouth North (Penny Mordaunt) made some excellent points about Portsmouth’s infrastructure needs, which were duly noted. The hon. Member for Glasgow North East (Mr Bain) did a very good job of following his Whip’s brief, but he asked one interesting question: where were the members of the Scottish National party? I was asking myself that as well, especially given that the Bill is UK-wide and is intended to support infrastructure throughout the United Kingdom, including all the devolved regions. It was surprising that we did not hear much from SNP members. I had thought that they would be here today, fighting for the interests of their constituents.
John Healey
Given the absence of Scottish and Welsh nationalists, may I ask the Minister whether decisions on projects in Scotland and Wales will be made in Scotland and Wales?
Sajid Javid
All decisions covered by the Bill will be made by the United Kingdom Government: by the UK Treasury, or by relevant Secretaries of State. However, when projects clearly relate to devolved regions, the Government will work very closely with the relevant Departments in those regions.
The hon. Member for Walthamstow (Stella Creasy) made a thoughtful speech containing some very good points, but I must take issue with one of her closing comments. I believe she said that one of the problems with the Bill was that it placed restrictions on spending. It does place restrictions on spending, because this Government are very keen on restrictions on spending. The previous Government lost sight of that, which is what got us into this mess in the first place.
Stephen Pound
Let me add my voice to those of Members who have already congratulated the Minister.
The Minister has rightly called the House’s attention to the absence of members of certain political parties. May I remind him that the Democratic Unionist party, one of the parties representing Northern Ireland, has a strong interest in the Bill, although much of the material that we are discussing today is devolved? The issue of infrastructure development in Northern Ireland is essential. Will he assure me, and silent members of the Northern Ireland parties—unusually silent—that he will continue that dialogue?
Sajid Javid
I agree with the hon. Gentleman: they are unusually silent, although they are welcome to intervene on my speech. However, I can tell the hon. Gentleman that people in Northern Ireland should be assured that the Bill is intended to help infrastructure investment throughout the United Kingdom. I agree with him that there are often some special cases in Northern Ireland, which suffers from a relatively higher level of unemployment than other parts of the UK. I look forward to receiving applications from the Province.
Two issues—two myths, I should say—arose again and again in the speeches of Labour Members. The first—
Geraint Davies
Are the Government going to become involved in the brokering of deals and the forming of partnerships with the private sector? I am thinking specifically of easyJet’s move to Cardiff airport and its discussions with First Great Western about the provision of more passenger links to ensure that when the two come together it makes sense for everyone. Are the Government willing to become involved in that?
Sajid Javid
The purpose of the Bill is to establish a structure to provide guarantees for credit-worthy projects in the private sector. Of course the Government will work very closely, step by step, with the private-sector promoters of each of the projects, and if one of the companies feels that it has a viable project that the Government should consider, it will be encouraged to discuss it with the Treasury. A specific Treasury team called Infrastructure UK, which was set up a couple of years ago, is full of specialists who understand infrastructure and have a great deal of experience. It will be keen to look at every single project, and if the hon. Gentleman has one in mind he should please present it as soon as possible.
The two myths that I heard from the Opposition—
John Healey
I am very grateful to the Minister for giving way; he is answering the questions that come up. Will Infrastructure UK look at every project and proposal for these borrowing guarantees?
Sajid Javid
It will consider every project that comes its way, but that does not mean it will agree to support every one. However, it is willing to look at every project and to come back with an answer on each.
Priti Patel
Can my hon. Friend confirm for the Opposition that the Infrastructure UK team has contributed a great deal more than the euro preparation team that Labour created?
Sajid Javid
As always, my hon. Friend is absolutely right. [Interruption.] I must plough on.
On a number of occasions the Opposition suggested that this Government were spending less on infrastructure than they would have if, by some miracle, they had won the last election. Let us look at the facts. After the last election, the right hon. Member for South Shields (David Miliband) said in his leadership hustings bid that they were going to halve the share of national income going into capital spending. Plans presented by Labour to this House at their last Budget, in March 2010, showed net investment falling from £50 billion in 2009 to a projected £23 billion by 2014-15, a figure lower than the one this Government have planned.
We heard from the Opposition about Britain’s growing debt. However, they forget, conveniently, that when this Government came to power, our budget deficit was 11% of GDP, higher than any other nation in the G7. According to the Institute for Fiscal Studies, if the plans of the right hon. Member for Edinburgh South West (Mr Darling) had been implemented, this country’s debt would be £200 billion higher than under the plans of this Government. They just do not get it—more spending, more borrowing, more debt.
Members on both sides of the House have recognised the scale of capital required to realise some major infrastructure investments.
Sajid Javid
I will absolutely be writing to my hon. Friend. The questions he raised were characteristic of him, showing the experience he has brought to this House from the business sector. They were just the right type of thoughtful questions.
Sajid Javid
Please sit down; sorry.
The Bill contains measures that will support growth, jobs and families. It will support the UK’s infrastructure sector by providing access to finance for financially credible, high value for money projects. It will unlock the investment that the UK needs to make it one of the best places in the world to do business. I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Infrastructure (Financial assistance) Bill (programme)
Motion made, and Question put forthwith (Standing Order No.83A(7)),
That the following provisions shall apply to the Infrastructure (Financial Assistance) Bill:
Committal
1. The Bill shall be committed to a Committee of the whole House.
Proceedings in Committee, on consideration and Third Reading
2. Proceedings in Committee, any proceedings on consideration and proceedings on Third Reading shall be taken in one day in accordance with the following provisions of this Order.
3. Proceedings in Committee and any proceedings on consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
4. Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
Programming committee
5. Standing Order No. 83B (Programming committees) shall not apply to proceedings in Committee, any proceedings on consideration or proceedings on Third Reading.
Other proceedings
6. Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or any further messages from the Lords) may be programmed.—(Mr Evennett.)
Question agreed to.
Infrastructure (financial assistance) bill (money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the Infrastructure (Financial Assistance) Bill, it is expedient to authorise—
(1) the payment out of money provided by Parliament of expenditure incurred by the Treasury, or by the Secretary of State, in giving, or in connection with giving, financial assistance to any person in respect of the provision of infrastructure; and
(2) the payment out of the Consolidated Fund, in certain cases, of expenditure which would otherwise be paid under the Act out of money provided by Parliament.—(Mr Evennett.)
Question agreed to.
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Internet Trolling
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Steve Rotheram (Liverpool, Walton) (Lab)
I am delighted to have the chance to initiate an Adjournment debate to highlight an issue that is becoming commonplace on social media sites.
Trolling is wide-ranging and stirs up strong feelings, among people who want it criminalised and want those who indulge in it to be jailed, and among those who believe it is their inherent right to indulge in—as they see it—a bit of banter, and who claim that freedom of speech is one of their human rights, whether or not it causes offence. It should be noted that the right to freedom of speech is not absolute in any country, and that right is commonly subject to limitations.
The topic transcends the usual petty party politics. It is not about attributing blame, or even urging a particular Department to take ownership of the issue. Indeed, I am aware that Members on both sides of the House have been victims of trolling, as have I—although of course we all know that parliamentarians are pachyderms, with little or no feeling, so it should not bother us. But it does bother the public. My hope is that all parties will work together to reach a solution and take trolling seriously, specifically RIP trolling.
As I shall set out at the end of my speech, the solution may or may not take the form of legislation, but if a change in the law is required, so be it. In that spirit, I am grateful to the Under-Secretary of State for the Home Department for meeting me at the end of last year. Since then, I have met, among others, the hon. Member for Mid Bedfordshire (Nadine Dorries), and representatives from Merseyside police, Facebook and the Crown Prosecution Service. Although some of those meetings were less productive than others, there was universal recognition that trolling exists, and that it is grossly offensive and it is escalating. With such a rise in prominence has come greater scrutiny of the laws that govern its practice and punishment. The starting point must be to see how we can improve the way trolling is prevented, policed and punished. That would be preferable to trying to get Parliament to act, as the wheels of justice turn slowly.
Nadine Dorries (Mid Bedfordshire) (Con)
I congratulate the hon. Gentleman on securing an Adjournment debate on such an important issue. He mentioned that he had met the CPS and Merseyside police. From those conversations, I am sure he would agree that one of the problems for the police is that it is difficult to know which legislation to invoke when trying to prosecute offences, and that there are no definite frameworks or boundaries for them to work in. Furthermore, the CPS will consider only what happened over the previous six months, and will not go further back to look at abuse caused by trolling.
Steve Rotheram
The hon. Lady is right. I hope to tease out some of the complexities of the legislation during my contribution, but it is not as easy as us just saying that trolls should be brought to book—I shall try to outline why.
Trolling has become a sick hobby for some and an increasing problem for dedicated police trying to monitor and respond to reported cases. Trolls are individuals intent on upsetting and offending people, often in their hour of grief and mourning, for a kind of pleasure that I must admit is totally alien to me and, I would think, to every person in this Chamber.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on bringing the matter to the House’s attention. Every Member will have examples of constituents who have been subjected to trolling, whether in the workplace, in schools or on the internet. Young people who write about the good things that have happened to them can find that they are attacked on the websites. The example of Tom Daley comes to mind, because of what happened to him at the Olympics, when a cheerful thing turned into nastiness. Does the hon. Gentleman agree that there must be some system in place, whether banning trolls from using the websites, legislation or whatever, to protect young people and those using the internet in an innocent fashion?
Steve Rotheram
I agree that the first thing to do is to try to identify those people causing the offence, which is very difficult because they hide behind the anonymity of a computer. The second part, of course, is to try to get the issue out among the general public, so that we can secure a culture change in society. One of the starting points is to highlight some of the celebrity trolling and the great offence it has caused, although it happens to ordinary people too.
Graham Jones (Hyndburn) (Lab)
It seems that local newspapers now cannot have an online discussion or commentary following an article on their websites because trolls will totally dominate and post page after page of abuse, which means other people just switch off. I do not know whether that is my hon. Friend’s experience, but it is certainly mine.
Steve Rotheram
I have experienced and identified that when reading the comments beneath an article. It is not about people having extreme views; it is about the posting of really offensive, disgusting and vile comments that shock people. That sort of thing is prevalent in online discussions.
I want to bring to the House’s attention the case of Georgia Varley, who was just 16 years old when she slipped from a platform under the carriage of a departing train at James Street station in Liverpool. Her devastated family and friends set up a dedicated memorial page on Facebook to inform others of Georgia’s death and as a means of demonstrating their outpouring of love and affection for this popular schoolgirl. But in the days and weeks that followed, sick, vile and truly grotesque individuals whose identity was hidden through an online alias abused Georgia’s site. Most had never even visited Liverpool and certainly had no knowledge of Georgia, but they thought it would be fun to exploit her death.
I would never dream of repeating the vicious insults directed at Georgia and her family, because it would be wrong for them to appear in Hansard. Indeed, I believe that it would probably give the trolls a kick if they thought that outcome was the product of their vindictiveness. However, I have directed my staff to keep records of certain trolls, and I would be happy to place copies in the House of Commons Library if requested so that Members can ascertain for themselves the truly depraved nature of the content.
Nadine Dorries
I thank the hon. Gentleman for being so generous in giving way. I think that he has recounted that story before in this place, and it is truly awful, but the situation is even worse. There are cases of people actually being driven to their deaths by trolls. Two cases come to mind, those of Natasha MacBryde and Olivia Penpraze, who both wrote on the internet and thought that social media was something they could engage with. They thought that the people they were engaging with were just reasonable human beings, but the fact is that there are some pretty horrific people out there. Those two girls were driven to their deaths by trolls telling them to kill themselves. That is the severity of the situation. It is not just people who have died whose sites are abused; people can be driven to their deaths.
Steve Rotheram
Those are two of the most depressing and disgusting instances of trolling. It is not just about having a bit of fun; it can lead to serious consequences. I will return to the case of at least one of those people who, unfortunately, took their own life.
Part of the problem is that a degree of professionalism is associated with some trolls that might be too sophisticated for our laws to combat in their current guise. The relevant legislation on this matter predates the birth of social media such as Facebook and Twitter, which were not launched until 2004 and 2006 respectively. In fact, since becoming actively involved in this issue, I have increasingly come to understand that the law surrounding trolling is a minefield. If only Thomas Jefferson had been right when he said:
“Laws are made for men of ordinary understanding and should, therefore, be construed by the ordinary rules of common sense. Their meaning is not to be sought for in metaphysical subtleties which may make anything mean everything or nothing at pleasure.”
A whole plethora of associated legislation could potentially be used against trolls, but there is nothing specific to outlaw the practice itself. The Suicide Act 1961 can still be used against those who encourage others to take their own lives, and it was specifically amended, with websites in mind and to simplify the law, by the Coroners and Justice Act 2009. We also have the Telecommunications Act 1984; section 4a of the Public Order Act 1986; the Computer Misuse Act 1990, which created precedent by extending the time limit to investigate cases for summary offence; and the Protection from Harassment Act 1997, under section 3(2) of which claimants may pursue a civil case for damages. Those are all relevant pieces of legislation, but none specifically identifies trolling as an offence, and every single one was passed before Facebook or Twitter existed. Even section 127 of the Communications Act 2003 predates social media, but it suggests that someone can be found to have broken the law if a message is sent that is
“grossly offensive or of an indecent, obscene or menacing character.”
It goes on to say that the section
“targets false messages and persistent misuse intended to cause annoyance, inconvenience or needless anxiety”.
The Crown Prosecution Service clarified this on its website by stating:
“If a message sent is grossly offensive, indecent, obscene, menacing or false, it is irrelevant whether it was received. The offence is one of sending, so it is committed when the sending takes place.”
The CPS also confirms:
“A person guilty of an offence under the same section shall be liable, on summary conviction, to imprisonment for a term not exceeding six months or to a fine or to both.”
The crime is dealt with under the fixed penalty scheme. However, there is a degree of subjectivity when we talk about causing offence. Trolls often write that they do not know what might cause offence to a particular individual and so cannot be accused of so doing.
We can already see the pitfalls. There is ambiguity over whether a six-month sentence is long enough in order to send a message to trolls that such behaviour is not to be tolerated and, by extension, to seek fundamentally to change behaviour. There are also questions about whether, given the complexities surrounding false identities, there is enough time for the police fully to investigate complaints and for the CPS to deem whether a successful prosecution is likely. The Guardian recently reported that nearly 8% of Facebook profiles were fake, which equates to approximately 83 million accounts worldwide. This has become not just a national but an international problem.
The other relevant piece of legislation is the Malicious Communications Act 1988, section 1 of which deals with the sending to another of
“any article which is indecent or grossly offensive, or which conveys a threat, or which is false, provided there is intent to cause distress or anxiety to the recipient”.
The offence covers letters, writing of all descriptions, electronic communications, photographs and other images in material form, tape recordings, films and video recordings.
I believe that the greatest strength of both that Act and the Communications Act 2003 is that for an offence to be deemed to have been committed, the intended recipient of the message never has to receive it. That is pivotal in prosecuting RIP trolls, because more often than not the intended recipient of their bile is deceased. It is therefore right and proper that it is the sending that is an offence, and that proof is not needed that a person has received the communication in question. There still has to be intent to cause offence or distress.
Jim Shannon
Does the hon. Gentleman therefore feel that there is a greater role for the police to play? If the legislation is in place and there is an opportunity to prosecute, should the police do more?
Steve Rotheram
It is always difficult to say whether the police should do more, and part of the problem is the complexities of the gaps in legislation which I have just identified. That has to be the starting place for the House to consider seriously whether a Bill should be introduced to close the loopholes that people have been able to wriggle out of.
There have recently been two prosecutions for racially motivated tweets. One was sent to the former footballer Stan Collymore and the other was sent in the wake of the collapse on the pitch of Fabrice Muamba. Both were vile comments, but the sanctions imposed by judges were met with condemnation from certain sections of the public and disdain from others for being too lenient.
We must work harder to raise the issue of trolling so that people know unequivocally that they should not say something online that they would not say face to face. The case of Natasha MacBryde, which was mentioned earlier, is perhaps the most high-profile case of trolling, because an 18-week prison sentence was handed out to Sean Duffy, who admitted that he was hooked on the sick craze. That is far and away the severest sentence that a court has handed out to date.
Many months before the release of the Hillsborough independent panel report, I spoke to Facebook about a page that had been set up on its site called “96 Wasn’t Enough”. It informed me that the content of the page and/or postings on the site did not constitute a breach of its community standards, and that there was no need to remove the page because there was not an implied or explicit threat. I add that I do not condone trolling by anyone. Alan Davies received some horrendous abuse over his ill-judged comments about Hillsborough, and I was quick to condemn hate messages aimed towards him and his family. I think it is better to educate than to abuse.
Trolling is not about normal social discourse, or even about disagreeing vehemently with someone who has a contrary opinion. The test should be quite simple: would someone be happy to put their name to what they have said under a false identity? We are not talking about cases of whistleblowing, in which it would be understandable to anonymise a person’s details. If the answer to that question is that someone would not be happy to be identified, we have to ask why. Why would somebody need to hide their identity under such circumstances?
Having listened carefully to what Facebook had to say when I met it, I have developed a better understanding of what it determines to be acceptable. Although I may disagree with the grey areas within the boundaries that social media sites impose, I understand that they are as much about the sharing of information as they are about people getting a better understanding of local, national, regional and international cultures, events in history and universally famous tragedies. However, I have severe reservations about the ability of social media sites to understand fully the gross offence caused by certain types of message, especially to families and friends of deceased victims. Surely common sense must prevail. All too often, the benefit of the doubt falls in favour of the rights of the troll over those of their innocent target.
Trolling is not about disagreeing with another person’s perspective. It is not about telling somebody straight what they think about them, or that they think that the other person is wrong. Trolling is not even about arguing with somebody online about sensitive issues. It is about setting out, intentionally and deliberately, to cause gross offence to another, or to say something menacing.
I reiterate that I hope that tonight’s debate is just the beginning. I am keen to hear others’ views and to learn new things about trolling. Will the Minister therefore answer the following questions? Do the Government fully appreciate the escalating problem of trolling? What monitoring of activity are they undertaking? Are the Government satisfied with the prosecution rate of trolls, or does the Minister believe, like me, that the number of trolling cases far outweighs that of convictions? Has the Minister met the police and/or the CPS recently to discuss the obstacles to prosecuting trolls? What time frame have the Government scheduled to look at ways in which to address the problem? Could an amendment to legislation be made in this Parliament, if the Minister believes that to be appropriate? What discussions has he had with social media sites about the need to strengthen the community standards that govern best practice on them? Does he agree that they could and should do far more to aid the police with prosecuting trolls?
I believe that the law of the land needs to be constantly updated to reflect social and technological advancements. However, I also appreciate that, in the case of trolling, concerted effort by Parliament to change online culture may well prove to be just as important as an amendment to existing legislation.
The Minister of State, Home Department (Mr Jeremy Browne)
I congratulate the hon. Member for Liverpool, Walton (Steve Rotheram) not only on giving us the opportunity to debate this important subject—and he made his speech with great force and evident sincerity—but on his ongoing campaigning on the subject. I am happy, as a Home Office Minister, to indicate a willingness to engage with him on how we can try to address many of the serious concerns that he raised.
We all benefit from the internet, and the Government are keen to promote the positives of that technology for both economic growth and social value. At the same time, we all have a responsibility to help prevent crime, and to take appropriate action to protect ourselves and others in cyberspace.
So-called trolling is an example of where the opportunities presented by the internet, particularly social media networks, can be abused in the ways that the hon. Gentleman highlighted. It has the potential to be far more serious than simple banter—I agree with him about that, and disagree with commentators who have described it merely in those terms. It can include highly offensive, obscene and menacing behaviour, solely intended to cause pain and distress—activity that we would all agree is deplorable and disgraceful. The hon. Gentleman raised a powerful example from his constituency: grossly offensive messages on memorial pages to a young constituent who died in a tragic accident last year. I am sure that we all join him in expressing how terrible it must have been for that young constituent’s family and friends to have their grief compounded by those abusive and appalling messages.
More recently, as the hon. Member for Strangford (Jim Shannon) said, there has been a series of incidents involving high-profile public figures, which brought the activity—which impacts on people across the country going about their everyday lives—to wider public attention. If those examples serve any purpose, it is that they contribute to a wider public discourse about acceptable social norms and behaviour, particularly in the context of the appropriateness of behaviour online as well as offline.
Let me be clear, for the avoidance of doubt, that the Government are not seeking to criminalise bad manners, unkind comments, or idiotic views. Social media sites are not, and cannot, be an opportunity for entirely anonymous and consequence-free posting of comments that would be unacceptable in any other context. It is, therefore, important to emphasise the oft-repeated and clear principle that what is illegal offline is also illegal online. An individual should be charged and prosecuted for the offence they commit, irrespective of whether it happens in the street or in cyberspace.
Trolling can manifest itself in a number of ways, and hon. Members may find it helpful if I quickly rehearse the legislation that can be—and has been—used to prosecute such activity. The Malicious Communications Act 1988 covers the
“sending of an indecent, offensive or threatening letter, electronic communication or other article to another person.”
As has been mentioned, Sean Duffy was prosecuted last September under section 1 of that Act after posting offensive messages and videos on the tribute pages of young people who had died. He was jailed for 18 weeks.
Section 127 of the Communications Act 2003 created an offence of sending, or causing to be sent,
“by means of a public electronic communications network a message or other matter that is grossly offensive or of an indecent, obscene or menacing character”.
In 2010, Colm Coss was charged under section 127 of that Act for posting obscene messages on social network tribute sites. He, too, was successfully prosecuted and imprisoned for 18 weeks.
When trolling involves conduct that amounts to the harassment of another, offenders can be charged under the Protection from Harassment Act 1997. Conduct amounting to child abuse can be, and has been, prosecuted under the Protection of Children Act 1978. The Government are currently clarifying the law in the Defamation Bill to ensure that where trolling is defamatory, website operators are clear about their responsibilities to victims.
The Government are reforming measures to tackle antisocial behaviour, regardless of whether it occurs offline or online. To continue to support professionals to help and protect victims, we are introducing simpler and more effective powers that, where appropriate, agencies can use flexibly to deal with antisocial individuals who cause misery and distress to others. Robust legislation already exists, and the Crown Prosecution Service will determine what legislation to use in a prosecution, depending on the circumstances of each case.
The Government recognise that laws to deal with internet trolling are not sufficient on their own. Police and prosecutors need the capacity and knowledge to work within a complex legal framework, to meet the jurisdictional challenges of the online world, and to understand and balance legitimate concerns about civil liberties.
The Government take the threat to the UK from cyberspace extremely seriously, and are spending considerable amounts of money on cyber-security and cybercrime in its more narrow form. We have taken a number of significant actions to increase the capacity and capability of the UK law enforcement response to cybercrime. In particular, we are developing training on cybercrime for all police officers, which will help them to investigate crimes committed online, and we will create a national cybercrime unit within the National Crime Agency by 2013.
However, we should not see this problem entirely in legal terms; it is also about ensuring that cultural norms on appropriate and acceptable behaviour evolve at the same pace as technology. That goes wider than the role of the Home Office or the Government, to all of society. We recognise that prevention is a key part of tackling trolling as well as other forms of abuse and misuse of social networking sites. We are accordingly pressing the internet industry in the UK and Europe to implement clear and simple processes for dealing with abuse online. In our experience, for the most part, social network site operators adopt sensible and responsible positions on any abuse or misuse of their services in the terms and conditions they require for their use, but I take the point made by the hon. Member for Liverpool, Walton that that may require further work.
I pay tribute again to the hon. Gentleman for raising this matter and to others who contributed to the debate. I believe that we have sufficient laws in place to deal with the problem, but we need to be vigilant about it and aware of the huge offence it can cause. When the line between merely unpleasant behaviour and illegal behaviour is crossed, the Government are happy to work with Members of all parties to ensure that the appropriate action is taken.
Question put and agreed to.
Ministerial Corrections
(12 years, 3 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Wildlife: Circuses
(12 years, 3 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Mike Hancock
To ask the Secretary of State for Environment, Food and Rural Affairs how much her Department has spent on impact assessments, circus inspections and other research and investigations in support of her proposed licensing regime for wild animals in circuses.
[Official Report, 3 September 2012, Vol. 549, c. 129W.]
Letter of correction from Richard Benyon:
An error has been identified in the written answer given to the hon. Member for Portsmouth South (Mr Hancock) on 3 September 2012.
The full answer given was as follows:
Richard Benyon
DEFRA's budget from July 2012 to October 2012 for the team tasked with taking forward the implementation of licensing regulations, as well as developing the case for a ban on the use of performing wild animals in travelling circuses, is £261,000.
The correct answer should have been:
Richard Benyon
DEFRA's budget from July 2011 to October 2012 for the team tasked with taking forward the implementation of licensing regulations, as well as developing the case for a ban on the use of performing wild animals in travelling circuses, is £261,000.
Homelessness
(12 years, 3 months ago)
Ministerial CorrectionsRead Full debate Read Hansard Text
Chris Ruane
To ask the Secretary of State for Communities and Local Government what estimate he has made of the number of homeless people in each (a) local authority area and (b) Parliamentary constituency in each of the last 20 years.
[Official Report, 11 September 2012, Vol. 550, c. 143-4W.]
Letter of correction from Mark Prisk:
An error has been identified in the written answer given to the hon. Member for Vale of Clwyd (Chris Ruane) on 11 September 2012. The figure given for investment in homelessness prevention was incorrect due to an administrative error.
The full answer given was follows:
Mr Prisk
The Department publishes statistics on homelessness for England. Figures for the other UK countries are a matter for the devolved Administrations. I have placed in the Library of the House, two tables setting out the numbers of households accepted by local housing authorities as eligible for assistance, unintentionally homeless and in priority need, and therefore owed a main homelessness duty (to ensure that suitable accommodation is available) for each local authority area and for each financial year from 1997-98 to 2011-12. One table covers the period 1997-98 to 2008-09 and the other one covers the period following local government restructuring, from 2009-10 to 2011-12. This information has been collected from local authorities on quarterly P1E returns.
Figures at local authority level for earlier years are not readily available: some may be available from paper returns, but only at disproportionate cost.
Quarterly figures for recent years are also available from the Department's website at:
http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/homelessnessstatistics/publicationshomelessness
The available figures for numbers of people estimated or counted as rough sleepers within each local authority area from 1998 to 2011 are published on the Department's website at:
http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/homelessnessstatistics/roughsleepingcounts
Please note that the methodology involved was reviewed and changing during 2010, meaning that figures for 2010 and 2011 are not comparable with those for earlier years.
The Department does not collect or publish information on the number of homeless people in individual parliamentary constituencies, except for the few cases where a constituency is coterminous with the area of a local authority, which are covered in the answer above.
Homelessness acceptances remain lower than in 28 of the last 30 years and are still under half the level it reached under the Labour Government (49,000 in 2011 compared with 136,000 in 2003).
We are investing £3900 million in homelessness prevention over four years 2011-12 to 2014-15). We provided an additional £70 million last year to help local agencies prevent and tackle homelessness.
The correct answer should have been:
Mr Prisk
The Department publishes statistics on homelessness for England. Figures for the other UK countries are a matter for the devolved Administrations. I have placed in the Library of the House, two tables setting out the numbers of households accepted by local housing authorities as eligible for assistance, unintentionally homeless and in priority need, and therefore owed a main homelessness duty (to ensure that suitable accommodation is available) for each local authority area and for each financial year from 1997-98 to 2011-12. One table covers the period 1997-98 to 2008-09 and the other one covers the period following local government restructuring, from 2009-10 to 2011-12. This information has been collected from local authorities on quarterly P1E returns.
Figures at local authority level for earlier years are not readily available: some may be available from paper returns, but only at disproportionate cost.
Quarterly figures for recent years are also available from the Department's website at:
http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/homelessnessstatistics/publicationshomelessness
The available figures for numbers of people estimated or counted as rough sleepers within each local authority area from 1998 to 2011 are published on the Department's website at:
http://www.communities.gov.uk/housing/housingresearch/housingstatistics/housingstatisticsby/homelessnessstatistics/roughsleepingcounts
Please note that the methodology involved was reviewed and changing during 2010, meaning that figures for 2010 and 2011 are not comparable with those for earlier years.
The Department does not collect or publish information on the number of homeless people in individual parliamentary constituencies, except for the few cases where a constituency is coterminous with the area of a local authority, which are covered in the answer above.
Homelessness acceptances remain lower than in 28 of the last 30 years and are still under half the level it reached under the Labour Government (49,000 in 2011 compared with 136,000 in 2003).
We are investing £400 million in homelessness prevention over four years 2011-12 to 2014-15). We provided an additional £70 million last year to help local agencies prevent and tackle homelessness.
Westminster Hall
(12 years, 3 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Backbench Business
(12 years, 3 months ago)
Westminster HallRead Full debate Read Hansard Text
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
West Coast Main Line
(12 years, 3 months ago)
Westminster HallRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Rosie Cooper (West Lancashire) (Lab)
I beg to move,
That this House has considered the e-petition from Ross McKillop and others relating to the West Coast Mainline franchise decision.
The motion reflects the concerns of more than 170,000 people who have signed the e-petition and it calls on the Government to reconsider the decision to award the west coast main line franchise to FirstGroup.
It is a pleasure to serve under your chairmanship today, Mr Bone. I understand that this is the first Backbench Business Committee debate to take place in Westminster Hall on a Monday. I wish to thank the Committee for accepting the application for this debate and for granting us time before the conference recess. I congratulate the Minister on his new role at the Department for Transport. I am sure that he would have welcomed a less contentious issue so early in his post.
Due to Committee business, members of the Transport Committee are unable to join us today. My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) and her Committee colleagues are already interrogating people over this matter.
Iain Stewart (Milton Keynes South) (Con)
I am a member of the Transport Committee and I am here.
Rosie Cooper
I am glad that the hon. Gentleman is here and is able to contribute to the debate. His colleagues, I believe, are away on business.
The Transport Committee is considering this matter through the work of its Rail 2020 inquiry. Several hon. Members from Lancashire, who are currently attending a meeting with Ministers on employment matters in their constituencies, wish, with your permission, Mr Bone, to speak later in the debate.
More than 170,000 people put their name to an e-petition, which was started by Ross McKillop, calling on the Government to reconsider their decision on the west coast main line franchise. That huge number of signatures, which was collected over a short period of time, reflects strong feelings and shows that the subject deserves to be debated in the House.
On the west coast main line, we are talking about 31 million passenger journeys a year and a £5.5 billion contract that will last for 15 years—that is this Parliament and the two that follow it. Hon. Members from all parts of the House have called on Transport Ministers to give Members an opportunity to scrutinise in more detail the actual process through which the decision was made. In August, my hon. Friend the Member for Garston and Halewood (Maria Eagle) wrote to the then Secretary of State for Transport, asking her to make a statement to the House. This will be the first opportunity for Members from all parts of the House, apart from the Transport Committee, to ask questions of the Minister, to begin to scrutinise the decision and to put their views and those of their constituents directly to the Minister.
A considerable amount of press coverage and opinion seeks to make the issue one of FirstGroup versus Virgin. Personally, I do not care much about the name of the company that provides the service. My priority is to ensure that the final decision, taken by the Department for Transport, is the best deal for taxpayers and fare payers. I hope to get from the Minister today the guarantees and reassurances necessary to be satisfied that the decision-making process is robust, so that the right decision is made with taxpayers’ money.
Given the determined efforts of Transport Ministers to avoid answering questions on this franchise decision, I do not begin this debate from a position of resounding confidence. We are told over and over that the process is rigorous, detailed and fair. It is as if by repeating that mantra we will all believe it. Yet there have been many complaints that the process does not even deliver against its own objectives.
The basis of the judicial review is that the Department for Transport broke its own rules when evaluating the bids, and we need to get to the bottom of that. There are those who argue that the entire franchise bidding process is flawed, and driven solely by the promise of large sums of money no matter what the cost, and irrespective of the stated objectives.
Mr Dave Watts (St Helens North) (Lab)
Does my hon. Friend share my concern that the Department for Transport officials, who looked at the Virgin contract when it was let, underestimated the amount of money that would be made by Virgin? Given that there is that lack of credibility, how much credibility does she place on the assessment of the First bid?
Rosie Cooper
I was not a Member of this House when that decision was taken, so was not in a position rigorously to examine it. Overall, though, I do not have great confidence in the various projections of the Department.
To continue, let us take, for example, the objective to achieve sustainable value for money. That is a stated objective, yet the process encourages risky bids because companies know that if their bid is £250 million more than any other bid their competitors’ bids do not go forward for further evaluation. I have deep reservations about a system that does not attempt to answer why one bid is so much higher than all the rest, and then does not quantify the difference.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
The hon. Lady intimates that she has concerns about the way in which matters are carried out at the Department for Transport. Like me, she was at a meeting when Virgin Trains, which had been invited to talk to MPs, said very clearly that it had discussed its concerns with Lord Adonis. What did the previous Labour Administration do to allay Virgin’s fears at the time?
Rosie Cooper
I did not clearly hear that part of the meeting. Perhaps it happened before I arrived. I was there when the hon. Gentleman said that he called the meeting so that Virgin and FirstGroup could say how they had arrived at their current situation—of one being awarded the contract and the other having started a judicial review. I pointed out that nobody from the Government had bothered to turn up to answer MPs’ questions and that democracy had been short-changed.
I understand that the Government use a computer programme to test the assumptions within the bid, which the Minister will no doubt tell me is a robust approach. My response would be to ask whether this was the same modelling package that was used by the consultants who said that the west coast main line should be carrying an extra £15 million of fares during the period of the Olympics and Paralympics? It was never physically possible to get that volume of passengers within that time frame to deliver £15 million of sales. In the end, the additional revenues amounted to between £1 million and £2 million. Such projections were for a single event over a short period of time and they were way, way off. How much confidence does that instil in us over projections that are supposed to last 15 years?
Tim Farron (Westmorland and Lonsdale) (LD)
The hon. Lady points out that it is very easy for all of us to be experts after the fact. Does that not demonstrate that the real problem here is that this decision was taken maybe completely appropriately, but it was announced during the summer recess so that Parliament had no chance to discuss or interrogate this issue? Moreover, perhaps one criterion that ought to be added to the process is what the public and the users of the service think about it.
Rosie Cooper
The hon. Gentleman raises several of the points that I am about to discuss in more detail, but I absolutely agree with him.
Surely projections about the contract should score highly on the basis of value for money for the taxpayer and the commuter. There is a belief that passenger growth could continue to be 10% per annum. However, such growth figures were achieved at the top of the economy. Even for a non-economist such as me, it does not take a great leap of faith to think that such growth rates are not sustainable in an economy that is in the doldrums and with fears of a double-dip recession not having gone away.
David Mowat (Warrington South) (Con)
The hon. Lady is quite right to say that all these projections for the future are estimates and guesses, that they may be too low or too high and that FirstGroup made very aggressive ones. However, is not the key point of a procurement process to ensure that the risk in respect of those projections is with FirstGroup’s shareholders and not with the passengers? The issue is how we manage that risk and not what the estimates were.
Rosie Cooper
Absolutely, and I will come on to that point later in my remarks, because it is absolutely clear that the risk here, with such a small guaranteed sum, is with the taxpayer.
Joan Walley (Stoke-on-Trent North) (Lab)
I congratulate my hon. Friend on securing this debate, because it is important that this matter is debated in Parliament. However, the particular issue that we are considering here needs to relate to the deliverability of the process by which the contract has been offered, and there is no real way that we can assess, all those years into the future, whether the winning bidder can produce what is meant to be there. Therefore it is a matter of great concern that there does not seem to be a proper assessment process about how the bid is actually given out.
Rosie Cooper
I agree, and again my hon. Friend raises points that I will return to later in my remarks.
It is absolutely for sure that we are dealing with risk—risk in the assumptions and economic risk. However, the only bidder for the contract that does not seem to have put up a lot of money is the company that has been awarded the contract. Again, I will return to that point later.
Economic assumptions are central to franchise bids. Governments expect rail companies to predict GDP trends over the lifetime of a franchise. As the Government cannot manage to predict GDP over the short term, how can we have confidence that any bids based on long-term projections have credibility? If an economist can tell me that those projections are credible, I suggest that the Government employ that economist as the current lot of economists cannot manage to.
Mr Watts
Is not the point that the Department for Transport has a long record of getting everything wrong? It gets it wrong on roads, on airports and on rail. The only thing that it seems will protect the Minister is that some penalties will be imposed if the contract is not delivered in the way that his officials propose. Should not we be transparent and absolutely clear about how this contract was let, know how any penalties are going to work and be quite clear that there will be no payment by the taxpayer if things go wrong?
Rosie Cooper
I absolutely agree with those comments, and those points are central to why I asked the Backbench Business Committee to allow a debate on this subject today. It is clear that there should be an open and transparent process. Perhaps we should be at the point now of comparing bids.
Let me return to my train of thought. There are other anomalies. For instance, the Virgin bid offers £133 million more in the period of the franchise up to March 2020. After that point, FirstGroup says that it will pay £1.23 billion more between March 2020 and March 2026. It does so based on a forecast of huge growth in passenger numbers, which comes at a time when there is no planned investment and when there will be huge disruption from the High Speed 2 rail project. So I ask again: how is sustainability at the heart of this decision?
Besides the computer modelling, there is also the anonymised scoring system, which I hope would prioritise sustainable value for money over high-value promises.
Mr William Cash (Stone) (Con)
We know that the Transport Committee is looking at this issue. Has the hon. Lady asked whether the Public Accounts Committee should look at it? As we are dealing with public money and value for money, is not what she is referring to today an ideal issue for the PAC to consider? Perhaps later, after the debate, she could address that question to the right hon. Member for Barking (Margaret Hodge), who is the Chairman of the PAC.
Rosie Cooper
I will indeed do that. I had not considered the idea of asking the PAC to look at this issue, but I undertake now to ensure that I send a letter to that effect to the Chairman of the PAC before I leave Parliament today.
Joan Walley
When my hon. Friend does so, will she ensure that she asks for the recommendations of an earlier PAC report on procurement to be considered within the context that has just been described by the hon. Member for Stone (Mr Cash)?
Rosie Cooper
Indeed I will, and I will seek further advice from my right hon. Friend on that point as well.
There is considerable difference in value when one bidder offers £800 million worth of investment and the other bidder offers £350 million. Unbelievably, there are reports that FirstGroup scored higher in the bidding process on customer service than Virgin did. Can the Minister tell me how the scoring system squares that with the results from various customer satisfaction surveys of FirstGroup’s current users—in other words, FirstGroup’s passengers—that show that those users rated the Great Western service as the second worst service around? It is not unfair or illogical to assume that, if a company offers a certain service on one line, it may offer something similar on another line. So can he explain how an anonymised scoring system is better informed than the passengers who actually use the railway system and FirstGroup in particular?
Sustainability is one of the watchwords in every aspect of public expenditure. Ensuring that the bids that are submitted can be sustained over the life of a franchise is essential. One of the reasons why hon. Members asked for the debate is that recent franchise experiences have shown that the highest bids—the riskiest bids—are not necessarily sustainable bids. The Government have even admitted that the successful bid for the west coast main line is indeed the riskier bid.
I was intrigued to hear that, during the tendering process, the Department for Transport informed one bidder that it did not view a 5% margin as sustainable. In the light of that information, that bidder reworked its bid and achieved a 7% margin. That leaves me perplexed, when I read that the successful bid is based on a 5% margin. If that is true—I assume that it is—given the lack of information and transparency, a whole series of questions are raised. Does the DFT believe that a 5% margin is sustainable? Did DFT officials give each of the bidders the same information? If they did offer the same view on sustainability to each bidder, why was a bid accepted with a figure that they believed to be unsustainable? That is an important question because it relates to risk and, in turn, how that relates to the guarantees being sought by the Government.
There is considerable contention about the guarantee that the successful bidder was asked to put against the bid. In the first case, my understanding of the guarantee is that it is based on the assessment of risk using a set formula. It is argued that if the Department had applied that formula uniformly, FirstGroup would expect, reasonably, to have been asked to put up a guarantee of around £600 million, not just the £215 million asked of it initially, which was finally reduced to £200 million. Secondly, did any negotiation take place with FirstGroup on the level of guarantee? If so, what were the circumstances? How did we reach the very small guarantee figure of £200 million, if the Department had been applying the same formula across all bids? If there was no provision within the invitation to tender for the guarantee to be negotiated, how does the Minister explain the variation in the figures from potentially £600 million down to £215 million, and finally to £200 million? Those figures are relevant to mitigating taxpayer risk.
We must not forget that in recent years a number of train operators have handed the keys back to the Government on franchises such as the east coast main line. I believe that Members want to be assured that that will not happen again and that taxpayers have an assurance that they will not be held to ransom by Dick Turpin train operators asking them to stand and deliver, having secured the contract on a bogus premise, taking their profits and scarpering when it is time to deliver the promised high return.
Daniel Kawczynski
I hope that the hon. Lady is not referring to any train operators as Dick Turpin-type figures.
Rosie Cooper
Oh, I think there are a lot of Dick Turpin-type figures about.
I would very much like to hear from the Minister on this precise point: has the Department applied its own rules or not? Given the whole handling of the process, a judicial review has been applied for, which has left us in a position where re-nationalising the line is being considered. The new Secretary of State for Transport has stated that he would seek to re-nationalise the west coast main line if there is a failure to reach an agreement before 9 December.
David Mowat
The hon. Lady suggests that an operator might walk away from a franchise having made the money in the early years of the contract. Is it not key for the Government to make it clear at this point that if the operator did that—giving the keys back, as she said—it would do no further work with the Government in any other contract? Therefore, for all intents and purposes, they would be barred from any further procurement processes in the future. If the Government made that clear, they would be acting in a much more private sector-type mentality, in a way that Governments often do not do. Does she agree?
Rosie Cooper
I would agree that, initially, we need a proper figure to mitigate taxpayer risk, to ensure that taxpayer costs are covered in the eventuality. However, if we have any more shenanigans, those operators should be barred from Government contracts.
Mr Watts
One of the problems that we see daily is that companies can go out of business and then start again under a new name. If First did that, could it not overcome that problem by reorganising itself, developing a new company and then bidding for future contracts? I do not see how we could legally stop it from doing so.
Rosie Cooper
I think that is a real option. I understand from the grapevine that First does not intend to brand the west coast main line “FirstGroup”, but that there is a great possibility that it will be called Horizon. We might be in that kind of territory; I am not sure.
If there is a failure to reach an agreement before 9 December, it would mean instituting a directly operated railway service on the west coast, matching the current system on the east coast. The Government’s own guidance says that 120 days are required to get that kind of operation in place, and here we are 90 days away from the end of the current west coast franchise. Will the Minister enlighten us on how that will be achieved to ensure the smooth transfer of services to the DOR, if necessary? There is much to consider and address: safety matters; employment and contracting issues; even the simple thing of setting up a website to sell tickets. What would be the associated costs of the DOR in the initial set-up and the monthly costs thereafter? Those costs would be incurred by the taxpayer because of the Government’s failure to handle the situation adequately.
We must consider the staff. Come 9 December, they will have no idea for whom they will be working—FirstGroup, the DOR, or perhaps even Virgin. As part of any transfer of a franchise, there is a responsibility for the incumbent to work with the new operator.
The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
The hon. Lady has been speculating quite a lot about the steps that the Secretary of State may or may not take as a result of a comment that he made yesterday. Let us be clear: he has a statutory duty under section 30 of the Railways Act 1993 to provide or secure the provision of services. As he made clear, that would be a temporary measure should the franchising arrangements not come into place.
Rosie Cooper
Is the Minister saying that any offer from Virgin to run the service at no cost and the best-value operation will affect his decision? I will ask him some questions about the associated costs should we set up a DOR.
I understand that two mobilisation processes are running side by side. Will the Minister tell us how that is working in practice? What are the associated risks and costs that arise from the lack of clarity? What assurances can he offer staff that their positions will be secure and the situation resolved?
The Minister has partially intimated the answer to the question that I am going to ask. If a DOR is to run the service, will it have the contract for a defined period, or will another mobilisation process be undertaken where an operator is awarded the contract? What will be the cost of that process?
One of the reasons for securing this debate is the manner in which the Department has handled the entire process, from the timing of the announcement to the consistent reluctance to answer hon. Members’ questions. We keep being told that this Government are open and transparent, and I want to believe that. We are told by the Department that it is confident in its decision on the west coast franchise. If I accept that both those statements are true, why have Transport Ministers not had the courage of their convictions and been willing to come to the House to make a statement to allow scrutiny of the process and the decision? There is a claim that one of the bidders had submitted questions to the Department seeking clarification on certain matters, but it has yet to receive a response. We are basically being told by the Department, “Trust us. Trust what we are telling you.”
Daniel Kawczynski
Before the announcement was made before the recess, I asked the Prime Minister a question about the process at Prime Minister’s Question Time. I do not recall hearing any questions from shadow Ministers or Labour Members challenging the process or the timing of when the decision would be made. Is that not the Labour party jumping on the bandwagon after concerns were generated in the media?
Rosie Cooper
Protecting taxpayers’ interests is a great bandwagon to jump on. We will protect their interests. The Department says, “Trust us. Trust us. Trust us,” and the hon. Gentleman is inferring that we should trust it. In the week that we had the Hillsborough revelations, “Trust us” is a very hollow call; I am not simply being cynical.
If the Government believe the decision is right, they should open the books and allow the bids to be compared. They should be open and transparent. To be honest, within the context of the east coast main line and the Great Western line, sadly I do not think we can put our faith in the Department.
During my comments, I have raised questions on the risk assessment, the funnelling of bids, the application of the rules and the soundness of growth projections. I ask the Department to try putting its faith in the democratic process and the parliamentary system so that, through debate, questioning and scrutiny, we can be assured that we have arrived at the best outcome for all parties.
Those who fail to learn the lessons of history are doomed to repeat them. The Government will not be forgiven if they allow history to repeat itself with any company taking profits from running our railways and then walking away from the contract without paying a huge penalty to cover taxpayers’ costs and, as the hon. Member for Warrington South (David Mowat) said, being barred from future Government contracts. Unless the Government can evidentially support their case, I, as one of the 170,000 people who signed the e-petition, call for them to reconsider their position.
Iain Stewart (Milton Keynes South) (Con)
It is always a pleasure to serve under your chairmanship, Mr Bone.
I draw attention to my entry in the Register of Members’ Financial Interests. My interests in this important subject are threefold. First, as I suspect is true for most hon. Members in the room, the west coast main line serves my constituency. Secondly, I use the line on a regular basis for both business and leisure. Finally, I am a member of the Select Committee on Transport and, as the hon. Member for West Lancashire (Rosie Cooper) has mentioned, we are undertaking an inquiry into the bidding process as part of our general Rail 2020 inquiry. I stress that I speak today entirely in a personal capacity and not on behalf of the Committee.
I want to take a step back and remind hon. Members of what we are debating. We are talking about a highly congested, highly used multi-use railway line that links Glasgow, north-west England, the midlands and London. The west coast main line is one of the country’s key railway arteries and has seen exceptional rises in demand from both passengers and freight over recent years. All the indications are that that demand will continue to grow over the next 10 to 15 years. Indeed, that is one of the main reasons for the High Speed 2 debate, because the line will eventually run out of capacity and intermediate steps such as lengthening trains, remodelling junctions and the rest will not deliver the capacity we need.
Within the passenger context, there is also a conflict of needs on the west coast main line. Some users want London, Birmingham, Manchester and Liverpool to be linked with very fast services, and other places on the line, such as my constituency, want inter-regional services that stop so people can travel from Milton Keynes to Glasgow or from Nuneaton, Rugby and elsewhere to other destinations on the line. Plus, of course, there is all the commuter traffic in and around the major conurbations on the line. The west coast main line is a complex railway system, and it is vital that, over the next 15 years before High Speed 2, we make the most efficient use of that line.
No one, other than the Department’s senior officials and Ministers, has seen the full detail of the two bids, which I believe run into thousands of pages and have been assessed over many months. We should, therefore, be a little careful how we approach this debate. We have all heard the accusations and counter-accusations made by the two companies, but we have not seen that information. Indeed, picking up on one of the points raised by the hon. Member for West Lancashire, I am not sure we can see the bids in any detail because the information they contain is commercially sensitive, and no bidder would want such information released during the bidding process.
Anas Sarwar (Glasgow Central) (Lab)
I am not sure that is something I want said with some of my Labour colleagues in the room!
There has been a debate on the two companies, but does the hon. Gentleman agree that it is not about which company operates the line but about getting the right deal for the taxpayer and the passenger? People need reassurance that we will get the same quality and frequency of service and the same low fares and that taxpayers will not eventually have to foot the bill.
Iain Stewart
I agree with the hon. Gentleman. I also put it on record that I have no preference as to whether Virgin or FirstGroup wins the franchise. Virgin operated the franchise perfectly competently, and I would have had no problem had it been the successful bidder. Equally, FirstGroup has made a very attractive offer, so I approach this from a neutral perspective.
Albert Owen (Ynys Môn) (Lab)
In his introduction, the hon. Gentleman omitted the fact that the west cost main line also serves north Wales. I will address that important point if I catch your eye, Mr Bone.
The hon. Gentleman mentioned that we may never know the detail of the bids, but surely that is the purpose of the Transport Committee’s inquiry. Ministers are there to answer such questions, and it would be in the Government’s interest if we were to have at least a summary so that we could clear up some of what he calls “speculation.”
Iain Stewart
I apologise to the hon. Gentleman; of course the route also serves Chester and the north Wales coast, and I will refer to that a little later.
We have had a summary of the respective bids, but to assess fully whether the FirstGroup bid is deliverable in preference to the Virgin bid, we would need to see the very detailed evidence that supports the headlines we all know about. My contention is that we cannot expect to see that while the bidding process is ongoing, because the bids contain commercially sensitive information. That would be like a card game in which each player has to reveal their hand before they play.
David Mowat
My hon. Friend is right that the bids contain a huge amount of detail that is very hard for anyone here to understand. In his Select Committee role, he might like to investigate—I have heard this several times—the Virgin bid not being evaluated against the other bid because of the £250 million price gap, which has been highlighted by the hon. Member for West Lancashire (Rosie Cooper). That would be worth understanding.
Iain Stewart
That is a fair question. I cannot answer, but perhaps the Minister will.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
What is the purpose of the Select Committee’s report, or an inquiry, if it cannot be given the evidence that will show the difference, if there is a difference, between the two bids? The press, for instance, have suggested that the FirstGroup bid is back-loaded. How will the Select Committee work to the advantage of the taxpayer in such circumstances?
Iain Stewart
That is a fair question. When the Select Committee debated whether we should call Sir Richard Branson, Tim O'Toole and their colleagues, I made the point that we would not be able to probe them fully because we did not have access to the information because of the legal position. I would love to be able to go further, but we shine as much light as we can.
Iain Stewart
I will give way one last time, but I must then make some progress.
Mr Brown
I thank the hon. Gentleman for giving way. Obviously, the bids contain significant detail. As he and other hon. Members have indicated, we may never find out all of it. There are so many claims and counter-claims, and through the Select Committee and this debate we are looking for a clear indication from the Minister, without the detail, of whether every claim and counter-claim was carefully considered. Has he covered everything to ensure that the outcome is fair for the taxpayer?
Iain Stewart
Some of those questions are for the Minister to answer. I shall come in a moment to some reasons for my own conclusions about the two bids, but there is a caveat attached to what I say, because I do not have access to that information.
For the first half of the franchise period, up to eight to 10 years, the two bids are remarkably similar. There may be a higher premium payment from one than the other in a given year, but the lines on a graph are broadly consistent. They diverge only in the last period. The shorthand explanation is that FirstGroup believes it can continue to grow the market throughout the franchise, whereas Virgin believes that revenue growth and passenger numbers will tail off towards the end. The first bid is therefore more ambitious, and consequently riskier. What we must assess is whether that risk is acceptable. My conclusion is that it is within the bounds of acceptability.
My first reason for believing that is that population growth along the route is likely to be considerable over the 15 years. The Milton Keynes area has 25,000 housing permissions over the lifetime of the bid, and other towns and cities on the route have similar housing growth ambitions for that time. Feeder services into the main line will also be enhanced. The east-west rail link in my area will, I hope, open by 2017. One of its attractions is that it will build feeder services into the west coast, for people from Oxford or Bedford who might want to travel to stations in the north-west, or Scotland. That will drive demand on the line. Similarly, in the Manchester area, the northern hub will we hope attract more rail users on to the line and enable it to continue its ambitious growth, taking passengers away from the air route. For those reasons I believe there will be sustainable demand in the next 15 years.
The next question is whether the line can deliver the capacity to meet the demand. One of Virgin’s accusations was that by the end of the franchise First will have to fill every seat on every train every day to meet its premium payments. We need to examine the detail of what First proposes. It proposes more trains than the Virgin bid does. Both companies propose to buy new electric train sets for parts of the network. I understand that the difference is that First will augment the existing fleet. Virgin would replace the Voyagers with the new electric ones, whereas FirstGroup would keep the Voyager fleet and lengthen five-car trains into 10-car trains. First also wants to use more ambitious ticketing structures: a new class of travel between standard class and first class. It makes a point about capacity; the figure for the trains across the week is only 35%, whereas other franchises run at near 50%.
Anas Sarwar
Is not the hon. Gentleman concerned that with that predicted doubling of user numbers on the service in the next 15 years, and given that figure for capacity of 35%, fares will go up, and will be much higher in peak times, to attract people to travel off-peak? That could lead to a massive increase in fares for people using the service at the most important times.
Iain Stewart
Without wanting to put words in his mouth, I think, from our questioning in Committee of Tim O’Toole of FirstGroup, that he would reflect whatever changes the Government make to the definition of the peak period. The ambition is indeed to try to get a more equitable spread of rail demand across the day so that trains are not packed at certain times while others run comparatively empty. That is a sensible ambition. However, the long-term answer to the hon. Gentleman’s question is a step change in rail capacity, which will come with High Speed 2. In the mean time, the question is how to make best use of the capacity that we have.
Mr John Leech (Manchester, Withington) (LD)
I thank my fellow Select Committee member for giving way. I felt that one problem with the questions to Tim O’Toole was that he seemed to argue that First would be able to get people on to those peak-time trains that are under-utilised at the moment with a 15% discount on rail fares. However, that still seems significantly more expensive than the off-peak saver returns or first advance tickets. There is a danger that the ambition to fill those trains will not be realised without increasing the cost of some first advance tickets, so that people cannot get them on off-peak trains.
Iain Stewart
I thank my hon. Friend and fellow Select Committee member for that point. There will still be a peak period and an off-peak period. My perspective is that we should be able to manage a more effective distribution. However, Mr O’Toole also made the point that he will not realise his ambition to fill the trains if fares are so high that people will not use them. His ambition is to achieve a modal shift from car and air to train.
Mr Watts
Perhaps the hon. Gentleman can clarify one point. The operators do not buy the trains; they lease them. If the increase in question does not happen, and Virgin is right and First is wrong, will First be forced to lease trains in the 10th, 11th, or 12th years—up to 15 years? Alternatively, will it just be able to decide that perhaps it will not increase capacity then, because there would be no justification?
Iain Stewart
I am not privy to the contractual details in relation to the trains. From memory, First would be obliged to continue with the existing Pendolino fleet, which is the mainstay of the route. The trains in question are additional ones, to meet the capacity. Things could easily go the other way. The trains that are being bought are six-car ones; if, suddenly, passenger numbers go up beyond expectations, it might be feasible to lengthen them, in the same way that the Pendolinos have been lengthened from nine to 11 cars.
Mr Watts
The hon. Gentleman is being generous with his time. If what he said is the case, the commitment to long-term investment may never materialise. It is one of the main planks of the argument for First, but First may not build the capacity because there might not be a justification for it. Does the hon. Gentleman agree that that is why it is important that we have more transparency, and can all see the details of the contract?
Iain Stewart
Perhaps it is a case of whether we see the glass as half-full or half-empty. I see an attractive proposition for growth in use. Why would FirstGroup, an experienced rail operator, want to tarnish its reputation by not delivering on what it promises? I will come on to one difficulty that I anticipate—or on which, at least, I would like reassurance. However, I think First’s ambition is genuine. As I have tried to explain, I think that there is underlying growth in the market, and that First will be able to innovate with new products to attract people on to the railways.
I do not want to continue much longer, because other hon. Members want to contribute. I have a concern about one aspect of the matter, and the hon. Member for West Lancashire touched on it. There will be considerable work on the west coast main line over the franchise period, particularly in the Euston area, if it is decided that that will be the High Speed 2 terminus. That may have an impact on the ability of the line to deliver the extra capacity. I should be grateful for a comment from the Minister, whom I welcome him to his post. He has long taken an interest in rail, and richly deserves his position. Perhaps he could say a little about how the upgrade work at Euston and elsewhere on the line will be accommodated, along with growing passenger numbers, over the period in question. I believe that there are solutions. For example, it might be possible to divert some commuter traffic on the London midland line into the Crossrail terminus while Euston is being upgraded, and for extra capacity to be created there. If the Minister would say a few words about that, I should be grateful.
David Mowat
The thrust of my hon. Friend’s remarks is that if there is an issue with Euston or the revenue projections, that is a problem for the Government, but it must be a problem for FirstGroup, and the contractual basis must make that clear. Such points, although interesting, do not mitigate FirstGroup’s liability. That must be a principle.
Iain Stewart
That is a fair point. I genuinely do not believe that FirstGroup would be making the bid if it did not believe that it could deliver. However, we do not have the full details, and I do not think that we can. I believe that the process has been rigorous. The bids were anonymised; the Government could not have displayed any commercial bias for or against any operator.
In conclusion, it is healthy that we have such a high level of ambition and competition. It is to the benefit of all who use the railway that different companies want to develop the line in innovative ways. I hope that my constituents and those of other hon. Members will see an improvement in their rail services over the life of the franchise.
Mr Peter Bone (in the Chair)
It might help Members to know that the winding-up speeches will begin no later than 6.55 pm, and that I intend to call first those who have given notice to Mr Speaker.
Derek Twigg (Halton) (Lab)
I congratulate my hon. Friend the Member for West Lancashire (Rosie Cooper) on securing this unique debate and for the interest that she has taken for many years in transport issues, rail and the west coast line.
I was a bit worried earlier when my hon. Friend the Member for St Helens North (Mr Watts) was criticising the Department for Transport for getting decisions wrong all the time. He mentioned rail. As a former rail Minister, I thought, “Does he mean me?” He has since popped over and said that he did not.
I was rail Minister for 18 months, and it was a fascinating period. We discussed franchising; I am certainly sceptical about it. I had to appear before the Transport Committee, then chaired by Gwyneth Dunwoody, the former Member for Crewe and Nantwich, a formidable individual who is, sadly, no longer with us. We always used to look forward to appearing before her in Committee to answer her questions. It was an experience. I remember asking the officials what franchising adds and what it brought to the party to improve things. I found it difficult to get an answer. The best that they could come up with was that it improves customer service, is more innovative and has brought improvements in service, but their answer was not overwhelming.
We had various problems with franchises. Southern was one that was sort of operated by the Department; now we have East Coast as well. There are alternatives to be considered. Franchising creates many problems, some of which we have heard outlined during this debate.
I welcome the Minister to his new job. I am sure that he will be helpful in answering our questions, and I am sure that he is finding out that the matter is not at all straightforward and has many difficulties and pressures.
I wanted to speak in this debate primarily because I believe that all politics is local. My constituents have contacted me asking me to put forward their views, both on behalf of passengers and because Runcorn station, one of the best-used stations on the west coast main line, is in my constituency, and numerous staff there are my constituents. I worry about their employment and their future. Surprisingly, a lot of people who have contacted me have said that they are disappointed that Virgin lost, because they think Virgin made a difference. Even one long-standing critic of Virgin has come to accept that in the circumstances of franchising Virgin has made a difference, but I will come to that shortly.
The hon. Member for Warrington South (David Mowat) has kept intervening to say that the risk to shareholders and taxpayers is crucial. That has not been made clear at all. Maybe the Minister will make it clear. It is a key issue, because the arrangements must be a good deal for both the fare payer and the taxpayer. We have no idea at the moment whether they are. I am sure that he will want to explore that.
The franchise decision was announced during the summer recess, denying Members of Parliament, many of whom have a close interest in the matter, recourse to questions to the Minister about the ramifications, the process and how the franchise award was arrived at. The decision to award the franchise to FirstGroup has created a lot of concern—I cannot recall a recent franchise award that has been so much criticised—so it is clear that this debate is important.
We are all well aware of the findings of the Transport Committee, chaired by my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), on previous franchise fiscal failures. To dwell on Virgin for a bit, I will not pretend that things have been trouble-free under Virgin—there were certainly a lot of difficulties in the early days—but it had and continues to have fantastic staff, whether at my station at Runcorn, which has won award after award for customer care and service, or on the trains. If I have any criticisms of Virgin, one is that it changed a good thing. Passengers travelling on a line got to know the train crews, and Virgin decided to change them and swap them around the country. A lot of people thought that that added to the drop in service. It was not popular, and it led to a drop in morale.
The prices that Virgin charges for walk-on fares are frankly scandalous; I think that we all know what sort of prices I am talking about. However, it had many innovative ideas about advanced ticketing. Gating along the line could have been done better, as has been discussed in relation to the franchise. Parking charges have been a problem. If I had not stepped in to confront Virgin about parking charges at Runcorn, they would be much higher than they are now, adding to the massive parking problems around the station faced by my constituents.
To return to the franchise, the Department for Transport still has questions to be answered regarding its failure on the relative bid risk assessment; FirstGroup’s bid posed a risk not properly mitigated through adequate risk insurance. My hon. Friend the Member for West Lancashire has asked many questions that are in the public domain, so I will not repeat them. The Minister has heard them, and I hope that he will answer them.
Derek Twigg
We would have to explore the consequences to the rest of the rail users on the system, but it should certainly be explored.
I return to a key issue that several hon. Members have pointed out. A cloud of controversy has surrounded the back-loading of the premium payments to the Government in the final few years of the franchise, whereas Virgin pledged more cumulative premiums to the Government for the first nine years of the franchise. I know the west coast line well, not just from travelling it but from my experiences as the rail Minister, and there were major problems on the west coast line during the early 2000s, for various reasons. At one stage, it was almost in a state of collapse, and the train services provided were pretty awful. Income dropped massively during those early years, for obvious reasons: people were not using the service. Because of the problems, they were using alternative transport such as cars, planes and so on. Income jumped in 2004 or 2005, and the timetable came out and so on. As the Minister will be aware, in 2009, a new timetable was introduced with weekend running and faster trains, which I mentioned. Did the bid take account of, or did Ministers ask questions about, that unusual situation at the beginning at the 2000s and its impact on longer-term predictions of income?
I assume that High Speed 2 will have a major impact on Euston, unless the Minister can tell me something different. Has any care been taken about that and the possible impact on the west coast?
The other question for the Minister relates to the GDP forecast on which the bids were based. Will the Minister confirm whether the bidders went along with the Government’s forecasts—a major failing in recent years—or a lower forecast? That will have an important impact on the bids. Projections are guess work, but I am not sure—we have not seen all the details, because we keep being told that they are confidential—whether the details actually add up. There is no doubt that the line has the potential for a great amount of growth. A point was made earlier about capacity and future investment. I am slightly sceptical about High Speed 2, because it has the potential to have an impact on necessary investment in the west coast main line.
Mr Watts
Does my hon. Friend agree that it seems that the First bid will deliver premium payments at the end of the contract, which will mean that the Government will have less money to invest in the west coast main line in the early years? Is there not an argument for doing the opposite, so that we can invest to deal with the congestion problems we will face while waiting for High Speed 2? Given the fact that no one knows whether HS2 will go ahead, is it not crucial to invest early rather than later?
Derek Twigg
As ever, my hon. Friend makes an important point. One key failure of the system—I hold my hands up as a former rail Minister—is in being unable to get investment into certain franchises to improve rolling stock, passenger experience, gating and so on. Some companies that have won franchises have decided not to invest, for various reasons that we do not have time to go into.
As I said, all politics is local. Runcorn, in my constituency, has benefited significantly from improvements put in place in the past 10 years or so. I am concerned that we will not build on those improvements and, because of problems with the franchise, take a step backwards. What has happened in recent years is remarkable. Virgin has achieved a good partnership with Halton borough council, which has been crucial in the reconstruction of Halton’s economy. The previous Government’s massive £8 billion investment in the west coast main line, after decades of underinvestment by other Governments, was crucial in achieving the improvements we now see, and Virgin became part of that achievement because it ran the franchise. We have seen massive improvements. From Runcorn, it now takes just under two hours to get to London, with the fastest train taking 1 hour 50 minutes.
Mr Marcus Jones (Nuneaton) (Con)
Some things that happened under the last Labour Government and during Virgin’s franchise were not actually that positive for people on the west coast main line. Through his Government’s actions, my constituents in Nuneaton were severely disadvantaged in 2008, when all their fast off-peak services were taken away, something that hopefully the new franchise will rectify.
Derek Twigg
I understand the hon. Gentleman making an important point about his constituency, but faster trains to London were part of the attractiveness of the changes that were made. Where most passengers got on was important in making those decisions, and I am sorry that that disappointed the hon. Gentleman. I was very pleased for my constituency. I have not seen the details of the new franchise, but I hope there will be no attempt by the winning bidder to reduce the number of trains that stop at Runcorn. Merseytravel has pushed strongly for trains to stop at Liverpool Parkway, but we do not want any reduction in the number of trains stopping at Runcorn because of the economic impact the excellent service has on my constituency.
There have been massive station improvements. Mick Noone, the transportation strategic director at Halton borough council, has said the line is
“extremely attractive and well used”.
He went on to say:
“The quality, frequency and reliability of the services have undoubtedly encouraged more people to use the train”.
After years of persistent lobbying by me and Halton borough council, we were able to secure investment for a £650,000 refurbishment programme in Runcorn station. Its tired old 1960s appearance has been upgraded with new cladding, improving the experience for passengers and for my constituents who work there and provide such brilliant service.
Mark Pawsey (Rugby) (Con)
The hon. Gentleman’s experience as a former Minister is valuable, and on many occasions he has referred to the substantial public investment in the west coast main line. Is it not that investment itself that makes it important for the Government to go for the bid that gives the maximum return?
Derek Twigg
If the Government go for a bid that says it will give the maximum return but it does not stack up, that is a problem. I am glad that the hon. Gentleman made the point about the massive amount of public investment that took place under a Labour Government; it has made a massive improvement.
Derek Twigg
Most of the problems with the west coast main line were due to the lack of investment during the 18 years of the previous Conservative Government, so if the hon. Gentleman wants to get into a political argument I am happy to do so.
Ann McKechin (Glasgow North) (Lab)
My hon. Friend is making some excellent points. Does he agree that there are a lack of effective penalties in this contract? If the return to the taxpayer is back-loaded, there is no guarantee that the investment required on this vital line will take place in the way envisaged by the Government. I have to yet to hear where the effective penalties will apply.
Derek Twigg
My hon. Friend is absolutely right and we need to know. The Minister is probably getting the answer as we speak, which I hope he will be able to give us later.
I am concentrating on what this issue means to the passenger and the taxpayer. For the passengers in my constituency, the experience has been superb. We want it to continue and do not want it to be put at risk. From 2010-11, there was a total of 619,882 entries-exits at Runcorn station, up almost 16% on the previous year according to data from the Office of Rail Regulation—a significant improvement.
I have asked the Minister some specific questions that fold in nicely with those asked by my hon. Friend the Member for West Lancashire. I do not want to put the improvements that have benefited my constituents in the past 10 years or so, particularly in the past five years, at risk. We want to continue to see improvements. The west coast main line is vital to the economy of Merseyside, Cheshire and my constituency of Halton in particular. I hope the Minister will take into account the points raised when he makes the final decision, and that he answers them as openly and as transparently as possible.
Mark Pawsey (Rugby) (Con)
It is a pleasure to serve under your chairmanship, Mr Bone.
I would like to speak about the importance of the rail connection to my constituency of Rugby. I am pleased to see the Minister in his place. He will recall, in his former role, standing on a drafty Rugby station platform months before the 2010 general election. The rail connection is of massive importance. We are in the centre of the UK and we benefit from the crossroads of the motorway network. We also benefit from the 50-minute journey time on the existing Virgin service from London Euston. That service has enabled us to attract businesses to our town, where we offer lower wages and lower premises costs than businesses based in the capital. It has also led to a large increase in the number of people who commute on a daily basis from Rugby to London. The quality of the service they receive is fundamental.
The recent history of the line has been one of substantial improvements in service from Virgin. I put on record my thanks, and that of my constituents, and congratulate it on the way it has improved. My predecessors as MP for Rugby would have had a far busier time dealing with constituents on rail issues than I have had. In fact, one of my predecessors, Andy King, the MP from 1997 to 2005, was instrumental in setting up the Rugby rail users group, a campaign body set up to deal with service problems. I often attend that group, but I am not told of significant problems or failures on the line. In fact, in the immediate aftermath of this decision being announced, I went on local radio and advised that there had been no complaints about the service provided by Virgin in the time that I had been Rugby’s Member of Parliament. Somebody got in touch with me to remind me that there was an issue, but it was a ticketing issue rather than a service issue.
We have gone through a very public tender process. We knew that the tender was coming up at around this time; it had been shadowed for a great deal of time, there had been lots of publicity and the requirement was known. When assessing this tender, the Department for Transport would have known that this decision would come under massive scrutiny. I am confident that such scrutiny will have led to the utmost probity in respect of its decision.
As hon. Members have mentioned, the Government have a duty to secure the best deal. They have invested £9 billion in the west coast main line. There is no use trumpeting big numbers if we do not get some benefit from that investment. It is important that we get the return not only to fare payers, as users of the line, but to the taxpayer more broadly.
Mr Watts
It is also the duty and responsibility of the Ministry of Defence to get value for money for contracts, but as we know that often does not occur. So what people want to achieve and what is actually achieved can be two different things. Does the hon. Gentleman agree that the GDP factor is crucial? If the GDP figure is halved, will First’s bid still be deliverable? If it is not, surely that may put at risk the whole analysis of this contract.
Mark Pawsey
I will come on to the First bid, including questions that other hon. Members and I have put to it about the accuracy of its bid and where its bid stands. I am not sure that making comparisons with other Departments in this debate is helpful, Mr Bone. We need to ensure that the Government get the maximum value for money for every item of expenditure.
John Hemming (Birmingham, Yardley) (LD)
As a Birmingham MP I use that train, although, to make a declaration of interest, I came down on the Chiltern line. Does my hon. Friend agree that consideration should be given to whether closing down one competitor may reduce the competitive nature of tendering in future and increase aggregate costs?
Mark Pawsey
I am about to talk about my own business experience in tendering. Clearly, the more tenderers available in the tender process, the greater the competition and the better chance of getting the best deal.
The First bid is worth more. I have run a business and, on occasions, have missed out on a contract, so I understand Virgin’s concern. In my business, from time to time we lost contracts, which was particularly frustrating when we were confident in a bid and had given exceptional customer service in recent years. It is appropriate and shrewd business for Virgin to encourage their satisfied customers to make representation through the petition. That activity has stimulated this debate.
It is estimated that 2,000 service users from my constituency are among those who signed the petition. I have received many letters and e-mails from constituents asking me to participate in this debate and drawing attention to the substantial improvements in service that they have experienced over the years. I am happy to do that. There are, of course, those who have not had such a good experience and I have in front of me an e-mail from one of those.
In addition to the increase in revenue to the Government, FirstGroup’s offer contains other positives. My hon. Friend the Member for Milton Keynes South (Iain Stewart) drew hon. Members’ attention to the additional seats and services that would be made available. I can, perhaps, support my hon. Friend the Member for Nuneaton (Mr Jones), because I met the managing director of FirstGroup only last week and he told me that he hoped that additional services might be available between Rugby and London early in the morning, and that access from Rugby to the north-west might be improved through Nuneaton, using Nuneaton as a hub station for the north-west. Innovation and proposals are coming from FirstGroup that were not available through Virgin.
The issue distils down to whether First has got its sums wrong. Did it get something about the maths wrong when preparing its bid—something that it did not take into account? I put that to First’s managing director last week and suggested that, if there were anything about his tender that in the clear light of day—in the light of discussions or ideas coming from Virgin and Opposition Members—he is not sure about, right now, before the new contract is awarded, First has the opportunity to withdraw. It might choose to say, “Yes, there are some points that people have drawn to our attention. We did not quite get our maths right. Our projections in the back end are just a little bit ambitious.” There is a window of opportunity for it to say, “Yes, we got it wrong,” and to leave. It does not wish to take that opportunity.
I have looked the managing director of First in the eye and asked “Are you able to deliver what’s proposed?”, and I am confident that he understands the significance of what he has done. Ultimately, he is part of a management team responsible to shareholders within FirstGroup. If First has got anything about the tender wrong, it needs to be called to account through the courts and be held to the commitment that it has made. It happens in plenty of other businesses; I do not see why that should not happen in this instance.
The delays in the process are unfortunate. Certainly, there is no benefit to anybody, whether the companies, the staff or rail users, if there is a short-term nationalisation, such as has been suggested if First is not able to receive its contract before the judicial process is concluded.
I advise the Minister to please get on with the process. I call on Virgin to withdraw its application for a judicial review. A decision has been taken. Let us get on with it and ensure that we get the right service for rail users in our constituencies.
Albert Owen (Ynys Môn) (Lab)
I congratulate my hon. Friend the Member for West Lancashire (Rosie Cooper) on securing this important debate. As a number of hon. Members have said in interventions, we have not had the opportunity to discuss this matter since the announcement was made. That is regrettable. I pay tribute to Labour Front Benchers, including my hon. Friend the Member for Garston and Halewood (Maria Eagle), for raising this point over the summer, and the 170,000 people who bothered to sign the petition. The discussion has been too one-sided in respect of one company, although the details are not known. I mention that because the purpose of this debate is to find out the details so that we can know for sure.
I met a number of the bidders prior to the process. I was concerned about the process and put my concerns to them, including my concern about the record of some of them. I mentioned to First, which was preparing its bid, my concerns regarding its franchise in the south of Wales. First said that it would learn the lessons, would not back-load as much in future and would look at the whole period. That is why I am raising this issue. Of course, First could not talk about the detail of the bid, but I was concerned that it had handed back the franchise on the south Wales route at great expense to the taxpayer.
Mr Marcus Jones
Did the hon. Gentleman raise his concerns directly with the Government when the draft invitation to tender was published, or did he wait until after that process was complete?
Albert Owen
Just to help the hon. Gentleman, I have been raising rail issues for many years. I am the son of a railway man. Yes, I have raised it with Conservative/Liberal Democrat and Labour Ministers.
As for the process, what was clear from my meetings with the potential bidders was that they could not speak about the detail, so we were not that concerned. Now that we have heard the outcome, we have concerns—genuine concerns—on behalf of the taxpayer and the fare payer. That is why it is important to have this debate and why I congratulate my hon. Friend the Member for West Lancashire.
The west coast line is important to my constituency. It is an historical link with north Wales, but it also linked the capital of England with the capital of Ireland. Many of the trains that went from Euston to Holyhead carried the Royal Mail—the great Irish Mail trains—but another reason why the link was so important was that it brought Members of Parliament from Ireland to this place for important votes. In those days, Members of Parliament from different parts of the country had real influence over train services—less so today—and one of the reasons for the service was to get all those Irish MPs over.
I have taken a great interest in the line for many years, and I represent a railway town that was and still is a major employer in the area. Today, after many years of investment, in particular over the past decade, we have fast and frequent trains. Now the Super Voyagers or Class 221 trains can do the run from Holyhead to Euston in three hours and 40 minutes. On top of that, there has been an increase in the number of trains to Chester, which has helped my constituents going along the north Wales coast or those going to Anglesey on other occasions. Although having to change at Chester is not always nice, it is better than standing in Euston for hours, which we had to do in the 1980s and early ’90s when trains were less frequent.
Susan Elan Jones (Clwyd South) (Lab)
I take on board my hon. Friend’s point about Chester, but does he agree that still more needs to be done with the direct link to Wrexham, Gobowen and so forth? That was not put in the tender, but the current situation is unacceptable and, when we consider the Wrexham and Shropshire line, all the more urgent. Whether Virgin or FirstGroup, it needs to be addressed properly.
Albert Owen
My hon. Friend is absolutely right, and my hon. Friend the Member for Halton (Derek Twigg) also made the point that we want continued improvement on the west coast line. People in all parts of the House want to improve the line, but many people including the petitioners have real concerns. It is absolutely right that we want the best deal for our areas, but we also want the best deal for the taxpayer and the fare payer.
I can recall a modernisation programme for the west coast in the early ’90s, which was hampered slightly by privatisation, with things put on hold. Many people, including Conservative supporters, thought that rail privatisation was a privatisation too far. There was a lot of under-investment and the programme was put back slightly, and there was also the Railtrack debacle, with Network Rail having to take over. There were therefore massive issues, but that huge investment of £9 billion—mentioned by the hon. Member for Rugby (Mark Pawsey)—still went ahead and made significant improvements, bringing business from the regions of north-west England, Scotland and north Wales closer to London. Many business people, some of whom I travelled down with today from Bangor station, now come to London and can do business in a day. That is how important the west coast line is to many people and why the debate is so important. We need to get things right for the future.
In the early days, there were issues with the operator—Virgin—which hampered the service, for example on safety, with many line speeds and signalling having to be improved. Stations such as Nuneaton, Rugby and Stafford, represented by Members here, had huge investment simply to improve the safety of the lines, because a lot of work needed to be done. Now we can see the results of that investment—faster, cleaner and safer trains travelling on the west coast.
Virgin is a popular brand. I have been contacted by many constituents—not natural Labour supporters—who are concerned about the franchise and how it will run. They want safeguards, and answers to questions, which is what we want from this debate. I understand about franchising, the judicial review and the difficulties for the Minister—whom I welcome to his post, because he has a great interest in the railways—but I hope that he will be able to answer some of the questions asked by my hon. Friends and Government Members today. We are not asking about the details of the franchise, but about some of the principles.
The Minister and the Secretary of State mentioned that if we do not get the matter resolved by 9 December, the franchise might have to be taken into state ownership of some sort and to be renationalised—I think that was the word he allegedly used—temporarily. If that happens, however, it is important for the Department for Transport to have a contingency plan, which I hope that the Minister can tell us about. We understand that there is a responsibility for that to happen under the franchise agreement, but we need to get that plan. The staff and the travelling public need to know, and ticketing for the future has to be set up and run. State ownership might be an attractive proposition to many people, but it was brought into the debate by the Secretary of State, and we need some answers. The Minister should clarify whether that contingency is being planned for, so that we do not have a period when people do not know where to get their tickets if the judicial review is not complete and the new owner not in place.
Robert Flello (Stoke-on-Trent South) (Lab)
I have been listening carefully to my hon. Friend’s speech. Does he want to comment a little further on the effect that all the uncertainty and confusion might have on staffing levels, and therefore on service? If staff are, understandably, concerned about their future, they might decide to go elsewhere, if such opportunities are available, and that might affect the service that the travelling public can expect.
Albert Owen
That is absolutely right. There is huge anxiety, and morale has been sapped, so it is important to get clarification on where we are going. Yes, the judicial review is out of Minister’s hands, but if the Secretary of State makes announcements about temporary renationalisation, he needs to reassure people that he has the plans in place so that any such period is dealt with as smoothly and efficiently as possible.
I speak to rail staff regularly, and did so only a few hours ago on the train journey down, and they are very anxious. To be fair, they have been given assurances about their future by both Virgin and FirstGroup, but the hiatus because of the judicial review is causing greater anxiety. It is incumbent on the Government, who award the franchises, to make it clear, if they are to take temporary measures, what those measures are.
Many issues have been raised, but some are important and need repeating. We need to know whether all the bids were treated exactly the same and whether the risk of all the bids was assessed, not just for the leading or highest bid. We are not talking about a casino, but about running our transport system—the process is hugely important and needs to be done properly. I hope that the Minister can answer some of the questions and confirm whether he has had a list of questions from Virgin and explain why he has refused to answer some of those questions. Some of them may be commercially sensitive, which I understand, but the ones that I have seen and that I was supplied with by Virgin were general. We want the answers to some of them, in the interest of the 170,000-plus petitioners. I hope that we will deal with the issues of renationalisation over that short period and whether the risk for all bids was assessed equally. A tendering system has to be done in that way—robustly over the 15-year period and not only on the basis of the highest money value to the Government.
A lot of questions have been asked by Members in all parts of the House. I know the sensitivity of the judicial review, but it should not be a shield for the Minister to hide behind and to use to avoid answering general questions. The public have a right to know—the rail is in public ownership and a lot of taxpayer money goes into the franchise agreement—and they deserve those answers, which the Minister could give today and help the debate.
I had a quick response from the Minister of State, Department for Transport, the right hon. Member for Chelmsford (Mr Burns), saying robustly that he was happy with what the Government had done. He also said that the contract remains alive, and that he expects it to be signed soon. He has that confidence and information at his fingertips, and I am sure that the Minister present can share some of that information with us today. It is important that the Government are seen to be open and transparent, because we are talking about billions of pounds of investment.
We all want the west coast main line to be improved. I am not interested in the logo on the side of the trains, but I am interested in the quality of service on the west coast. It has improved considerably over the past decade, and I want it to improve further. I want investment in areas such as Anglesey so that we have connectivity with rail services. This debate is about the petitioners and their concerns rightly being aired by Members of Parliament, and being answered efficiently by the Government.
Mr Peter Bone (in the Chair)
I see seven hon. Members trying to catch my eye, and we have less then 55 minutes remaining for Back Benchers to speak. Hon. Members can do the arithmetic.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
It is great to follow the hon. Member for Ynys Môn (Albert Owen). Across the divide, we share many concerns with other hon. Members who represent the regions, as I do. We have come from Liverpool via Milton Keynes, Runcorn, Rugby, and Holyhead to Lancaster, but I am not sure whether there is a through ticket for that; perhaps the two groups might suggest one.
[Philip Davies in the Chair]
I congratulate my fellow Lancastrian, the hon. Member for West Lancashire (Rosie Cooper) on getting the debate under way, but I have one stricture about her Dick Turpin analogy. I was always taught that, because he took from the rich and gave to the poor, he was a good guy. Never mind; perhaps history has changed since I last taught it.
I welcome the debate, and like many hon. Members with constituencies on the west coast main line, I have received e-mails about it and have seen the petition. All credit is due to the Backbench Business Committee for getting this debate under way so quickly. My concern, which is shared by others, is that regional areas such as mine depend hugely on rail connections. I will not repeat what the hon. Member for Ynys Môn said, but I share what he said about the impact on business and improvements on the west coast main line.
My confidence in the Department for Transport has increased following what has happened in the past two years, particularly in my part of the north-west. The Government have made commitment after commitment on rail in a way that we have not seen for a long time under previous Governments. They include electrification on a huge scale all the way to Blackpool and extra carriages, and that represents a total completion of the commitment on the northern hub. Before my time, people petitioned Government after Government on that. My confidence has increased, and I believe that the present Department for Transport is fully committed to those improvements and understands the impact on the regions. That is why I have a bit more confidence in the process.
My hon. Friend the Member for Milton Keynes South (Iain Stewart) spoke eloquently about commercial sensitivity. We have not seen all the minutiae, and we now have judicial sensitivity on top of commercial sensitivity, so we are left just with the bits that we have seen. Credit is due to the two companies for their impact and for trying to get across to us what has been going on.
Like many other hon. Members, I speak as a regular user of the west coast main line, and I have my own opinion of the Virgin Stagecoach service. I have seen an improvement in the service over the past couple of years. One of the worst problems in my part of the north-west was overcrowding, so I was pleased with the Government’s support for extra carriages, which has had an impact.
I believe that the Virgin Stagecoach service is relatively good, and many of my constituents have signed the petition, so they agree. However, I accept that it can always be improved and that we need more value for the amount of money that has gone into such commercial operations. The issue is how to weigh that up.
I have talked to FirstGroup, and its offer seems to be attractive, with extra trains, extra carriages, reduced overcrowding, smart ticketing and even reduced fares on some services. Like my hon. Friend the Member for Rugby (Mark Pawsey), I shall be parochial about what happens in my constituency. My concern about the FirstGroup bid was that it was talking about faster trains from Glasgow to London, and my immediate instinct was that that would mean fewer trains stopping at Lancaster, but I have been reassured that Lancaster will have the same number of stops, so I am pleased about that. I am also pleased about the offer to upgrade parking arrangements at Lancaster station and at Preston, which affects me down the line.
The biggest impact will be the through service to Blackpool, which edges through part of my constituency. Discussions are still taking place, but FirstGroup is prepared to consider the possibility of a stop at Poulton station, which is not in my constituency but is the nearest station to Fleetwood. I shall digress slightly because we have a new Transport Minister and, as his Parliamentary Private Secretary knows, he will hear from me frequently about Fleetwood, which is one of the 10 biggest towns in the country still without a direct rail connection.
Mark Hendrick (Preston) (Lab/Co-op)
The hon. Gentleman touched on Preston station, which is in my constituency. Like him, I am concerned about the developments. We have had an excellent service from Virgin, and I have been pleased with it. We have had many promises from FirstGroup, but does he agree that a major concern is whether jobs will be secure with FirstGroup if there is a change in the franchise? Clearly, the Government are intent on continuing the deal, and FirstGroup won the franchise, subject to the review. Is he, like me, worried about the job situation and ensuring that the hard-working staff continue in employment?
Eric Ollerenshaw
My neighbour in Lancashire raises a valid point about staff that had not previously been raised. There have been improvements in staff approachability and deliverability, and I hope that whoever wins the bid—whether Virgin or FirstGroup—will protect those good employees. I have seen real improvements.
Another matter that we need to be secure about if FirstGroup takes over is travel cards, about which constituents have contacted me. For many years, I have received promises, but I am still not sure about long-term use of the cards. Many senior constituents—I declare an interest because I include myself—find them extremely useful.
I will finish my contribution shortly to enable other hon. Members to speak. For me, the public relations battle has not been particularly useful. On the performance at the Transport Committee, Virgin tried to say that it provided an altruistic service, but it is, rightly and like any other commercial company, in it for money. In 2011, Virgin Rail and Stagecoach declared a dividend of around £10.5 million. That is good, because they ran a good service, but let us not hide the fact that they provide a commercial service at a profit.
I have an issue with Virgin because a year or so ago Grand Central proposed a direct service from London to Blackpool, and I understand that Virgin used its franchise to block that. Let us be under no illusions. The competition is a commercial one between two companies, and one of them is Virgin, but I call it Virgin Stagecoach because Stagecoach has a 49% stake. We must understand the situation.
When we are through the judicial review, I am sure that Ministers will provide us all with a degree of security that lessons have been learnt about private finance initiatives under the previous Government and about the way in which the upgrade on the west coast main line caused chaos for years under that same Government. Because of Ministers’ commitment to the north-west, electrification and the northern hub, I have great confidence that they are as determined as I am, as a regional Member of Parliament, to see an improved service that provides better value for my constituents. I feel that we will see that when the judicial battle is over.
At the end of the day, however, I am not interested in which company runs the service. I want a better deal for my constituents and for the Department to be able to put its hand on its heart and say that it did its best to deliver that deal and to provide security about the risks.
Barbara Keeley (Worsley and Eccles South) (Lab)
It is a pleasure to serve under your chairmanship, Mr Davies, and to follow another hon. Member from the north-west. I apologise for being absent during the first part of the debate; as I notified the Speaker, I was attending a funeral in my constituency earlier this afternoon.
Like many hon. Members, I travel on the west coast main line every week. Since first entering the House, I have seen the service improve greatly over the past few years, when it has been run by Virgin. Thinking back to 2005, when I was first elected, many colleagues flew to London and back rather than using the train, which is not the case now. The service takes around two hours from Stockport to Euston, and there are three trains an hour. Since the upgrade—which was, indeed, painful—to the infrastructure on the west coast main line and the introduction of Pendolino trains, passenger numbers have grown from 13 million to 31 million.
The debate this afternoon is about letting the franchise for the main line go to FirstGroup, even though there are strong concerns about that company. I shall focus on those issues in my remarks. There are worries about FirstGroup’s bid, as the company will make premium payments of £5.5 billion during the core term, based on 66 million customers being carried. That point is important; the number of passengers has increased from 13 million to 31 million, but can it increase to 66 million?
Compared with FirstGroup, Virgin Rail Group bid premium payments of £4.8 billion. That amount was based on 49 million customers being carried, which I think is much more realistic. I find it hard to see how the number of customers carried on the west coast main line can more than double, and if it does not, FirstGroup will not have the income to pay its premium payments. We have seen unrealistic bids in rail franchising that turned out to be undeliverable. After winning bids for the east coast main line franchise, Great North Eastern Railway and National Express fell short of their forecasts and were forced to hand the franchise back. There would be more chaos down the road if a similar thing happened.
I want to focus on FirstGroup’s track record, which, in Greater Manchester, is not at all positive. As a constituency MP, I have had very negative experiences of the way in which FirstGroup operates as a public transport provider in Salford and across Greater Manchester. During my first few years in the House, the company undertook a major reorganisation of routes and bus service timetables in our constituencies. As time is short, I shall refer quickly to the restrictive and extremely disruptive impact that that had on constituents. Although a different mode of transport is involved, it indicates how FirstGroup regards passengers and its customers.
For example, a bus service from Leigh to Bolton was re-routed and changed to run hourly, so that it went nowhere near the major supermarkets that many of my older constituents, in particular, wanted to visit. After the alterations, people had to change buses, cross a busy dual carriageway and walk 500 metres uphill to make the same journey that they had previously made on just one bus. At the time, many people told me that those journeys became impossible for them. FirstGroup’s changes, in spite of many representations being made to the company, had a debilitating effect on older people’s lives, chipping away at their independence. They also had a major impact on families, because many families have one member or more who commute into Manchester.
A single parent in my constituency needed to travel 10 miles into the city for her work. She had arranged her working hours completely around one of FirstGroup’s services, which the company threatened to withdraw. It was the only way that she could get to work. I found myself, as a new MP, constantly making representations, presenting petitions and putting concerns forward.
Perhaps worst of all, given the economic situation we are in, changes made by FirstGroup became a barrier to people’s ability to work. Little Hulton ward in my constituency is in the top 10% of the most deprived wards nationally. Only 53% of the people there have access to a car. There are very few local sources of employment, so constituents have to travel to find work. However, FirstGroup withdrew the bus stop for services from that ward to Manchester, even though that bus service allowed people in that deprived part of my constituency to travel to work. The withdrawal also made it much more difficult for people to search for work. I believe that FirstGroup’s attitude and its changes tied the hands of people searching for jobs by restricting their options for work to destinations that had a bus link to where they lived.
Such changes were not only a major issue five years ago; FirstGroup are still making similar alterations to services today. It has recently changed the frequency of a service to the Roe Green area of my constituency from half-hourly to hourly. When I made representations to the company on behalf of angry constituents—something I have had to do an awful lot as an MP—it responded:
“First keeps its network under constant review, which means services can be changed or reduced”.
That change was made with seven days’ notice.
Following years of bad experiences with FirstGroup as a public transport provider, I have little confidence in the company at all. That feeling is shared by many constituents, as well as more widely. I note that the 2012 bus passenger survey found that 13% of FirstGroup’s users were dissatisfied with its services, compared with only 7% dissatisfaction among Stagecoach’s customers. On value for money, 35% of FirstGroup’s users described themselves as dissatisfied, compared with a figure of 19% for Stagecoach. With similar services, therefore, FirstGroup is not doing a good job, and that has been entirely my experience of the company.
Furthermore, constituents, along with many people who have signed this petition, have expressed their concerns about the franchising process, commenting most unfavourably on their experience of rail journeys with FirstGroup. One constituent told me:
“I want to express my total dismay at First Group being granted the franchise for the North West rail route. Our regular experience of First is little short of scrabbling for a place in a cattle truck. We have actually been afraid when forced into a crowded carriage during a busy period... It would be a disaster if a passenger suffered an epileptic episode or a heart attack under such conditions. The lack of capacity makes the idea of a return journey a nightmare. We are both elderly and having to stand in a crowded carriage is not a good experience.”
In such a context, we must remember that FirstGroup has bid to more than double the number of passengers carried on the west coast main line.
My constituent continued:
“By comparison, Virgin trains have given us nothing but satisfaction. We travel to London regularly to see our family and the service is excellent.”
My constituent concluded that the franchising decision
“seems to be badly thought through—and seems to rest on a desire to increase revenue, rather than provide a service for this era”.
I wholeheartedly agree. I have had years of bad experience of FirstGroup. I cannot face the situation that I think we will find ourselves in if it takes over the efficient, effective service currently run by Virgin. I urge the Minister and the Government to think again.
Philip Davies (in the Chair)
We have five hon. Members left and less than 40 minutes remaining. I hope hon. Members will bear in mind the desire of others to speak.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
Thank you, Mr Davies. The Shropshire MPs have been campaigning on a cross-party basis, together with our Welsh neighbours, on trying to secure a direct rail service for Shrewsbury. That issue is extremely important for us, bearing in mind tourism and business investment, and that is why I was delighted by the announcement that FirstGroup had been selected and would provide the direct service for Shrewsbury.
My first reaction when I heard about Virgin’s judicial review was frustration and concern, and I felt a little as though it was a case of sour grapes. Subsequently, I met representatives of FirstGroup, who stand by their figures unequivocally. I also met representatives of Virgin and held a meeting in the House of Commons that was attended by 40 colleagues, who came to interact with Virgin’s senior managers and directors. They tried to explain to us why, in their view, and from a commercial procurement perspective they felt that FirstGroup’s figures did not stack up.
Interestingly, Virgin Trains claims that it has been raising concerns about the whole procurement process with various Ministers over an extended period. Indeed, it raised the fact that it had tried to lobby Lord Adonis on this issue. It is therefore rather difficult for me to accept the flavour of some of the comments from Labour MPs that this problem has somehow developed recently. According to Virgin Trains, it had concerns at the time when Lord Adonis was in charge and it raised them with him. As I said, I invited representatives of Virgin to meet me and fellow parliamentarians, and 35 or 40 MPs came to that meeting. I have sent my right hon. Friend the Secretary of State for Transport minutes of the meeting.
I believe that immediately after the announcement, the shadow Secretary of State for Transport, the hon. Member for Garston and Halewood (Maria Eagle), whom I was watching on television, was calling for an urgent inquiry because the decision had been made when Parliament was in recess. I think that she expressed a great deal of frustration about that. However, I have been trawling through all the questions that she has submitted to the Secretary of State for Transport and the Department for Transport, and the Library has also been checking them and—she may correct me on this—I cannot find any questions from her during the past six months about the timing of the decision or the procurement process. As I said, she may correct me if I am wrong, but I feel that this is the Labour party jumping on a bandwagon.
Maria Eagle (Garston and Halewood) (Lab)
The Government have chosen to delay the completion of the process by six months. They negotiated with Virgin an extension to the contract that it was running. Therefore, the timing has been a matter for the Government. Obviously, I was not aware that they would make the announcement in the middle of August, when Parliament was in recess. That would be a matter for the Government.
Daniel Kawczynski
That is very strange, because I knew that the announcement was to be made in August and I am just a humble PPS. I raised this issue with my right hon. Friend the Prime Minister at Prime Minister’s questions, asking him to try to intervene to ensure that we have a direct rail service for Shrewsbury, and he clearly stated in his response on the Floor of the House in July that the result of the process would be announced in August and that he was sure that the train operators would have listened to my point about Shrewsbury. That is a matter of record during Prime Minister’s questions in July.
Glyn Davies (Montgomeryshire) (Con)
My hon. Friend rightly makes references to Shrewsbury. I want to associate with his comments my comment about how important a direct line to Shrewsbury is for the whole of mid-Wales. Shrewsbury is our station as well, and a direct line from Shrewsbury to Euston will make a huge difference to the ability of the people of mid-Wales to use the train. I thank him for allowing me to put that point into the debate.
Daniel Kawczynski
I thank my hon. Friend and constituency neighbour and pay tribute to the intense work that he has done to campaign for his constituents across the border in Montgomeryshire, many of whom will, of course, rely on this service.
I had the pleasure of meeting Sir Richard Branson the other day to talk about this issue. I would like my hon. Friend the Minister to know that Virgin is very keen—I am just making observations—to talk to the Secretary of State. It claims that it has tried to engage in high-level discussions over a long period. It is very keen to meet the Secretary of State to highlight its concerns. Interestingly, the impression that I get is that the Department for Transport is not keen to meet Virgin at this time because of the judicial review. I would be grateful for an update from the Minister. What is the situation?
I think that the judicial review will cost a fortune for both sides, and I very much regret the fact that taxpayers’ money will be used in trying to defend that challenge through the courts. An awful lot of money will be made by lawyers at the expense of the companies and the Government. We need to engage with the operators on the procurement process for the future. I want us to avoid these problems in the future. I want all train operators to agree on some form of bidding or procurement process that has buy-in, so that we can try to avoid these disputes. It is highly regrettable, when constituents are looking forward to better train services, that we have somehow degenerated into this legal quagmire, which could take a great deal of time and cost a great deal of money to resolve.
We are very pleased that there will be a direct service for Shrewsbury from FirstGroup. Apparently, Virgin Trains is now claiming that its bid also included provision of a direct rail service for Shrewsbury. However, I reiterate to the Minister that one of the biggest problems that we have is the lack of parking capacity at Shrewsbury station. I intend to meet Network Rail shortly to discuss that and will be trying to secure a meeting with him on that point as well.
David Morris (Morecambe and Lunesdale) (Con)
This subject has been so contentious during the past few weeks that we can all agree that some questions need to be answered. It is right, therefore, that we hold a debate to bring greater understanding of the issues that led to the decision to award the west coast main line franchise to FirstGroup. In discussions that I have had, I have always been clear that I remain neutral on who gets the franchise. What is important to me is that the process is transparent and understandable. Does it reassure the public and does it result in improvements and greater connectivity to the service? I am referring not just to the places that the west coast main line MPs represent, but to the areas that filter people to the stations. Most people do not have the time to study the process in great detail. I hope that this debate will help to create a greater understanding of it. The fact that we are having the debate sheds light on the process, and that is bound to make people feel more engaged.
I want to focus on the future of the west coast main line, especially given its importance to my constituency of Morecambe and Lunesdale. We are a transport corridor, both north to south and east to west. The station for the area of Carnforth has been rebuilt and has trains going through it. However, in the words of the train buffs in the area, it is the centre of the railway universe, but nothing seems to stop there. As I said, we are a transport corridor, both north to south and east to west. I appreciate that many hon. Members have one of those elements in their constituency, but we are lucky to have both. However, the lack of flexibility in the franchise over the years has made it hard for us to capitalise on that.
I have had regular meetings with Virgin, which has made the following points to me. It was hard to bring in new destinations. Even Chester was added only because the DFT put it in as a requirement. We need the train operating company—TOC for short—to be able to respond to the market.
One thing that has been positive about FirstGroup is its willingness to consider exceeding the terms of the franchise. We will see what that comes to, but the fact is that it helped it to get the franchise. I hope that in the future the franchise document serves as a starting point, as my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski) was intimating, and that bids will offer real choice rather than being minor variations on something essentially dictated from Whitehall.
One of the big concerns in my constituency is that the DFT seemed unable to think beyond existing network capacity. What I mean is that getting the most out of Euston was widely discussed, but little thought seemed to go into adding new destinations and connections. That was particularly important because it meant that Carnforth, in my constituency, was just never considered as part of the franchise, despite vigorous local campaigns spearheaded both by me and by the local rail groups. I refer in particular to Peter Yates, who is sat here today.
Obviously, many hon. Members have local interests, and I am no different. I understand that not every station can get a west coast stop, but feeling that no new stops were considered is frustrating. I might also say at this stage that the same problem of lack of vision has led to unending difficulties in trying to stop trans-Pennine trains at Carnforth. The platforms themselves are on the west coast main line and would need refurbishment before they could be reopened.
Historically, this essentially minor detail was something that led to Carnforth being totally ignored. If the public want the station opened and if the TOC would seriously consider stopping there, why would Whitehall stand in the way, especially if that is from a background of never really bothering to consider it anyway? As I said, I had talks with Virgin. It said to me, with regard to the west coast main line train that stops for 20 minutes three times a day at the back of Carnforth station, where there is a sealed-up platform entrance, that it would consider accessing passengers on to the train if the station was upgraded. I am glad to say today that I had the same offer from, and more consideration given to me by, FirstGroup. Whatever people thought the outcome of the franchise process should have been, at least we have started the process of breaking that mindset in my area. To that end, whatever FirstGroup’s history, it seems keen to adapt to passenger need, which must be looked into. If the DFT is also willing to think outside the box, I hope that, in summing up how the franchise was awarded, we can too.
I accept that Rome was not built in a day and things do not change overnight. There are strengths and weaknesses in both Virgin and FirstGroup, but what is most important is that no company has a right to a free ride. That has been agreed. Just because companies have been good in the past, does that give them an open-ended right? If we have learned anything from this, we should insist that the DFT facilitates companies and travellers to come up with new ideas, rather than dictating from on high how services should be run. If we continue with such a process, it will be easier to tender, offer the missing flexibility and give local communities a real opportunity to campaign for better rail services, as my hon. Friend the Member for Shrewsbury and Atcham has done so admirably.
It has been a privilege to speak in this very contentious debate. Whatever the outcome, let us ensure that we make the right decision on the franchise, and that that decision is transparent and that the public know that we, in Parliament, listen and care about how we spend taxpayers’ money on the west coast main line.
Mr Marcus Jones (Nuneaton) (Con)
I am grateful for the opportunity to speak in this important debate. As a member of the Backbench Business Committee, I welcome the first of the Monday debates, which rely on the public’s response to e-petitions.
The west coast main line is vital to many of my constituents, who, I must say, are a little perplexed, to say the least, about the whole saga of the letting of the west coast main line franchise. In the debate today, it is important for our constituents to understand that we are here, as Members of this House, without the power or jurisdiction to change anything at this point. It is important to state that the only people who can change the decision, unless the will of the Government changes after the judicial review, are the judiciary. The judicial process must be followed and Members must respect that process.
That said, there are general principles that we should discuss, but as MPs it would be a grave error to delve into the minutiae of each bid, because we have not seen the information first hand, and so are second-guessing from the claims and counter-claims of the different companies involved. The issues come under two categories: first, the franchise process itself; and, secondly, how the various bids were applied to the franchise criteria. To take the franchise process first: Virgin Trains and others, particularly Opposition Members, contend that the tendering process was flawed. I have concerns and scepticism about that argument. If flaws had been identified at the outset, before the draft invitation to tender or when the Government released it, we should have seen a robust challenge from the Opposition at that point.
Maria Eagle
As far as I am concerned, nobody on the Opposition Benches has suggested that the tendering process as it was undertaken was unfair. We do not know the details, which is why it is important to have a debate, to ask the Minister what he can tell us.
Mr Jones
I thank the shadow Minister for that comment, because it illustrates the crux of the issue. There is a lot of second-guessing and a lot of assumptions are being made. The people making those assumptions do not necessarily know the full facts. As I will come on to later in my comments, it is dangerous in any such tendering process for an MP or a Government to move the goal posts once the process has begun.
Mr Jones
I will not give way at the moment, because other Members want to get in, but I will give the hon. Lady an opportunity in a few minutes.
There are a few questions about why Virgin or any other party did not raise such a high profile campaign at the outset. Why did we receive letters and ice lollies—I am not sure whether they were connected to this or were part of the Olympics—from Virgin Group on the train platform only once the bid was lost and Virgin had come in second? Why are Labour Members only now coming up with these concerns? They are not even giving their position on the matter. To me, it is a little like someone going to a restaurant and ordering liver, knowing that they do not like liver, and sending it back once it comes to the table and is put down in front of them. In the same way, we need to be careful what we wish for here.
For the Government’s part, it is important that once they have set a franchising process, it should be the benchmark against which the bids are judged. As I said in response to the intervention from the hon. Member for Garston and Halewood (Maria Eagle), it sets a dangerous precedent if, after the bids have come in and a tender has been let, we try to shift the goal posts to get the outcome that we were looking for. Not only would that completely undermine the tendering process, but there are obviously potential legal ramifications.
The critical question is whether the process was followed properly. If Department for Transport officials have not properly applied their own criteria to the bids, then yes, we have to acknowledge the concerns of Virgin Trains, and yes, the Government have to address any subsequent issues that might arise. At this point, that decision is a matter for the courts. It is dangerous as an MP to call for the franchise to be re-let on the basis of a petition, rather than an independent judgment to ensure that the correct procedure and process has been followed.
We should wait to see what the judicial review says, and if it is accepted by the court, the Government should deal with it appropriately at that point. If not, I will fully support the Government in signing the contract, on the basis of retaining the integrity of the tendering processes that they follow. For my constituents, the winning bidder at this point, FirstGroup, notwithstanding the legal case, is on the face of it offering the taxpayer a better deal and far better services to Nuneaton, which is what my constituents are looking for.
Jeremy Lefroy (Stafford) (Con)
I congratulate the hon. Member for West Lancashire (Rosie Cooper) on instigating the debate and congratulate everybody who has taken part so far. In the few minutes remaining, I want to stress why the debate is of great importance to my constituents.
More that 1 million people a year use Stafford railway station—the hon. Member for Halton (Derek Twigg) mentioned 650,000 at Runcorn, which is indeed an extremely important station. They are from not only the town of Stafford, but over the Shropshire border and throughout the rest of Staffordshire. The reaction over the past few years to the service offered by Virgin has been generally positive. There were clearly some problems at the end of the ’90s and in the first part of the previous decade, particularly after the Hatfield rail crash, which was obviously nothing to do with Virgin, but due to the state of the rails.
In a situation such as this the Government are really caught between a rock and a hard place. On the one hand, we can applaud the Virgin service and say that we want that or, indeed, a higher standard of service to continue. We can say that, in Virgin, to some extent we have a safe bet: it has proved itself over the past few years and is likely to continue to do so. However, if that had been the criterion, and the Government had accepted £1.4 billion less—or, in net present value, £700 million, which is perhaps a more accurate number—again, questions would have been raised about why the Government, on behalf of taxpayers, have accepted £700 million less, at net present value, simply because they liked the service that Virgin delivers, when a competitor claimed that it would deliver an equal service. The decision was not at all easy, which is why so many Members, including the instigator of this debate, have mentioned that the process is so important. We must see not only that it has been properly followed, but that it is the right process for future franchises.
I also have to say that I was glad that the final two bidders are headquartered in the UK. One bidder was Abellio, which is the Dutch railway; I think it also runs railways in Germany, and it runs Chiltern services very well. I wanted whoever runs the most important railway line in the United Kingdom to be a British-headquartered company. Notice that I say “British”, because both final bidders are based in Scotland—at least, Stagecoach and FirstGroup, if not Virgin, are.
I want to comment on the effect on staff. Clearly, a number of my constituents are affected, and it is extremely important that the transition, however it goes, should first and foremost be done with regard to staff, as well as to passengers. They have clearly been put into a state of some trepidation, although I am glad to hear the reassurances given by FirstGroup about the continuation of services. The issue is not only about the continuation of employment; it is also about how the company treats its staff. It is extremely important that staff are seen as the most valuable asset—not just on paper, but in reality.
When I met the managing director of FirstGroup, I made that quite clear. I have also said that it is extremely important that the service is maintained or improved. I was therefore glad to hear him offer to come to Stafford at least yearly, if not more frequently, to talk to passengers about the service. It is vital that, if and when the transfer goes ahead, it is not just that a service is promised at one point in time, but that, month in, month out, that promise is maintained and that passengers are able to have a direct input into the company running the service.
Clearly, it is extremely important for people in Stafford to see the maintenance of vital hourly services. However, there is also the important question of later and earlier services that I and my predecessor, David Kidney, have frequently raised with both Network Rail and Virgin. Most continental railways have much later services both from the capital to other towns and cities, and vice versa. Stafford is on the Liverpool line and, from what I have heard, I know that people in Liverpool would also like later services and ones earlier in the morning for that great city. I realise that that will be subject to the limits of the track, but with the improvements—particularly those around Norton Bridge just outside my constituency; it is in that of my hon. Friend the Member for Stone (Mr Cash)—that are coming up in the next year or two, I want to see whether it is possible, with additional train paths and improvements to time, to introduce either a later or an earlier service or, indeed, both.
I suppose that, as well as the staff and the service for passengers, the Government are equally concerned about the return to the taxpayer. To me, what it is absolutely key is the confidence that the winning bidder—in this case, FirstGroup—will fulfil its commitment; that is vital. There is a penalty of some £280 million, which is clearly substantial, but that is not a deal maker or a deal breaker. Far more important, as other Members have already said, is reputation. FirstGroup is, according to its website, the largest transport group in the world. It runs Greyhound buses in the States, as well as many yellow school buses and other franchises in Britain. To me, it is absolutely beyond question that any company that walks away from a rail franchise should have no further part in the UK rail industry. That must be absolutely clear: we cannot have confidence in a bidder that fails to fulfil its commitments. I want to hear the Minister’s response on that, and whether that is part of the thinking. This is too big a deal—not only for my constituents, but for the entire country—to allow people yet again to walk away from the firm commitments that they have made.
I have two other questions for the Minister. The first refers to the process. Whatever happens in this case, will he look very closely at the process for future bids to ensure that it is watertight and cannot be subject to the kind of public disquiet and challenge that we are now having. Above all, secondly, do he and his colleagues believe the passenger figures that we have been given? To me, that is the crux of the matter. If those passenger figures are realistic and have been calculated in a way that demands respect and is robust, I see no real problem with the contract going ahead. However, we have to be convinced that the Minister and his Secretary of State, who will stand behind the decision, are themselves convinced of the figures, and I want to hear that from the Minister today.
Maria Eagle (Garston and Halewood) (Lab)
It is a pleasure to serve under your chairmanship, Mr Davies.
I congratulate my hon. Friend the Member for West Lancashire (Rosie Cooper) on securing the debate. As has been said, more than 172,000 members of the public have signed the e-petition on the west coast main line franchising decision. This debate, which is a result of that petition and of the good offices of the Backbench Business Committee, has enabled Members to put their points. Many of them represent constituencies that are served directly or indirectly by this important strategic route.
A lot of concerns and other points have been placed on the record. From my experience as an Under-Secretary, I know that the Minister—I welcome him to his place for his first debate in the role—probably will not have enough time, even if he has the inclination, to answer all the questions. However, I am sure that he will undertake to write to those Members he does not get around to answering with the fullest answers, so that we can read what he thinks about every point made.
We have had excellent contributions, first from my hon. Friend the Member for West Lancashire, but also from the hon. Member for Milton Keynes South (Iain Stewart), my hon. Friend the Member for Halton (Derek Twigg), the hon. Member for Rugby (Mark Pawsey), my hon. Friend the Member for Ynys Môn (Albert Owen), the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw), my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley), the hon. Members for Shrewsbury and Atcham (Daniel Kawczynski), for Morecambe and Lunesdale (David Morris), for Nuneaton (Mr Jones) and, last but not least, for Stafford (Jeremy Lefroy)—I would have guessed that that was his constituency from what he said. Not surprisingly, that includes many railway towns and constituencies that very much depend on stations on the west coast main line.
Many of the points made are at the centre of the debate arising from the awarding of the franchise. If Virgin Trains had not begun the legal proceedings that are now under way, Ministers would have signed the west coast main line contract before Members had had any chance to debate the issue in the Chamber. The truth is that Ministers probably rather hoped that the issue could have been done and dusted towards the end of the summer recess, with the decision slipped out while Parliament was not sitting and attention was focused on recovering from the Olympics. That is not helpful when we are dealing with a 15-year franchise that will cover several Parliaments. It is right that parliamentarians have a chance to debate the issue, and in that respect I very much welcome this debate.
I am disappointed that the Secretary of State—I congratulate him, too, on his appointment, as I have told him in the Chamber—was so quick to rule out a review of the process that led to this contentious decision. As a new Secretary of State, he would have been perfectly entitled to take the time to read through all the documentation and to have all the meetings. Yet, last week, he told the Transport Committee:
“I am content with the way in which the Department exercised its review of that contract.”
Despite his long-standing experience as Aviation and Shipping Minister many years ago, it is difficult to envisage how he could have conducted anything but the most cursory assessment of his Department’s action in this case. He came to his conclusion very quickly after his appointment, which is a shame. When the Minister meets the Secretary of State, I urge them, notwithstanding the legal process currently under way, to reflect on whether a decision to proceed with the signing of this contract should at the very least await the report of the Transport Committee.
One of the main concerns about the decision is that it seems to be almost exclusively a bottom line one, driven as it is by a particularly high pledge of payments to Government—FirstGroup’s successful bid was £5.5 billion compared with £4.8 billion offered by the incumbent. Obviously, such payments are an important part of any decision; I do not suggest that they should not be taken into account. None the less, there have been reports of the Treasury putting pressure on the Department for Transport, which is not unheard of in my experience, to focus precisely on the headline figure offered. The Department has admitted that it has accepted the bid that offers the largest dividend payment but that also carries with it the greatest risk to deliverability.
Two specific concerns raised by hon. Members relate to the credibility of the predictions of passenger growth and the profiling of the promised revenue payments, which are back loaded towards the end of the franchise period. There is huge variance in the rival claims about the growth in passenger numbers that each company believes to be achievable during the lifetime of the franchise. Virgin’s claim of 49 million passengers compares with FirstGroup’s claim of 66 million. The growth that we have seen on the line during the past decade has been largely driven by the £9 billion upgrade of the west coast main line infrastructure and the introduction of the fleet of Pendolino trains. The investment in track and train has delivered faster and consequently more frequent services. What is likely to drive similar growth in the next period, given that we are not about to have another such upgrade?
The invitation to tender documents also set out significant challenges that will face the west coast operator during the latter period of the licence, all of which could impact on the potential to achieve significant growth in passenger numbers. The most significant is the start of work on High Speed 2 at Euston, which will see the number of platforms for services available at any one time cut from 17 to 14 in order to achieve the rebuilding of that station. Yet it is in the later years of the contract that much of the projected growth is expected to come.
If the growth in passenger numbers is not credible, the only other source of additional revenue is higher fares or a reduction in services, or at least in the quality of services. As one would expect, the successful bidder has given some welcome reassurances on all those issues. The reason that concerns remain is that the Government have included in these new franchises new flexibilities to reduce services, close ticket offices, cut passenger-facing staff and even axe CCTV from trains. Such flexibilities would not enhance service provision were they to be taken up by the successful bidder.
Passengers would welcome clarity from Government on the extent to which those new “freedoms” can be used. Only today, Ministers have announced that they have agreed to requests from London Midland to close ticket offices and reduce opening hours at others, despite months of denying our claims that such measures were being planned. Passengers are nervous about the future.
The invitation to tender also gives the successful bidder significant freedoms in respect of fares throughout the term of the contract. It promises that fares can rise by
“RPI+3%+5% in 2013 and 2014 and then by RPI+1%+5%”.
Consequently, it is possible that some routes could see ticket prices increase by up to 11% for each of the next two years and then up to 8% each year until 2026. If that is to be the only way of meeting the promised revenue payments in the event of the predicted growth not being reached, it is no wonder that many passengers are concerned.
FirstGroup rightly points out that its profile of predicted growth and revenue is very similar to Virgin’s in the first two thirds of the franchise. However, it is the fact that the much higher growth and payments to Government occur towards the end of the franchise that is the cause of the concern. The figures are stark. The profile of proposed payments to Government increases from just £26 million in 2014 to £739 million by 2026.
Mark Pawsey
I am listening carefully to the hon. Lady’s argument. What I do not understand is whether, given what we now know, she would have made a different decision from that made by the Government.
Maria Eagle
The hon. Gentleman is tempting me, but it is impossible for me to make such a decision on the very low level of information that is in the public domain. As a Minister—I was never a Minister in the DfT, though I was in many other Departments—I had to make decisions like this, but I had to hand significant information––all the documentation and all the lawyers and officials. I do not have sufficient information in this Chamber today to answer that question. I hope he will regard my answer not as evasive but as plain common sense.
It is only in the final three to four years of the 13-year contract that the premium payments promised by FirstGroup exceed those promised by Virgin. The profile of payments goes steeply upwards from £26 million in 2014 to £739 million in 2026. The fear is that that builds in a clear incentive for the bidder to walk away from the contract before the payments are due, not least if the predicted revenue that is to fund the process does not start to appear as expected over the course of the contract and if the predictions turn out to be optimistic. FirstGroup states:
“Any suggestion we may walk away from our West Coast bid is misplaced. We would face considerable damage to our reputation and credibility if we did—and doing so would significantly impact our ability to win further franchises.”
I welcome that reassurance and I am sure that it is made in good faith, but I do not believe that, under the current Government’s approach to franchising, the consequences are as obvious.
In the past year, FirstGroup has exercised a right not to complete the maximum possible length of the contract it holds to deliver services on the Great Western main line, thus avoiding more than £800 million in dividend payments to the Government. I appreciate that FirstGroup would robustly state that that is not the same as walking away from a contract, but what is the same is that it was possible because the promised premium payments were highest during the final three years of the contract. Yet FirstGroup has secured the west coast franchise and it has been shortlisted again for the Great Western contract, so there are no consequences there for what is in effect gaming the system.
I do not accept that it is obvious that FirstGroup has cause to feel that it will suffer any damage, let alone find it harder to win future contracts, from terminating a contract early. Indeed, under Governments of both persuasions—I perhaps need to say under Governments of all persuasions, given that we have a coalition Government at present—we have not seen consequences follow from gaming the system or from failing to meet obligations. Companies have routinely been shortlisted again for franchises and have won franchises even though they have handed back keys or gamed the system to avoid making payments back to the taxpayer.
It is also said that the penalty for handing back the keys early is significant; at £190 million in the case of FirstGroup, it certainly sounds significant. However, put in the context of just one year’s payment to Government being £739 million, walking away does not seem quite such a bad deal if one is focused purely on financial considerations.
If these concerns were just being raised by the losing bidder, we might put it down to sour grapes; indeed, I think that was a phrase that one Government Member used. Clearly there is an element of that driving the judicial review and the challenge that we are now seeing. However, the fact is that many respected people across the industry are dubious about whether the bid that FirstGroup has succeeded with is viable.
Perhaps the Minister would be willing to listen to George Muir, who was the director general of the Association of Train Operating Companies between 1999 and 2008. Writing in Passenger Transport magazine, which is on my reading list, he starkly sets out the reason why there is widespread incredulity in the industry about this contract. He says:
“A 10.4% growth rate produces, in the year 2025/26, revenue of £2,982m out of which is to be paid premium payments to the government £1,696m…and profit to FirstGroup of £149m. Put it this way, in 13 years’ time this fine franchise is to have a profit margin of 62%. Wow! Surreal.
Put it another way, the premium in year 2025/26 is £1,140m in today’s money…and this to be paid by a business with passenger revenue last year of just £824m.
Well, if you believe this, you will believe anything.”
He warns that the Department for Transport
“cannot possibly believe they will get over £1bn, in today’s money, for four years on the trot from FirstGroup. They don’t. It’s a farce.”
Those are not my words, but those of George Muir, who was the director general of ATOC for many years and understands the industry. He is clear where the blame lies—it is in the changes that the Government have explicitly made to franchising since the election. He says:
“The problem goes back to Theresa Villiers’ franchise reform white paper of a couple of years’ ago, which she had been scribbling away in opposition. It reminds me of Andrew Lansley’s NHS reform, crackpot ideas in opposition.”
I stress that those are not my words; I am quoting George Muir.
The Government are right to prepare contingency plans if the legal challenge is not settled by the 9 December deadline for transfer. It would be helpful if the Minister could confirm that the proposal is to transfer responsibility for running these services to Directly Operated Railways. He would have our support for that decision and we would agree that a more appropriate course of action than pursuing the offer from the incumbent to allow it to continue to run the service temporarily on a not-for-dividend basis.
Of course, the Government are also only days away from beginning the tendering process for the east coast main line. The taxpayer received a dividend of £187.7 million from the east coast line in the past year and £170.7 million in the year before that. From next year, that money will go either to private shareholders or to the state railway of Germany if it was to win the contract; it has made a bid for the Great Western contract. I do not believe that the east coast line has been given the stability and certainty to enable us to judge whether a not-for-dividend model could work in the longer term more widely across the rail system. Therefore, I hope that the Minister will be willing to consider our proposal that the east coast line continues to be run as a not-for-dividend publicly run comparator to some of the other companies that are running franchises.
In conclusion, let me be very clear that this issue is not about siding with any particular company, and I do not think that today’s debate has been about that. Having said that, I understand Virgin Trains’ frustration, which it frequently expresses, that it has been runner-up twice to successful bids on the east coast franchise and that the successful companies—Great North Eastern Railway and National Express—later failed to meet their contractual obligations. It is this unfortunate history of franchise contracts being brought to an early end, at least in part because of over-ambitious payment promises that later proved impossible to meet, that has sparked fears that history may be repeating itself. I hope that the Minister wants to ensure that lessons have been learned and I also hope that he will now agree that, even if it becomes legally permissible to do so, he will not proceed further with this contract until there is a chance for the House to receive and consider the forthcoming report of the Transport Committee on this issue.
Mr Donohoe
On a point of order, Mr Davies. It is a genuine point of order. Is it in order for us to have a vote on this very important subject at the end of this debate?
Philip Davies (in the Chair)
No, it is not possible to have a vote on it. There is no mechanism for votes in Westminster Hall.
Mr Donohoe
Further to that point of order, Mr Davies. If that is the case, surely somebody has to devise a method by which there can be a vote? Given that this is a new procedure that is going into unknown territory, I would think that the House authorities should be looking at that position, as to whether or not a vote is allowed on a very important subject, as this subject is.
Philip Davies (in the Chair)
That is not a matter for today but something that the hon. Gentleman might want to take up with the new Chairman of the Procedure Committee, when that post is elected.
The Parliamentary Under-Secretary of State for Transport (Stephen Hammond)
I congratulate the hon. Member for West Lancashire (Rosie Cooper) on securing this debate. It is obviously an important debate and it is, of course, historic; as she will recognise, this is the first debate held on a Monday afternoon in Westminster Hall under these auspices. I have joy in responding to it on behalf of the Government—I am delighted to do so—but I would probably not have quite the same joy if my hon. Friend the Member for South Staffordshire (Gavin Williamson) suggested that I might be here every Monday afternoon from 4.30 pm to 7.30 pm. Mr Davies, it is also a pleasure to serve under your chairmanship.
We have had a fascinating debate. I thank a number of hon. Members, including the hon. Member for Garston and Halewood (Maria Eagle), for their kind comments and for the questions that they have put. I will attempt to answer those questions. Of course, some of them tempt me to go down a line that, if I were to take it, would probably mean I had the shortest ministerial career in history, and I do not propose to do that this afternoon. However, where possible, I will be as helpful as I can. Where I can, and at the right time, I will answer some questions now, and where I can, and at the right time, we will look at perhaps responding more fully in writing.
It has been a very interesting debate. The hon. Member for Halton (Derek Twigg) said that all politics is local, and that has certainly been proved by a number of the contributions today, including his own: I listened very carefully to the comments about Runcorn, the number of passengers and the more frequent service. I remember well the cold morning in Rugby; well done to my hon. Friend the Member for Rugby (Mark Pawsey) for continuing to press the case of Rugby rail users. I will respond to the questions put by the hon. Member for Ynys Môn (Albert Owen) later in my speech. May I also just say to my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw) that, as I understand it, he will be able to use his rail cards on off-peak journeys in future? He also made a number of representations and I am delighted to tell him that I am sure the Minister of State, my right hon. Friend the Member for Chelmsford (Mr Burns), will be listening to his concerns avidly. As usual, my hon. Friends the Members for Shrewsbury and Atcham (Daniel Kawczynski) and for Montgomeryshire (Glyn Davies) made the case on behalf of their constituents powerfully. And my hon. Friend the Member for Morecambe and Lunesdale (David Morris) wanted more than a “Brief Encounter” with the west coast main line at Carnforth; I understand that point entirely. There were a number of other contributions that I wish to pick up as we go through.
As the hon. Member for West Lancashire said, the petition had more than 172,000 signatures. Beyond any question, the franchise process is of genuine public interest, and quite rightly so. After all, whether someone is a fare payer or a taxpayer, they have a stake in our railway networks and an interest in ensuring that they provide real value for money, as well as services that are accessible, reliable and safe. The Government clearly want the railways to succeed in that regard, which is why we are investing more than £18 billion in the railways over the spending review period.
It is important to mention at the start the Government’s objectives for the railways, which were set out in the rail Command Paper this May by my right hon. Friend the Member for Putney (Justine Greening), who was then the Secretary of State. As I am sure a number of hon. Members will remember, it was subject to extensive debate on the Floor of the House. Our aim as a Government is to work closely with the industry to ensure that our railways are financially sustainable and consumer-focused. That approach is essential if we are to ease the burden on the taxpayer and improve value for money for fare payers. We are also building on the work done by my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), which looked specifically at reforming rail franchising.
I note the remarks made by the hon. Member for Garston and Halewood about George Muir. I remember discussing with George his comments on rail franchising. He was in a minority of one at the time, and I think he probably remains in a minority of one, certainly within the Association of Train Operating Companies community.
On rail franchising, the Government set out three key principles in January 2011. First, we believe that franchises should be longer, expanding the opportunity for operators to invest in improvements, as well as enabling them to strengthen their working relationships with Network Rail and other key stakeholders. Secondly, we set out that we should see demanding outcomes for operators to deliver, but give them more flexibility to decide how best to achieve those outcomes. Finally, we said that the specifics of each franchise would be decided on a case-by-case basis.
The procurement of the new inter-city west coast franchise was, as everyone would expect, a thorough and extensive process, which a number of hon. Members have stated. The process was transparent to both Parliament and the public. The first public consultation was held 18 months ago. In May 2011, the then Secretary of State, my right hon. Friend the Member for Runnymede and Weybridge (Mr Hammond), came to the House and gave an updated timetable, including the extension that was partly announced to ensure the success of the Olympics. He provided an updated timetable for the procurement, alongside a draft invitation to tender.
There was then a second public consultation on the train service specification. All bidders were explicitly encouraged to submit bids that contained proposals that reflected consultation with stakeholder groups, including local groups along the route of the franchise, many of which were spoken about today, and Passenger Focus. Following that consultation, the formal ITT was launched and placed on the Department’s website this January. As is now known, following that, four bids for the franchise were received: from Abellio; FirstGroup; a joint venture between SNCF and Keolis; and Virgin Trains, a joint venture between Virgin and Stagecoach.
Daniel Kawczynski
The Minister is talking about timetables. Does he agree that the date that the bids would be announced had been well known for a considerable time?
Mr Hammond
My hon. Friend is right to make that point. As I said, my right hon. Friend the Member for Runnymede and Weybridge had made the announcement in May 2011 and set out the timetable. It was apparent from that time when the announcement of the bids would be.
A thorough examination of the bids was carried out over nearly three months. As soon as the winning bidder was identified, in accordance with existing practice and the published timetable, the Department ensured that announcements were made to the London stock exchange that it intended to award the inter-city west coast franchise to First West Coast Ltd, a subsidiary of First.
A number of Members talked about parliamentary scrutiny today. It is not unusual that the announcement was made during a recess. On two occasions, the previous Government made announcements to the market, quite properly, on days when the House of Commons was not sitting. To suggest that that is a new way of doing something—
Mr Hammond
The hon. Lady comments from a sedentary position. She is quite right; she did not suggest that, but a number of her colleagues did. It is not a new way of doing things, provided that as soon as Ministers return to the House, they make a written ministerial statement. Following the announcement on 15 August, on the first possible date thereafter—3 September—my right hon. Friend the Member for Chipping Barnet took the opportunity to make a written ministerial statement to the House.
After the announcement, the Department received a legal challenge to the procurement from Virgin Trains Ltd, which had bid unsuccessfully. I intend to try to answer as many questions as possible, but I do not need to be reminded—I am sure that hon. Members do not either—that in cases where there is a legal challenge, it is difficult to answer all the questions that may be asked. As I said earlier, if I appear reticent, it is not any wish not to be transparent, but simply that when matters are subject to the judicial process, it is impossible to make broader comment.
It is right and proper, and the Department believes so, that our choices regarding new franchises and value for money for the taxpayer are subject to scrutiny by Parliament. However, there is a right and proper time for that to take place.
Many hon. Members paid tributes, quite rightly, to Virgin Group. Sir Richard Branson and Virgin have made an undeniable and tremendous contribution to UK rail. Let me try to assure hon. Members that the winning bid offers significant benefits to passengers. First West Coast Ltd has contracted to introduce 11 new electric trains of six carriages from December 2016. That will mean an extra 12,000 seats a day for passengers. First has also committed to retaining and fully refurbishing the trains already in the fleet.
In the speech by the hon. Member for Halton, his colleague the hon. Member for St Helens North (Mr Watts), who is not currently in his place, made a point about the leasing of trains. The short answer to his question is that commitment to lease trains is in the franchise agreement. To remove any part of the train fleet, the Secretary of State’s consent is required. I hope that that clears up that issue.
Subject to the approval of the Office of Rail Regulation, First will take advantage of the increased flexibility in the contract to introduce a number of new services from London Euston to Blackpool, Bolton, Telford Central and Shrewsbury. It will also introduce ITSO-based smart ticketing, which will benefit users across the country, bringing the sort of freedom that we have already seen in London with the Oyster system. It will not have escaped the attention of hon. Members that in its bid, alongside that investment, First West Coast Ltd has committed to reduce standard anytime fares by on average about 15% over the first two years.
There have been a number of questions on staff and morale. I reassure hon. Members that, as with previous franchise transfers, existing employees, including drivers, guards and back-office staff assigned to the part of the organisation transferred to First West Coast Ltd, will be protected by TUPE regulations. FirstGroup has also given a commitment to continued investment in front-line staff.
I reassure the hon. Member for Ynys Môn that all bids were assessed independently for deliverability, and all bids were assessed as deliverable. The Department believes that the winning bid is deliverable, provides value for money for taxpayers and passengers, and capitalises on the £9 billion already invested in the west coast main line and the £18 billion the Government are continuing to invest.
None the less, as the hon. Member for Garston and Halewood said, the Government can learn lessons from the mistakes of previous Governments on handing back keys and the failure of certain people on the east coast main line to deliver. There have been several comments on the procurement process, and we are acutely aware that we need to ensure we learn lessons from past franchise failures. In designing the franchise, some of those comments and recommendations, particularly the Public Accounts Committee’s recommendations, following the failure of the east coast main line have been taken into account. We therefore required First West Coast Ltd to provide a third party-backed guarantee, the largest guarantee ever required.
We have also removed the cap and collar system that was in place for the east coast franchise and introduced a GDP support mechanism—a question was asked about that. Indeed, the mechanism supports the Government because there is protection whether GDP goes up or down. I will happily write to the hon. Member for Halton with the full details of that mechanism when I am able to do so.
Derek Twigg
I do not want to pursue the matter for too long, because time is short. If the Government’s projections for GDP, which the bids were based on, is low—the Minister has not said whether one bidder put in a lower projection, despite the Government’s figures—will the Government have to give money back to the successful bidder?
Stephen Hammond
My understanding of the GDP process currently in place is that there would be either payments back to the Government or payments from the Government. I will write to the hon. Gentleman about that.
I make it clear that GDP was only one of the external factors; it was not the only external factor. To ensure that the Government are further protected, a profit share mechanism has also been introduced. The mechanism will enable the taxpayer to benefit from a share in any super profits that the franchise generates while continuing to provide an incentive for the franchisee to outperform.
The hon. Member for West Lancashire asked a number of questions about the Government’s preparations, should the franchise end without a new franchisee being in place. I make it clear that the existing contractor has a contractual obligation to support handover activities. On the 120 days to which she referred, a departmental mobilisation manual is being used by both parties in every franchise to ensure that a franchise handover process is in place, and the activities and time scales required to effect a transfer are set out. The Government are confident that the Department is putting in place the right contingencies in the time scale, should the process not be completed. We expect the legal issues to be resolved so that contingency plans will not be necessary.
Rosie Cooper
We have very little time, and I implore the Minister to answer my questions on the detail of the guarantee and on the contract negotiations. I also implore him to answer the question asked by my hon. Friend the Member for Halton (Derek Twigg). They are important and pertinent questions that go to the heart of protecting taxpayers’ money, and, sadly, the Minister has not answered any of them. I know we have gone round the houses, but the Minister has not answered the questions at the heart of the debate.
Stephen Hammond
I am sure the hon. Lady has listened to my contribution, and I am sure she has taken notes, but I have made it clear that, where I am able to answer questions because of the ongoing judicial process, I have answered them. Equally, I have given a guarantee that after the judicial process, where the Department is able to answer those questions, we will provide a written answer. As I am sure she knows, I cannot make a statement that would prejudice the judicial process.
Mark Pawsey
Given all that we have heard in this effective debate, does the Minister agree with the majority of Government Members that the interests of rail users, taxpayers and railway staff will be served by the contract going ahead?
Stephen Hammond
The Department is confident that we have taken the right decision in the interests of taxpayers and passengers. We expect to sign the contract soon, but we intend to defend the judicial process robustly. Of course, as I said at the outset, it is right that Parliament should scrutinise the franchising process, but there is a right time.
I make it clear that this is not a political decision; it is a commercial decision taken in line with the franchise and procurement processes set out in the reforms of the then Secretary of State, my right hon. Friend the Member for Runnymede and Weybridge. There may be a desire for more extensive parliamentary scrutiny of the process and the bids, but commenting too deeply and changing our decision now could fundamentally undermine any future Government competition, and it would be wholly inappropriate for me to do so.
I guarantee that my ministerial colleagues and I will continue to keep the House and the Transport Committee updated on developments, subject to any constraints of legal or commercial privilege.
Philip Davies (in the Chair)
I call the hon. Member for West Lancashire (Rosie Cooper) to wind up the debate. I am sure she is aware that we are due to finish at 7.30 pm.
Rosie Cooper
Very quickly, I thank you for your stewardship of the second part of the debate, Mr Davies.
I hoped to be able to respond more extensively, but in the half a minute that is left to me, I sum up by telling the Minister that I believe a bird in the hand is worth two in the bush. For the record, I do not believe in the tooth fairy, either.
Question put and agreed to.
Resolved,
That this House has considered the e-petition from Ross McKillop and others relating to the West Coast Mainline franchise decision.
Written Ministerial Statements
(12 years, 3 months ago)
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Local Enterprise Partnerships
(12 years, 3 months ago)
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The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I, as the Minister with responsibility for business and enterprise, together with the Minister for Housing, Department for Communities and Local Government, am today announcing that £25 million of Government funding will be made available to support local enterprise partnerships in their pursuit of economic growth.
The Government’s goal is to promote strong, sustainable and balanced growth across the UK. Local enterprise partnerships are central to our approach to driving local economic growth and for ensuring that every locality is able to fulfil its potential. Local enterprise partnerships are voluntary partnerships of business and civic leaders, working across local economic areas, and have a vitally important role in identifying opportunities for private sector growth and addressing local barriers to growth through the united efforts of their partners.
Local enterprise partnerships have also been encouraged to identify local barriers to growth where Government action can address some of the specific barriers. Ministers across Government are committed to supporting local enterprise partnerships achieve their local growth priorities and tackle the barriers to progress.
In response to recent strong representations the Department for Business, Innovation and Skills and the Department for Communities and Local Government have decided to offer jointly up to £250,000 pa of matched core funding to local enterprise partnerships for the remainder of this Parliament (until 2014-15), subject to satisfactory proposals being received. We will offer each local enterprise partnership a one-off initial payment of £125,000 for the remainder of this financial year to provide immediate support, with subsequent years funding dependent on matched funding from local partners. Where matched by funds locally the overall funding pot could equate up to £45 million over this period. With this offer of core resources, local enterprise partnerships will be asked to ensure that they have a clear set of priorities for local growth in place.
Local enterprise partnerships will remain voluntary business and civic partnerships to drive sustainable private sector growth and job creation in their area. This offer of core resource funding will provide more capacity for local enterprise partnerships to drive forward their growth priorities, allow them to do longer-term resource planning and strengthen support and autonomy of the business-led boards.
Government's Alcohol Strategy
(12 years, 3 months ago)
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The Parliamentary Under-Secretary of State for Health (Anna Soubry)
We are today laying before Parliament the “Government Response to the House of Commons Health Committee Report of Session 2010-12: Government’s Alcohol Strategy” (Cm 8439).
The Committee gave a positive welcome overall to the Government’s alcohol strategy and welcomed in particular the decision to introduce a minimum unit price for alcohol. The Committee made some important points about the need to set out the evidence behind this policy and its implementation. We will address these points when we consult on the level of minimum unit price and other proposals set out in the strategy during the autumn.
We welcome the Committee’s argument that the alcohol industry’s participation in the responsibility deal is “intrinsic to responsible corporate citizenship”. We fully agree with the Committee that it is not a substitute for Government policy.
We are committed to reversing the long term rise in both health and social harms from alcohol misuse and have set out in the strategy a number of challenging ambitions by which our success will be judged.
We welcome the Committee’s support for effective local action, such as that in Birmingham, and the opportunity they recognize for local authorities and others, supported by Public Health England, to address the serious problems caused by alcohol misuse in local communities.
Today’s publication is in the Library. Copies are available to hon. Members from the Vote Office and to noble Lords from the Printed Paper Office.
Chief Coroner's Powers
(12 years, 3 months ago)
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The Parliamentary Under-Secretary of State for Justice (Mrs Helen Grant)
The Minister for the Armed Forces, my right hon. Friend the Member for South Leicestershire (Mr Robathan) and I wish to make the following statement to the House regarding investigations into service personnel who have died overseas:
On 24 September 2012 the Government will commence powers under sections 12 and 50 of the Coroners and Justice Act 2009 to enable for the first time deaths of service personnel killed abroad to be investigated in Scotland under the Fatal Accidents and Sudden Deaths Inquiry (Scotland) Act 1976 where appropriate.
His Honour Judge Peter Thornton QC, who has today assumed the role of chief coroner of England and Wales will be able to recommend that investigations be transferred from England and Wales in appropriate circumstances, for example where the deceased’s family is based in Scotland.
The provisions aim to reduce the additional distress that can be caused by ensuring that bereaved service families from Scotland do not have to travel long distances to England or Wales to attend an inquest.
London Midland (Ticketing and Settlement Agreement)
(12 years, 3 months ago)
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The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I would like to inform the House of the decision that has been made in relation to London Midland’s application to change schedule 17 of the ticketing and settlement agreement (TSA), which was referred to the Department for Transport for arbitration.
The TSA sets out the various arrangements between train operators relating to the carriage of passengers and the retailing of tickets. London Midland’s proposal was to change the minimum opening hours of a number of ticket offices, including the closure of nine offices altogether. These changes would not affect the level of train services in any way.
I have decided to approve London Midland’s proposal in part, but reject some elements where the case for changes has not been made. Ticket offices at Small Heath, Jewellery Quarter, Bescot Stadium, Duddeston and Adderley Park, which were proposed for closure, will remain open. However, I have agreed four of the nine proposed ticket office closures, at Wythall, Witton, Lye and Cheddington.
Several ticket offices will have their opening hours extended, while a number of other stations will have their ticket office opening hours reduced. A full list of the changes has been published on the Department’s website.
In arbitrating this decision, we were careful to ensure that the proposal was in line with the criteria set out in the TSA, whereby passengers continue to enjoy widespread and easy access to the purchase of rail products, and that the proposal represents an improvement in terms of quality of service and/or cost-effectiveness.
I have also ensured that no particular group of rail users is affected disproportionately by the changes, particularly passengers with disabilities.
The changes reflect the change in the way passengers are buying tickets, with more choosing to purchase their tickets online or at ticket vending machines, and the changes that have been approved will not generally affect stations during periods in which the ticket office is currently selling more than 12 tickets an hour.
As a condition of the changes, London Midland will also be required to provide a total of 29 additional ticket vending machines at stations that do not currently have this facility. This will be an improvement in availability at stations where the ticket office is currently only open part-time, with passengers in future able to purchase tickets whenever they wish to travel.
We have also ensured that London Midland will keep lifts in operation when stations are unstaffed. London Midland will also improve safety and security at stations, including through the provision of upgraded CCTV at 11 stations and will provide additional shelters and upgraded signage as a condition of this approval.
In addition, London Midland will invest in 30 new train boarding ramps to improve access to trains for wheelchair users. Passengers who require assistance in making their journey can now book this via the new industry website, which was launched by the Association of Train Operating Companies (ATOC) on 24 August.
There are currently many ticket offices open for very long hours, while selling very few tickets indeed. In an era where passengers are telling us that they need fares to come down and investment in services to rise, these sorts of costs simply cannot be justified.
These changes will provide savings to taxpayers and passengers far beyond the life of the existing franchise, and will ultimately save millions of pounds. I believe that this is a necessary step in improving the efficiency of the rail network, and reducing the cost of rail travel for everyone.
Disability Strategy (Fulfilling Potential)
(12 years, 3 months ago)
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The Parliamentary Under-Secretary of State for Work and Pensions (Esther McVey)
I am pleased to announce that later today we will publish two documents as part of our disability strategy, Fulfilling Potential. These set out how the Government will work in partnership with others to enable disabled people to achieve their aspirations and play a full role in society.
The London 2012 Paralympic games have challenged outdated perceptions of disabled people. They have provided a platform for greater understanding and inclusion, and a stronger focus on ability rather than disability. Fulfilling Potential will build on this and is about making the UN Convention on the Rights of Disabled People a living reality for disabled people in Britain today.
Last December we invited disabled people to help shape a new cross-Government disability strategy. We received an overwhelming response. “Fulfilling Potential—the Discussions So Far” summarises the issues raised, and shows how actions are already being taken across Government to address many of the issues.
We will also publish “Fulfilling Potential—Next Steps” which will take us further forward. It sets out our vision and principles; outlines further public sector reforms; and announces a new disability action alliance, involving organisations from across the private, public and voluntary and community sectors.
Convened by Disability Rights UK and supported by the Office for Disability Issues, the alliance will put disabled people and their organisations in influential roles. It will lead the way in promoting local communities which include disabled people, and identify action to change attitudes and behaviours, increase choice and control and encourage early interventions to support independent living.
We will continue to work with disabled people and publish in the autumn, an analysis of the latest statistics and research, to help build a deeper understanding of disability in our society today; and in 2013 a further strategic document and action plan.
I will place a copy of both documents in the House Library later today.
Work Capability Assessment (Government Response)
(12 years, 3 months ago)
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The Minister of State, Department for Work and Pensions (Mr Mark Hoban)
Today I will be publishing the Government response to the consultation—“Work Capability Assessment: accounting for the effects of cancer treatment”.
I strongly support the principle of the work capability assessment and am committed to continuously improving the assessment process to ensure it is as fair and as accurate as possible.
We have a statutory commitment to an annual independent review of the work capability assessment for the first five years of its operation and appointed Professor Malcolm Harrington in June 2010 to start these reviews.
Professor Harrington has to date carried out two independent reviews of the work capability assessment and is currently undertaking a third. As part of his second independent review Professor Harrington asked Macmillan Cancer Support to look in detail at how the work capability assessment assesses people with cancer in order to provide him with evidence for further recommendations for improvement.
As a result of the evidence received from Macmillan we decided to conduct an informal consultation to seek a wider range of views and evidence. The consultation “Work Capability Assessment: accounting for the effects of cancer treatment” was announced on 24 November 2011 as part of the Government’s response to Professor Harrington’s second review.
Today’s document outlines the responses received to that consultation and provides further information on how we intend to change the way the work capability assessment works for people receiving cancer treatment based on consideration of those responses.
The revised proposals expand the categories of cancer treatments under which a claimant may be treated as having limited capability to undertake work-related activity to now include individuals who are: awaiting, receiving or recovering from treatment by way of chemotherapy irrespective of route; or awaiting, receiving or recovering from radiotherapy.
I will place a copy of the full Government response to the consultation in the House Library and it will also be available later today at: www.dwp.gov.uk/consultations.