House of Commons

Wednesday 31st October 2012 Commons Chamber

Wednesday 31 October 2012

The House met at half-past Eleven o’clock

Prayers

Wednesday 31st October 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 31st October 2012 Commons Chamber

The Secretary of State was asked—

[Ian Lucas (Wrexham) (Lab)]

1. What recent assessment her Department has made of the humanitarian implications of Rwanda’s support for militia activity in eastern Democratic Republic of the Congo.

[The Secretary of State for International Development (Justine Greening)]

The humanitarian situation in the Democratic Republic of the Congo has worsened; in fact, 2012 has seen about 2.3 million people displaced, which is the highest number in many years. That is in part linked to the activities of M23 and other militia. In answer to the hon. Gentleman’s point about Rwanda, the UN group of experts will report in November. I will critically assess the situation when I make the next decision on budget support in December.

[Ian Lucas]

I congratulate the Secretary of State on her appointment to her extremely important role.

Yesterday a Congolese citizen told me that she could not understand why the Government were supporting individuals whom the UN experts had said were attacking and creating mayhem in eastern Congo. Was the decision to reinstate aid supported by officials in the Secretary of State’s Department?

[Justine Greening]

My predecessor set out in his written ministerial statement the basis on which the Government’s decision was taken. My understanding is that it was based on officials’ advice.

[Sir Malcolm Bruce (Gordon) (LD)]

May I, too, welcome the Secretary of State to her position and say on behalf of the Select Committee on International Development that we look forward to engaging with her? She will be aware that we produced a report on conflict in the DRC, and we are undertaking one on the situation in Rwanda in the light of budget support being reinstated. Does she accept that the dilemma we face is that Rwanda is a country where development money delivers real results for poor people, but where issues such as freedom of speech and plurality are compromised? That is a dilemma we have to resolve.

[Justine Greening]

The right hon. Gentleman is right. It is worth remembering that 5 million people are living in poverty in Rwanda. Our programme of support is aimed at helping those people in particular. When we came into government, we attached more conditionality to our general budget support, not least through the partnership principles. It is things such as the partnership principles that I will look at in reaching the decision we will take in December.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

I, too, congratulate the Secretary of State on her new appointment. She told my hon. Friend the Member for Wrexham (Ian Lucas) that officials were consulted and that her predecessor sought their advice. Were other donors and allies who had suspended payments to Rwanda consulted about their views on the impact of the UK’s unilateral decision to reinstate aid?

[Justine Greening]

I was not in my role when that decision was taken, so I cannot answer the hon. Gentleman’s question directly, but the International Development Committee is planning to look at this issue, and I am sure it will be able to ask and get answers to those questions for him.

[Mr Gary Streeter (South West Devon) (Con)]

Is it not worth putting on record the fact that Rwanda has made tremendous strides in the last 15 years since the troubles of the 1990s, in no small part thanks to substantial assistance from the United Kingdom Government? That is something we should absolutely be proud of.

[Justine Greening]

I think we should be. In recent years I have spent time in Rwanda, which is a good example of where achieving things on the ground is often complex. Life is not black and white; we have to deal with real people and situations and navigate our way through them to the best of our ability. We know that there are still millions of people in Rwanda living in poverty. The aid programmes we have invested in there have been extremely successful, so there is absolutely a need to continue that work.

[Richard Fuller (Bedford) (Con)]

2. What steps she is taking to encourage private capital investment in the Economic Community of West African States.

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

Through DFID offices and international programmes, we are helping west African countries to build infrastructure, reform laws and institutions that govern business, strengthen financial services and develop sound projects, to make them more attractive to private investors and stronger trading partners for the United Kingdom.

[Richard Fuller]

I thank the Minister for that response. I am sure that, like me, she recognises the critical role that small and medium-sized enterprises can play in west African states in ensuring development. We welcome the global SME finance facility that the Government have put in place. Will the Minister keep an open mind about expanding that facility, particularly for west African states, and will she join me in welcoming the steps that Governor Fashola has taken in Lagos state to improve the ease of doing business in Nigeria?

[Lynne Featherstone]

I thank my hon. Friend and pay tribute to his work in Nigeria. I know of his interest in development in west Africa. Small and medium-sized enterprises—in fact, all businesses—are most important. Nigeria—and, as he mentions, Lagos in particular—is the growth hub of Africa, as the Prime Minister highlighted when he visited it last year. UK aid will continue to help to create an even better climate for business by supporting better regulation, better infrastructure and more efficient and productive markets.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Does the Minister agree that, should the United Nations Security Council agree to the deployment of troops in north Mali, it will be essential that we do our best to look after the civilian population there and to ensure that humanitarian aid can be delivered?

[Lynne Featherstone]

The right hon. Gentleman raises a really important point. Whatever the military action, our responsibility is to ensure that humanitarian aid is delivered as fast as possible.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

3. What recent assessment she has made of the humanitarian situation in Syria.

[Nicola Blackwood (Oxford West and Abingdon) (Con)]

6. What recent assessment she has made of the humanitarian situation in Syria.

[The Secretary of State for International Development (Justine Greening)]

The humanitarian situation in Syria is deteriorating rapidly: 2.5 million people are already in need and more than 350,000 have fled to neighbouring countries. The UK has already provided £39.5 million of funding for essential food, heating and shelter to help people to cope with the coming winter. I am assessing with other agencies how we can ensure that we are well prepared if the situation deteriorates further, as many people suspect it will.

[Meg Hillier]

I thank the Secretary of State for her answer. With access to large parts of Syria becoming increasingly difficult and challenging, what work is she doing with the international community to ensure that people in those areas can receive the aid that they need?

[Justine Greening]

The hon. Lady is absolutely right. Approximately half the support that we provide has been for refugees, and half to help people inside Syria. I have had discussions with the International Committee of the Red Cross and the World Food Programme, the key providers of aid within Syria, and we are working with them to ensure that they can do their job efficiently. Clearly, they are neutral and dispassionate in regard to the politics, and it is vital that we use them.

[Mr Philip Hollobone (Kettering) (Con)]

The Christian community in Syria is one of the oldest in the world, and one of the largest in middle east. Indeed, was it not St Paul who was converted on the road to Damascus? If the wrong people come out on top in the Syrian civil war, there is every chance of a bloodbath in the Christian community on a biblical scale. Will my right hon. Friend do everything she can to ensure that the humanitarian provision addresses that very real fear?

[Justine Greening]

I will. We want to ensure that the humanitarian support that we are providing is there for all parts of the Syrian people. My hon. Friend is absolutely right to say that the situation is particularly precarious at the moment, not least because the opposition forces are fragmented and it is therefore unclear what form an emergent Syria will take. However, I am working closely with the Foreign Secretary on this matter, and I can assure my hon. Friend that I will bear in mind the point that he has made.

[Wayne David (Caerphilly) (Lab)]

Is the Secretary of State liaising closely with her colleagues in the Foreign Office to ensure that the maximum political pressure is placed on China and Russia to ensure that they adopt a more enlightened approach to the situation in Syria?

[Justine Greening]

I can assure the hon. Gentleman of that. Clearly, if we are to make any progress through the United Nations, it will be critical to get buy-in from those two countries. So far, that has proved to be extremely challenging. There is clearly a diplomatic route to making progress, as well as a humanitarian one.

[Nicola Blackwood]

Save the Children’s recent report from the Zaatari camp in Jordan tells of Syrian children who have survived the most appalling atrocities, including arbitrary detention, torture and sexual violence, as well as others who have not survived. Will the Secretary of State tell us what is being done to support those children, and what steps are being taken to monitor the atrocities that they are reporting?

[Justine Greening]

My hon. Friend is absolutely right. It is shocking to see how what is now the Syrian civil war has affected children in particular. Half of our support has gone to refugees, many of whom are children fleeing with their families. The fact that we have provided trauma support for 28,000 children will give the House a sense of the scale of the problem that we are tackling, and we have announced a further £3 million of support for UNICEF’s work. We are providing not only counselling but clinical care in places such as Jordan to Syrian refugees who have experienced sexual violence. That is an incredibly worrying aspect of the work that we are doing, but we are absolutely committed to doing what we, as a country, can do with our partners to help that situation.

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

4. What estimate she has made of the number of people in (a) Israel, (b) Gaza and (c) the remainder of the Occupied Palestinian Territories who are in employment; and what assessment she has made of the factors preventing equalisation of employment levels in the region.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

In the second quarter of this year, unemployment was 7% in Israel, 28% in Gaza and 17% in the west bank. We support the International Monetary Fund’s recent assessment that Israeli controls on external trade and access to Area C of the west bank are a serious constraint on Palestinian employment levels.

[Mr Turner]

Does my right hon. Friend agree that more needs to be done to persuade Israel to remove the barriers that prevent Palestinians from crossing the border in order to find work, and, indeed, to seize more opportunities to create work in Gaza and the rest of Palestine?

[Mr Duncan]

Yes, we want people and goods to be able to cross borders freely with the minimum constraints necessary to ensure Israel’s security, and we want the Palestinian Authority to be able to exploit its own resources, such as the gas fields off the coast of Gaza, so that the PA can pay its own way and eventually require less support from the international community.

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

The crazy economic and employment situation in Gaza is exemplified by the position of its fishing industry. Fishermen are prevented by an Israeli blockade from fishing more than 3 km offshore while, at the same time, fish can be imported through illegal tunnels, yet the indigenous people of Gaza cannot, by and large, afford to buy those fish. Would it not be better to lift the blockade, open the crossings and close the tunnels?

[Mr Duncan]

We are deeply concerned that the situation in Gaza remains dire, with 38% of Gazans living in poverty and 66% depending on food aid. Their ability to fish and exploit their own resources properly within international law is something that we would of course encourage.

[Mr Crispin Blunt (Reigate) (Con)]

My right hon. Friend and the previous Secretary of State achieved an enviable record of support for the United Nations Relief and Works Agency and Britain’s reputation in addressing some of the economic issues. Will my right hon. Friend assure me that that support is going to continue?

[Mr Duncan]

Yes, I can give my hon. Friend the assurances he seeks. We work very closely with UNRWA, and I regularly meet Filippo Grande who runs it. I have visited the area with him on many occasions, and look forward to doing so again, while also expressing our support in terms of hard cash for the future.

[Naomi Long (Belfast East) (Alliance)]

The Minister will be aware that water security has huge implications for economic and social development in the region. What specific actions are the UK Government taking to ensure that water is no longer used as a weapon against some of the most vulnerable people in the region?

[Mr Duncan]

We are well aware of the access restrictions to safe drinking water in the west bank and Gaza. The UK Government regularly discuss these issues with Israel, and we continue to call for the full implementation of the relaxation of access restrictions for Gaza that Israel announced in June 2010.

[George Freeman (Mid Norfolk) (Con)]

5. What steps her Department is taking to use its aid budget to support strategic trading alliances between the UK and emerging nations.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

The European Union leads on trade negotiations for its member states. DFID considers trade to be a key element to sustainable poverty reduction in developing countries. It helps to generate wealth, create jobs and raise incomes. We work with others to help to strengthen the multilateral trading system, and we provide practical support to enable poor countries to participate more effectively in international trade.

[George Freeman]

I thank the Minister for that answer. Given that the best form of aid is trade, and given the urgent need to rebalance our trade away from the sclerotic eurozone and the potential of our world-class biosciences to tackle food security, does the Minister agree that there is a huge opportunity, through strategic collaborations in agricultural science, to unlock relationships with emerging nations such as India to the benefit of us both?

[Mr Duncan]

The UK’s aid budget is, of course, untied, but technology transfer is an increasingly important part of DFID’s programme. For example, through our AgResults programme, we will harness technological innovation so that we can improve agricultural productivity and food security in some of the world’s poorest countries. Part of the Government’s strategy for life sciences is to export the benefits of our research to the developing world.

[Keith Vaz (Leicester East) (Lab)]

I thank the Minister for all the work he has done over the years to support the people of Yemen, but he will know that half the people of Yemen are still malnourished. How can we ensure that we give them the capacity to be able to use trade-related skills in order to help themselves?

[Mr Duncan]

We see trade as an important ingredient in all our development activities. I recognise the right hon. Gentleman’s own personal interest in Yemen and can assure him that the UK has been in the lead in garnering international support to raise pledged donor contributions reaching $8 billion. The key now is to ensure that those funds are disbursed honestly and effectively.

[Steve Brine (Winchester) (Con)]

7. What steps she is taking to ensure value for money in her Department.

[The Secretary of State for International Development (Justine Greening)]

I am determined to ensure that our budget has the maximum possible impact, and that every pound we spend reaches the people and projects for which it was intended. With that in mind, since taking office I have already reduced the thresholds for ministerial approval. I have also instigated a review to improve the use of our consultants. I shall meet our top suppliers over the coming weeks to ensure that we have better value for money, and in the meantime I am starting to sign off all new supply contracts worth over £1 million.

[Steve Brine]

I am incredibly proud—as are many of my constituents—that the Government are standing by some of the world’s poorest people at a time when things are so difficult at home, but a number of my constituents are understandably concerned when India, for instance, is reported as saying that it does not need or, indeed, want our money. How does the new Secretary of State intend to bridge that credibility gap when it comes to the way in which some—and I stress the word “some”—UK aid money is spent overseas?

[Justine Greening]

My hon. Friend has raised an important matter which I, too, recognise. I have already engaged the Indian Government in discussions—at the World Bank meeting a few weekends ago—and I shall continue those discussions, as a matter of urgency, over the coming weeks. I think that as the aid budget enables countries to develop—and far fewer countries are classed as lower-income than 10 or 20 years ago—and as they move from aid-based to trade-based support, we must work with them carefully to establish what constitutes a responsible transition package, and that is what I am discussing with the Indians.

[Sir Tony Cunningham (Workington) (Lab)]

I, too, warmly welcome the new Secretary of State to her post. Of course we all want to see value for money, so in the spirit of openness and transparency, will she tell the House when she will publish her report on the Department’s use of private consultants?

[Justine Greening]

I have already made it clear that we will take a number of actions in relation to the work that I arranged to be done, and I urge the hon. Gentleman to wait and see what steps we are able to take. The key to all this is ensuring that we understand when we should do things in-house and when we should opt for external support, and then working out how we can secure much better value for money. Many of the countries in which we operate are fragile and conflicted, and therefore need specialist skills. I think that it is right for us to use consultants; the question on which I have challenged the Department is how we can use them far, far better.

[Martin Horwood (Cheltenham) (LD)]

I welcome all the Ministers to their new responsibilities.

When Lord Ashdown conducted a review of the impact and value for money of DFID emergency aid, he emphasised the importance of resilience and preparedness in disaster-prone areas. Does the Secretary of State believe that the potentially tragic impact of Hurricane Sandy on, in particular, vulnerable Caribbean nations offers us an opportunity not only to provide immediate assistance, but to evaluate progress on that agenda of preparedness and resilience?

[Justine Greening]

I am sure that it does. When I attended the UN General Assembly session in New York a few weeks ago, a meeting of so-called political champions was convened to discuss the important issue of resilience. If we can build resilience into our country development plans in the first place, that will be far more effective in terms of taxpayer money than having to pick up the pieces after a catastrophe.

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

8. If she will estimate the cost to European aid programmes of the Israeli occupation of the west bank.

[The Minister of State, Department for International Development (Mr Alan Duncan)]

We estimate that between 2006 and 2010 the total value of European aid programmes on the west bank averaged $1 billion per year. Our funding aims to support the creation of an independent, viable Palestinian state with a flourishing economy. Our assessment is that, over time, such a state would become self-sufficient, and would no longer require aid.

[Mr Denham]

Many of us consider high levels of aid for the west bank to be an essential investment in the peace process, but now that Israeli settlements are making a two-state solution impossible, how will the Government ensure that the Israeli Government rather than European taxpayers pay the costs of the illegal occupation?

[Mr Duncan]

I understand the concept that the right hon. Gentleman has presented, namely that our aid somehow subsidises the occupation. The solution to the problem that he has raised is an enduring peace process that will enable a secure Israel to live alongside a viable Palestinian state, so that aid, compensation or any other such financial support can be rendered less necessary.

[Mark Pawsey (Rugby) (Con)]

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

[The Secretary of State for International Development (Justine Greening)]

It has been a busy first few weeks in the Department. I have attended the United Nations General Assembly, where I was able to discuss the humanitarian situation in Syria. I have travelled to a World Bank meeting in Tokyo, where I met the Indian Finance Minister, as I have just said. I have taken the opportunity to meet my counterparts at the European Council of Ministers in Luxembourg. [Interruption.] I have introduced new financial controls and instigated a review of consultancy in the Department. I have also managed to visit country programmes in Kenya and Somalia. [Interruption.]

[Mr Speaker]

Order. The Secretary of State should also manage to be heard, and she would be helped in that if we could have a bit of order for Mark Pawsey.

[Mark Pawsey]

In the crisis that is developing in the eastern Congo, there is evidence that women and children are being affected most. What steps is the Department taking to ensure that support gets to those most in need?

[Justine Greening]

We are the third largest humanitarian donor to the Democratic Republic of the Congo, and we focus on working with organisations that specialise in meeting the needs of women and children, such as UNICEF, and with organisations that have a specific mandate to protect the most vulnerable, such as the International Committee of the Red Cross.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

I welcome the Secretary of State and the Under-Secretary to their new posts.

The Secretary of State has said empowering women and girls is a central departmental goal, but as a recent International Development Committee report highlights, the Government’s actions have not lived up to their rhetoric on ensuring that women’s empowerment and rights are central to development. Given the specific support that is needed, how will the Secretary of State rectify that?

[Justine Greening]

I take issue with the hon. Lady’s assertion that we have not focused on women and children. Doing so is absolutely crucial, and it has been at the heart of everything we have done, not least through the Prime Minister’s family planning summit, which he held with my predecessor earlier this year. As the hon. Lady will be aware, the millennium development goals focus on areas such as education, women and children, and we are determined to see that continue in the post-2015 goals.

[Jane Ellison (Battersea) (Con)]

T2. I congratulate my hon. Friend the Under-Secretary on being appointed not only to her new post, but as international champion against violence against women. Will she demand more action from Governments in areas where there is a high prevalence of female genital mutilation, and give support to the brave local campaigners doing amazing work on the ground to combat such human rights abuse?

[The Parliamentary Under-Secretary of State for International Development (Lynne Featherstone)]

I thank my hon. Friend, and pay tribute to her for taking such a passionate interest in this issue. Tackling female genital cutting is a priority for me, and there is now a rising desire in Africa to tackle it. Senegal, Burkina Faso, Uganda and the African Union have all indicated that they want to take this forward. We are currently designing an ambitious programme to help end FGC, and supporting civil society organisations working on the ground is likely to be a key component of our work.

[Mr Ivan Lewis (Bury South) (Lab)]

This week in London the Prime Minister will co-chair the first meeting of the UN high-level panel on post-2015 development goals. In this important week, does the Secretary of State accept that we will end the grotesque inequality that continues to scar our planet only through new, responsible capitalism—where ethics and profit are no longer competing options, Governments are active in support of sustainable growth, there is zero tolerance of tax-dodging and corruption, and unfair trade barriers are removed? Does the Secretary of State accept that this radical aid-plus agenda, combining responsible capitalism with social justice, will require a major shift in her Government’s approach to international development?

[Justine Greening]

In talking about the golden thread, our Prime Minister has been very clear about the importance of the key building blocks for all states and societies, such as access to legal rights and respect for human rights. I think having an inclusive society is another important building block, which is why female rights are equally important. We should also listen to the people who are playing a leading role in transforming their countries, such as President Ellen Johnson Sirleaf of Liberia. I draw the hon. Gentleman’s attention to an article she has written in The Times today entitled “Aid is not an alternative to self-sufficiency”. She starts off by quoting Margaret Thatcher, and the article gets better from then on.

[Mel Stride (Central Devon) (Con)]

T3. India has twice the number of billionaires as our country, yet is home to more than a third of those globally who subsist on less than 80p a day. Will my right hon. Friend set out for the House the steps the Government are taking to make sure that our aid goes to the most needy in India, and is not spent on projects that could and should be supported by the Indian Government?

[Justine Greening]

I can give my hon. Friend that assurance. My predecessor had already overhauled our development programme in India so that it was more targeted on not only the poorest states, but the poorest communities in those states. However, as India continues to develop, it is right that we continue to examine that programme, which is what I am doing right now.

[Rosie Cooper (West Lancashire) (Lab)]

T4. Following the success in meeting millennium development goal 4 on clean drinking water, the then Secretary of State committed to doubling the number of people with access to safe drinking water and basic sanitation, but we have yet to see any new plans. Will the Secretary of State update the House on what progress has been made on that objective?

[Justine Greening]

We have focused a lot of our development aid on making sure that there is access to clean water and sanitation, as some of the starkest statistics are in that area. Just one in 20 people in Afghanistan has access to a pit latrine, which tells us the scale of the problem we are seeking to address. The hon. Lady is absolutely right about this, and I assure her that my Department carefully focuses on clean water provision. I will write to her with more details.

The Prime Minister was asked—

[Andrew Stephenson (Pendle) (Con)]

Q1. If he will list his official engagements for Wednesday 31 October.

[The Prime Minister (Mr David Cameron)]

Before listing my engagements, I am sure that the whole House will wish to join me in paying tribute to Corporal David O’Connor of 40 Commando, the Royal Marines, and Corporal Channing Day of 3 Medical Regiment, the Royal Army Medical Corps. We owe them and all others who have lost their lives a deep debt of gratitude. Their courage, their dedication and their sheer professionalism will never be forgotten by our nation, and our sincere condolences are with their colleagues, their friends and their families.

This morning, I had meetings with ministerial colleagues and others, and in addition to my duties in this House I shall have further such meetings later today.

[Andrew Stephenson]

I am sure that the whole House will want to associate itself with the Prime Minister’s remarks about our brave service personnel and to send our deepest condolences to their families.

Will the Prime Minister confirm that if he cannot get a good deal for Britain in the EU budget negotiations, he will use the veto and reject any advice on this matter from those who gave our rebate away?

[The Prime Minister]

I can absolutely give my hon. Friend that assurance. This Government are taking the toughest line in these budget negotiations of any Government since we joined the European Union. At best, we would like it cut, at worst, frozen, and I am quite prepared to use the veto if we do not get a deal that is good for Britain.

But let us be clear that it is in our interests to try to get a deal, because a seven-year freeze would keep our bills down compared with annual budgets. Labour’s position is one of complete opportunism. Labour Members gave away half the rebate, they sent the budget through the roof and now they want to posture rather than get a good deal for Britain—the nation will see right through it.

[Edward Miliband (Doncaster North) (Lab)]

I start by joining the Prime Minister in paying tribute to Corporal David O’Connor of 40 Commando, the Royal Marines, and Corporal Channing Day of 3 Medical Regiment, the Royal Army Medical Corps. Their deaths are a reminder of the unremitting danger that our troops face on a daily basis on our behalf. They both showed the utmost courage and bravery, and our condolences go to their family and friends.

The Prime Minister has an opportunity today to get a mandate from this House for a real-terms reduction in the EU budget—which he says he wants—over the next seven years, which he could take to the negotiations in Europe. Why is he resisting that opportunity?

[The Prime Minister]

I think the whole country will see through what is rank opportunism. People have not forgotten the fact that Labour gave away half our rebate in one negotiation and agreed a massive increase to the EU budget when in government. Now, today, Labour has not even put down its own resolution on this issue. The nation will absolutely see straight through it. The right hon. Gentleman is playing politics; he is not serving the country.

[Edward Miliband]

When it comes to consistency, the Prime Minister seems to have forgotten what he said as Leader of the Opposition just four months before the last general election—[Interruption.] I would have thought that Government Members were interested in what the Prime Minister said when he was Leader of the Opposition. He said:

“At a time when budgets are being cut in the UK, does the Prime Minister agree that in reviewing the EU budget, the main purpose should be to push for a real-terms cut?”.—[Official Report, 14 December 2012; Vol. 502, c. 647.]

That is what he said when he was in opposition. So when it comes to opportunism, this Prime Minister is a gold medallist. At a time when he is cutting the education budget by 11%, the transport budget by 15% and the police budget by 20%, how can he be giving up on a cut in the EU budget before the negotiations have even begun?

[The Prime Minister]

We have to make cuts in the budget because we are dealing with the record debt and deficit that Labour left us. If the right hon. Gentleman wants to talk about consistency, perhaps he can explain why his own Members of the European Parliament voted against the budget freeze that we achieved last year. Perhaps he can explain why the Socialists group in the European Parliament, of which he is such a proud member, is calling not for an increase in the budget, not for a freeze in the budget but for a €200 billion increase in the budget—and while they are at it, they want to get rid of the rest of the British rebate. Is that his policy?

[Edward Miliband]

It is good to see—[Interruption.]

[Mr Speaker]

Order. Government Back Benchers, including Ministers, are apparently approaching maturity. They must tackle their behavioural problems before it is too late.

[Edward Miliband]

The Prime Minister is certainly getting very angry, Mr Speaker, but perhaps he is worried about losing the vote this afternoon. The reality is that our MEPs voted the same way as his on the motion before the European Parliament 10 days ago. He cannot convince anyone on Europe. Last year he flounced out of the December negotiations with a veto and the agreement went ahead anyway. He has thrown in the towel even before these negotiations have begun. He cannot convince European leaders; he cannot even convince his own Back Benchers. He is weak abroad, he is weak at home—it is John Major all over again.

[The Prime Minister]

The right hon. Gentleman’s position is completely incredible. He says he wants a cut in the EU budget but he does not sanction a veto. We have made it clear that we will use the veto, as I have used it before. So let me ask him: will you use the veto?

[Mr Speaker]

Order. I will not be using the veto. I ask the Prime Minister—this is about the 10th time I have done so—to respect parliamentary procedure in these matters.

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

The south-east region is often regarded as the engine driver of the British economy, but the Solent region faces many challenges, particularly with the announcement of job losses at Ford last week. Does my right hon. Friend agree that the case for a city deal for Southampton and Portsmouth is particularly compelling?

[The Prime Minister]

It is particularly compelling that we ensure that Southampton has a city deal. I understand that it is on the list. Obviously the news from Ford was very disappointing; it was a blackspot in an otherwise strong performance by the British automotive industry. I know that the Business Secretary will work very closely with Southampton city council to do everything we can to help people find jobs.

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

Q2. May I ask a straightforward question which should command a straightforward answer? In the forthcoming police and crime commissioner elections, it is predicted that the turnout will be as low as 20%. Does the Prime Minister think that that gives democratic legitimacy?

[The Prime Minister]

I want the turnout to be as high as possible, but I recognise that in new elections for a new post that is always a challenge. It is even a challenge when we have dedicated Labour MPs resigning from this House to stand as police and crime commissioners. One point that the police and crime commissioner will be able to make in the hon. Gentleman’s constituency is that we should celebrate the fact that since the election crime is down 20%.

[Martin Vickers (Cleethorpes) (Con)]

Q3. In recent months, northern Lincolnshire has benefited from several positive announcements from the Government and the private sector that will boost the local economy. However, my right hon. Friend will be aware that Kimberly-Clark announced last week the closure of its factory at Barton-upon-Humber, in my constituency, with the loss of up to 500 jobs. Will he assure me that the Government will do everything possible to attract new business to the area?

[The Prime Minister]

I can certainly give my hon. Friend that assurance, and I know that that is sad news for the workers at Barton-upon-Humber. I understand that the local council is working closely with Jobcentre Plus and the company to establish a local taskforce to help employees to find alternative employment, and the Government will give that our support.

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

Q4. Following the press reporting of the Hillsborough disaster and the phone hacking scandal, self-regulation of the press, by the press, is simply no longer acceptable to the public. More than three quarters of respondents to two recent polls backed an end to media self-regulation. Prime Minister, your Ministers have been briefing against Leveson. Whose side are you on—the public or the press?

[Mr Speaker]

Order. I am not on anybody’s side in this. Members really must adhere to the proper procedures of this House, which they ought to know by now.

[The Prime Minister]

I think that we should wait for the Leveson report to come out. A lot of work has been done. I want a robust regulatory system, and what matters most of all, as I said in the House last week, I think, is to ensure that newspapers can be fined if they get things wrong, that journalists can be properly investigated, and that there are proper prominent apologies. We know what a proper regulatory system should look like. We do not have one now; we need one for the future.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

First, I echo the Prime Minister’s tribute to our armed forces and fallen comrades. The country owes them, their families and their loved ones a huge debt of honour and gratitude.

Last week, we saw the sentencing of former staff of Winterbourne View hospital who were found guilty of ill treatment and neglect. I had hoped that those prosecutions would help to bring some closure, or at least a sense of justice served, to the victims and their families, but we learned this week that patients from Winterbourne View may have been subject to further abuse and neglect elsewhere. Does the Prime Minister agree with me and the right hon. Member for Sutton and Cheam (Paul Burstow), the former Minister for care services, that care providers such as Castlebeck, which ran Winterbourne View, should be subject to prosecution for wilful corporate negligence?

[The Prime Minister]

I pay tribute to what my hon. Friend says about our armed forces.

On Winterbourne View, anyone who saw the television pictures showing how very vulnerable people were being treated would have been absolutely shocked. They, like me and him, I am sure, would want to ensure that the law goes exactly where the evidence leads. If further prosecutions are needed, they should happen. We saw shocking pictures of the shocking things that happened. We should judge our society by how we deal with the most vulnerable and needy people, and what happened was completely unacceptable.

[Edward Miliband (Doncaster North) (Lab)]

It is welcome that the British economy is out of the longest double-dip recession since the war, but Lord Heseltine says today:

“the message I keep hearing is that the UK does not have a strategy for growth and wealth creation”.

Whom does the Prime Minister blame for that?

[The Prime Minister]

What Michael Heseltine actually said was:

“The Coalition is fundamentally on the right track...I praise its work”

on the

“industrial strategy plans…pioneering city devolution”

and

“the revolution in education and tackling unemployment.”

Frankly, we can spend all afternoon trading quotes, but I think that Michael Heseltine is making a much bigger point. In this excellent report, he is saying that our economy became too centralised over decades, with regions and nations of our country falling behind. Manufacturing halved as a share of national income under the previous Government. During the boom years in the west midlands, for instance, there were no net new private sector jobs. He is dealing with the big issues; what a pity that all the right hon. Gentleman can do is stand up and try to read out a quote.

[Edward Miliband]

The Prime Minister says that Lord Heseltine’s report states that he is on the right track, but goodness knows what it would have said if it had stated that he was on the wrong track. Lord Heseltine says that there is no strategy for jobs and growth, that business has no confidence in the Prime Minister, and that deregulation—the Prime Minister’s chosen approach—is not the answer.

Let me turn to a specific aspect of Lord Heseltine’s report: recommendation 61, with which I am sure the Prime Minister is familiar. Lord Heseltine says:

“The Government needs to set out a definitive and unambiguous energy policy”.

This is obviously an appropriate day to consider that recommendation on energy. By the way, it is good to see the Business Secretary in the Chamber, and I am sorry that that growth committee he is on is so unmemorable that he cannot remember it.

This is an appropriate day to be considering this recommendation so his—[Interruption.] I am rather enjoying this. The Prime Minister’s Energy Minister says he is against wind farms and enough is enough, while his Energy Secretary—[Interruption.]

[Mr Speaker]

Order. Let me say to Government Back Benchers: it is very straightforward. Either they calm down or the session will be extended, at whoever’s inconvenience that may be. Let us be very clear. It is incredibly straightforward.

[Edward Miliband]

The Prime Minister’s Energy Minister says he is against wind farms and enough is enough, while his Energy Secretary says he is gung-ho for them. Who speaks for the Government—the Energy Secretary or the Energy Minister?

[The Prime Minister]

Today the jokes have been bad and the substance has been bad too. It is not a good day. I will tell you why it is a good day to talk about energy policy—because today Hitachi is investing £20 billion in our nuclear industry. Today is a good day to talk about energy because there is more investment in renewable energy under three years of this Government than under 13 years of the Labour Government. It is a good day to talk about energy policy because we have got a green investment bank up and running. That is what is happening under this Government. There has been no change towards renewable energy. Let me explain exactly. We have a big pipeline of onshore and offshore wind projects that are coming through. We are committed to those, but all parties will have to have a debate in the House and outside about what happens once those targets are met. The right hon. Gentleman ought to understand that, if he could be bothered to look at the substance.

[Edward Miliband]

That was a completely useless answer. There are investors all round this country who want certainty about energy policy. It is very simple for the Prime Minister. He has one Minister who says he is totally against wind energy—that is the Energy Minister whom he appointed, having sacked the previous guy—and there is the Energy Secretary who says he is gung-ho for wind farms. The Prime Minister just has to make a choice about where he stands. After all, he has a wind turbine on his house, so I thought he was in favour of wind turbines, but here is the reality. Lord Heseltine says in his report that there are people who are resistant to his ideas. We know who they are: the Chancellor and the Prime Minister. The evidence of the past two and a half years is that deregulation, sink or swim—their answer—is not the answer. Lord Heseltine is right and they are wrong.

[The Prime Minister]

I have one thing to say. Not you, Mr Speaker, but the right hon. Gentleman—he’s no Michael Heseltine. [Interruption.]

[Mr Speaker]

Order. I want to hear Mr Swales and I feel sure the people of Redcar do.

[Ian Swales (Redcar) (LD)]

The Russians want to award the prestigious Ushakov medal to Arctic convoy veterans. The Governments of Australia, Canada, New Zealand and the USA have agreed. The UK Government have refused. Will the Prime Minister get this decision reversed quickly so that my constituent, John Ramsey, and the rest of the dwindling band of veterans get the recognition they so richly deserve?

[The Prime Minister]

I have every sympathy with my hon. Friend and his constituent. That is why we have asked Sir John Holmes to conduct the review not just of medals in general, but to look specifically at some of the most important cases, of which the Arctic convoys is probably the most pressing. As my hon. Friend asks, he is getting on with it.

[Chris Bryant (Rhondda) (Lab)]

Q5. The Foreign Secretary said yesterday that the rules of the House require that Ministers answer questions. So, there is a stash of embarrassing e-mails, isn’t there? Adam Smith had to publish every single one of his e-mails and ended up resigning. Why will the Prime Minister not publish all his e-mails? Can he really be a fit and proper person to judge on the future of press regulation if he will not come clean with the British public?

[The Prime Minister]

There is another rule of the House, which is that if you insult someone in the House, you make an apology. I am still waiting. It is this Government who set up the Leveson inquiry and I gave all the information that Leveson requested to that inquiry.

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

Q6. The Owl and the Pussycat is a coffee shop in Laugharne in my constituency. Its business rates have just been hiked by 700% and the council is coming after it for the money even though it has not yet heard the appeal, which means that the business might have to close and jobs will be lost. The situation is not unique to Wales, so will the Prime Minister come to the rescue?

[The Prime Minister]

I have every sympathy with the business my hon. Friend mentions. Of course, business rates are a devolved issue, so this is something that needs to be taken up with the Welsh Assembly Government. In England we have doubled small business rate relief to help half a million small firms, made it easier for small firms and shops to claim small business rate relief and given local councils new powers to levy local business rate discounts, for example to support the sorts of shops and pubs he refers to. I think that is the right approach for England and I am sure he will want to take that case to Wales.

[Heidi Alexander (Lewisham East) (Lab)]

Q14. In 2007 the Prime Minister identified Lewisham hospital as one of 29 hospitals he would be prepared to get into a “bare-knuckle fight” over, yet on Monday it emerged that Lewisham’s A and E and maternity services could end up paying the price for financial failures elsewhere in the NHS. Which side of this bare-knuckle fight is he now on?

[The Prime Minister]

We are on the side of the fight for increasing the resources going into the NHS—that is a decision we have taken—including extra money going into Lewisham, and the hon. Lady is on the side of cutting the money going into the NHS. What we have done, which the previous Government did not do, is to set out that there will be no changes to NHS configurations unless they have the support of local GPs, unless they have strong public and patient engagement, unless they are backed by sound clinical evidence and unless they provide support for patient choice. Those sorts of protections were never in place under the previous Government, but they are now.

[Margot James (Stourbridge) (Con)]

Q7. In the light of last week’s positive growth figures, does the Prime Minister agree that policies requiring yet more spending, more borrowing and more debt are the precise opposite of what our country needs?

[The Prime Minister]

My hon. Friend is entirely right. Last week’s news was welcome. The economy is growing, unemployment is coming down, inflation is coming down, the rate of small business creation is going up and a million more people are employed in the private sector than there were two years ago. The one absolute certainty is that the worst approach—Michael Heseltine confirms this in his report—would be to see more spending, more borrowing and more debt, because that is what got us into the mess in the first place. The Labour party has only one growth plan: the plan to grow the deficit.

[Jim Shannon (Strangford) (DUP)]

I thank the Prime Minister for his condolences on the death of my constituent, Corporal Channing Day. She was a courageous young lady. She always wanted to join the Army and for eight years served as a medic. Her job was to save lives—to run the line of fire in order to give aid. Imagine what it meant to a wounded soldier to see someone running to help them when all hell was bursting around them and to know that they were not alone. Corporal Channing Day is not alone today. She will soon return to the bosom of her family, to her mother, father, sisters, brothers, friends and family, who loved her dearly, and to the community, which is immensely proud of her achievements. This House and this great nation of the United Kingdom of Great Britain and Northern Ireland salute her courage, bravery and heroism.

Prime Minister, will you agree with me that Army medics are often the unsung heroes of conflict, and will you agree to meet me and my colleagues to discuss the implementation of the military covenant in Northern Ireland?

[The Prime Minister]

I would be very happy to meet the hon. Gentleman and his colleagues to talk about the implementation of the covenant in Northern Ireland. It is something I have spoken about with the First Minister and Deputy First Minister in Northern Ireland. I know that there are issues about its implementation, but I hope that it can be done, and I would be happy to have that meeting.

The hon. Gentleman spoke very strongly and movingly about Corporal Channing Day. I think he is absolutely right that those in the Royal Army Medical Corp do a fantastic job. It has been a huge honour and privilege for me to meet some of them, including in Afghanistan. When you see the service they provide, you really can put your hand on your heart and know that British military personnel in theatre are getting medical care that is as good as that which anyone in history ever got. What they do is truly remarkable.

[Mr Philip Hollobone (Kettering) (Con)]

Q8. If he will make it his policy that the accident and emergency and maternity departments at Kettering general hospital will not be downgraded or closed as part of the Healthier Together review of NHS acute services in the south-east midlands; and if he will ensure that patients and clinical staff at Kettering general hospital will be involved fully in that review.

[The Prime Minister]

Healthier Together has promised that Kettering hospital will retain its accident and emergency and maternity services. Any suggestion otherwise, including by the Opposition, is simply scaremongering of the worst kind.

[Mr Hollobone]

Kettering has the sixth highest household growth rate in the whole country, and accident and emergency admissions are up 10% year on year. Given that Kettering general hospital has been at the very heart of the local community for well over 100 years, do not local people deserve a clear assurance that our much-loved and badly needed local hospital has a bright future ahead of it?

[The Prime Minister]

I gave my hon. Friend the strongest possible assurance. The point that I have made, and which I made to the hon. Member for Lewisham East (Heidi Alexander), is that there cannot be any changes unless there is full public consultation and unless there is the support of local GPs and strong public and patient engagement. In the case of Kettering, that is not on the agenda. As I said, any suggestion by the Opposition is simply scaremongering of the worst kind, and I can see that they are at it again.

[Lindsay Roy (Glenrothes) (Lab)]

Q9. The importance of skills in promoting economic growth has been emphasised again and again in all parts of the House, so why did the number of under-19 apprenticeship starts fall last year?

[The Prime Minister]

The number of apprenticeships under this Government is about 900,000; it is a record number and it has hugely increased.

[Julian Sturdy (York Outer) (Con)]

Q10. The Government recently announced plans to extend the freeze on council tax for a third year. Unfortunately, Labour-run City of York council increased council tax by 2.9% this year and has moved with remarkable speed to confirm a 2% increase next year. Does my right hon. Friend agree that such a rise is apparently out of order and not in the interests of York constituents, and will he urge City of York council to look at this again?

[The Prime Minister]

I will certainly join my hon. Friend in doing that. The Government have made money available so that councils can freeze their council tax for a third year in a row. This is a very important way of demonstrating that we are on the side of people who want to work hard and get on and who struggle to pay the bills. Frankly, all councils should look at the money that is available and recognise that a council tax freeze is in the interests of all our citizens.

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

When did the Prime Minister become aware of the plans to close Ford plants at Southampton and Dagenham, and was he aware of those plans when the Government awarded a large sum of money from the regional growth fund to that company just a few days earlier?

[The Prime Minister]

Obviously these issues were discussed, and we work very closely with all the automotive industry companies in the United Kingdom. As I said earlier, the news from most of them—from Nissan, from Toyota and from Jaguar Land Rover—has been extremely positive. What happened at Ford in Southampton is clearly very regrettable, but we must do everything we can to help those people into work.

[Dr Julian Huppert (Cambridge) (LD)]

Q11. I am delighted that the economy is finally growing, and green growth is a key part of this. Is the Prime Minister still committed to this being the greenest Government ever, particularly when it comes to his policies on renewable energy?

[The Prime Minister]

Under this Government we have seen more investment in green energy in three years than we had from Labour in 13. The green investment bank that we promised is up and running. The carbon floor price that we spoke about is in place. This is indeed a very green Government and we are sticking to our promises.

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

Q12. The number of people waiting more than four hours in accident and emergency units has more than doubled in the past two years, and the Prime Minister will not intervene to stop the closures of A and E units at Central Middlesex hospital and Ealing hospital; and we now know about Lewisham—and I suspect, despite his weasel words, Kettering hospital too. What confidence can my constituents have that if they end up in casualty they will not have to wait longer for A and E services too?

[The Prime Minister]

I have to say to the hon. Gentleman that I could not have been any clearer about the future of Kettering hospital, and for him to say that is scaremongering of the worst kind. Let me tell him what is happening at the hospitals that serve his constituents. In May 2010, there were 52 patients waiting longer than 12 months. How many are there now? None, under this Government. That is what is actually happening, because we are putting the money into the NHS and Labour would take it out.

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

Further to the result of the vote on 18 October regarding the contentious decision to axe 2nd Battalion the Royal Regiment of Fusiliers, and given that we have very recently, only last night, met the Secretary of State for Defence, will the Prime Minister meet me and other interested Members from across the House to discuss this issue?

[The Prime Minister]

I am always happy to talk to colleagues about this issue, as are, I know, the Ministry of Defence and the Secretary of State. As my hon. Friend knows, we have had to make difficult decisions to put in place the future structure of the Army, with 82,000 regular soldiers and a larger reserve of 30,000 Territorial Army soldiers. I think that is the right approach. Clearly we have had to make some difficult decisions about regiments and about battalions, and in that we were guided by trying to save as many regiments and cap badges as possible. I think that the proposals have taken that into account and are right, but of course the Defence Secretary will go on listening to representations.

[Jim Dobbin (Heywood and Middleton) (Lab/Co-op)]

Q13. Will the Prime Minister confirm that the overall cost of the changes to child benefit, which are due to be introduced next January, will be more than £100 million?

[The Prime Minister]

The changes that we are making to child benefit, where we are taking child benefit away altogether from those people earning over £60,000, are going to save around £2 billion. It is necessary to take tough decisions in order to deal with the massive deficit—bigger than Greece’s, bigger than Spain’s—that the hon. Gentleman’s party left us. I have to say that I find it completely inexplicable that the Labour party, which says that it wants those with the broadest backs to share some of the burden, opposes the idea of taking child benefit away from people who earn over £60,000, £70,000, £80,000 and £90,000. I do not see why those on the Opposition Front Bench should go on collecting their child benefit when we are having to make so many other difficult decisions.

[Jessica Lee (Erewash) (Con)]

Will my right hon. Friend join me in congratulating Douglas Gill International in my constituency on its Queen’s award for enterprise for successfully exporting sports marine wear? Does he agree that this is a fine example of British business on the up, promoting the best of British and, indeed, the best of Erewash?

[The Prime Minister]

My hon. Friend makes a very important point. We need to have export-led growth in this country and a rebalancing of our economy. That is what the increase in exports, manufacturing and industrial production is all about, but we need to go further and faster, which, indeed, is what Michael Heseltine’s excellent report today is all about.

Points of Order

Wednesday 31st October 2012 Commons Chamber

12:31

[Sir Roger Gale (North Thanet) (Con)]

On a point of order, Mr Speaker. It has not escaped the notice of this member of the Procedure Committee—and I doubt that it has escaped yours—that during topical questions to the Secretary of State for International Development, two of the questions were put by Front-Bench spokesmen and neither of them was topical in its content. There is a grave danger, is there not, that the whole purpose of topical questions might be undermined if they are monopolised by Front-Bench spokesmen instead of Back Benchers?

[Mr Speaker]

What I would say to the hon. Gentleman is that I always keep a beady eye on these matters. I will reflect carefully on what he has said. It has been a practice of long standing for Opposition Front Benchers to come in to an extent, but there is a balance to be struck and I am very happy to consider whether that balance is right. I accept the point of order in the spirit in which it has been volunteered to the House by the hon. Gentleman, who is a member of the Procedure Committee and who is now, I think, the most senior member of the Panel of Chairs.

[Robert Halfon (Harlow) (Con)]

Further to that point of order, Mr Speaker.

[Mr Speaker]

I am not sure that there is a further to that point of order, but we will take the hon. Gentleman’s point of order nevertheless.

[Robert Halfon]

Thank you, Mr Speaker. There are reports that film moguls are going to be allowed to use Big Ben. Could you ensure that Members of this House will be able to vote on that decision if it is made?

[Mr Speaker]

The hon. Gentleman is usually keenly attentive to his chances to contribute to debates in the Chamber. May I suggest to him that the debate on the Floor of the House on 8 November might be a suitable opportunity for him to seek to catch my eye or that of the occupant of the Chair at the time? He will then be able to develop his thoughts on this matter in full detail.

[Mr Denis MacShane (Rotherham) (Lab)]

On a point of order, Mr Speaker. Might it be possible to place in The House magazine an article, perhaps written by the Clerk, on the importance of using the third person singular, rather than “you”, in this House? This is not just fussy parliamentarianism, but a very important point that allows us to exchange the most bitter views without making them personal. We should not “you” it, but make references in the third person. We should not throw away what is quite an important protection for us. We can be friends outside the House whatever anger we have in this Chamber, provided that we keep it to the third person.

[Mr Speaker]

I appreciate the support of the right hon. Gentleman and think that his point is valid. I will reflect on his particular suggestion. Certainly, if there is to be an author, it is scarcely conceivable that there could be a better author than the person whom he has just identified.

If there are no further points of order and the appetite for them is exhausted and the Clerk is suitably complimented, we can move to the 10-minute rule motion.

European Union Free Movement Directive 2004 (Disapplication)

Wednesday 31st October 2012 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

12:34

[Mr Stewart Jackson (Peterborough) (Con)]

I beg to move,

That leave be given to bring in a Bill to disapply the European Union Free Movement Directive 2004/38/EC; and for connected purposes.

I am pleased to introduce the Bill, which is intended to restate a basic tenet of national sovereignty—the control of our borders, and the principle that who comes to live and work in our country from foreign countries should be a matter largely for the British people and their elected representatives in this House, and not solely at the discretion and by leave of a foreign political entity. Free movement between sovereign countries should first and foremost be dictated by our own national interests. That basic truth seems to have been lost in a rush to be as communautaire as possible since 2004, to the detriment of many of the constituents in whose name we serve.

Few would deny that it was a major error of judgment for the Labour Government not to exercise their right to a moratorium on the free movement directive for seven years, as most other EU countries did. It could be argued that it retarded efforts to tackle welfare dependency, low educational attainment and problems with skills and social mobility among many indigenous British workers.

A recent YouGov poll found that 78% of voters who had deserted Labour since 1997 wanted net migration to be reduced to zero. Even 67% of voters who had remained loyal to the party believed the same thing. There is no evidence to suggest that they regard EU migration differently from non-EU migration.

I argue that the forthcoming free movement of potentially huge numbers of Romanian and Bulgarian citizens to the UK from early 2014 will render the Government’s welfare reforms null and void, such will be the likely distortion of the labour market. In addition, as things stand, it is very likely to put a huge strain on delivery in pinch points across the UK, an issue to which I will return later. The UK Statistics Authority estimated that in the second quarter of 2012, there were 1.4 million EU citizens in work in the UK, 107,000 unemployed and 436,000 economically inactive, and 388,000 children of EU citizens.

The Bill is not about ending immigration from the EU, although there is little empirical or academic evidence that mass EU migration since 2004 has been a definitive net benefit to the UK. Instead, it is intended to ensure that Her Majesty’s Government vary the free movement directive, not least as a response to significant public concerns about immigration. It is about not repealing but disapplying the current directive.

The Bill is about ensuring that the most talented and hard-working foreign workers and their families come to this country from the EU to help our economy grow and thrive in a fiercely competitive global marketplace. It also highlights an asymmetry in the Government’s stated policy on reducing net migration to the tens of thousands. We rightly focus on that policy, but we accept EU migration as a fait accompli.

Hon. Members will recall a television documentary shown in 2006 entitled “The Poles Are Coming!”, which presaged the impact of mass EU migration on my constituency. I make no apology for seeing the issue through the prism of my constituency and the impact that uncontrolled and unplanned mass migration has had on it. Peterborough is a regional hub for transport, logistics, food processing and packaging, agriculture and horticulture, but youth unemployment nevertheless stands at 11.5%, almost twice the regional average, and almost 12,000 people in my constituency are on out-of-work benefits. Some 34,480 national insurance numbers have been issued in Peterborough since 2004, in a local authority area whose population in 2001 was 156,000, and new arrivals make up one in five of the population, which is currently estimated at 184,000.

There is an acute shortage of primary school places. In nine of the 33 primary schools in my constituency, two thirds of the children do not speak English as their first language, and in two schools the figure is more than 96%. The problem is one of not just resources but churn—the in-term movement in and out of schools of hundreds of children of itinerant and other seasonal workers—which regrettably has an impact on educational attainment. Likewise, health services in the city are under considerable strain. The number of births in the city leapt from 3,395 in 2003 to 4,680 last year, and GP registrations of EU migrants have almost trebled over the past 10 years.

The free movement directive is primary legislation that governs the right of member state nationals, and their families, to move or reside freely in other member states for up to three months, without any conditions other than that they hold a valid passport and identity card. The directive specifically makes it clear, inter alia, that people should have “sufficient resources” for themselves and their family members so as not to become a “burden” on the “social assistance cover” in the host country, and that they should hold comprehensive sickness insurance.

The host member state is not obliged to provide social assistance during the first three months of residence, and UK law precludes EU citizens and family members from residing purely on the basis of that initial right to reside. Indeed, the UK has a habitual residence test. Perversely, however, some benefits such as jobseeker’s allowance are granted under UK law. That is an example of the UK gold plating as the directive’s exemption is clear.

Host member states are permitted to require EU citizens and their family members to register with the authorities and impose proportionate and non-discriminatory sanctions on those who fail to do so. The UK Government fail to do that, and—bizarrely—the Home Office told me in a parliamentary answer last week that such actions are “optional”.

Member states are also permitted to restrict rights of entry on grounds of

“public policy, public security or public health”.

However, the UK Government have failed ever to test those conditions or the specific issue of “proportionality” that is implicit in the directive in respect of the deportation of persistent and prolific criminals who are EU citizens. The Government have rarely invoked their ability to refuse or withdraw any right under the directive in cases of

“abuse of rights or fraud”.

Recently, the Spanish Government, which are facing calamitous levels of unemployment, have begun to interpret the free movement directive much more robustly. All EU citizens and family members have to register with the authorities if they wish to reside in Spain for more than three months, and through that process the Spanish authorities can check whether the requirements of the directive regarding residence after that period are fulfilled. The authorities also require notification of any change of address or marital status.

In summary, the free movement directive confers the right to reside on many people who do not work or who do not have enough resources to be self-sufficient. It allows ready access to the UK’s welfare system and throws up obstacles to the implementation of robust systems to check that nationals from other EU member states, and their families, are abiding by the rules and do not pose a drain on the health service or a criminal threat to society. It prevents automatic deportation of nationals of other EU member states when they have committed a crime.

The formula in the Bill for stopping objectionable aspects of EU law, such as the free movement directive, is straightforward. The legislation simply has to state that its provisions apply notwithstanding any provision of the European Communities Act 1972.

Under my Bill, EU nationals and their family members would have the right to reside in the UK for up to three months, on the basis of a valid passport or ID card. That would facilitate tourism, and give those willing the opportunity to find work. With the right to reside for three months, EU nationals would have to be in work or self-sufficient, and they would gain access to benefits only in exceptional circumstances. EU nationals and their family members would need to be registered, and they would have no access to public funds during the first 18 months of residence. After 18 months, British citizens would be given priority over EU nationals for local authority housing allocation, which is in particularly scarce supply. There would be no right to reside based solely on being in vocational training until the EU national in question had completed five years’ continuous employment.

The right of permanent residence would typically be granted only after a continuous 10-year period of legal residence, rather than five years as at present. EU nationals and family members would be deported after being convicted of a crime in the UK and sentenced to 12 months’ imprisonment, or more, in the same way as other foreign nationals.

Time does not permit me to elucidate further, but this Bill would be popular and promote fairness and equity, not least for the hard-pressed UK taxpayer. It would facilitate the migration of only the most talented EU citizens to our country, and seek to restore the almost forgotten principle of member state subsidiarity and UK national sovereignty. It is for us to decide about our borders and who we allow into our country, and for those reasons, I strongly commend this Bill to the House.

12:45

[Mr Denis MacShane (Rotherham) (Lab)]

I rise to oppose this sad and bad Bill. The Bill is sad because I find it uncomfortable to hear in the House remarks about fellow Europeans that cast them in a uniformly negative light. There are more British citizens living and working in other EU member states as a share of our population than there are EU member states’ citizens living here. The Bill is a message to the 700,000 to 800,000 British citizens who are made to feel welcome in Spain despite complaints that they are taking advantage of Spanish health care, old-age care and social security services; it is gravely worrying to the many British citizens who are opening businesses all over the EU; and it is an insult to the many EU citizens who live and work in our country and contribute enormously to all levels of our economy.

This is a bad Bill, and I wonder whether the hon. Member for Peterborough (Mr Jackson) has discussed it with employers in Peterborough and the wider region, which is one of the great agricultural and food processing centres of our economy. The east Europeans are there, as they are in Hull, which is also a great food processing centre in the English national economy, because local employers cannot find local workers to do the work. That has been the pull of immigration throughout the ages. Enoch Powell had to allow many people from different Afro-Caribbean countries into the NHS, and the textile factories and foundries of west and south Yorkshire had to invite many people from Pakistan, because they could not get the legendary indigenous working class to do those jobs.

Mr Evan Davis of the BBC made a programme on that very subject. He went to King’s Lynn and the region and tried to find local workers who were willing to get up at 5 am to fill the sandwiches or to pick fruit and vegetables in uncomfortable conditions, but he could find none. The Bill would condemn to abolition the many firms in the hon. Gentleman’s region and elsewhere in the country that use that labour.

Let me turn to my more fundamental objection. The Bill is part of the growing attempt by the Conservative party to break apart our relationship with the EU. The four freedoms—the movement of goods, capital, people and ideas—are fundamental. We cannot sustain the other three freedoms and say that we cannot have the free movement of people. In the 1980s, we were grateful for the free movement of people, when the “Auf Wiedersehen, Pet” generation had to leave their own country because of the disastrous economic policies of the Prime Minister—I forget her name—and go and find jobs in Germany.

If the hon. Gentleman wants to destroy the four freedoms, he should come out and say so, but he should not think we can have sauce for the British goose, but not sauce for the German Gans or the French oie—I do not know what the Polish word for “goose” is. We cannot have a rule that says we will control every EU citizen who comes into our country and not have the 26 other EU member states saying exactly the same thing. The Minister for Immigration has made that point repeatedly in Home Office questions.

Specifically on the question of the 2004 enlargement, the hon. Member for Peterborough has confused—I do not mean this disrespectfully, but he may be confused—the free movement of citizens and the free movement of workers. The moment countries join the EU, their citizens have complete free movement as citizens. They must obey local laws—they must register with a police station in Germany, and register and have a residents permit if they want to live in France. I do not object to that part of the hon. Gentleman’s Bill. That is why I was in favour of national identity cards—I do not want to raise old issues, but they are how the rest of Europe has some idea of who comes to live within the different frontiers of EU member states.

The hon. Gentleman is right that the free movement of workers could have been delayed by seven years. To begin with, France and Germany applied those measures, but within two years they found they had become unworkable and lifted them. With the free movement of people, Poles, Slovakians and so on came into France and Germany. Different nationalities go to different areas of the world. People from south-east EU member states, including the incoming Romanians, tend to gravitate to Italy and Spain, while we get Poles—for historic reasons, we have a huge Polish community here, and have had since the end of the war. We have Ryanair and easyJet flying backwards and forwards with utterly full planes between all the main British and Polish cities.

I welcome that for one simple reason: Britain has always depended on a flow of European workers, particularly the citizens of the sovereign Republic of Ireland. The greatest number of non-British EU workers on the Olympic games site, which was finished magnificently and on time thanks to a huge input of EU workers, came from the Republic of Ireland. If the hon. Gentleman’s Bill was put into full force, we would be saying to every friend and family in Ireland, “You’re not welcome here, except on highly restrictive terms”. Coming partly from a Scottish-Irish family, I find that very depressing. The free flow of people between our two countries has been a positive thing.

The hon. Gentleman is right that after 2008, when we had the crash and the sudden spike in unemployment, employment conditions got extremely tight. As we speak, unemployment is rising in Leeds, Bradford and Rotherham, as again we create a two-nation Britain under this Government. The plain fact is that hundreds of thousands of firms as well as landlords, as well as our tax and national insurance system—everyone who works has to pay taxes and NI—have benefited from the contribution of non-British EU workers. Hundred of thousands of firms that might otherwise have relocated outside the UK in search of hard-working and, yes, low-wage workers—that is a problem—stayed in the UK.

The answer to that is to build more houses and schools, and to ensure that workers in all firms are treated properly. We should be applying the agency workers directive and the new living wage idea to ensure that employers cannot discriminate against local employees—because they would have to pay everybody fairly. That is my solution to the problem. The solution is not to put up barriers or destroy the free movement of people. If we do that, we kiss goodbye to the free movement of goods and capital. Let us not think that we can take away one pillar of what makes the EU work and assume that the other pillars will stay standing. They will not. Any discrimination that we choose to apply against any fellow EU citizen will be turned back and applied to us. We need visas to go to Australia and many Commonwealth countries, and many of the latter refuse to accept our agricultural products, but they are fully accepted in every EU member state.

I once asked Radek Sikorski, the Polish Foreign Minister, “What about the Poles coming to Britain?”, and he said, “Every time a Pole feels he has to leave Poland for Britain it is a disaster, a national tragedy, a loss to our nation.” He is right. We need to build the economies of these countries. Mrs Thatcher massively increased UK contributions to the EU in the 1980s in order, she said, to help grow Ireland, Portugal, Spain and Greece. At that time, those countries were growing, and Ireland became a country of immigration, not emigration.

For those reasons, I ask the House to reject the Bill. I do not propose to divide the House, but, without wishing to challenge the integrity or position of the hon. Gentleman, I hope that every decent Member of Parliament will think a bit more deeply and understand that a Britain open to the world is good for us. We cannot be open for business and closed to foreigners.

Question put and agreed to.

Ordered,

That Mr Stewart Jackson, Heather Wheeler, Mr Frank Field, Priti Patel, Mr Philip Hollobone, Gordon Henderson, Henry Smith, Mr Andrew Turner, Zac Goldsmith, Caroline Nokes, Kate Hoey and Mr James Clappison present the Bill.

Mr Stewart Jackson accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 14 December 2012, and to be printed (Bill 86).

Local government Finance Bill (Programme) (No. 3)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Local Government Finance Bill for the purpose of supplementing the Orders of 10 January 2012 in the last session (Local Government Finance Bill (Programme)) and 21 May 2012 (Local Government Finance Bill (Programme) (No. 2)):

Consideration of Lords Amendments

1. Proceedings on consideration of Lords Amendments shall (so far as not previously concluded) be brought to a conclusion three hours after their commencement at today’s sitting.

Subsequent stages

2. Any further Message from the Lords may be considered forthwith without any Question being put.

3. The Proceedings on any further Message from the Lords shall (so far as not previously concluded) be brought to a conclusion one hour after their commencement.—(Mark Lancaster.)

Question agreed to.

Local Government Finance Bill

Wednesday 31st October 2012 Commons Chamber

Consideration of Lords amendments

[Mr Speaker]

I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 1, 2, 4, 5 10 and 19 to 85. If the House agrees them, I will cause an appropriate entry to be made in the Journal.

Clause 1

Local retention of non-domestic rates

12:56

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

I beg to move, That this House agrees with Lords amendment 1.

[Mr Speaker]

With this it will be convenient to consider Lords amendments 2 and 19 to 82.

[Brandon Lewis]

This group contains all the amendments made in the other place to the provisions allowing for a business rates retention scheme. The scheme will, for the first time in a generation, allow local areas to share in the proceeds of growth. Continuing the precedent set when the Bill was considered in this House, each amendment was introduced by the Government to make the changes that we believed would improve the Bill. The majority of the amendments are highly technical and, in several cases, have been introduced in direct response to the discussions that we have continued to hold with local government on the operation of the scheme. Other recommendations give effect to local government’s preferred approach or, in one case, to a recommendation of the Delegated Powers and Regulatory Reform Committee.

Owing to their largely technical nature, I do not plan to explain each amendment in the group in detail—though I could be tempted—but I will outline what they do. They enable the Government to deliver on our commitment fully to fund the five-year discount on business rates up to the state aid de minimis level for businesses moving to an enterprise zone before April 2015. They provide for the scheme to operate on local government’s preferred administrative approach. That approach—the collection fund approach—is currently used for council tax, and so is familiar to it, and works well. They also provide for the appropriate assurance of calculation and information supplied under the business rates retention scheme.

The amendments will also clarify some points of detail for local government. In particular, they will remove any ambiguity about the basis on which local authorities can apply for a safety net payment on account—an important process. Authorities anticipate that they will need safety net support and will be able to access that support before the end of the financial year, and to simplify the arrangements for designing a pool without reducing the safeguards in place for pool authorities by removing the duty to undertake consultation with those likely to be affected by a pooling designation or revocation and in direct response to strongly held views of local government on this point.

Taken together, these technical amendments to the non-domestic rating provisions will give effect to smooth implementation of the rates retention scheme, and I urge hon. Members to agree to them.

13:00

[Helen Jones (Warrington North) (Lab)]

As the Minister said, many of the amendments in this group are technical. I do not wish to take up too much time on them—[Interruption.] That is the Minister’s job, not mine. If his Whips want him to talk for longer, that is his problem. There are a number of issues I want to raise in relation to one or two amendments.

We do not have a problem with Lords amendment 1 or the subsequent amendments dealing with discretionary rate relief in enterprise zones, or with Lords amendment 2, which implements a recommendation by the Delegated Powers and Regulatory Reform Committee. We support that, as we did in the other place.

The group of amendments beginning with Lords amendment 19, however, which deals with administration of the rate-retention system, raises a couple of questions on which I would appreciate clarification from the Minister. Billing authorities are being required to estimate their income before the start of the financial year. That estimate will determine the amount to be paid to Government as a central share and the amount to be paid to precepting authorities, to be transferred to their own funds. There are a number of amendments consequent on that change. If amounts are different, I understand that they will appear as surpluses or deficits on the authority’s collection fund. However, will the Minister clarify what would happen where a firm paying a major proportion of the authority’s business rates closed down mid-year—an example we have raised throughout the Bill’s progress? Surely that would lead to a deficit in the collection fund, so what would the local authority’s position be? Can a collection fund be run at a deficit, or would the shortfall have to be made up from reserves? I should make it clear that I am talking about a really catastrophic event, such as a firm that pays maybe 20% or 30% of the business rates in an area closing down, as happened with Alcan in Northumberland, for example.

As the Minister said, Lords amendments 34 to 38 deal with the arrangements for assurance. It is rather typical of the muddled way in which the Government go about things that they are having to make arrangements to take effect subsequent to the abolition of the Audit Commission before they have actually abolished it—so far they have only a draft Bill. The amendments ensure that the Secretary of State will define the assurance requirements though directions and produce certification instructions—I am sure he will work on them personally over the Christmas holiday. The amendments show the mess that the Government have got themselves into. They have no legislation ready to abolish the Audit Commission, yet they are having to put in place provisions in this Bill. The Government have ended up giving yet more power to the Secretary of State, in what was supposed to be a Bill to give more power to local authorities.

I would be grateful if the Minister clarified those points before we move on to the next group of amendments.

[Robert Neill (Bromley and Chislehurst) (Con)]

I welcome the stance that my hon. Friend the Minister has taken with this Bill. It is sensible to adopt the Lords amendments that he has outlined, and I am glad to see them. When I was responsible for the Bill in my previous role, they seemed to me to offer useful clarification and to strengthen the Bill.

I am particularly pleased that my hon. Friend referred to pooling. It is important that we encourage local authorities to explore to the maximum the opportunities that pooling makes available. The reason for that—the reason I think the Lords amendments are helpful—is that as the economy picks up, as it will, development opportunities will in many cases enhance the interdependency of neighbouring authorities. My London borough of Bromley is a good example. Many people in Bromley work in central London, but they are effectively part of the same economic area. The borough council pays for the services it gives people as residents, who contribute to the London economy through their work in the west end, the City of London or elsewhere, including, in some cases, across London borough boundaries—they may work in Croydon or somewhere such as that.

There is therefore great merit in giving local authorities not only the maximum flexibility to pool, but the maximum encouragement to do so, because one would not want a council to approve a substantial development on its boundaries that might bring it all the financial benefits, but which needed planning support from neighbouring authorities under the duty to co-operate and their good will because of where the work force come from. Pooling is important, and the Lords amendments give us sensible flexibilities.

Importantly, pooling fits with some of the other parts of the Government’s localism agenda. One of the arguments made earlier—I noted it in their lordships’ discussion—was about enabling local authorities to have adequate critical mass with their retained business rates, which they can use for tax increment financing, for example. The Bill has been important in taking steps forward on that. A pool will have a greater critical mass of funding, which can be used to approach the markets and enables greater leverage.

[George Hollingbery (Meon Valley) (Con)]

My hon. Friend did a great deal of work on the Bill, for which I thank him. The Select Committee on Communities and Local Government visited Manchester some months ago, where we saw some fantastic examples of regeneration. Some had gone incredibly well, although admittedly one or two had not gone quite so well. Does he feel that pooling arrangements are likely to help such projects in future?

[Robert Neill]

I believe they can. Manchester is an interesting example. Indeed, my hon. Friend must be intuitive, because I was about to say that pooling can often fit sensibly with the other development that we have seen—in which Manchester has been something of a pathfinder—which is the establishment of joint authorities. It is a classic means of dealing with co-operation by local authorities from the bottom up without the need for—dare I say it in the current climate?—unitary reorganisation. The ability to form a joint authority creates the ability to procure jointly, pool business rates jointly and, therefore, invest jointly, as well as a raft of other things, which are beyond the scope of this Bill.

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

I am with the hon. Gentleman on pooling and how economies such as those in Greater Manchester work, but he should not get too carried away with the Manchester example, because my understanding is that Tory Trafford and Liberal Democrat Stockport are not very keen on the idea of pooling resources.

[Robert Neill]

All those authorities signed up to the concept of the joint authority. Any pooling will have to involve sensible negotiation between the various authorities about what is in their mutual interest. I would have thought that a degree of caution was perfectly understandable at this stage in the process. The important thing we are doing in this Bill is putting in place the legislative means to enable areas such as Manchester and other areas with pooling to take up more of the opportunities as, I hope, confidence grows. I hope that my hon. Friend the Minister will confirm that the ability to pool is yet another reason the Government have no intention of going down the route of imposing top-down unitary reorganisation—I am sure this is a timely moment at which to remind ourselves of that point. I hope that the opportunity to pool will also encourage other conurbations to develop a similar approach to that being taken in Greater Manchester. Pooling would provide a means of achieving many of the benefits of what were once described as city regions, without the need for the top-down imposition that went with those arrangements.

[Jake Berry (Rossendale and Darwen) (Con)]

Does my hon. Friend envisage pooling working across county boundaries? My constituency lies in the east Lancashire economic area—within which co-operation would work well—but quite a lot of the economic activity spreads over into Yorkshire. For example, a lot of businesses have their headquarters in Lancashire and premises in Yorkshire.

[Robert Neill]

I must confess that my view on that has shifted somewhat. I was initially sceptical about cross-county boundary pooling, because of the potential administrative complexities involved. For example, we would have to consider how to deal with the tier split where two-tier areas were involved. It might be easier to achieve where only adjoining unitaries were involved. We should not rule it out totally, however. It is important to recognise that the proposal that we are debating fits into the broader localism agenda, in that it recognises that economic geography might not follow the purely administrative geography of an area. I am in favour of maximum flexibility, and my hon. Friend has raised a good example. In my area, Bromley would probably fall within the area of Greater London, but there are some local authorities on the edge of London, such as Thurrock, Slough and Watford, whose economic geography would make them as much a part of the London economic area as of the shire county of which they are a part. I hope that the Government will consider this as an option, provided that the technical issues can be resolved. Perhaps the Minister will deal in detail with the important point that my hon. Friend has just raised.

It is particularly useful to explore that point in the context of the pool providing an opportunity to raise funding for infrastructure investment. Earlier this week, in our debate on the Public Service Pensions Bill, we discussed raising the cap on the amount of local authority pension funds that could be put into infrastructure investment. I favour raising the cap, as the Bill proposes. The proposal before us today would provide yet another means of raising revenue streams that could be put together to enhance the amount of a local authority’s investment leverage.

It is worth bearing it in mind that that happens elsewhere in Europe. We see a degree of it in the Federal Republic of Germany, but the area that I know best is in France. The French have developed quite sophisticated models of co-operation, known as communautés urbaines. They are generally similar to a Greater Manchester-style joint authority, stretching across a conurbation. An example that I know well is that of greater Toulouse, which, thanks to the pooling of resources, has been able to procure, invest and deliver infrastructure jointly. This has led to the development of a metro system in Toulouse, a tramway going out to the suburbs and improved road links to Blagnac airport. Toulouse is an historic city with a considerable learning pool in the centre, but it is also inextricably linked to Aérospatiale and the avionics industries around Blagnac, which are outside the municipal boundary. I am reminded that such co-operation was the logic behind local enterprise partnerships.

[James Duddridge (Rochford and Southend East) (Con)]

My hon. Friend knows my constituency well. I see parallels between his examples and the expansion of Southend airport, which is owned by Southend unitary authority but located in the district of Rochford. How would the proposals impact on my constituents? It sounds as though they could present an exciting opportunity.

[Robert Neill]

I am quite well acquainted with my hon. Friend’s constituency, and I have visited Southend airport on a number of occasions. He has provided a classic example of how pooling could unlock significant opportunities. As he knows, Southend’s boundaries are tightly drawn around its urban area, but it is clearly part of a broader south Essex conurbation. Its development opportunities, of which the airport is an example, lie almost entirely outside its boundary, but people would think of them as being part of Southend because they form part of the economic area. It would cause all manner of upheaval if we were to resolve the problems through the top-down imposition of a unitary structure in south-east Essex, as we have seen happen elsewhere.

13:15

This kind of pooling, however, would give Southend and the neighbouring Rochford district an incentive to share the benefits that would come from the development of areas in Rochford that were on the periphery of Southend. The pooling of the retained rates would enhance Rochford’s council tax base. The measure would also make Southend a more attractive business destination, because it would be able to open up economic development and infrastructure opportunities that it would be unable to do entirely within its own boundary.

My hon. Friend’s constituency provides a good example of how pooling could work. I can envisage Southend, Rochford and, say, Castle Point forming a natural economic subset that would hold together very willingly. The south-east local enterprise partnership, comprising Essex, Kent and East Sussex, is the largest in the country. That would probably not be regarded as a logical area in which to pool, although it might be more appropriate in some of the smaller LEPs that fit more tightly the economic geography of their area.

Speaking as an Essex boy myself, I should point out that, in areas such as that of my hon. Friend the Member for Rochford and Southend East (James Duddridge), pooling would take place across boundaries, in a sense. Although all the places concerned are all in Essex, Southend is a unitary authority and the two areas surrounding it—its hinterland—are still districts in the two-tier county of Essex. The point about the ability to pool across boundaries is important, and I hope that my hon. Friend the Minister will address the technical issues involved. In this case, how would we resolve the question of Southend unitary authority not having to do a tier split of its benefit from the pool, even though the two surrounding districts would have to take into account the tier split? I do not think that the problem is beyond being reconciled, and such pooling would provide a powerful tool to encourage inward investment into Southend.

The same would apply to another part of the Thames Gateway with which I am familiar, on the other side of the river, in the Medway towns. It would be sensible to give them the opportunity to have a pooling arrangement with their adjoining districts in the two-tier county of Kent. It would therefore make sense to sort out any technical obstacles to that type of flexibility. As my hon. Friend the Member for Rossendale and Darwen (Jake Berry) suggested, even starker cases that cross long-established country boundaries could still make sense in economic terms. There is considerable merit in the proposals.

It has rightly been observed that this proposal is by no means the only element in what is a considerable stream of technical amendments in this group. It would probably be appropriate if I now dealt with the others as best I can—unless I stray off course, Mr Speaker, although I know that you will not let me do that.

[Mr Speaker]

We are all looking forward to the development of the hon. Gentleman’s further arguments with eager anticipation.

[Robert Neill]

I am grateful to you, Mr Speaker.

[James Duddridge]

Before my hon. Friend rushes on to his next point, may I slow him down a little and draw him back to the pooling of funds? He has spoken eloquently about my constituency of Rochford and Southend East, but does he think that areas involved in such pooling arrangements need to be contiguous? For example, there are many synergies between Thurrock, a unitary, and Southend, another unitary. The two are close, but they do not actually touch. Similarly, along the Thames Gateway line, we see places such as Margate and other seaside towns that could work well together even though they are not neighbours. Would they still be able to pool?

[Robert Neill]

That is taking the argument beyond what I was considering when I left office, which gave me more time to reflect on these matters. My hon. Friend and I both had a little time to reflect over the summer. Like me, he has been putting it to constructive use. I think there is merit in providing that option: why not? If the economic geography is such that the two areas hang together, why should we rule out such a possibility? In this day and age, investment decisions will be driven precisely by factors such as economic characteristics, infrastructure opportunities and the nature of the work force and the market, rather than by geographic contiguity alone.

I mentioned earlier, for example, that Slough has a great deal in common with the economy of west London, without being actually contiguous to the London borough of Hillingdon. As I recall, a little bit of the county of Berkshire is located between the two. If such arrangements were wanted, merit could be seen in allowing Slough to enter into a pool with Hillingdon, with some other west London authorities or with Watford. Equally, going in the other direction, Slough might want to involve Reading. There is an argument for saying that there is a natural economic geography that starts almost at the Hammersmith flyover and which goes out through Brentford and then through what is generally called silicon valley. Those opportunities are also important.

[George Hollingbery]

My hon. Friend is making an interesting argument. I wonder if I might plumb his expertise a little further. It occurs to me that some of the local enterprise partnerships that have been formed are natural economic areas that plainly do not run according to local authority boundaries. I am thinking particularly of what I think is called the Gatwick partnership, which runs from Croydon all the way down to Brighton. Indeed, in my own county of Hampshire, we have the M3 partnership, which runs up that artery towards the businesses and markets of London. I want to examine my hon. Friend’s knowledge of this subject. Is it possible for local authorities to pool partially, as it seems to me that in certain cases—with the Solent partnership, for example—there would be some logic in that? It seems right and proper that some of the moneys from Portsmouth and Southampton should be invested in that partnership or be centred on its work, but perhaps those two cities could look outside that area as well. Will he explain how that might work?

[Robert Neill]

I suppose it comes back to the technical issues that I mentioned on coping with tier splits in two-tier areas. We should not rule out the ability to try to achieve that, particularly if it can be done by agreement. It would be interesting to see if partial pooling could be achieved. It might not be something that happens at the beginning, but the point to remember about the whole of this local government finance reform is that it is making a major change in providing the legal mechanisms and the tools necessary for local authorities to use in relation to retained business rates. That is very important in itself, as this is, after all, the first time in many of our political lifetimes that the Treasury has forgone an element of revenue.

At the moment, all the business rates are, in effect, nationalised, taken back to the Treasury and distributed on a formulaic basis, which does not provide the sort of incentive for economic development and investment that we all wish to see. The Bill puts that right. I hope it will be possible to make pooling more attractive over time. As the deficit is paid down and the economy grows, the local share available to go into the pool can perhaps increase from its current 50% level. That would make retention as a whole and pooling more attractive, because the pot produced from the pool will, of course, be greater, and therefore even more attractive as a potential investment vehicle. I think we should examine the case with some care.

[Jake Berry]

As my hon. Friend develops his argument, I would be interested to hear how his views might relate to east Lancashire. When we formed the LEP, the borough council of Rossendale, which I represent, did not want to go into a wider Lancashire LEP. Eventually, it did so, however, and I think the then Housing Minister made absolutely the right decision on that occasion, as the arrangement has proved to be a great success. When it comes to the pooling of two-tier authorities, I could foresee a situation in which Rossendale council, which looks south towards Manchester for economic growth, would want to team up with the Associated Greater Manchester Authorities, but Lancashire county council could wish it to remain within Lancashire county for pooling purposes. In that exact situation, in my hon. Friend’s opinion, who would have sway and which argument would win?

[Robert Neill]

If I were a lawyer, like my hon. Friend, I would be advising the parties to try to come to some negotiation rather than litigating, if I might put it that way, as it would not be in the authorities’ interest to get into a dispute. The general approach has been, of course, that in the two-tier areas the bulk of the incentive should rightly go to the planning authority, as its members have to take the decision to allow development that may sometimes be controversial. It is right for such an authority to say to its electors, or to the people who sometimes complain about what the planning authorities do, that there are benefits to come from looking at the bigger picture, some of which will be captured for the local communities. I can see why that would be a sensible development, but it does not mean that I have become an advocate of unitary restructuring. It might be simpler, but the fact remains that the two-tier option has been taken into account in respect of the structures put in place by the Bill.

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

Will the hon. Gentleman give way?

[Robert Neill]

If I may finish the point, I will happily give way to my old sparring partner. I think we should be prepared, as we develop the scheme, to provide maximum flexibility.

[John Healey]

I apologise for not having been able to be present at the start of the hon. Gentleman’s contribution, but I have come in at a very interesting part of his speech. Does this not show up the exact problem with two-tier areas and two-tier authorities, in that fostering and supporting economic growth is so much more than simply the planning system, as it involves education, skills and transport? Many such responsibilities in two-tier areas are held at county level rather than at district level.

[Robert Neill]

I do not see it as a problem; the issue can be grappled with and dealt with. The right hon. Gentleman and I have debated unitary restructuring on more than one occasion over the years, and we end up on different sides of the fence. My point is that through co-operation it is possible to ensure that the economic development levers, which generally sit with the county council, can be sensibly allied to the development levers, which sit with the district council. A good example can be found in Essex, as Chelmsford has a successful local planning authority in Chelmsford borough council—it might now be Chelmsford city council since the town has been given city status—and has not experienced the friction that is sometimes used as an argument to justify unitary authorities. Both the county and its county town have recognised that it is in both their economic interests to grow Chelmsford as a significant hub in that part of the world. In that case, unitary reorganisation was not necessary to achieve significant economic regeneration in Chelmsford.

I have to say that some of the downsides of unitary reorganisation that we saw under the previous Government, when it was enforced against the wishes of the local authorities, were a distraction from the serious job of getting on with economic development, promotion of the area and encouraging investment by sensible planning decisions. These issues can never be seen in isolation. The incentives in the Bill, linked with the duty to co-operate in planning terms, provide a further incentive for sensible arrangements not only between adjoining local planning authorities, but with the county authority as a highway authority, as highway considerations are often important in determining where development is acceptable and therefore where the investment might come from.

[Richard Fuller (Bedford) (Con)]

rose—

[James Duddridge]

rose—

[Mr Iain Wright (Hartlepool) (Lab)]

rose—

[Robert Neill]

There is a bit of queue. I shall give way to my hon. Friend the Member for Bedford (Richard Fuller) first, as he rose first.

[Richard Fuller]

I am grateful for my hon. Friend’s generosity in giving way, first because I know that he is eager to deal with other matters in his speech and I do not wish to delay him unduly, and secondly because to describe myself as a novice when it comes to local government finance would be an insult to novices throughout the country. I have learned more about the subject as a result of listening to my hon. Friend, who exhibits the patience of Aristotle teaching one of his slower students.

13:30

My question relates partly to the issue of two-tier and one-tier local authorities and their decision-making processes, and partly to the interaction between the attitudes to pooling taken by local authorities and those taken by the local and broader business communities. May I briefly draw a parallel? Sometimes there is a clear understanding between teachers and people who wish to set up a free school, but the project is delayed by some intransigence or slowness of understanding on the part of the local authority. Similarly, different authorities have different ideas about how they wish to proceed. For example, my own county, which benefits from unitary structures, contains some rather small areas. Will my hon. Friend comment on that?

[Robert Neill]

My hon. Friend has raised a couple of important points. I shall begin with the last, if I may—and I shall not forget the other Members who wish to intervene.

We should not make the error of thinking that unitary status is always a solution. Some unitary authorities that are on the small side do not follow their natural boundaries, and their critical mass is towards the lower end of the scale in terms of economic, financial and managerial capacity. It is clear to us now that the creation of a string of fairly small unitaries was not necessarily the best solution. We should not assume that unitary is always good and two-tier is always bad. Some unitaries work and some do not; some two-tier areas work, while in others there are tensions. We need to ensure that they work better in future, and I believe that the Bill and the Lords amendments will be one means of helping them to achieve that.

My hon. Friend’s point about perception is important too. I experienced some frustration when I was first elected as a councillor in the London borough of Havering in 1974—[Interruption.] I must tell the hon. Member for Hartlepool (Mr Wright) that it was a little after the Municipal Reform Act 1835, but it was a while ago nevertheless. In those days, not only was I one of the few members of our 60-odd-strong council who were interested in taking part in the pan-London bodies that we had to have, but I was regarded as very dangerous—dangerously outward-looking—because I had stood for the Greater London Council as well. In 1974, some members of the borough council still thought in terms of the two predecessor authorities. We did not have cabinets in those days, but there was concern about whether the committee chairmen were drawn sufficiently from the Romford end or the Hornchurch end, even if they were members of the same political party. That inward-looking tendency is one of the bigger challenges that we face in dealing with local government as a whole, but attitudes have improved massively since those days in 1974, which is to local government’s credit.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I remind the hon. Gentleman that we are discussing an amendment. I know that he has been tempted away from it by the hon. Member for Bedford (Richard Fuller) and that he wishes to return to it, but I should like us to get past 1974, right up to date, and back to the amendment, on which I know that the hon. Gentleman was about to enlighten the House.

[Robert Neill]

You are, as always, the guardian of rectitude in this place, Mr Deputy Speaker, and, as you know, I am always the willing servant of rectitude in these matters. The point that I was making was that we had indeed moved on a great deal since 1974, in terms of thinking as well as chronology. The situation is better than it was. However, we still have to deal with some entrenched thinking. I believe that, by promoting pooling, the amendment can break down some of that thinking, which, as was pointed out by my hon. Friend the Member for Bedford, can spill into other areas of policy decision-making as well as those relating to local government finance. I hope that, by encouraging economic investment, pooling will make it easier and more desirable to provide the educational opportunities cited by my hon. Friend in the context of free schools. His point was well made: all the various legislative measures interact as part of a broader localism agenda.

Now I must not forget the hon. Member for Hartlepool, who tried to intervene earlier.

[Mr Iain Wright]

I am grateful to the hon. Gentleman, who is being characteristically generous and engaging. I want to move on from 1862, when he was first elected, and away from 1974, when you were born, Mr Deputy Speaker—I hope to catch your eye again: that is why I am trying to be as helpful as possible—to today. Has the hon. Gentleman had a chance to look at Lord Heseltine’s review, which was published today, and which strikes me as very significant in relation to local economic development? In particular, has he had a chance to read recommendation 11? It states:

“All two-tier English local authorities outside London should pursue a path towards unitary status. The Government should encourage this and work with authorities to clarify the process and enable it to happen.”

Notwithstanding his earlier comments, does the hon. Gentleman agree with that?

[Robert Neill]

I must preface my remarks by saying that I cannot pretend to have read all 200-odd pages—

[Mr Wright]

There are 228.

[Robert Neill]

I note that the hon. Gentleman has both read them and counted them. Anyway, I cannot pretend to have read all of Lord Heseltine’s tour de force of a report, but the cursory reading that time allowed me while I was preparing my brief notes for the debate—[Laughter]—did give me a flavour of that helpful and valuable document. I think that it contains much that we, as a Government, would wish to take on board. As for the specific point raised by the hon. Gentleman in relation to recommendation 11, I do not agree with it, for reasons that I have already given. I believe that an imposed form of unitary restructuring is unnecessary, and that the devices and tools given to local authorities by the amendment reinforce the reasons for not following the route proposed by Lord Heseltine.

[James Duddridge]

My hon. Friend the Member for Bedford (Richard Fuller) described himself as a novice. I am less modest—I thought that I understood the amendment before I came into the Chamber—but, despite the eloquence of my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), I have become somewhat confused. Perhaps you will allow me a slightly lengthy intervention, Mr Deputy Speaker, in order to avoid a lengthy speech from me later in the debate.

The “Commentary on Lords amendments” in the explanatory notes refers to “billing authorities” and “precepting authorities”. My hon. Friend has already referred to planning authorities and highways authorities. In fact, the commentary uses the phrase “major precepting authorities”, but does not explain what “major” means in this context. Perhaps I am slightly sensitive about such terms because I represent a slightly smaller precepting authority, but is a distinction being made between parish and district councils, or between major and minor precepting authorities? My hon. Friend knows a great deal more about these matters than I do, but I was equally confused by the reference to billing authorities, given that police and fire authorities are effectively billing authorities. What do those terms actually mean?

[Robert Neill]

My hon. Friend makes a fair point. You will be familiar, Mr Deputy Speaker, with a joke that is well known in local government finance circles. It is said that the formula grant is like the Schleswig-Holstein question. Only three people have ever understood it; one is dead, one has gone mad, and the third has forgotten. The same is true of some of the complexities of local government finance. When I arrived at the Department for Communities and Local Government, I was not wholly convinced that that was a joke, but there were some very sound officials who put me right on all occasions.

The nomenclature to which my hon. Friend refers is slightly historic, but it is important. For practical purposes, the billing authority will be the unitary authority in the case of the Southend part of my his constituency, and the district council in the Rochford part. In most cases the major precepting authority is a county council. In Greater London, in my case, the London borough of Bromley is the billing authority, but the Mayor of London and the Greater London authority is the major preceptor. I think fire and police authorities also count as major precepting authorities. That is because of how they have developed and become separated from the county councils, although they were originally intended to be part of them.

[James Duddridge]

rose—

[Robert Neill]

Let me finish the point, and if I am not making it clear, perhaps I will need to repeat it.

The major preceptors have certain statutory rights in respect of consultation, and they do more or less what its says on the tin: they deliver a significant amount of services, especially in county councils, and in two-tier areas the county council precept will often be the largest part of the bill, rather than the district council element of the council tax, although they are, of course, itemised separately.

[James Duddridge]

My hon. Friend is endeavouring to explain the situation, but I am now less convinced that I support the amendment. The explanatory notes refer to passing a proportion of the amount to the major precepting authorities. Will that be in only one direction, so Southend could pass to Essex county council, but Essex could not pass to Southend even if it was in the wider county’s interest?

[Robert Neill]

That point is slightly different from the pooling point. I was talking about the provisions that deal with the tier splits. We are returning some of the moneys—the business rate—directly to local government. That was formerly taken by the Treasury and distributed by formula grant. Some of those moneys will be needed to fund district council functions in two-tier areas, and some will be needed to fund county council functions in two-tier areas.

That highlights why there has to be a passing of money. It is collected by the billing authority; that is the case at the moment. Southend borough council and Rochford district council collect all the business rates and then have to send the money to central Government as, I think, a monthly payment. It is then returned in the local government finance settlement each year, predominantly by way of the formula grant—although there are one or two other grants, as this is a slightly complex world. We are allowing authorities to keep some of that money at the beginning, but because it has to fund two types of authority—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sure the hon. Gentleman will want to address his comments through the Chair, rather than personally across the Bench to his colleague, as he is currently doing. I am also sure that he is not filibustering; I can see that there is no organisation.

[Richard Fuller]

rose—

[Mr Deputy Speaker]

I think there is about to be another intervention on you, Mr Neill.

[Robert Neill]

As you know, Mr Deputy Speaker, the last thing I would ever wish to do is filibuster. I have spent a large proportion of my life dealing with local government finance, and I wish we could explain things in one simple sentence, as that would make life a lot easier for many of us.

I have outlined the essence of the issue, and the reasons why we have references to billing authorities and major precepting authorities. There are other precepts; the parish council can levy a precept, but it is not a major precepting authority. Very occasionally, there will also be certain levies put on top, but for our current purposes we need not discuss that and add further confusion.

Usually the district council in a two-tier area is the planning authority, and it is also the billing authority. Importantly, however, for investment purposes—this is where this point links in with the question of business rates retention—the highway authority will tend to be the county council, which often has significant economic development resources that district councils do not have, and the education authority will be the most significant body for the skills agenda and in attracting the required work force. That is why pooling makes sense. It links the pooling of resources with pooling and collaboration on a raft of issues, which is essential in the modern world.

[Richard Fuller]

For many of us, Mr Deputy Speaker, my hon. Friend’s speech is not a filibuster; it is a master class in explaining some of the intricacies of non-domestic rates and pooling. Having listened to his account of the complex relationship between different authorities, I think I may be slipping from my novice ranking. I ask my hon. Friend to return to his response to the hon. Member for Hartlepool (Mr Wright), who referred to today’s report by Lord Heseltine. Does my hon. Friend agree that there are some valid arguments in Lord Heseltine’s suggestions on unitary authorities, as they will help to simplify the relationship between businesses and local authorities? This is an extremely important point. As this is a master class, I think all of us would like to hear a very full response from my hon. Friend.

13:45

[Robert Neill]

My hon. Friend is very kind. He knows a great deal about this topic, as I know from having visited Bedford on a number of occasions when we were in opposition and he was the prospective parliamentary candidate.

[Mr Iain Wright]

So it’s your fault!

[Robert Neill]

I will be delighted to take responsibility for my hon. Friend’s arrival in this House.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I say to the hon. Gentleman that we do not need to rehearse the CV of any Member. Furthermore, I am worried that Members may become more confused about the issues in hand after his detailed explanations. We must now address the amendment alone, and not embark on a tour of the country.

[Robert Neill]

I entirely agree, Mr Deputy Speaker, and the point of the amendment is—

[Mr Deputy Speaker]

Order. Let me reiterate that we will now deal with Lords amendment 1 and we will not be distracted from that.

[Robert Neill]

Lords amendment 1 is important because it enables pooling, and pooling is one reason why irrelevances such as unitary reorganisation need not trouble the Government in the future.

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

I represent a Birmingham constituency. The local government structure in the area arises from the fact that the West Midlands county council was abolished in 1985 and three functions were dealt with separately: the police and the fire service are now precepting authorities, while the integrated transport authority—it used to be the passenger transport authority—is not a precepting authority. In terms of encouraging economic development, therefore, there is a key question as to whether pooling serves to improve transport. Will the Minister comment on—

[Mr Deputy Speaker]

Order. The hon. Member for Bromley and Chislehurst (Robert Neill) is a former Minister; he is not still a Minister. Also, interventions need to be shorter. If Members wish to speak, they should put their name down, and I am sure we will be able to accommodate them.

[Robert Neill]

My hon. Friend makes a fair point. When seeking clarity on these matters, we are sometimes bedevilled by history. A passenger transport authority would, I suspect, be a levying authority rather than a precepting authority for the purposes under discussion. At present, it would not necessarily fall within the scope of this pooling. It is important to raise such topics, however. There must be a means whereby the pooling of retained business rates includes incentives for transport authorities. In Greater Manchester, the solution has been the creation of a joint authority. There might be merit in considering a similar solution in Birmingham. I am sure the Minister will take that point on board, and I ask him to address it in his concluding remarks. It is also worth pointing out that if there is a large amount of money in the business rate pool, more money can, of course, be leveraged into investment, particularly for infrastructure purposes—and infrastructure investment is precisely what authorities want.

[John Hemming]

The key point is that public transport is an important driver of economic development, and it therefore needs to be encouraged through the pooling process.

[Robert Neill]

I agree, and I am sure we will be able to find ways to address that. The amendment in question and the pooling of business rates is one of the tools, and it is an important one, but it is not the only tool the Government are putting into the local authority box.

[Andrew Gwynne]

Greater Manchester provides a good example for pooling resources, and not only in terms of business rates. The 10 district councils of Greater Manchester have already decided to pool their local transport fund allocations. That is a gamble for some of them, because they are not getting the direct benefits of the new Metrolink extensions, while other parts of the county are.

[Robert Neill]

That was a helpful intervention, and I hope that it will go some way to helping my hon. Friend the Member for Birmingham, Yardley (John Hemming), because one important source of funding for passenger transport authorities is the allocations that come to the constituent local councils, which they can then use. This is about ensuring that there can be a sensible linkage. If they pool the allocations, it will be logical to find a mechanism whereby they can pool the product of the retained business rate, so that the two can be aligned. The hon. Gentleman makes a very important point.

[George Hollingbery]

Understanding, always, that this is exclusively about the pooling of business rates, it occurs to me that there might be the odd occasion when councils wish to pool some element of their council tax. Will my hon. Friend confirm whether that was considered as a possibility for the Bill or whether it was rejected at an early stage?

[Robert Neill]

When I was in the Department, we did not get into the issue of pooling council tax, for the simple reason that we were dealing with the business rates element. As I saw it, the first step in the equation was to secure the return of a significant amount of business rates revenue to local authorities, rather than for it to be taken back through the nationalised system, as I might call it, whereby it goes to the Treasury and is then redistributed through the formula grant, the point being that over a period of time we would be able to make local authorities less dependent on formula grant as the principal source of their income.

Interestingly, we should perhaps explore, as a future step along the road, the means whereby local authorities might voluntarily—I stress that this must have a voluntary basis—examine ways of aligning their council tax receipts. After all, authorities can seek to pool the product of that in their investment decisions at the moment. I referred to the success of the communautés urbaines in France, which has come about because they have been able to set up joint investment funds and procure directly. In a sense, they have been putting together the product of their local taxes, and we might able to do that. We must remember that the billing authority sets the level of council tax in any given place, but there is no reason now why local authorities in an area could not deliberately align their council tax levels if they wished to do so to make sure that their area was not disadvantaged economically by having different rates within what might be almost the same built-up area. That is important. The level of the business rate is not changed by these proposals, because the multiplier continues to be set nationally, but the incentive is in retaining the product. The amendment provides us with the important tool of giving maximum flexibility in the pooling of the product to get the maximum benefit from investment for the area, particularly in economic development terms.

[Jake Berry]

On the amendment and its effect on enterprise zones, I have been an advocate of the do-it-yourself enterprise zone, which I hope could be achieved in east Lancashire, along the M65 corridor, by using the localisation of business rates. Local authorities would be able to give rate holidays to people who set up new businesses within a DIY enterprise zone. This amendment allows a deduction for rates which should have been in the enterprise zone. Would that preclude the DIY enterprise zone or encourage such a zone?

[Robert Neill]

It ought to be a means of encouraging that type of zone. That seems to be the logic of the proposal. Being able to offset and make the deduction is necessary in ensuring that there is an incentive. I am sure that the Minister will be able to confirm that position. My hon. Friend the Member for Rossendale and Darwen makes an important point about the interaction of pooling and enterprise zones: it is important not to create a disincentive to having an enterprise zone. Equally, we must not create a distortion in the local economy whereby investment is purely sucked into an enterprise zone because of the benefits, and other parts of the local authority area or the conurbation, which happen not to be in an enterprise zone but have real development opportunities, are set at a disadvantage. It is important to make sure that we get that interaction right.

[Jake Berry]

We have heard today how Lord Heseltine has produced an excellent report, and we must remember that he was the first proponent of enterprise zones. Does my hon. Friend believe that if the amendment is agreed to there will be a peppering of mini enterprise zones, which could be run by local authorities or groups of local authorities by pooling business rates and enabling advantages locally? There could be, for example, a mini silicon valley in Rossendale. Does he think that is the likely outcome?

[Robert Neill]

I hope that if there is the political and economic will to do that, we will see it; I favour the maximum diversity in these measures. We should seek to give the maximum flexibility to local authorities on how they use these various tools, because that is genuinely localist. What will be appropriate in Rossendale will probably not be appropriate in Bromley, but it is sensible that those alternatives are available. I want an emphasis on outcomes, rather than on structure or process. Breaking down the barriers that can sometimes be an impediment is an important part of that. My hon. Friend the Member for Bedford talked about a mindset. Just as breaking that down is important, so, too, is breaking down the structural impediments that might stifle the initiative that I am increasingly finding local authorities want to take up through the opportunities that come from business rates retention. That is an important part of the mix that we must introduce.

[John Hemming]

One of the issues about hypothecating the pooled revenue from national non-domestic rates is that we can develop further employment. Does the hon. Gentleman feel there is merit in having a facility for localised sector tendering, funded by a transport authority, receiving money through the pooled process of the national non-domestic rates—it is now localised non-domestic rates, of course—on the basis that that would make it easier for people to get to work by bus?

[Robert Neill]

That is an interesting proposition. I had not specifically applied my mind to it and I cannot say off the top of my head whether or not the legislation would permit it. I am sure the Minister will be advised on that before he responds. We ought to be examining all these matters.

I am conscious that this is a technical measure and that we have to discuss a number of other important measures. I have probably said all I need to say on pooling. Other elements of a more technical kind are contained in the schedules, which are addressed in amendments 19 to 82. I would not dream of dealing with those individually, but it is important that we examine them carefully—yet briefly—because, as is always the way of local government on these things, the devil is in the detail of the schedules. Indeed, when, as Ministers, we looked at the Bill early on, we found that most of the work is in the schedules. Amendments 19 to 82 seem to deal with some of the important issues that the hon. Member for Warrington North (Helen Jones) raised: the questions relating to how we deal with deficits or surpluses in the collection fund. The solution that the Government propose is workable and elegant, and will merit attention. The amendments clarify and strengthen the position, so I hope that they will also commend themselves to the House.

Important amendments are also proposed to the schedules in respect of the position of major precepting and billing authorities. I am sorry that my hon. Friend the Member for Rochford and Southend East is not in his place, as those amendments will help to clarify the issues he raised. I hope that those amendments, too, will be seen as important and valuable. Although there are a lot of them, they deal with certain themes, and all of them, taken together, represent a significant strengthening of the Bill. I hope that this stream of amendments will commend itself to the House.

13:59

[Annette Brooke (Mid Dorset and North Poole) (LD)]

It is a great pleasure to follow my hon. Friend the Member for Bromley and Chislehurst (Robert Neill), who has identified some key issues that are important both generally and in relation to particular areas. I want to add to his comments on pooling and the arrangements for different types of authorities.

I represent a constituency that has district councils, a county council and a unitary authority. Indeed, Dorset’s local enterprise partnership has boundaries that encompass two unitaries, umpteen districts and the county council. It is important that we should be clear on how pooling can take place so that we can facilitate it, because I certainly see it as a driver for growth. The important point, however, is about choice. Some authorities might not want to play and although that might be a pity, the important point is that this is all about our localism agenda and putting more power into people’s hands at the lowest possible level.

[George Hollingbery]

Rather than yielding to recommendation 11 of Lord Heseltine’s report, which is that we should impose unitary authorities, is it not true that we are much more likely to get unitary-type authorities by accretion through election and localism than by imposing them from the top down? They will also last longer and be more robust.

[Annette Brooke]

I sincerely believe that the driver must come from local people at a local level. Anything imposed from above inhibits good local decision making and will inhibit growth.

I am talking about making decisions at the lowest possible level and I and, I assume, many other Members have been lobbied by the National Association of Local Councils. Of course, my hon. Friend the Member for Bromley and Chislehurst dealt with the question of the distribution of the business rates between the billing authority and the precepts but, as I understand it, town and parish councils do not come into the equation. I would be very pleased if the Minister could clarify the difference the amendments will make and how it will be possible for the billing authority to drive activity down to the local level and to town and parish councils. I happen to be attending the annual meeting of the Dorset Association of Town and Parish Councils on Saturday, so it would be helpful if I could be clear about what we pass today.

[Mr Stewart Jackson (Peterborough) (Con)]

Were we to consider devolving fiscal powers to town and parish councils, would we not also need to review their functions as a corollary? By comparison with international examples, our town and parish councils have very limited functions that are at the most micro level—they just have powers on street lights, fencing and allotments, for example. If we are going to take an holistic approach, we should perhaps consider in their entirety the functions that we expect parish and town councils to discharge.

[Annette Brooke]

There have been many innovations in some areas with the close working of councils at all levels. We want to generate a spirit of that happening at all levels, because we all know that in difficult economic circumstances parish and town councils have taken over some functions. It has happened rather naturally and sometimes it works well, such as when they have the “Links” man deal with all the weeds. It can be as simple as that, but there is a lot more scope for such working. I agree with my hon. Friend on that general principle.

Let me return to the thrust of this whole section of the Bill: the business rate retention scheme. It is incredibly important to add to the growth agenda and it is an important ingredient. It puts local decision making where it should be and provides opportunities and flexibility. I hope that with our good growth figures during the last quarter, we will all be incentivised to do the best we can for our local economies. Members of Parliament should take a leadership role and support those organisations. What an opportunity!

Finally, I believe that the Local Government Association is in favour of the retention of the local business rates, but there are of course doubts about the details. May I ask the Minister whether the LGA is fully behind the amendments? It is true that Members of the other place scrutinised the Bill extremely thoroughly. Some very good ideas came out of that scrutiny and although I totally support the thrust of the amendments, I merely seek the clarification that I have requested.

[Mr Stewart Jackson]

I apologise, Mr Deputy Speaker, for not being present at the outset of the debate. I want to make a few brief points.

Let me echo some of the points made by the hon. Member for Mid Dorset and North Poole (Annette Brooke) in her commendably succinct contribution to the debate—

[The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)]

And powerful.

[Mr Jackson]

The right hon. Gentleman admonishes me. It was powerful and eloquent. The hon. Lady has great experience in local government in Dorset and she added to the debate.

It is timely to remember the basis on which business rates were centralised. I do not want to go too much into the history, but there was a significant degree of criticism of the decision of the previous Conservative Government to centralise business rates. There was an historical context, however, given what happened in too many of our large municipalities under the metropolitan district councils, particularly in the midlands and the north of England. The local councils had a mandate, and I accept that, and were elected by local ratepayers—later council tax payers—but they often used that mandate to attack the policies of central Government. One way they did that was by significantly increasing business rates, which were then localised, above the rate of inflation.

The Government had to choose what to do about that fiscal weapon, used disproportionately by Labour councils, and its impact on regeneration, growth, business development and entrepreneurship in the areas where it was used. That was the context. I am a localist—actually, I was a localist, but I am probably now a born-again centralist. However, I was then a localist.

I must not be too unkind to the right hon. Lord Heseltine, but I fear that his views on regeneration have ossified and, perhaps, stopped in about 1981. The answer to every question for Lord Heseltine involves banging the table, big figures, big organisations and big macho approaches to local government, but that does not always reflect the nuances of the different power structures and checks and balances in modern local government in a 21st-century country. I hope that I have not been too unkind to Lord Heseltine, but I am sure he has heard worse—[Interruption.] He speaks incredibly highly of me. He is a very talented man who created a fantastic business—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I know that the hon. Gentleman wants to deal with Lords amendment 1. I am sure that Lord Heseltine will not lose any sleep over his comments, so perhaps we can get back to the amendment.

[Mr Jackson]

I was meandering among the ash trees of Lord Heseltine’s arboretum, Mr Deputy Speaker, and—

[Mr Deputy Speaker]

Order. I hope that the hon. Gentleman will get out of the wood and on to the subject in hand.

[Mr Jackson]

We must respect the unique nature and authenticity of local government. When my right hon. Friend the Chancellor reads the report and teases out its nuances, I am sure that there will be more with which he agrees than with which he disagrees.

The context of centralising business rates was the desire to give a break to businesses, which often encountered difficulties dealing with local authorities that were not business-focused and did not make protecting the interests of individual workers in growing businesses a priority, which was especially the case in places such as Liverpool and Manchester.

[Jake Berry]

I am sure that my hon. Friend accepts that the exciting aspect of the Bill, which is reflected in these Lords amendments, is that it gives local authorities a stake in making their communities a success for the first time. The hon. Member for Mid Dorset and North Poole (Annette Brooke) talked about even parish councils having a stake in making their communities a success. As a born-again centralist, does my hon. Friend welcome those things?

[Mr Jackson]

I certainly do, but the reason I am, in some respects, a born-again centralist is that I have witnessed the huge logjams that often occur in the planning system, which my hon. Friend the Member for Bromley and Chislehurst (Robert Neill) knows about. There was never a more excellent local government Minister than him, and it is a great loss to local and central Government that he no longer occupies that position. However, he will do a fantastic job on behalf of his constituents as a diligent and community-focused Member.

There is an intellectual coherence in the Bill, because when we examined the regional development agencies—[Laughter.] Labour Members laugh, but the RDAs were bureaucratic and wasteful, and they failed to deliver—[Interruption.] That is absolutely true.

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

I thank the hon. Gentleman for taking an intervention on such an important point. May I remind him that One North East, the RDA for the north-east, was independently assessed as delivering £4.50 to the regional economy for every pound of public investment?

[Mr Jackson]

When I was shadow regeneration Minister, I met One North East in a rather salubrious hotel in central Newcastle. I agree that it did some good work, but if we consider all the regional development agencies throughout the country, they failed in two respects. They did not ameliorate the internal divisions in the economies in their areas, because even in the north-east, the economies of Stockton and Middlesbrough are amazingly different from those of Morpeth and Hexham, and they are amazingly different from those of Bishop Auckland or the City of Durham. At the same time, the RDAs failed to tackle social, demographic and economic inequalities between the regions, and they did not facilitate the growth in private sector jobs and regeneration that we would have wanted in the north-west and the north-east, although that did happen in London, the south-east and the south-west.

[Robert Neill]

May I reinforce my hon. Friend’s point? I am sure that he is aware not only that the regional development agency system failed to address such regional inequalities, but that inequality between the regions actually grew rather than reduced under the Labour Government, despite the expense of such a top-heavy bureaucracy.

[Mr Jackson]

My hon. Friend makes a typically astute point. The Local Government Association did not have an axe to grind against the previous Government, but it produced several reports showing that the significant public investment in regional development agencies under that Labour Government did not deliver objective outputs. My hon. Friend and I have scrutinised regeneration legislation that has addressed those points.

There is an intellectual coherence in the Bill because if we are devolving power to the lowest level, which the hon. Member for Mid Dorset and North Poole talked about, and if we are to give local authorities a vested interest—and fiscal incentive—in driving regeneration and growth on the basis of local priorities, which my hon. Friend the Member for Rossendale and Darwen (Jake Berry) mentioned, local enterprise partnerships are the model to use. Those partnerships are driven by business and give local authorities of whatever political persuasion the opportunity to show leadership and vision.

I will be honest with hon. Members: there are some fantastic Labour councils, such as Lewisham and Wigan. I am positive about Wigan, which is a fantastic place to live, because my wife is from there. It is unfortunate that it has a Labour council, but to give it its due, it is doing a good job. The local enterprise partnerships have a complementary relationship with the new homes bonus, and there is therefore a fiscal incentive to drive forward a philosophy on the basis of local need. Money comes into the pot via the new homes bonus, and then local authorities may make a value judgment about whether the quality of life in their area is such that they wish to build hundreds or thousands of new homes, or to keep things as they are. Authorities know that they will not get that fiscal incentive for the delivery of core services. My local authority in Peterborough wants to build 25,000 homes between 2009 and 2026, so it will have a fiscal incentive to encourage the building of private sector and shared equity housing, as well as social and affordable housing.

14:16

The Bill rights a wrong that has existed among the political classes in local government for years. Our country does not devolve sufficient power locally, and our rate of raising money locally is probably the lowest in the western world. We have not engaged as we should have done over the years in things such as residential estate investment trusts and giving fiscal incentives for the building of private sector housing. We have not engaged with local authority bonds, unlike Canada and the United States. It is anathema to us that we should use a bond issue to fund the building of a bridge, a community centre or a new road, but that happens in every municipality in the United States. Boards of supervisors and mayors in towns, counties, cities and states throughout America think nothing of that, but for us it is like another world. It is good that we are now focusing on delivering infrastructure that is aligned with local people’s priorities.

I know that you will forgive me, Mr Deputy Speaker, for my little perambulation observing the vicissitudes in Lord Heseltine’s thoughts about regeneration. However, the Bill makes sense and gives weight to the Government’s real commitment to localism.

[Brandon Lewis]

I shall try to cover the general points raised in the excellent speeches that we have heard and then deal with the specific questions asked by the hon. Member for Warrington North (Helen Jones) and others.

The proposals on the retention of business rates represent a fundamental shift in the way in which local authorities are funded. They give councils a strong financial incentive to drive local economic growth. We will ensure that there is a stable starting point for the scheme so that no council is worse off as a result of its business rates base at its outset, and that will be achieved through a system of tariffs and top-ups that will be fixed in future years so that councils benefit from the growth of their business rates. Tariffs and top-ups will be uprated by inflation to ensure that a major part of authorities’ top-up income under the scheme is not eroded in real terms.

We have also proposed further protections to ensure that councils can meet local needs, including a safety net—I will directly deal with the specific question asked by the hon. Member for Warrington North later—that will be funded by a levy that recovers a share of any disproportionate gain from growth. The safety net will help to ensure that service provision does not suffer as a result of any volatility in a council’s business rates base. We announced that we intended to set the safety net threshold at a level between 7.5% and 10%, with the proportional levy ratio at 1:1, subject to consultation. That consultation took place over the summer; it has now ended, and we will consider the responses that we received before we take a final decision for this year’s settlement.

[Mr Iain Wright]

During yesterday’s excellent debate on business rates, I made the point that one business in my constituency—the nuclear power station—contributes 15% of all business rates collected in Hartlepool. The Minister says that the safety net will be between 7.5% and 10%, so how will the policy address my specific constituency concerns?

[Brandon Lewis]

I thank the hon. Gentleman for his question. I will come to that specific point, as the hon. Lady raised a similar one.

Where councils want to join forces to pool their business rates, sharing the rewards and risks with their neighbours and thinking together strategically about how they should invest the money—a topic on which we have spent some time this afternoon—they will be able to do so. I will come back to that in response to the points raised by my hon. Friend the Member for Bromley and Chislehurst (Robert Neill).

The proposals for business rates retention will give all local authorities unfettered access to tax increment financing. There will be no constraints. From April 2013 local authorities will be able to get on with implementation. We are also making £150 million available to fund a limited number of new development deals—projects in the core cities.

A number of Members commented at length on issues related to pooling. My hon. Friend the Member for Bromley and Chislehurst was the first to raise this in his remarks. I record my thanks to him for the fantastic work he did in bringing the Bill to the point at which I inherited it. He gave a great speech outlining some of the thoughts underlying the Bill and answering a great number of questions from Members to help everybody in the House have a fuller and better understanding of where the Bill is coming from and therefore what it aims to deliver.

Business rates retention changes the ground rules for local government and moves power back to where it should be. To pick up on a point made by my hon. Friend the Member for Peterborough (Mr Jackson), it effectively puts local money back with local people in local communities—local money for and by, to coin a phrase, local communities.

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

I note the Minister’s support for the concept of pooling. It is right that if local authorities choose to bring their capacities together, they should be allowed to do so. Does that not rather contrast, however, with the Government’s response to the Select Committee’s report on housing, in which we suggested that local authorities might be able to pool their capabilities to borrow under their housing revenue account—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Mr Betts, I do not know how long you have been in the Chamber. I presume you have not just come in. That was a very long intervention. I am sure the Minister will recognise the question that you have posed to him already. I take it that you had finished the question, as it was so long.

[Mr Betts]

Yes.

[Brandon Lewis]

I thank the Chairman of the Select Committee. I would like to thank him for his courtesy in inviting me to the Select Committee on Monday, and I enjoyed talking through some of the issues that local councils face. He tempts me to move outside the scope of the amendments, and I think the Deputy Speaker has made clear his views on their scope, but I will expand a little further on pooling without being tempted too far outside the terms of the amendments.

Pooling gives councils a new tool to support economic growth across their area and greater ability to invest in the things that will have a greater impact on economic growth. As has been noted, the more the money comes together, the bigger its multiplier effect—the leveraging—can be. My hon. Friend the Member for Bromley and Chislehurst made a comparison between this and the debate earlier this week on pension schemes, and how, by bringing that money together and building it up into bigger pots, it can have a much more beneficial impact on local areas. That is why it is important that we allow councils to support economic priorities that have a benefit across a wider area. We are allowing councils better to weather any downturns in business rates income by sharing fluctuations in those rates. I will come back to the issue of a particular business.

It is worth local authorities looking at and thinking through the effects of pooling, which will give them greater resilience and greater buying power and allow greater economic growth. I encourage local authorities to consider it, and they have until 9 November to submit proposals. Earlier this year we had more than 20 expressions of interest from authorities. I stress that pooling is wholly voluntary but in terms of resilience, buying power and the ability to grow, I encourage councils to look carefully at it.

We heard queries about whether pools may cross county boundaries and whether they must be linked geographically or in any other way. In the true spirit of localism, it is for councils themselves to determine the make-up of a pool. They will not be restricted to pooling within a county boundary, allowing rates retention to support the priorities of local enterprise partnerships where this is what councils want.

[Mr Stewart Jackson]

I take this opportunity to congratulate my hon. Friend on his appointment as a Minister, with his great experience as leader of Brentwood borough council. I agree with his point that local enterprise partnerships are based on authentic sub-regional and local economies. Does he see a time when it might be possible to try to—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sorry. We must have shorter interventions. I cannot say that to Members on one side of the House without saying it to those on the other. I am sure the Minister has grasped the question.

[Brandon Lewis]

My hon. Friend the Member for Peterborough mentioned in his speech—

[Mr Jackson]

Will my hon. Friend allow me to be more succinct?

[Brandon Lewis]

Of course.

[Mr Jackson]

Does my hon. Friend foresee the Government trying to encourage a more holistic approach, pulling together initiatives such as Growing Places, Get Britain Moving and the Portas review, using the funding he is speaking about?

[Brandon Lewis]

My hon. Friend makes an excellent point and I am pleased that he had the chance to make that succinct intervention. An important by-product of business rates pooling is the opportunity for local authorities to look across the piece at whether they can pool to give themselves greater resilience, to look at the other funds that they can bring in, including the new homes bonus, and to look at their local enterprise partnership, their Portas money and any city deals that they might have, and how they can pull these things together, so that those authorities can work together to supercharge the opportunity to be part of local economic growth and to drive it from their local perspective.

[Mr Iain Wright]

Could pooling of business rates apply sectorally as well—for example, the automotive industry? Could Sunderland city council, with Nissan in its patch, link with Coventry council, where Jaguar Land Rover is located, in order to push forward the UK automotive industry? Does the Minister anticipate that?

[Brandon Lewis]

The hon. Gentleman makes a very interesting suggestion. As I said, there is no county boundary restriction on local authorities working together. One of the more imaginative things that we are seeing in local government generally is that authorities are not delineated by their geographic boundaries. We have seen, for example, the excellent shared services and other work between South Holland and Breckland district council, which do not share a geographic boundary but have found a way of working together. Such arrangements are possible and councils should looking for such interesting and exciting opportunities to work together.

We have, however, said that there should be a clear rationale for the geographic coverage of a pool if councils are to work together. It is important that councils have the flexibility to do what is right for them. That has worked well in local enterprise partnerships, on which a number of speakers have commented this afternoon. One of the reasons that LEPs are gaining such support and will be such a long-term success and powerhouse is that they have not been artificially designed and drawn on a map by people in Whitehall. They have come about as a result of communities, business organisations and local authorities coming together to decide what works for them and their community.

Some interesting structures have developed. For example, in my part of the world, Great Yarmouth, the New Anglia partnership crosses the county boundary between Norfolk and Suffolk. It focuses much of its time on the energy industry across Lowestoft and Great Yarmouth. It goes further in that it does not pick just one piece of land as its enterprise zone. It has a number of different sites because that is what the local business people, communities and local authorities coming together thought would work best for them. That is showing success already.

14:30

Councils can choose whether they join a business rates pool, with all the benefits that that brings, during each reset period. Enterprise zones are different. In interventions and speeches, Members have asked about opportunities for pooling and whether that will lead, in effect, to mini-enterprise zones. It is worth noting that there is effectively the opportunity for local authorities to create—I think the Secretary of State has used the phrase—enterprise zone-lites by putting many of the opportunities that enterprise zones offer into local areas to drive growth, but enterprise zones differ in respect of pooling. Enterprise zones, as my hon. Friend the Member for Rossendale and Darwen (Jake Berry)—he is no longer in his place—rightly pointed out, offer a wider and longer-term series of benefits because they run over 25 years and receive additional funds from the Treasury. Councils, working with their local partners, will need to consider what is right for their local areas. If they can do that, together with pooling, as I said in my opening remarks, they will see some real benefits for supercharging their economic growth.

[Mr Stewart Jackson]

Will my hon. Friend have a word with our colleagues in the Treasury about the design of some fiscal policies that are based on regional boundaries, such as the national insurance holiday, which disadvantage those on the wrong side? For instance, Peterborough was at a disadvantage compared with, say, Corby or the south of Lincolnshire because it was in a different county and region. There was an obvious disincentive for businesses to consider Peterborough, based on that fiscal change.

[Brandon Lewis]

My hon. Friend makes a good point, and he makes it so well that I have no doubt that the Treasury will have heard it directly, so I will leave it there.

[Robert Neill]

I congratulate my hon. Friend on the admirable speech he is making and warmly congratulate him face to face on his new appointment. I am delighted he has succeeded me. I think that we share the same philosophy in these matters. He made an important point about pooling, for which I am grateful, and there are some other issues that my hon. Friend the Member for Meon Valley (George Hollingbery) raised. As I understand it, the key element in Lords amendment 1, which deals with my hon. Friend’s point, is that the Government have undertaken to fund the discretionary rate relief in relation to enterprise zones so that there is not the disincentive to have an enterprise zone that there might otherwise be. Will he indicate that that is the way the rate relief will be delivered so that we can be sure that it is worth while for a local authority to have an enterprise zone without prejudicing the benefits of rate retention?

[Brandon Lewis]

I thank my hon. Friend for his intervention and hope that you, Mr Deputy Speaker, will allow me 30-seconds’ leeway to thank him for his kind words. This is the first time I have been at the Dispatch Box during a debate in which he, who he is a good friend, has spoken, so I want to put on the record how fortunate I am to be following in the footsteps of someone who laid so clear a path, and one that I support and agree with. Equally, that offers a challenge, because I have quite an act to follow. As in all the matters we are discussing this afternoon, he is absolutely right that enterprise zones are structured in that way so that there is no such disincentive. It is important to bear in mind how the incentives work. Business rates retention offers local authorities a clear incentive to help drive growth, because they will benefit from all the growth they see. That is something we very much want to see so that local authorities are absolutely at the heart of driving economic growth.

I will turn now to some of the question hon. Members asked. The hon. Member for Warrington North asked what happens when a major business goes down mid year, a point the hon. Member for Hartlepool (Mr Wright) also touched on. The payments to major precepting authorities would be set on the basis of estimates of income made by the billing authority. Those payments will not change, so billing authorities might need to consider how they would fund any shortfall in the short term before the safety net calculations are made.

[Helen Jones]

Will the Minister explain how a billing authority would fund a shortfall of 20% in its business rate income?

[Brandon Lewis]

I must stress that that is the approach the Local Government Association wanted and has been pushing for. It is also linked to the operation of the safety net more generally if a business has a problem mid-year. The draft regulations we published last week envisage safety net calculations and payments being made after the end of the financial year, and safety net payments on account to be made where the authority thinks, on the basis of its estimates before the start of the year, that its rates income will be less than the threshold. The draft does not currently propose that authorities be able to apply during the year for a safety net payment on account, in line with the clear views of our local government finance working group. These regulations are out to consultation in draft, and we look forward to receiving comments and will obviously feed back.

The hon. Member for Warrington North also commented on the discrepancy, as she perceives it, between some of the Bill’s clauses and the situation with regard to the Audit Commission. I was somewhat flabbergasted, because I think that she might have been trying to argue for retaining the Audit Commission, but this is a transitional phase. It seems amazing to suggest delaying parts of the Bill or not having the clause that will allow it to move forward in dealing with that side of the Audit Commission, because the Bill is about driving growth of about £10 billion. To do something because of her views on the Audit Commission seems very short-sighted for our economy, so she will excuse us if we resist that.

I will turn to the comments made by my hon. Friend the Member for Mid Dorset and North Poole (Annette Brooke), who made a powerful and clear speech in which she talked about town and parish councils working together. On the technical side of her point, I point out that parish councils raise their own cash with their precept; they are funded not through the money raised by business rates, but directly through council tax. We feel that it is right that the district billing authorities receive funds from business rates as they are the key local drivers of growth. However, I want to stress that I feel clearly—this has been reflected in the comments made by several hon. Members this afternoon—that they should work with all bodies that can support growth, including parish councils, and will be involved in some areas in the potential for growth.

We have worked with the Local Government Association, the National Association of Local Councils, with which I had a good meeting earlier this week, and other organisations and parties in the other place throughout the passage of the Bill, and I would like to thank all parties that have been involved in feeding into it. It is also important to note that there is a range of measures for driving economic growth at community level, which provides parish councils with a particular opportunity to get involved. There are community budgets, neighbourhood planning, the right to build, the right to challenge, and the community share scheme, all of which will play a huge part.

My hon. Friend the Member for Mid Dorset and North Poole—I know that parish councils are close to her heart—will have noted that only today we announced formally the measures to make it easier to establish new parish, town and community councils, which I think is an important step forward, working with local communities, to offer the opportunity for more people to get involved and to be part of their local community. Their local council at parish, district, county, unitary and metropolitan level will be part of driving economic growth, which is at the heart of the move forward with the business rates retention scheme.

My hon. Friend the Member for Peterborough (Mr Jackson) spoke clearly about the power and ability of LEPs and touched on Lord Heseltine’s report, which highlights exactly where LEPs and local enterprise zones have a huge part to play. As I have said, the business rates retention scheme makes a fundamental shift in the way local authorities are funded. It will give councils a strong financial incentive to be part of driving local economic growth.

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

In the spirit of localism, will the Minister now commit to implementing the recommendations of the Morgan report, commissioned by the Welsh Government, which calls for the full devolution of responsibility for business taxes to the Welsh Government so that they, too, can increase their taxation base?

[Brandon Lewis]

I thank the hon. Gentleman for his intervention, but he will excuse me if I stay within the remit of the Bill and do not delve into changes to financial and tax arrangements that the Treasury, the Welsh Assembly, the Local Government Association and many Members across the House will undoubtedly have a view on. I welcome his decision to choose this moment to start that debate.

What I think is important in business rates retention and the way it moves the goalposts and the way local councils work is that it is really starting to shift back to what local authorities always want—I know this from my time as a council leader—which is to have their hands on the purse strings and the ability to have a direct impact on the amount of money they can bring in. They want more direct control over the way they work, their decisions, the way they develop the local economy and community and the way they involve the community. Local authorities will see a financial benefit and will be able to use that income to provide even more benefits for their communities and residents, and perhaps they will also use it to keep council tax down and, in so doing, further develop the work the Government are rightly doing through the council tax freezes we have brought in over the past few years. This is a very important step forward, and we are pleased that local government seems to be enthused by it. We hope that it motivates them towards growth.

We are looking at the consultation results that we have received, and we will return to them later this year. We are setting out a whole new framework in which local government can work and where it becomes part of driving its local economy. That is not only a key part of how it shapes its community; it means that it can benefit from the advantages and growth that it sees in that community. The community will see that the local authority is benefiting in that way, and we will get a positive circle that can only be good for our communities, for our residents, and for economic growth in our country.

Lords amendment 1 agreed to, with Commons financial privileges waived.

Lords amendment 2 agreed to, with Commons financial privileges waived.

Before Clause 9

Council tax reduction schemes: review

[Helen Jones (Warrington North) (Lab)]

I beg to move amendment (a) to Lords amendment 3.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

With this it will be convenient to discuss Lords amendment 16, amendment (a) thereto, and Lords amendments 18 and 83 to 90.

[Helen Jones]

Amendment 3 was moved in the other place by my noble Friend Baroness Hollis of Heigham. It calls for one very simple thing: a review of how the new system for council tax support is working three years after the Bill as enacted comes into effect. We tabled amendment (a) to make clear the original intention of the amendment in applying only to England because this is a devolved matter in Wales. When my noble Friend introduced the amendment in the Lords, she made a clear and persuasive case that was supported by a good majority.

The Government opposed the measure at the time, but I understand that they may now decide to accept it; the Minister will tell us. Opposition Members may wonder why that is, but in fact, we know why. The Government know that their policy on council tax is a shambles. It is so bad that they cannot even convince their own Members to support it. Their councils in North Yorkshire, including the Foreign Secretary’s council, have campaigned against its unfairness. The departmental Secretary of State’s own county council says that it has major implications for some of the most vulnerable members of the community. West Oxfordshire, the Prime Minister’s council, has refused to implement any scheme at all and will rely on the default scheme. Westminster, the Tories’ flagship local authority, which we hear so much about, says that it will not implement it because residents are already adversely affected by changes to local housing allowance and other benefit cuts. This is what Westminster said in one of the documents that it submitted:

“The previous Community Charge (Poll Tax) experience shows that there are inherent difficulties in asking benefit claimants to pay small sums of Council Tax. This can make the debt difficult, and in some cases uneconomical, to collect.”

It also says:

“A decision to pass on the funding cut to claimants would be a reputational risk for the Council, as residents will perceive the cut as a local authority decision (rather than a central government given benefit cut).”

[Andrew Gwynne]

In their consultations, Tameside suggested that it would need to make £3.575 million of savings, while Stockport said that it would need £2.4 million of savings in relation to any new council tax support scheme. If Stockport or Tameside applied for and were eligible for the DCLG’s support mechanism, Tameside would get only £460,379 and Stockport £385,550. This is so unfair.

14:44

[Helen Jones]

Indeed; my hon. Friend is exactly right. I will want to return to those issues later.

What is happening, of course, is that councils that are better off with fewer claimants can afford to subsidise the scheme, while others cannot. I have quoted Westminster, the flagship Tory local authority, and that is before we even move on to what the Government’s noble Friends in the Lords say. Last week Lord Jenkin was asked by the BBC whether there were echoes of the poll tax in this proposal. He said, “Yes, oh yes”—and after all, he should know, as he was the architect of the poll tax. When he warns the Government of the risk of backlash, they should listen, because he knows what happened last time. The late Lord Newton of Braintree—not, by anyone’s standards, a woolly liberal—is recorded as having said in the Lords last year:

“Is it sane?...I can hardly believe my ears”.—[Official Report, House of Lords, 6 October 2011; Vol. 730, c. GC377.]

These are the Government’s allies, let us remember, and if they are aware of the problems it is no wonder the Government are now thinking about a review.

The Liberal Democrats—those who are here—should listen to Lord Greaves, the architect of many of their by-election victories, who told the Lancashire Telegraph that the scheme was “disgraceful” and told the Financial Times that it was

“the poll tax all over again.”

How far have the Lib Dems fallen that the party of Lloyd George is now voting for Pickles’ poll tax?

No wonder the Government are trying to find a way out of the mess they have created. No wonder they have decided not only that a review might be a good idea but to bring in some transitional relief as well.

[Annette Brooke]

Can the hon. Lady clarify the position of Labour Front Benchers? Do they object to the principle of localising council tax benefit—the principle, and not necessarily the situation we are in—or would they prefer that the system were returned to the Department for Work and Pensions and thus centralised rather than localised?

[Helen Jones]

Labour Front Benchers believe in a fair deal for vulnerable people wherever in the country they happen to live, and we do not believe that a disabled person in Wokingham should be treated differently from a disabled person in Wigan. Our principle is that the help that someone gets should be dependent on their situation, not on where they happen to live. That is a key part of our policy. Let me say this to the hon. Lady: this is a policy designed to hit the poorest people hardest, especially the poorest people who happen to live in the poorest local authorities, which have already taken the biggest cuts in spending power, as we have seen during the passage of the Bill. Let us remember the figures. Liverpool will have lost £235 per person in spending power. In Hartlepool, the figure is £183. In Wokingham—I could not resist mentioning it just once more in the context of this Bill—it is a grand total of £1.

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

I put it to my hon. Friend that we may well have disagreement between individual Members, and possibly even parties, about whether it is a localist measure to devolve council tax benefit to local authorities or whether it is sensible to have a national benefit, but no one who is sensible, looking at this, can possibly agree that it is proper and right to make a 10% arbitrary cut in the amount of money available for such people at the time that the system is being decentralised. That is what is utterly objectionable and what the hon. Member for Mid Dorset and North Poole (Annette Brooke) should be apologising for.

[Helen Jones]

My right hon. Friend is right. The reduction in the money available for council tax benefit is not the only thing that we are dealing with. The very same councils will be hit by the Government scheme for business rate localisation before being hit again by the reduction in the amount available for council tax. The Government call it a 10% cut, but in fact it is much more than that, because their calculations are based on what they think the cost of council tax benefit payments will be next year. It is no surprise to hon. Members who have followed the Bill’s passage through Parliament to learn that the Government believe that the cost will go down. In fact, the number of claims is rising as more people face reduced hours of work or unemployment. The Government have produced a wonderful document, which could have been written by Pollyanna, stating that claims will go down because the number of people on jobseeker’s allowance will go down and pensioner take-up will decline and so on. That is nonsense.

[Robert Neill]

The hon. Lady is very good at rubbishing proposals for reform, but will she accept her and her party’s responsibility for getting into a situation whereby spending on council tax benefit doubled on their watch? Given that they are so good at criticising everybody else, what would they do to reform the situation and actually help councils get people back into work?

[Helen Jones]

I say to the hon. Gentleman that the one thing we would not do is target the poorest and most vulnerable for cuts at the same time as giving a tax cut to millionaires. The Government’s priorities are entirely wrong.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

Surely one thing we could do is agree with Birmingham council’s proposal to defer the plan for at least one year, so that the transitional arrangements can be properly worked out and places such as Birmingham will not end up losing about £10 million, which no fair-minded person would believe was the deliberate intention.

[Helen Jones]

My hon. Friend makes a very good point. During the passage of the Bill we have repeatedly tabled amendments asking for the measure to be deferred, but the Government have always turned them down. His figures are right, too: Birmingham will lose more than £10 million, Manchester almost £5 million, Liverpool £6.1 million, Haringey £3.8 million and Cherwell £747,000. The poorest authorities are losing more money overall, have more claimants and are therefore less likely to be able to make up the shortfall.

As I have said, a person’s entitlement will no longer depend on their position—it will depend on where they live. An unemployed person in Peterborough will be treated differently from an unemployed person in Portsmouth, and a disabled person in Wokingham will be treated differently from a disabled person in Wigan. That is why this is a wrong-headed policy that will need review and, when we get to that review, the policy’s ill-effects will be all too apparent.

[Andrew Gwynne]

My hon. Friend is being incredibly generous in giving way. I have mentioned the £3.575 million that the Tameside council scheme will lose. That comes on top of the council’s delivery of £43 million of savings in 2010-11 and 2011-12 and £22 million of savings this year, and it estimates a further £70.4 million of savings over the next three years. That is the real unfairness of this—it is hitting the same communities time and again.

[Helen Jones]

My hon. Friend makes his point eloquently. The Government have always failed to acknowledge not only that this policy affects the same economies again and again, but that it has a devastating effect on local attempts to grow their economy. The very people who are losing money are those who went out and spent money in local shops and businesses, because, by the very nature of their low incomes, they have to spend everything they get. Councils are now faced with the most awful decisions and the people being hit hardest are people with disabilities, their carers and, most of all, the working poor—the people who this Government try to pretend do not exist.

We all remember the former Housing Minister, the right hon. Member for Welwyn Hatfield (Grant Shapps), telling a Select Committee that if someone was working they would not get council tax benefit, because they would not need it. He did not believe that people who were in work received council tax benefit. He did not believe in the existence of those 743,000 people who are on non-passported council tax benefit and are in work. I admit that I sometimes find it difficult to believe in the existence of the right hon. Gentleman, because he has so many different identities—I often wonder whether he is an internet marketing guru masquerading as a member of the Government—but those working people on low incomes are certainly there and cannot be ignored.

Among the options that councils are consulting on are: paying no award less than £5 a week; restricting awards to the cost for a band D and, in some cases, even a band A property; restricting awards between 80% and 90% of value; increasing the taper; and abolishing the second adult rebate. The list goes on and it gets worse. One council—Tendring—is proposing residency criteria, so that people will only become eligible for support if they have lived in the district for five years. If someone moves there for work—after all, the Government want people to move for work—and happens to lose their job, hard luck: they will not get a penny. Those of us who know our history will recognise that proposal immediately for what it is. It is a reinstitution of the Poor Law—if someone needs relief, they should move back to their own parish, or in this case their own borough. On that basis, I wonder whether the Government live in the 21st or the 18th century.

It is no wonder that the Government have introduced a £100 million transitional relief fund. There is no better proof of the shambles that they are in than the fact that they have made that announcement after local authorities have begun consultations on their schemes.

[Mr Betts]

My hon. Friend is making a very important point. This should not come as a surprise to the Government. The Communities and Local Government Committee inquiry reported in September 2011, and in the report we drew attention to the problems at that time with the time scale, the difficulties with implementation and the unintended consequences. We asked the Government to consider a delay in order to allow more time for everything to happen. Their only response has been to complicate matters even further with a £100 million offer right at the last minute and in the middle of a consultation process. Could there be a more cack-handed way of running a policy?

[Helen Jones]

I am tempted to say to my hon. Friend, who is the distinguished Chair of the Committee, that I cannot think of a more cack-handed policy, but then again this Government constantly surprise us by coming up with something more cack-handed than we had ever thought of. He is right about the problems with the transitional relief fund. Councils have begun consultation on their schemes, but now the Government want them redesigned to qualify for a transitional grant. Their conditions include the requirement that those currently receiving 100% relief should pay no more than 8.5% of tax, that the taper does not increase above 25%, and that there is no sharp decline in support for people entering work. Having embarked on a system that they insisted should rest on local decision making, they are now dictating how the scheme should be designed.

Even so, that does not solve the problems. There is no legal clarity on whether councils will now have to consult again on these new schemes. Could the Minister give councils some advice about that? There is no indication of how, if they have to do another consultation, its cost will be met, and there is still a £400 million funding gap, even according to the Government’s own figures.

[Andrew Gwynne]

To return to Tameside council, one of the two authorities in my constituency, it tells me that the recent announcement on transitional funding will cause it added difficulties and that

“the indicative grant would be insufficient to bridge the funding gap, and the money is for one year only.”

[Helen Jones]

My hon. Friend is entirely right. It is not sufficient to bridge the funding gap. It seems from the indicative amounts that my own local authority will get back £320,000, including money for the police and fire authority precepts, but lose £1.3 million. Birmingham will get back £2.4 million out of £10 million, Manchester £1.1 million out £5 million, Liverpool nearly £1.5 million out of £6.1 million and Haringey £888,000 out of £3.8 million.

15:00

Those councils are caught in a dilemma once again. If they adopt the Secretary of State’s scheme, there will still be a huge funding gap, and how will it be met? It would be difficult under the Government’s scheme to meet it through cuts to council tax benefits for other claimants of working age, pensioners are protected and there is a limit on the council tax rises that local authorities can introduce, so the only alternative is cuts in services. Yet local authorities that are already managing to fund the shortfall will now get a windfall. Westminster will get £318,000 and West Oxfordshire £116,000. That is not transitional relief for local councils, it is emergency relief for Conservative councillors facing the electorate next May.

[Mike Freer (Finchley and Golders Green) (Con)]

May I help the shadow Minister? The way that Tameside could fund the shortfall is perhaps to dip into the £45 million increase in its reserves for the financial year 2011-12.

[Helen Jones]

The hon. Gentleman, as a former leader of a local authority, should know that in the current circumstances, local authority treasurers are advising councils to build up reserves because of the uncertainty of the system that the Government are introducing.

[Brandon Lewis]

Will the hon. Lady share with the House her view on whether borough treasurers should run their local communities and councils, or whether the leaders and politicians should make those decisions?

[Helen Jones]

Of course the politicians should make the decisions, but in cases such as this they make them based on proper professional advice. If they did not, the Minister would be the first to criticise them.

[Mr Raynsford]

My hon. Friend will know that under the Government’s proposals, the entire downside risk—the risk of further expenditure as the result of an increase in the number of claimants or further demand for council tax benefit—all has to be borne by the local authority, so it is hardly surprising if treasurers are advising their councils that they need to build up reserves against eventualities imposed on them by Government decisions.

[Helen Jones]

My right hon. Friend is entirely right. I suspect that if a council found itself in financial difficulty and did not have reserves, Ministers would be the first to stand up and accuse it of failing to plan prudently for that eventuality.

The scheme will last only one year. Will schemes have to be redesigned again after that? If so, people will have had to cope with three different council tax benefit systems in three years. Currently, they might pay nothing, but next year they might pay 8.5%. After that, who knows—15%, 20%, 30%? There is huge uncertainty for the poorest people in the community.

As my right hon. Friend says, local councils will also be left with huge financial uncertainty. The Government believe that the number of pensioners claiming council tax benefit will drop, but everyone who deals with benefits believes that it will rise, because in future the sum in question will be shown as a reduction in someone’s council tax bill rather than a separate benefit. If unemployment goes up in an area, if a major employer closes down or if there are increases in part-time working, as there have been recently, local authorities will bear all the financial risk.

[Andrew Gwynne]

Does my hon. Friend share my confusion about the Government’s thinking and the lack of joined-up decision making between Departments? Universal credit is being introduced, which was supposed to simplify the benefits system, yet here we have the Government making the council tax benefit system more complicated and setting it aside from the universal credit proposals.

[Helen Jones]

My hon. Friend is quite right. One problem with the system that the Government are introducing is that people will face two tests for benefits, possibly with two different tapers. For someone in the universal credit pilot, it will have to be decided whether the council tax benefit taper is applied before or after the universal credit taper. That clearly has not been thought through.

[Mr Betts]

That is not the only complication, of course. An individual whose income has changed and who has difficulties will now face the problem of going to the local council offices to sort out their council tax benefit, then going to the Department for Work and Pensions—either at the office if they can get there, or online or over the telephone—to sort out their housing benefit changes. Will that not confuse things enormously for people who are already struggling with financial difficulties?

[Helen Jones]

Absolutely right, and because of that there is real doubt among local authorities about whether they can collect payments from people who have never had to pay anything before and simply will not have the money to pay. Treasurers are predicting collection rates of only about 40% or 50%, and local authorities predict huge deficits because of the likelihood that they will not collect most of the money. What, then, are local authorities to do? Will they take people to court when they know that they do not have the money to pay? That would carry a huge cost to recover a small sum of money.

[Stephen Timms (East Ham) (Lab)]

My hon. Friend is helpfully shedding a lot of light on an extraordinary mess. It has been widely reported that it is the product of a spat, a huge row in Cabinet between the Secretary of State for Communities and Local Government, who wanted to promote localism and show that something of a localist character was happening, and the Secretary of State for Work and Pensions, who wanted sensible reform of the welfare system. Unfortunately, the Secretary of State for Communities and Local Government won. Is that my hon. Friend’s understanding of how we have got into this completely indefensible mess?

[Helen Jones]

My right hon. Friend may well be right. The Government seem to be able to get into a mess quite easily. The problem is that the people on the receiving end of their decisions are the poorest and most vulnerable in our community.

[George Hollingbery]

There is no doubt that the hon. Lady makes a powerful argument, and as a former deputy leader of a council I appreciate the difficulty that councils will have. It is also an unfortunate truth that those who need benefits will suffer most when they are withdrawn. However, I do not quite follow her argument about what she would like done about that. Does she wish the whole scheme to be repealed, so that we end up with the status quo ante, does she wish to have further delays in the scheme, or does she wish to implement it in part? I understand her arguments against it, but I do not understand what she thinks would replace it.

[Helen Jones]

We made it clear that we did not want the scheme in the first place, and we voted against it. We made it clear that if the Government were introducing universal credit, they should make it universal. The clue is in the name—if there is to be universal credit, it has to include everything.

[George Hollingbery]

There is a question that clearly follows, which I know is asked many times of the Opposition. Given that half a billion pounds of annual savings are attached to the change, can the hon. Lady please tell me where the extra half a billion pounds of savings would come from?

[Helen Jones]

First, we would not give millionaires a tax cut. We would introduce the measures that the shadow Chancellor has set out, which would raise money to invest in infrastructure. The hon. Gentleman also has to bear in mind the contradiction in the Government’s policy. They want councils to grow their local economies, but at the same time they are taking a massive amount of money out of the most deprived local economies—money that would otherwise be spent in shops and businesses.

[Robert Neill]

Will the hon. Lady give way?

[Helen Jones]

May I make a little progress? I have given way quite a lot.

We need to think clearly about who the people affected are and what the Government think of them.

I have been reading the Minister’s blog; it is very entertaining and I recommend it to my hon. Friends as it is a treasure trove of Tory doublethink. The Minister begins by repeating the usual mantra that if someone is not in work, it is their own fault. He states that too many people

“expect to be able to rely on benefits and those who are hard at work are starting to get the hump.”

Let me say to him that 1,540 people in Great Yarmouth might start to get the hump with him because they are employed and in receipt of council tax benefit.

There are others. Will the Minister tell his disabled constituents, the vast majority of whom would like nothing better than to have a job, why they face an increase in their council tax? The Government trumpet their council tax freeze while imposing council tax rises on the poorest people in the country. When the Minister next visits a group of carers in his constituency—people who do daily the things that most of us could not imagine doing, and who save the country millions of pounds every year—will he say why their reward is an increase in council tax?

Elsewhere on his blog, the Minister writes that

“the sign of a compassionate country and a modern democracy is how it caters for those who are most vulnerable.”

That is what I mean by doublethink, which I think Orwell defined as the ability to hold two contradictory ideas at the same time, while believing in both of them.

[Lilian Greenwood (Nottingham South) (Lab)]

Does my hon. Friend believe that the only localism in which the Government are interested is localising responsibility for cuts? The Government like to talk the talk on protecting the vulnerable while making it necessary for councils to cut the assistance that such people desperately need.

[Helen Jones]

My hon. Friend is entirely right. We have said throughout discussions on this Bill that it is about centralising power and devolving the blame—after all, Tory-run Westminster council recognises that. That is the test the Minister set for his Government—the sign of a compassionate society in a modern democracy—but I am afraid the Government have failed that, and failed some of the poorest, most vulnerable people in our society. Benefits for people who are disabled will no longer depend on their disability, but on where they happen to live. We are talking about people who are sacrificing their careers to look after members of their family who are ill or disabled, and those who go out to work every week for poverty wages, because they believe that working—when they can work—is the right thing to do.

The Government seek to stigmatise those people as scroungers and they should hang their head in shame. Those people are doing the right thing, contributing to society and doing their best on a low income. The amounts they are being asked to pay may not seem much to people on the Government Benches, but to an individual or family living on the edge, they are unobtainable. Every penny they have is accounted for and there is nothing left for emergencies. To try and find even a couple of pounds at the end of the week is out of the question; it is just not there. That is why council treasurers are expecting to collect only 40p in every £1, and why we risk a repeat of the poll tax fiasco, when thousands of people left the electoral register to try and avoid the tax, and 5,000 people went to prison.

[Andrew Gwynne]

My hon. Friend makes a powerful point about how the council tax benefit scheme is likely to hit some of the poorest and most vulnerable people in society, in particular the working poor. They are likely to be the same people who are also caught up with changes to housing benefit, and potentially with under-occupancy rules, and who have seen their tax credits reduced.

[Helen Jones]

My hon. Friend makes the point I was about to come to. We are talking about many of the same people who have lost tax credits because they cannot get extra hours at work, and many will also be losing housing benefit, as well as having to find money for extra council tax payments. I know the Government do not want to hear this, but we are going to say it again and again because it is true: the Government are introducing these measures on the same day as they fund a tax cut for millionaires. Nothing could demonstrate better how out of touch this Government are with the lives of most people. I wonder whether the Minister is proud of the system he is introducing.

15:15

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

Many hon. Members are already facing in their constituency surgeries people who are on the edge. Those people have fallen behind with small amounts each week, and are then faced with arrears and liability orders. Then the bailiffs arrive, and there is an additional charge of £120 to the local authority, or up to £200 for the bailiffs’ costs. There is physical intimidation by bailiffs. This supposed reform will increase that on a scale we have not seen before.

[Helen Jones]

My hon. Friend is entirely right. Many of us will have seen in our surgeries what is beginning to happen to some of the poorest people in our communities. I have seen people crying in mine, either because of what they face now, or because they know what is coming in April but do not know how they will cope. Many of those people are working—they are going out to work.

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

All Labour Members—and, I imagine, a few Government Members if they think about it—recognise the picture painted by my hon. Friend. Does it not mean that a number of the vulnerable people who will suffer as a result of these measures will need extra support from the local authority, or from the voluntary and third sectors, to get the advice they need? That advice will not be there, however, partly because the council is having to pay the administrative costs of the system that has caused the problems in the first place.

[Helen Jones]

My hon. Friend is entirely right. I already find in my constituency that the organisations to which I used to refer people for help—as, I am sure, did many of my hon. Friends—are so overburdened, or in some cases have closed down, that help is simply not there. This is a very short-term policy that is causing financial instability for local councils and is an attack on the living standards of the most vulnerable people. The least the Government can do is hold a review in three years’ time.

It may be that the Government still believe that the system will work—although that is increasingly looking unlikely—but I think they are beginning to get cold feet. They know what these reforms will do in their constituencies and local authorities, and that they will be unworkable. By the time we get to the review, it is likely that the Ministers who introduced these measures will have moved on. The poorest and most vulnerable people, however, will still be paying the price. I hope that the Minister will at least accept a review, because by the time it takes place, it will be obvious what a miserable, vindictive and failed scheme this is.

[Robert Neill]

That was a vintage performance from the hon. Lady, full of high-blown rhetoric, plenty of sneering, sarcasm and knocking copy, and devoid of a single element of constructive analysis. It was devoid of any sense of constructive alternative, and recognition of the reality of the economic mess for which her party was responsible. It was devoid of any sense of shame. The greatest shame in the House lies on the Labour party. The greatest threat to the living standards of the most vulnerable—

[Helen Jones]

Will the hon. Gentleman give way?

[Robert Neill]

I will give way to the hon. Lady as often as she gave way to me—once.

[Helen Jones]

The hon. Gentleman is getting very worked up again, but may I remind him that, when his Government took office, the economy was growing and unemployment was falling? If he calls that a failure, what does he call the longest double-dip recession since the war?

[Robert Neill]

I call the greatest deficit in our peacetime history a failure. The benefits system that Labour created was so confusing and complex—it has some 32 different benefits in it—that it is virtually impossible for anyone to navigate it. I call that a failure. I call the fact that spending on council tax benefit doubled over the 13 years of the Labour Government a failure, because they did not achieve what should have been the objective of aiding people back into work. Some of my constituents have not known the opportunity of work for three generations. I call that a failure. The suggestion that the Labour party did anything other than fail is a bogus one. No amount of rhetoric and high-flown words can hide that reality.

We have not heard from Labour Members what they would do about the problem. They have made not a single constructive suggestion.

[Mr Raynsford]

Will the hon. Gentleman give way?

[Robert Neill]

If the right hon. Gentleman will be patient, I will give way to him in due course.

What would Labour Members do to make the saving, which is a necessary contribution to the reduction of the deficit they created? We have not heard anything about that. What would they do to reform the system to increase the incentives to get people who are unemployed into work? What would they do to ensure that, when people move into work, the loss of benefit is not too great a disincentive? Our transitional scheme seeks to deal with that, but what would they do? We have heard not a word on that.

[Mr Raynsford]

I am grateful to the hon. Gentleman for giving way. I listened to him for almost an hour earlier in the debate, so I hope he will not ask me again to be patient—I have been very patient already.

I put it to the hon. Gentleman that he is complaining not about rhetoric—we have heard quite a lot of his rhetoric—but about the experience of Members of Parliament who know from their constituencies that very large numbers of people will be badly hit by the measures, and will suffer hardship, deprivation and poverty as a result of them. He should be ashamed of the remarks he has made.

[Robert Neill]

The right hon. Gentleman is always touchy when his Government’s record is called into question, but he must learn to live with that, because his record is questionable. The simple truth is that the Labour Government’s doubling of spending on council tax benefit is not a success; it is a mark of failure. I have heard not one word on what Labour Members would do to redress the situation.

I am relaxed about whether there is a review. The provisions of the Bill require local authorities, at local level, to keep their schemes under review. I am confident that a national review would demonstrate that the measure is necessary. Not a word has been said by Labour Members about how they would make good the funding gap that would be left if nothing were done. There is nothing from them about that. It is like the old prayer that is adopted—“Lord make me virtuous, but not yet.” They say they want to reduce the deficit, but they will not tell us when or how they will do so. Failing to reduce the deficit damages the underlying economy, real and sustainable growth, and the prospect of real and sustainable jobs for the very people about whom they claim to be concerned. Locking people into a massively complicated benefits system, which they created, is not helping—[Laughter.] Labour Members’ laughter demonstrates the air of unreality that hovers over them. They will not accept their responsibility. They behave like ostriches. To paraphrase the late George Carman QC, they prefer to put their heads in the sand, thereby revealing their thinking parts.

[George Hollingbery]

As I have said, it is inevitable that those who are on benefits suffer when benefits are withdrawn, but there is nothing compassionate about the long-term failure of the previous Government to address the number of people on benefits and the enormous increase in the bill for those benefits. The inevitable consequence was that one day, when spending had to contract, as it now most definitely does, that group of people would suffer. What is compassionate about that?

[Robert Neill]

My hon. Friend is absolutely right. There is nothing compassionate about that. The attitude of Labour Members is blinkered—to put it as charitably as I can. They think the only way to deal with people compassionately is by continuing with a rigid and failed system.

[Andrew Gwynne]

For a split millisecond, the hon. Gentleman had me sold on the idea that he was convinced about a simplified benefits system. If he is convinced, why does he believe council tax benefit should not be part of the universal credit system? The proposals will result in a different council tax benefit system for every local authority area in the country.

[Robert Neill]

The hon. Gentleman, whom I respect in these matters, makes an interesting point. I have two points to make in response. First, we consulted prior to the design of the system, and one question that came up is whether we should include council tax benefit in the universal credit. The cross-party local authority associations did not want that, which we reflected in the Bill. That was their view at the time and I still believe they were right. We adopted a localist stance, and we need take no lessons on that.

Secondly, the hon. Gentleman says there will be different approaches in different areas, but I should gently tell him that he betrays the error of the Labour party’s thinking. Labour Members take a monolithic approach, but local economic circumstances, the demands on people who are not in work, and the demand that they place on council budgets, vary from place to place. The whole point of localising the scheme is to recognise that local authorities are generally better placed than a monolithic and centrally administered scheme to recognise the particular influences on the jobs market and routes back into work in different places.

[Mr Christopher Chope (Christchurch) (Con)]

I congratulate my hon. Friend on the work he put into the Bill, which is a worthwhile contribution to localism. Does he agree that one great virtue of localism is that it gives elected local authorities the opportunity to inculcate their values in the local community? Tendring council might have values it wants to promote in the context of the legislation, but socialist local authorities might want to implement more socialism locally.

[Robert Neill]

My hon. Friend is absolutely right. Labour Members’ approach is bizarre. They claim to be localist but object when anything is localised. They claim to recognise the need to reduce the deficit—I am never quite sure about that—but never actually say how or when they would do it. Instead, they just give a blanket criticism of anything that seeks to move things forward.

[Brandon Lewis]

The hon. Member for Warrington North (Helen Jones) talked about West Oxfordshire and Westminster councils not having schemes as if that was a bad thing. Does my hon. Friend agree that, actually, the decision to protect local residents by not changing the schemes is an example of the very point we are making—it is about local choice?

[Hon. Members]

When you’ve got the money!

[Robert Neill]

The words of Little Sir Echo from the Opposition Benches!

My hon. Friend the Minister is absolutely right. The decision to use the default scheme is a local choice. The ability to design schemes in different ways is, and should be, a local choice. It is strange that there should be any objection to that. The Government have provided help, of course, and not only through the transitional scheme, which I regard not as a mark of weakness but as a mature and sensible reflection on how to proceed in a constructive way. [Interruption.] Again, that sense of unreality wafts across from the Opposition Benches. They prefer to exist in this land of denial where nothing is wrong with the current system, when it is manifestly failing.

[Mr Betts]

Given that the hon. Gentleman was previously the Minister in charge of the Bill, will he explain why, if it was a mature and sensible reflection, he did not have it a year ago? How can it possibly strike him as mature and sensible halfway through the period when local authorities are consulting on the policies they are trying to develop?

15:30

[Robert Neill]

We did some very sensible and mature things a year ago: we paid out £30 million upfront to assist with the design of the scheme; we gave early notice of our statement of intent; we enabled local authorities to run their consultations early while the secondary legislation was going through; and we listened to suggestions for further refinements, such as ensuring that the taper works smoothly so that it eases people back into work as their income rises. The Government should be congratulated on taking all that on board, not criticised, but that is not going to happen, of course, such is the Opposition’s unreal mindset. They seem to have locked themselves into a closed way of thinking.

What is the best way of getting people back into the labour market? How do we deal with the fraud that, I regret to say, is an issue with some benefits? The vast majority of benefit claimants act honestly and properly, but significant sums are, I am sorry to say, lost to fraud. That is far better dealt with locally, because local council officials and members have better local knowledge and are better linked to the various enforcement agencies. Significant savings for the honest and genuine claimant can be made through the better running of the scheme and by dealing with issues such as fraud, but those things are better dealt with locally.

[George Hollingbery]

In considering the proposal from the other place for a review over the next two or three years, does my hon. Friend agree that there is scope for the administration of grouped or pooled schemes across a local area? Under such a scheme, specialist advice, such as fraud advice, might be more economically obtained.

[Robert Neill]

That is a sensible and useful point. As in our earlier discussion about pooling business rates, there is sense in pooling some of the critical mass and resource available between local authorities. Again, if we are trying to get people back into the job markets, which might span more than one local authority area, it is sensible for there to be a means for local authorities to work together. That is a constructive suggestion. Would that we had heard any such constructive suggestion from the Opposition.

[John McDonnell]

Will the hon. Gentleman give way?

[Robert Neill]

I will give way to the hon. Gentleman, who is an old sparring partner from London days.

[John McDonnell]

The hon. Gentleman might remember from those days that I was involved, as an officer, in setting up the local fraud units, which were successful. We learned then that chasing small amounts of money, which these will be, was not cost-effective. What happens is that others decide, “If I’m not going to be chased, I won’t pay.” The problem with this proposal is that it will increase fraud, not reduce it.

[Robert Neill]

The point I take from the hon. Gentleman, whose experience I respect, is that, yes, it is not sensible to chase very small sums of money, but that is why the transitional scheme, for example, works to incentivise councils not to do precisely that. We have sensibly reflected on that.

It is important that we get to grips with this intractable issue. Amendment (a) sounds innocuous, and if my hon. Friend the Minister advises the House to accept it, I would have no difficulty in doing so, but the Labour party has not tabled it out of an interest in carrying out a significant and worthwhile review. It is simply a device for the Labour party to get off the hook for not having any constructive alternative to put forward.

[Mr Raynsford]

I have heard a number of speeches by the hon. Member for Bromley and Chislehurst (Robert Neill), but that was probably the worst. There was a total failure to acknowledge any problem with the proposals we are debating this afternoon and an attempt to deflect blame, rather than recognising that he has created something that will haunt him, his colleagues and all Members of Parliament, who from next April are likely to see large numbers of aggrieved constituents coming to ask why they suddenly have to pay sums of money that they do not have the means to pay. Then—this is an interesting point about the hon. Gentleman’s suggestion about fraud—when those constituents see that some councils will not pursue relatively small arrears, just because it is uneconomical to do so, they will probably think, “Well, there’s probably no need for me to pay.” If ever something were likely to undermine the culture of payment and responsibility, it is this kind of scheme, in just the same way that the poll tax undermined the culture of paying because it was seen as unfair, because it was arbitrary and because the arrears that built up took an enormous amount of time to recover.

All this is unnecessary. We can have a debate about whether council tax benefit should be localised. I have been happy to participate in that debate, and there are arguments both ways. There is an argument that council tax benefit should be part of a universal credit and benefit system. There are also arguments about localisation. We can have those debates. I would have been happy to participate in an argument about that and to try to develop either a local or national scheme that worked and that met the objectives that had been articulated. However, that is not what we are debating this afternoon. This is a ham-fisted set of proposals, cooked up by the Government in a way that shows a complete lack of joined-up thinking between Departments—the Department for Communities and Local Government is going in a completely different way from the Department for Work and Pensions—and then imposed to a chaotic timetable.

The way this House has handled the process is a cause for concern in itself. Our first debates about the Bill were in January, when the Committee stage was taken on the Floor of the House and had to be rushed through without adequate time to consider all the issues. Then the Bill was parked for three or four months. We heard nothing more about it. We wondered what was going on, until the penny dropped and one of the Clerks was wise enough to point out what was happening. The Government had suddenly realised that if they went through the parliamentary procedures, the Bill would fall with the end of the Session. They had to park it because they had not realised that the only way to get it through the current Session was not to take it through the House of Lords in the previous Session, so that they could then reintroduce it in this one.

Here we are, less than six months before the implementation of a hugely complex scheme that will affect the benefit entitlement of around 4 million people nationally, without the details agreed and with an extraordinary series of last-minute adjustments, including the transitional relief. We could not devise such a chaotic implementation programme if we tried. I am really disappointed that Ministers have not acknowledged that this is a mess. The right way forward now is to say, “We need time to get it right.” Let us give them credit: let us give them the opportunity to say that localisation is the right thing to do, but then please let us recognise that this is not the right way to do it. We have to give local authorities sufficient time to prepare, consult and carry their communities with them. We have to give them the means to do that without these arbitrary cuts, which affect individuals so harshly and unfairly, because there will be marked differences between categories of people.

Let us take the position of two households, one just over pension age and the other just under. Under the arrangements that are being introduced, if they both receive an equivalent amount of benefits, one group will be protected from any cuts because they are over pensionable age and the other will not. How will that be explained? How is there any sense of fairness whatever if those households’ circumstances are broadly the same? There will be anomalies, problems and a sense of injustice on the part of the public, and then there will be all the administrative issues in trying to collect small sums of money. It cannot make sense to proceed in this rushed way towards what is likely to be serious administrative chaos in early spring next year. The sensible measure would have been to say, “We must take stock. We must now pause and try to get this right.” Even if the Government will not accept that, they should at least confirm that there will be a review. It cannot be right to proceed with such a chaotic scheme that has gone through such a bad gestation period and that is now going to produce the kinds of problems that Members have articulated so well today, without a commitment to a thorough review.

The other place did us a service by passing the amendment that would make a commitment to such a review, and the Government should, at the very least, accept that the measure must be reviewed independently and fairly; otherwise, we shall be condemning large numbers of our citizens to an unfair and harsh series of measures that will impact on their livelihoods and that they will find impossible to understand. The Government are committing local authorities to implementing harsh and unfair measures for which they will get quite a lot of the blame. The whole thing is a terrible mistake, and I just hope that the Government will now recognise that they have a serious responsibility to the public and to local authorities to try to make the best of the very unfortunate position that they have got themselves into.

[Brandon Lewis]

I will deal first with the points raised by the right hon. Member for Greenwich and Woolwich (Mr Raynsford). I am still relatively new to the House, having joined in 2010, and I am certainly new to the Dispatch Box. I have to say that the opening remarks of his speech were the most undignified I have heard in this Chamber in my short time here. I therefore do not intend to comment further on what he had to say.

The hon. Member for Warrington North (Helen Jones) made a point about the scheme in general, and I shall respond to it directly. She seemed to suggest that her party would like to see a centrally controlled policy scheme, rather than trusting local councils. I must point out that the Local Government Association does not want this provision to be part of universal credit; it wants it to be localised, if it needs to change. I was disappointed that Labour Members seemed to lack trust and faith in local councils and local councillors to do what is right for their communities. We have far more trust and faith in them than Labour does.

I was astounded to hear at least one Member complain that the Government’s pledge of a further £100 million to help local authorities with the transition was unhelpful. That provision is of course voluntary; local councils do not need to take part and do not need to take up any of the money. It is simply a transitional grant that will be available if councils wish voluntarily to take up the offer of it. Some councils will come up with different schemes. It is part of localism that they will do what they think is right for their local communities. Some might have large reserves. If, for example, a council had about £45 million in reserve, it might use some of that to prepare for the changes. The Government’s position is that that should be a local decision. This is about local councils having the political will to do the right thing, to look at what is right for their communities, and to work to develop economic growth to get more people off benefits and into work. That goes hand in hand with the business rate retention that we discussed earlier.

[Andrew Gwynne]

It is important to record the fact that no Labour Member is saying that localism is a bad thing. The Minister cannot have it both ways, however. Either the Government take a localist approach, in which the arrangements for council tax benefit will be different from one local authority to another, or they do what the Minister says he wants to do, which is to simplify the system. That would involve one nationwide system.

[Brandon Lewis]

I am not quite sure what point the hon. Gentleman is trying to make. This is a localised scheme in which local councils will do what they want to do. Different councils are consulting on different schemes, and in response to some of the consultations the Government have made provision to allow local authorities some transitional money to help them to move to what might be a better scheme for their area. But—this is the key point—that money is part of a voluntary scheme. It is up to local authorities whether they take part in it, or whether they go ahead with what they believe is the right scheme for them.

[Andrew Gwynne]

By the Minister’s own admission, then, this is not a simplified scheme. It is a localised scheme, but it is not simplified. Every local authority will have a different system in place, which will add to complexity.

[Brandon Lewis]

I think the hon. Gentleman is starting to understand that localism means that local councils can do what they think is right for their local communities, understanding that what might work in one local community would not necessarily be right in another local community in respect of the schemes they devise to secure economic growth, to create more jobs or to get more people off benefits in the first place.

[George Hollingbery]

It is not an absolute certainty that localising council tax will indeed lead to fiendish complexities. It is entirely within the gift of local councils to negotiate among themselves to have council tax schemes grouped, which could then be agreed across, say, Hampshire. Given the commonality of economic prosperity in the area I represent, that would seem to make sense. Does the Minister agree?

00:00

[Brandon Lewis]

My hon. Friend makes a good point. I would add that there is a range of things for local councils to look at. Some local authorities will be looking to bear down on some of the fraud and error, which we believe is worth £200 million a year. They will be looking to come up with schemes to drive economic growth, to put more people into work, to be more efficient. They might be looking at saving money through shared services in the management teams and various other schemes. The flexibilities we are putting in place give them a huge opportunity.

The hon. Member for Warrington North (Helen Jones) made a comment, implying that the Government have somehow depressed the council tax benefit forecast. She will be aware that the forecasts for council tax benefit expenditure are considered and ratified by the independent Office for Budget Responsibility. I entirely reject her suggestion, if that is what it was, that we have in any way been able to influence these forecasts.

[Stephen Timms]

On the point of simplicity, many of us, including Government Members, sat through the Welfare Reform Bill debates, in which the simplicity of universal credit was presented to us as a great advantage. This change undermines that simplicity—fatally, it seems to me. As the director of the Social Market Foundation said in an article this morning, under this proposal

“not only will you need a computer to work out your benefit entitlements, you’ll need a map”.

[Brandon Lewis]

Coming from a party that had 32 different benefits to work through, I find that quite an amazing comment.

[Mr Betts]

rose—

[Brandon Lewis]

I give way, of course, to the Select Committee Chairman.

[Mr Betts]

It is all down to local councils to decide, but one of the complications is that the Government are localising council tax benefit, but centralising housing benefit. Local councils can get no sensible decisions from the Department for Work and Pensions on whether an arrangement will be allowed whereby applicants can go to one point for information and advice about both benefits. Are the Government to sort out this problem between the two Departments?

[Brandon Lewis]

I am sure we can take that back to the DWP, but I am sure the hon. Gentleman will appreciate that this goes some way outside the remit of the amendments. I will reflect on his comment and come back to him on it. As I have said, councils will have choices about how to meet the cost of support, and local authorities that have consulted on their proposals will need to consider whether they want to apply for the grant or whether they need to make changes to the proposed schemes in order to do that. I shall return to that issue in a few moments, if Members wish it.

Let me deal with the specific amendments. I shall ask the House to agree to Lords amendment 3 and to the other Lords amendments, but to resist the Opposition amendments to the amendments, which I shall ask the hon. Member for Warrington North to withdraw.

Lords amendment 3 requires the Secretary of State to provide for a review of council tax reduction schemes within three years of the Act coming into effect and sets out certain considerations for that review. As Baroness Hanham made clear in the House of Lords, Government routinely review policy and respond to ensure our objectives are met. The transitional grant scheme announced on 16 October was a direct response to those authorities that are proposing schemes that place what the Government consider to be an unacceptable burden on the very poorest. That is why we will accept that amendment, but we will not seek to overturn it.

In accepting the principle that Government should keep policy under review, I would make a couple of points. The terms of the review, as set out in the amendment, do not bind the Government to any course of action as a result of the review’s recommendations. I know that the Local Government Association is keen for us to make that clear. We will need carefully to consider the findings of the review before considering how we will respond. We remain clear that localisation is our preferred policy. It strengthens incentives to support local growth and jobs, drive down fraud and error and hold down council tax. It gives local authorities control over how to design support schemes, taking into account the impact on local populations and council tax collection rates. It also ensures that funding for council tax support is paid directly to the authorities that provide vital services. All those are important considerations that the Government would want to take into account in any future review.

The Opposition’s amendments seek to ensure that such a review would apply only to England, but I believe that if the Secretary of State is required to review the operation of local schemes in England that are provided for under powers in this Bill, such a review should also take place in relation to schemes that are similarly provided for in Wales. Let me explain that further.

Such schemes will be provided for under regulations to be introduced by Welsh Ministers, so it is right for Welsh Ministers to lead on any review. In complying with the requirement of the Lords amendment, the Secretary of State will therefore seek to agree with Welsh Ministers the scope and format of the review in relation to Wales. It will also be for Welsh Ministers to consider the implications of the review’s recommendations for the framework for schemes provided for through their regulations, and the powers provided, at their request, in the current Bill.

In the light of these assurances, I do not think that the Opposition’s amendments are necessary.

Lords amendments 83, 84 and 86 would enable regulations made by the Secretary of State or Welsh Ministers about council tax reduction schemes of billing authorities in England or Wales to make provision equivalent to the provisions of, or the provisions that could be made under, sections 32 to 34 of the Welfare Reform Act 2007. The amendments would also give billing authorities in England power to make additional provision in their local scheme which replicates, or could be made under, those sections. The amendments would allow local authority schemes to provide for extended payments, which are an important way of supporting work incentives.

Lords amendment 85 is a technical amendment. It is intended to ensure that the power in new paragraph 6 of schedule 1A to the Local Government Finance Act 1992, which allows major precepting and billing authorities to reach an agreement to vary payments or instalments that are required to be made under regulations about funds, applies—as was intended—only to regulations in relation to council tax.

Lords amendments 87 to 90 would ensure that the expertise of members of the First-tier Tribunal could be used in the deciding of appeals against decisions made in relation to council tax reduction schemes. The amendment would enable First-tier Tribunal members to sit as members of the Valuation Tribunal for England at the request of the president of the tribunal, with the approval of the Senior President of Tribunals, and only in relation to appeals that relate in whole or in part to council tax reduction schemes.

I urge Members to agree to the Lords amendments and resist the Commons amendments, and invite the hon. Member for Warrington North to consider withdrawing amendment (a).

[Helen Jones]

I wish to press the amendment.

Question put, That amendment (a) to Lords amendment 3 be made.

15:52

Division 90

Ayes: 245

---

Labour: 236
Democratic Unionist Party: 4
Plaid Cymru: 2
Social Democratic & Labour Party: 2
Independent: 1
Alliance: 1

Noes: 312

---

Conservative: 264
Liberal Democrat: 47

Lords amendment 3 agreed to.

16:07

More than three hours having elapsed since the commencement of proceedings on consideration of Lords amendments, the proceedings were interrupted (Programme Order, this day).

The Speaker then put forthwith the Questions necessary for the disposal of the business to be concluded at that time (Standing Order No. 83F).

Lords amendments 4 to 91 agreed to, with Commons financial privileges waived in respect of Lords amendments 4, 5, 10 and 19 to 85.

[Mr Speaker]

We come now to motion 4 on the Order Paper.

[Brandon Lewis]

I beg to move the motion formally.

[Mr Speaker]

I am extremely grateful to the Minister and I did wonder whether he had had a rather urgent job swap, but he has not. We are grateful to him for his conscientiousness, but he is not needed at this stage.

Multiannual Financial Framework

Wednesday 31st October 2012 Commons Chamber

[Mr Speaker]

I inform the House that I have selected the amendment in the name of the hon. Member for Rochester and Strood (Mark Reckless), from whom we will therefore hear in due course.

16:09

[The Financial Secretary to the Treasury (Greg Clark)]

I beg to move,

That this House takes note of European Union Documents No. 16844/11, No. 16845/11, No. 16846/11, No. 16847/11, No. 16848/11, No. 6708/12 and Addenda 1–3, No. 9007/12, No. 12356/12, and No. 13620/12, relating to the Commission’s proposal on the next Multiannual Financial Framework (MFF), 2014–2020; agrees with the Government that at a time of ongoing economic fragility in Europe and tight constraints on domestic public spending, the Commission’s proposal for substantial spending increases compared with current spend is unacceptable, unrealistic, too large and incompatible with the tough decisions being taken in the UK and in countries across Europe to bring deficits under control and stimulate economic growth; notes that UK contributions to the European Union budget have also risen in recent years due to the 2005 decision to give away parts of the UK rebate; agrees that the next MFF must see significant improvements in the financial management of EU resources by the Commission and by Member States and significant improvements in the value for money of spend; further agrees that the proposed changes to the UK abatement and proposals for new taxes to fund the EU budget are completely unacceptable and an unwelcome distraction from the pressing issues that the EU needs to address; and calls on the Government to seek significant savings to the Commission’s seven year framework, as set out in the Prime Minister’s joint letter with France, Germany, the Netherlands and Finland of 18 December 2010, which stated that ‘payment appropriations should increase, at most, by no more than inflation over the next financial perspectives’.

The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), is making a rapid getaway, but if he wants to deal with the motion, I shall not stand in his way.

It is a pleasure to have been sprung from the sometimes stormy world of planning policy into the calm and genteel discussions that characterise such European issues. The debate is, if nothing else, timely, given the forthcoming negotiations on the EU’s annual budget for 2013 and on the multiannual financial framework, which sets out budget ceilings for the seven years between 2014 and 2020.

When I became Financial Secretary last month, hon. Members can imagine the delight I felt to find that the EU negotiations were at the top of my in-tray. However, now that I have had a few weeks to immerse myself in the budgetary demands that have been made by not only the institutions of the EU but several member states, I have to report that my normally cheerful mood has soured. Frankly, the sheer lack of shame displayed by those demanding more of our money is extraordinary. They want more at a time when the International Monetary Fund predicts that Government spending across the EU will fall by more than 8% between 2010 and 2017. They want more at a time when Mr Barroso, the European Commission’s President, has said:

“public finances must be consolidated”

and

“sound public finances are needed to restore confidence that is so essential for growth”.

They are asking for more at a time when the Commission itself is forcing deep public spending cuts on member states that have the misfortune to be locked into a debt crisis. At just such a time, the European Commission has thought it reasonable to propose an increase in what the EU spends of more than €100 billion, which is 10% more than it spends already.

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

In light of what my right hon. Friend is saying, he might have noticed that I tried to give Her Majesty’s Government a nudge in the direction of a veto on anything that would be more than a freeze or a reduction, as well as a refusal to accept the financial transactions tax. Does it follow from his comments that the Government agree with my proposal?

[Greg Clark]

I normally agree with my hon. Friend, who is one of the House’s sages, and I can say that I agree in every respect with the amendment that he tabled.

[Mr Peter Bone (Wellingborough) (Con)]

The Government are therefore making a most generous concession, so will my right hon. Friend make things absolutely clear to the House? My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) spoke about a freeze, which would not allow for a cash increase. Is that the Government’s position?

[Greg Clark]

Our position is that we want the EU budget to be cut, but part of the negotiating mandate that the Prime Minister has agreed is that the very most that we would accept would be a real-terms freeze. However, we want a cut, as I shall explain.

The Commission—this time with the European Parliament—has proposed an increase of 6.8% for the 2013 annual budget. That is for a year in which the IMF forecasts that growth throughout Europe will average 0.5%. My view, and that of the Government, is that such a demand constitutes a grotesque imposition.

[Mr Denis MacShane (Rotherham) (Lab)]

I welcome the Financial Secretary to his new job. Will he confirm the House of Commons Library figures showing that Her Majesty’s Government’s spending between 2010 and 2015 will increase by £100 billion?

[Greg Clark]

I cannot confirm that, but I noted from the right hon. Gentleman’s article in the New Statesman that he is calling for increases in the budget, especially for the structural funds.

The Commission’s proposal is totally unacceptable, so let me say very clearly to hon. Members, as well as those around Europe who might be watching, that it is not happening. On the MFF, we will accept no real-terms increase in the EU budget for the next seven years. We will veto any proposal that either does not cut the budget or does not at the very least freeze it for the whole of the period. There will be no more budgets that pursue ever closer union through ever higher spending.

[Mr Edward Leigh (Gainsborough) (Con)]

I am sure that the Financial Secretary heard the Prime Minister’s excellent words today calling for a cut in the budget, so will he resist the blandishments of a very polite gentleman who appears to be impersonating the Conservative Chief Whip, and join those patriotic Conservative Members who will be voting for a cut in the budget?

[Greg Clark]

I have great respect for my hon. Friend, with whom I served on the Public Accounts Committee, and I shall explain why the Prime Minister will indeed be arguing for a cut, and why we have our mandate.

[Several hon. Members]

rose—

[Greg Clark]

Let me make a bit of progress and then I shall, of course, give way to hon. Members on both sides of the House.

Our opposition to the demands of the Commission is more than a matter of headline figures alone. When we dig down into the detail, there is always something repellent to find. For example, let us consider the EU administration costs. Members may not be aware that the pay of employees within the EU bureaucracy increases automatically each year. There is, however, a sensible provision to set this aside at times of economic crisis yet, unbelievably, the EU Commission is taking the EU Council to court to insist that the EU is not experiencing a time of economic crisis and that pay should rise. This is the same Commission that has attended four ordinary and three emergency European Councils during the past 12 months to agree unprecedented measures to bail out member states which have been unable to fund themselves without help. So while some member states face a crisis of solvency, the institutions of the EU face a crisis of credibility.

[Chris Bryant (Rhondda) (Lab)]

I welcome the right hon. Gentleman to his post. I have known him for a long time and he has always been a very good pro-European. One of the elements that determines how much Britain pays towards the EU is VAT. If we increase VAT in this country, it means that we pay more money to the EU. Can he tell us precisely how much more we are paying by virtue of the increase of VAT to 20%?

[Greg Clark]

The hon. Gentleman may have known me for a long time but he has a faulty memory. It was his Government—he served, I think, as Europe Minister in that Government—who gave away half of our rebate, which caused the increase that we have seen.

Though they are ready to lecture others on fiscal discipline, it is fiscal incontinence that characterises the approach of the European institutions. Administrative costs need to be hammered down to bring them into line with the modern world, yet the response of the Commission’s spokesman has been little short of insolent. The British Government asked the Commission to model cuts of €5 billion, €10 billion and €15 billion to its staffing budget, and the Commission refused. Its spokesman said:

“We declined as it’s a lot of work and a waste of time for our staff who are busy with more urgent matters…we are better educated than national civil servants. We’re high fliers, not burger flippers”.

As the Prime Minister has pointed out, one in every six of the Commission’s employees earns over €100,000 a year. The ordinary working people of this country have run out of patience with the attitude displayed by the Commission. The British public are ready to make sacrifices to put Britain back on its feet, but not to featherbed a self-styled elite and its agenda. We are not rolling back wasteful public spending in this country only to see it re-imposed from Brussels.

[Charlie Elphicke (Dover) (Con)]

My right hon. Friend is far too generous to the Labour party on the matter of the rebate. The House will recall that for every one of the 13 years of Labour government, there were above-inflation increases in the European Union.

[Greg Clark]

My hon. Friend is totally right. The last time the country had the misfortune to be in the hands of a Labour Government, including the shadow Foreign Secretary, who was Europe Minister at the time, far from agreeing even a real-terms freeze or a cut, they increased the budget over seven years by 8%. That is the record of the Opposition.

It is not just the overall total. Once more we see the usual suspects circling round Britain’s budget rebate. That rebate was secured for future generations by Margaret Thatcher at Fontainebleau—the rebate which Tony Blair and his Europe Minister, now the shadow Foreign Secretary, put on the table in 2005, in the negotiation of the current multiannual financial framework. Of course, when I say negotiation, what I mean is unconditional surrender, giving away in perpetuity a large part of the rebate in return for nothing. If seven days is a long time in politics, seven years is even longer. The amendment to the motion would delete all mention of this betrayal. The act would be forgotten, but the consequences have not gone away.

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

The position of the Opposition is truly incredible, given their record in government. However, the problem that the good people of Brigg and Goole have with the multiannual financial framework is that all we can do is hope for a freeze as potentially the best outcome. Does that not show just how much the European Union has managed to take away the sovereignty of this country?

[Greg Clark]

Every budget negotiation under the seven-year framework has resulted in an increase. That must now stop. The next seven years must see an end to the perpetual ratcheting up of EU spending. The Prime Minister will be looking to achieve precisely that. As far as the Government are concerned, what remains of the rebate, after the predations of the Labour party, is absolutely non-negotiable. That means that even talking about it is a waste of time. Without it, our net contribution would be by far the largest in the EU, twice as big as that of France and more than one and a half times that of Italy or Germany as a percentage of gross national income.

[Kelvin Hopkins (Luton North) (Lab)]

Earlier in his speech the Minister said that the Government are opposing a real-terms increase. The figure involved would be significantly different from a money-terms increase. Would the Government not do better by asking for a freeze in money terms, not real terms?

[Greg Clark]

Our position is very clear: we want to see a cut in the EU budget. That is what all of us on the Government side of the House want. I will come on to explain the negotiating mandate that the Prime Minister has agreed with European leaders.

[Mr John Redwood (Wokingham) (Con)]

I welcome strongly the Government’s wish to have a new relationship with the EU, which is so appropriate now that it is going to integrate for the euro, so why is this not the time to negotiate different arrangements on how much we contribute and how many spending programmes we are part of, as the framework covers such a long period of time?

[Greg Clark]

That is exactly what we are doing in this multiannual financial framework, and the opportunity we have to veto a settlement that we are not in favour of gives us leverage in that.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

The amendment to the motion

“calls on the Government to strengthen its stance so that the next MFF is reduced in real terms.”

Does the Financial Secretary disagree with the amendment?

[Greg Clark]

The hon. Gentleman, characteristically, is playing games with the issue. Of course we want to see a reduction. His position is wholly incredible, because this week he has been calling for a cut in the EU budget, which we all want to see, but when asked whether he is prepared to veto the budget, as we have said clearly we are prepared to do, he refuses. How can he take that position if he does not will the means to enforce it?

[Chris Leslie]

rose—

[Greg Clark]

I will not give way, because I want to make progress.

We have touched on a number of themes in the debate already—shamelessness, wastefulness, hypocrisy and betrayal—which leads us neatly to the position of the Labour party. Those sitting on the Opposition Front Bench are the same men who gave away so much of our rebate and who would surely surrender the rest on demand to curry favour with Europe. It is the party that, the last time it was in power and had the opportunity to negotiate an MFF, agreed not to a cut or a freeze, but to an 8% real-terms increase. It is a party whose socialist comrades in the European Parliament declared that the Commission’s proposed 10% increase was

“not sufficient to finance all the EU’s objectives”.

It is a party that nearly bankrupted our country but now claims conversion to the rigours of fiscal rectitude. It is a party whose last act in office was to sign Britain up to the EU stabilisation mechanism when it did not ever have a mandate to govern. It is a party that is so caught up in its cynical political games that it calls for a cut in the budget but at the same time says we should not deploy our veto to secure Britain’s interests. It is not a party that deserves to be taken seriously, as its opportunistic posturing this week shows.

[Wayne David (Caerphilly) (Lab)]

The previous Labour Government argued for the repatriation of regional policy to save money. Do this Government stand by that?

[Greg Clark]

One of the issues that I hope unites Members of this House is a reflection that the structural funds need to be cut. They are one aspect of the budget that is recycling money from one set of taxpayers to another, often the same taxpayers. If there is no reason for it, it should be cut, and that is part of our negotiations.

[Mark Pritchard (The Wrekin) (Con)]

Although it might be popular on the Government Benches, I think that the country is getting sick and tired of Eurosceptic words from Ministers but very little action on the ground. Is it not the case that, irrespective of whether or not the Government are successful in negotiating a freeze, in cash terms more money will be given to the European Union? If I am incorrect, will the Financial Secretary please correct me on the record?

[Greg Clark]

The shape of the budget needs to be negotiated—it has not been settled yet—but it is true to say that as a result of the giveaway of the rebate that the previous Government introduced we lose out from spending that goes to the new member states that previously would have been abated.

Let me address the three main differences between the motion and the amendment. First, the amendment would remove the condemnation of the previous Government for giving away part of our rebate. Despite the talk of fiscal responsibility, the aim is to conceal the loss to this country of £10 billion. That amount, coincidentally, is nearly equal to the whole of Britain’s share in the budget increase proposed by the Commission—an increase to which we are opposed. It is simply not credible to vote for restraint and then to remove from criticism the most wasteful surrender of the British taxpayer’s interest that any Prime Minister has made in Brussels.

The second effect of the amendment would be to delete references to new EU taxes. Yet the tax sovereignty of this country is, or should be, non-negotiable. In particular, this removal would send a signal that this House supports the introduction of a new financial transaction tax which could badly undermine Britain’s economy. By the Commission’s own analysis, the tax would lead to a fall in European GDP of up to 3.5% and nearly half a million job losses.

Thirdly and finally, there is the call simply to cut the EU budget and not, as the Government’s motion has it, to cut or, at the very least, to have a real-terms freeze. Let me address this aspect precisely, as it comes to the crux of the matter. I should like to say this not only to Labour Front Benchers but to all those Members present who are genuinely outraged by the budget proposal. Like them, I believe, very simply, that the EU should cut now, and keep on cutting. The Opposition call on the Government to persuade others and to build alliances with those who share our concerns. On the issue of budgetary restraint, that has been exactly our approach. In 2010, the Prime Minister achieved a historic breakthrough when he agreed with the leaders of Germany, France, Finland and the Netherlands that

“payment appropriations should increase at most, by no more that inflation over the next financial perspective.”

If this position were to be agreed to, then it would be the first time in the history of the EU that the seven-year budget has done anything other than accelerate. No one is pretending that this would represent all the long-term reform required—not a bit of it—but it would be a turning point. Having reached such an agreement, which has been scrutinised in this House in the two years since it was published, it is surely right for the Prime Minister to keep to his commitment rather than have to give backword at the last moment.

This Prime Minister has been clear, as neither of his two predecessors were, that the remorseless rise in spending in the EU has to stop, and it will stop. If there is no cut, or no real freeze, there is no deal: the framework will be vetoed. The Prime Minister has a formidable task in persuading other countries of this—many of them were looking forward to a seven-year pay-out—but he has made a strong start, and he deserves the support of this House as he goes in to bat for Britain.

[Mr Speaker]

Before I call the Opposition spokesman, I remind the House that there will be an eight-minute limit on Back-Bench contributions.

16:24

[Chris Leslie (Nottingham East) (Lab/Co-op)]

That was a rather partisan speech from the Minister—[Interruption.] Well, it is the truth—it was rather partisan. May I first place on the record my appreciation to the Leader of the House, who is not in his place, and to the new Chief Whip, for scheduling this debate? Without the Government helpfully timetabling the motion on the report from the European Scrutiny Committee, we would not have had the opportunity to express the view of the House of Commons today.

Our economy has struggled in the past two years. We have stood still while our international competitors have accelerated away, and the flatlining economy has been bad for public finances, with borrowing higher so far this year than in the same six-month period last year. It is therefore clear that all demands on the public purse need to be considered with care, and our contribution to the EU budget can be no exception.

[Mr MacShane]

My hon. Friend might be a bit young to recall that in 1984 Britain’s contribution to the then European Community was £654 million. Six years later it had risen fourfold to £2.54 billion. Does he remember which Prime Minister sprayed British taxpayers’ money all over Europe, or are we all now post-Thatcherite, because the Conservative party certainly is?

[Chris Leslie]

The two Government parties have a lot of history to confront, but I do not want to be as partisan as the Financial Secretary, except to say that in a week when 1 million letters are being sent clawing back child benefit, when police budgets are being cut by 20%, when pensioners are having their tax allowances frozen, and when some of the poorest in society are being asked to pay more in tax—[Interruption.] It is a fact. Given all that, would it not be perverse if the European Union were exempt from those cuts?

When times are tough, not only in Britain, but in countries throughout Europe, it is all the more important that the negotiations on the next seven-year EU spending review—the multiannual financial framework—spurn the inflationary tendencies which simply repeat previous settlements plus a nominal price adjustment. Heads of Government need to champion reform, get a grip on the fundamentals of the EU budget and reverse that upward trend. There is a very simple test for the summit on 22 November: will member states just keep rolling forward the EU budget, plus inflation, or can they achieve a real-terms reduction?

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

I accept the difficulties with public finances and the sincerity with which the hon. Gentleman makes his comments, but does he regret the actions of the previous Labour Government, who gave up the rebate?

[Chris Leslie]

The rebate has not been given up; it is still there to be defended. This is a task for the Prime Minister and the Chancellor to achieve, and we will see how they do. The last time we discussed these issues was seven years ago and we are now discussing them at a critical moment ahead of the next seven-year period, so this is when they matter most of all.

[Several hon. Members]

rose—

[Chris Leslie]

I want to address the motion and the amendment, if I may. The Government’s motion, for all its rhetoric, has such meagre ambitions. [Interruption.] It is true. The motion implies that the House should be content with business as usual, but that just will not do. A real-terms reduction is possible, but it requires persuasive diplomacy, careful alliance building and, above all, leadership.

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

The hon. Gentleman mentions careful alliance building. As we have heard, two years ago the Prime Minister did exactly that, with Germany, France and the Netherlands backing him to deliver a no real-terms increase. If the Prime Minister has to exercise the veto at the November meeting, will the hon. Gentleman support it? On 29 October, the hon. Gentleman said the opposite by saying that he thought we could avoid a veto, so will he now back it?

[Chris Leslie]

I hope that we can do better for Britain.

[Nadhim Zahawi]

Yes or no?

[Chris Leslie]

If the hon. Gentleman calms down, I will explain. No one should be fooled into thinking that a veto is cost-free. The hon. Gentleman and all other hon. Members should know that the way in which European Union rules work means that last year’s budget will be cut and pasted and become the new budget for 2014, plus the inflationary increase. In other words, if the Prime Minister flounces off again, an extra £310 million will go from the Exchequer to the 2014 budget. That is a fact and we need a negotiation strategy that is going to work.

[Greg Clark]

Will the hon. Gentleman answer a simple question? Would he back the use of the veto—yes or no?

[Chris Leslie]

We have three weeks of negotiations. There is a summit on 22 November. [Interruption.] If the Minister has decided today to use the veto, why even bother going to the summit on 22 November? What is the point of the Prime Minister even travelling there? Will he still attend the summit? Surely the path to be pursued is the one that is the best for the taxpayer. I have explained what will happen if the Prime Minister walks away from the talks—it will cost the taxpayer more. Members can look at the Library research paper, which makes it clear for all to see that it will cost £310 million in 2014.

[Chris Bryant]

Is not the truth of the matter that literally the only way in which we can ensure that we end up with a less than inflationary increase is by not announcing that we will use the veto and by ensuring that we negotiate all the way through to the end? It is a child who announces on the first day of negotiations that they are going to use the veto, because then the Commission gets its way.

[Chris Leslie]

My hon. Friend is entirely right, and that is why the Government do not get it. They need a negotiating strategy to get the best deal for the taxpayer. [Interruption.] The Minister laughs, and the Chancellor is next to him puppeting him along in his hilarity, but I say to the Chancellor that this is an incredibly serious issue. It is about taxpayers’ money, and incredibly large sums of it at that. [Interruption.]

[Mr Speaker]

Order. Mr Zahawi, I am sure that in your own way you mean well, but you are far too excitable. It is no good looking up and around, and at places outside the Chamber, and waving your hands in a bizarre manner. What you need to do is calm down. It will be good for you, good for the House and good for Stratford-on-Avon.

[Chris Leslie]

I am sure there is some Shakespearian reference about being calm in negotiations, and calm, persuasive diplomacy is the strategy that we need today.

[Several hon. Members]

rose—

[Chris Leslie]

I am sure that Members want to intervene to talk about that strategy.

[Dan Byles (North Warwickshire) (Con)]

I understand the hon. Gentleman’s point, but I do not think any Government Members are saying that we should go into the negotiations saying that we will use the veto. [Interruption.] No, what the Minister said was that he was not ruling it out, and that he was prepared to use it. That is a very different thing. Would the shadow Minister be prepared to use it if necessary?

[Chris Leslie]

Of course it is a fact that a veto is part of the suite of what is available at the negotiations, but we should try to negotiate a better settlement first. My point is simple: if we go along with the proposals—[Interruption.] Will hon. Members bear with me for a moment? If we go along with the proposals of the Commission and the European Parliament, the Chancellor will be providing significant extra money. Hon. Members need to be aware of what the implications for the taxpayer will be if we walk away, which I am sure the Chancellor will confirm. I am happy to give way to him on the subject. If we walk away and there is no agreement, the budget will roll forward along with an inflationary element, costing the Exchequer an extra £300 million.

[Mr Dennis Skinner (Bolsover) (Lab)]

Does my hon. Friend realise that this discussion is almost a replay of John Smith finding a way to oppose the Maastricht treaty? The result was rebellions lasting several years and a majority of about 190 for Labour. My hon. Friend’s measured response of joining those of us who have voted against most of the treaties is a wonderful idea, and the prospect could be him sitting on the Treasury Bench.

[Chris Leslie]

I respect my hon. Friend’s view, but our goal today is to stand up for the taxpayer. That is not just the preserve of Opposition Members, because I know that some Government Members also want to rise above the partisan discussions and ensure that a decision is made that will mean the best thing for the taxpayer.

[Several hon. Members]

rose—

[Chris Leslie]

What an array of Members to choose from. I give way to the right hon. Member for Mid Sussex (Nicholas Soames).

[Nicholas Soames (Mid Sussex) (Con)]

I am grateful. Would not the hon. Gentleman agree that the proposal that the Government have put forward in the face of extraordinary, irrational provocation from the Commission is extremely sensible and deserves the support of the whole House?

[Chris Leslie]

I respect the right hon. Gentleman’s position, but with the greatest respect, I do not think the Government’s proposal goes far enough. They need to set in train a negotiating stance for the UK that will lead to a real-terms reduction. For all the fine words that we heard from the Minister, if he believes that as well, he should quite simply accept the amendment.

[Several hon. Members]

rose—

[Chris Leslie]

I would like to make progress as we have a limited amount of time.

The next seven years of the EU budget should prioritise jobs, growth, infrastructure and practical programmes that rejuvenate fragile economies. Building up those elements, however, means reducing EU spending elsewhere. Savings can be made on the common agricultural policy, which currently costs European nations £45 billion with the UK contributing about £1 billion a year. The common agricultural policy is a distorting barrier to trade liberalisation, a wasteful programme that is in need of further reform, and it is astonishing that the Government motion does not refer to it.

Savings can be made on aspects of EU structural funds that represent 35% of the budget and are too often committed in a haphazard manner and depend on outdated commitments rather than future priorities. Unless structural funds contribute to positive economic development, they cannot be justified. Savings can also be made on subsidies for tobacco growers, which will be discontinued, on outdated practices such as relocating the European Parliament to Strasbourg for a week each month—that costs €200 million each year—on non-essential projects such as the House of European History museum, which cost a reported £137 million, and on export refunds, which cost millions and disfigure fair trade.

Savings can and must be made, and delivering a real-terms reduction in the EU budget requires a relentless focus on the justification behind detailed expenditure. That is why we need a more effective and independent EU auditor who is able to examine the impact of programmes on the EU economy. The auditor must also improve the accountability of spending on pro-growth activities, which will require the bringing together of disparate Commission priorities under the auspices of a single commissioner for growth, persistently and single-handedly concentrating on that overarching concern.

How capable is our Prime Minister of delivering real reform in the EU budget? Can he come back with a deal that sees the contribution from the UK Exchequer reduced in real terms? Those are the tests he must now face. We know that his phantom veto last December placed the UK in the margins of influence, just when it mattered most, but today’s debate must be about more than the frailties of the Prime Minister. It boils down to how much we care about taxpayers’ money—money that is hard-earned and needs to be safeguarded.

For every 1% that the Government concede in additional spending on the multiannual financial framework, nearly £1 billion will transfer from UK taxpayers to the EU budget over the seven years of the spending review period. If negotiations fail because a member state walks away from the talks, we will simply see last year’s settlement rolled forward and supplemented by an automatic 2% inflation upgrade which, as I said, will cost our taxpayers at home an extra £310 million in 2014.

[Andrea Leadsom (South Northamptonshire) (Con)]

Perhaps the hon. Gentleman has not realised that trying to negotiate in a calm way on a deal that was agreed two years ago by our Prime Minister is the most sensible way to proceed. If he looks into it, he will find that new member states also have a lot of skin in the game, and they will not want us to use our veto because they will also lose out. This is not just about Britain and Britain’s veto, but about dynamics across the whole EU membership. Using our stated policy over two years in a consistent and calm fashion gives us the best chance of achieving real reductions in cost for the British taxpayer.

[Chris Leslie]

I have a lot of respect for the hon. Lady and she made a calm and persuasive point. The difficulty is that the Prime Minister has not been calm in these negotiations; indeed, he has deployed the veto almost three weeks before negotiations have even started. It is important to have a consistent and calm strategy, and the window of opportunity must surely be to persuade nations across the EU that their taxpayers also want a spending reduction in real terms. If the Prime Minister ends up at the November summit writing a cheque for hundreds of millions of pounds more, he will surely send an unpalatable message to millions of hard-pressed taxpayers across the country.

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

Despite his youthful appearance, my hon. Friend has been in this House for many years longer I have. Perhaps he will explain to me why, although the Minister said that the stated ambition of his Government is to reduce the EU budget, Government Members who vote for that lose their positions.

[Chris Leslie]

The new Chief Whip will have his own strategy for twisting arms and using his powers of persuasion. The amendment is straightforward and similar to the position the Opposition took in July—[Interruption.] I hear what the junior Whip, the hon. Member for Chelsea and Fulham (Greg Hands), says about our position. It would be perverse for Government Members to walk through the Lobby to vote against the position the Minister proclaims he holds—but strange things happen in the House.

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

Will the shadow Minister confirm that, if the aims of the amendment are implemented, there will be a reduction in payments for Welsh farmers, and a reduction in convergence funding for some of the poorest communities in the EU, such as the one I represent?

[Chris Leslie]

No, that is not necessarily the case. I do not know what the hon. Gentleman has heard from Government Members or whether they have been trying to persuade him not to vote for the amendment, but my point, which other hon. Members will no doubt make during the debate, is that there is plenty of scope for savings within the EU budget. We need to prioritise jobs, growth and support for economies, but there are plenty of other ways in which we could make savings.

[Several hon. Members]

rose—

[Chris Leslie]

I want to make progress, if I may, because a lot of hon. Members want to speak.

I saw in The Guardian today that the Deputy Prime Minister has made a comment on Labour’s position. Liberal Democrats—there are none on the Treasury Bench, but some are in the Chamber—believe that Labour Members are dishonest and hypocritical simply because we want a real-terms reduction in the EU budget. Let us put to one side the fact that the Deputy Prime Minister, of all people, ought to avoid throwing those epithets. We have been clear on our position for a long period: because of the stagnating economy and the pressures on public finances, a real-terms rise in the EU budget is wrong. We have been saying that for months. The Deputy Prime Minister should figure out his own position before criticising those of us who want to stand up for the taxpayer.

I urge hon. Members to look at the amendment we tabled in the debate on 12 January, which states that the

“UK’s ability to negotiate a satisfactory European Union budget deal has been weakened by the Prime Minister’s failure to secure allies for a more prudent settlement in this qualified majority decision; and so calls on the Government to strengthen its stance so that the 2013 Budget and the forthcoming Multi-Annual Financial Framework are reduced in real terms”.

If the Government had paid attention back then, they might not be in such a weak position today.

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

I understand the hon. Gentleman’s point on the importance of building alliances. Will he update the House on how many leaders of Labour’s EU sister parties he has spoken to in the three days since Labour announced this new policy? Do any of those socialist leaders support his position?

[Chris Leslie]

If the Minister wants to resign his seat in the negotiations, we would be more than happy to take over—we would be a great deal more successful. We are the Opposition and are not in a position to negotiate, but we are quite ready to take that role to get a better deal for the taxpayer. I only hope Ministers do so.

[Several hon. Members]

rose—

[Chris Leslie]

I will not give way for a moment.

Some people seem to think that querying the size of the EU budget is anti-European, but it is not. For those of us who believe strongly in the benefits of coming together as a community of nations and working jointly in the EU, it is our duty to prove that pooled budgets can be spent wisely and effectively, and retain the confidence of taxpayers everywhere. Good relationships with other EU states require a level of diplomatic acumen to persuade our partners that there is an alternative way forward.

The Conservative party in opposition believed in a real-terms cut. We have heard what the Minister has said and the Prime Minister was quoted at Question Time. However, we now hear that sources in No. 10 are backtracking and implying that the proposals are impossible to deliver. It is all very difficult, but what has changed? Frankly, the Prime Minister needs to have his hand strengthened in the negotiations, and it is our duty as a Parliament to fortify him at this critical stage and help him on his way.

The amendment makes it crystal clear that a real-terms reduction should be the goal. It is a position identical to that laid out in our amendment when we last debated this question in the middle of July, and it is a position that we still support today. It is time for the House of Commons to speak with one voice on behalf of the whole nation and say to the Prime Minister, “This is what we expect of you. This is your task. Let’s do the right thing for the taxpayer and have a real-terms reduction in the EU budget.” We support the amendment.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Just before I call the hon. Member for Rochester and Strood (Mark Reckless), it might help the House if I explain that, in accordance with normal practice in these situations, he will have an opportunity formally to move his amendment at the conclusion of the debate. His opportunity now is simply to speak in it.

16:50

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

We simply cannot afford to agree an inflationary increase to the EU. This country has 13% less income than it had just five years ago, and we are seeing 20% reductions to domestic spending. According to the House of Commons Library, if an inflationary increase is agreed, next year it will amount to £290 million, every penny of which we will have to borrow. Hon. Members will have spoken to constituents on different issues, and police officers have been to my surgery. They understand that their pay is frozen, although they are less happy about changes to their pay and conditions and about not getting their increments, but they do not understand why other elements of the budget, particularly the EU, should be guaranteed inflationary increases, let alone inflationary increases all the way through to 2020.

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

I have the utmost respect for my hon. Friend. Does he have the utmost respect for Opposition Members who voted time and time again to give away our powers and our money to the EU but now propose to wrap themselves in the Eurosceptic flag and walk through the Lobby with him this afternoon?

[Mark Reckless]

No, I do not. Sometimes people do the right thing for the wrong reasons, but if even the Labour party is now arguing for a real-terms cut in the EU budget, I hope that Conservatives will do likewise.

As well as my police officers, my local council, Medway council, of which I was a member, passed a motion asking Members of Parliament representing that area to vote for a cut in the EU budget. It wrote:

“The Council notes, with indignation, that whilst Medway is facing a massive…reduction in its financial settlement…the UK’s contribution to the European Union is”

getting a massive rise. It continued:

“This Council believes the EU should be treated the same as the other tiers of government and in these austere times should share responsibility…for public spending reductions.”

It argues that that would allow it to protect local services. I could not agree more.

[Dr Sarah Wollaston (Totnes) (Con)]

I am proud to represent a part of Torbay. How will I turn to residents in Brixham in my constituency, who suffered an 11% cut in formula grant last year and are suffering a 6.7% cut this year, and justify our taking the savings that they are making and handing them over to Europe?

[Mark Reckless]

Many hon. Members will be asking themselves the same question.

We heard from the Financial Secretary what these EU officials are paid. The Prime Minister went to Brussels a week or two ago and said that one in six EU officials earned more than €100,000. He might have understated his case, because we need to compare like with like. Not only do they earn more than €100,000 but they pay a special, incredibly low tax rate that applies only to people who work for the EU. They get an enormous expatriate allowance that shoves on another €15,000 to €20,000. They get a huge housing allowance. And, while a group of people in this country are about to lose child benefit of about £85 a month, EU officials get paid, tax free, another €300 per month per child. They contribute virtually nothing to their pension contributions. Under the arrangement we have in this country, any time a public official earns more than the Prime Minister—£142,500—that has to be signed off by the Chief Secretary to the Treasury. If we had to sign off every time an EU official was, in effect, getting the same take-home pay there as the Prime Minister’s salary here, that would apply to more than 5,000 European Union officials, or more than one in six. The Chief Secretary would be doing nothing but signing off those requests.

Today we have an opportunity to debate and vote on the multiannual financial framework—the long-term budget. This comes round once every seven years. It requires unanimity among member states and primary legislation in this House to implement it.

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

Does the hon. Gentleman agree that, despite the agitation among Government Members, the real issue is not the objective—there is a general consensus on the need for cuts to the budget—but the weakness of the Prime Minister in being unable to negotiate and having to threaten a veto?

[Mark Reckless]

No, and that is not a sensible point at all, because we have a one-off opportunity. It is this House that ultimately votes, so if any Government Members feel uncomfortable—not because of who I will be following through the Lobby, but because of who may be following me, in support of my Conservative amendment—I say to them: if we send the Prime Minister to Brussels telling him that it is acceptable to agree an inflationary increase, he may come back to this House having agreed that inflationary increase. We will then have to vote on primary legislation, in Committee and on Report, for that inflationary increase for the EU budget, all the way to 2020. If Members do not want that, they should vote today for my amendment.

The other strong argument for the amendment is this. Some people say, “We’re not going to get a real-terms cut,” but we will certainly not get one if we do not even try. If we use the veto, that is not a bad place to be; in many ways, it is better than where we would be with an agreed inflationary increase. There are two strong reasons for that. First, either we operate within a multiannual financial framework under the old, frozen ceilings carried forward, or we agree new ceilings going up by inflation, allowing higher budgets in future. Each of those budgets is always negotiated under qualified majority voting annually; the question is, where we have unanimity and where we need legislation, do we allow inflationary higher limits to 2020 or not?

[Mr Brooks Newmark (Braintree) (Con)]

Will my hon. Friend give way?

[Mark Reckless]

If my hon. Friend does not mind, I shall continue, as others may like to come in

The second point is that if there is no agreement on a new MFF, the process of money being transferred from the budget towards the new member states will not continue. What happened, in that disgraceful decision in 2005 when Labour gave away the rebate, is that a process was put in place whereby the new member states do not pay towards our rebate in the way that the old member states do. If the Prime Minister vetoes an MFF package, that process of money shifting to new member states will be suspended; therefore, the process by which the rebate is given away will, at least for that period, be stopped, which is a significant gain for Britain. If there is an inflationary increase, as the Government propose, we will be looking at a net contribution going from £9.2 billion last year to £13.6 billion at the end of the process. We simply cannot afford that.

The European Commission put out its own press release, which asked the question: “What will happen if a new MFF is not agreed?” The press release states that failure to agree a new MFF

“would considerably complicate the adoption of new programmes. And in the absence of new legal bases, including their indicative financial envelopes, no commitments could be made…those multiannual spending programmes…the 2014 budget would probably only cover the agricultural payments and the payments on outstanding commitments,”

and that organisations

“benefiting from EU-funds…would face severe drawbacks.”

If hon. Members are prepared to vote through primary legislation—later, when we get that chance—and if they are happy with an inflationary increase in the EU budget, plus everything else that will happen because of the continued loss of the rebate if that is agreed, they should vote for the Government motion. If hon. Members think that the European Union has too much money and that its budget is too large and needs to be cut, they should support my amendment.

17:00

[Chris Bryant (Rhondda) (Lab)]

This debate comes at a very particular time in the economic situation in Europe. The debate on this multiannual round did not start a week or a year ago; it started three or four years ago, and it is vital that we give a clear message to the European Union, the Commission and the other member states that, however ludicrously pro-European we might be—as is the case with me—we do not believe that the European Union and the Commission should spend more money at a time when every member state is having to make cuts.

[Jonathan Edwards]

Will the hon. Gentleman give way?

[Chris Bryant]

If the hon. Gentleman will forgive me, I will not. A lot of people want to take part in the debate. Perhaps he will catch Mr Speaker’s eye later.

Mr Barroso, in his introduction to the original version of the Commission’s suggestions, said:

“The European budget is the instrument for investment in Europe and growth in Europe.”

That is arrogance of the highest degree. It might be one instrument—a tiny part of the equation that is trying to refocus Europe towards a more competitive economy that is able to fight for jobs and added value against countries such as Russia, China and Mexico—but the biggest instruments must surely be the member states, or even the nations and regions within them. For instance, the factor that will make a difference to the resolution of Spain’s problems will almost certainly be the economic future of Catalunya and whether it invests in IT and future industries. It will not be the EU budget.

I am also convinced that, whatever happens to the EU budget, it will not make a dramatic difference to solving the problems in Greece or in Spain. The issues in those two countries are completely different. In Spain, for instance, the sub-prime mortgage market and the way in which houses were constructed along the coast, often for the British ex-pat market, is the single biggest problem that is dragging down the Spanish economy. So I say to Mr Barroso that, although I am ardently pro-European and I believe that the European Union has been one of the great political success stories of the past 100 years, I do not believe that the EU budget is the way to resolve the problems of those countries.

Government Members have been talking today about the small-ticket items in the EU’s expenditure. The Financial Secretary to the Treasury held rather different views from those he holds today when he was a member of the Social Democratic party. When I was a member of the Conservative party, I held exactly the same views on Europe as those I hold today. The sadness is that the Conservative party has abandoned its past.

[Greg Clark]

May I again correct the faulty recollection of the hon. Gentleman? The reason that I was a member of the David Owen branch of the SDP, rather than the one that went off in a different direction, was precisely because of its position on Europe, and I held the same views then as I do now.

[Chris Bryant]

As you know, Mr Speaker, I love apologising to Government Members, and I apologise to the Minister. The point I am making is a serious one, however. He referred to some of the small-ticket items in the EU budget, but the big-ticket item is the common agricultural policy. If we do not address that issue in this next round, we will manifestly have failed to deal with the gaping moral and ethical hole at the centre of the European Union.

[Andrea Leadsom]

rose—

[Harriett Baldwin (West Worcestershire) (Con)]

rose—

[Sir Tony Baldry (Banbury) (Con)]

rose—

[Chris Bryant]

I do not want to give way to lots of people, as that would steal away time from others, but I can never resist the hon. Member for West Worcestershire (Harriett Baldwin).

[Harriett Baldwin]

On the subject of big-ticket items, will the hon. Gentleman confirm that, when he was Minister for Europe, the previous Government signed up to the euro bail-out mechanism? It was the present Government who had to negotiate us out of that mechanism.

[Chris Bryant]

The hon. Lady praises me far too much. I was Minister for Europe for about 2.5 seconds. In those 2.5 seconds, however, the one thing that I argued aggressively with my socialist friends and with my European People’s party friends—with whom her party used to be friends—was that the next multiannual round had to be lower than before and should not have an inflationary increase. I am afraid that the hon. Lady is pitching at the wrong person in this particular round.

I believe that there is a role for the EU budget and it should relate to growth, research and development. There are some things where we can do more together as a continent and add value. Unfortunately, however, those are not the issues that grab the attention of the French, the Germans, the Italians and the Spaniards. That is why we have to, and have always had to, build alliances with other countries, particularly the smaller countries.

[Andrea Leadsom]

rose—

[Chris Bryant]

I saw the hon. Lady attempting to intervene earlier. I will give way to her, but then no more.

[Andrea Leadsom]

I am grateful. Does the hon. Gentleman agree, then, that in order to be able to negotiate successfully on the big-ticket items as he says, we need a sound basis on which to go forward? Supporting an amendment that would simply trash all negotiations with other EU members, such as calling for a cut that is nigh on impossible, would not be the way to progress any decent negotiation on structural reform in the future.

[Chris Bryant]

To be honest, I do not agree with the hon. Lady. If I take her back to the last debate I had with her on this issue, I do not think that that is the position she was advocating then. In her heart of hearts, she would prefer Parliament to give a strong single voice today, so that the Government have a negotiating position whereby they can go to Brussels, Strasbourg or wherever and say, “Look, we have the whole of Parliament behind us saying, ‘We’ve got to cut’.” That is why I hope she will vote for the amendment today.

I know that some hon. Members do not like structural funds at all—perhaps this was the issue that the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), who has already left the Chamber, wanted to raise—but I believe structural funds have a role to play in trying to make the whole European Union far more competitive in the world economy. That is certainly true for places like the valleys in south Wales. Sometimes the money is not particularly well spent, but if we did not have structural funds and cohesion funds, the danger is that each individual country would end up abusing state aid to protect specific businesses in their own country, thereby undermining countries like our own that choose not to go down that route.

I ask Government Members this: how could we possibly go back to our constituents and say to teachers, fire officers, police officers and all the rest, “We want to give more money to the European Union, but you’ve got to live with a pay freeze, and you’ve got to live with less money, with 19% cuts year on year to local authority funding for the building of hospitals, homes and so forth.”? I just do not see how I could possibly argue that.

[Ben Gummer (Ipswich) (Con)]

rose—

[Chris Bryant]

I am not giving way, as I know that many other Members want to speak.

I resent the Minister’s answer to my earlier question, as I think he simply misunderstood it. When the Government increased VAT in this country to 20%, it increased the amount of money we would have to pay to—[Interruption.] The Minister has probably been inspired by officials at this point, so he may know the answer.

[Greg Clark]

I am surprised that the hon. Gentleman, as a former Minister for Europe, did not know the answer—that the tax base is notional, so the levies of VAT make no difference whatever. It is irrelevant.

[Chris Bryant]

I will explain it all to the Minister later; he is wrong.

There are some specific savings that the EU could and should make. One relates to the ludicrous caravanserai between Brussels and Strasbourg. I merely point out to Conservative Members that it was John Major who negotiated that final agreement in the treaty of Amsterdam; I wish we were able to dismantle it. It costs us £180 million a year, and it is a complete and utter waste of time and money. Similarly, we have to tackle the common agricultural policy.

My final point for Conservative Members is this. If they choose to start their negotiating position first by saying that the veto is going to be used, and secondly by saying that there is a long shopping list of things that they want the EU to deliver—the new Margaret Thatcher, the hon. Member for South Northamptonshire (Andrea Leadsom), has often referred to a shopping list—the danger is that when they get to the till, they will have to say how they are going to pay. If they have already said that they want to get out of justice and home affairs policy and all sorts of other European Union policies, they will not have a negotiating leg to stand on. If they have already declared that they are going to use the veto, they will end up with a worse, rather than a better position for the United Kingdom and will be paying more money. That is why I, as a good pro-European, will be supporting the amendment.

17:10

[Mr William Cash (Stone) (Con)]

The Labour party—the Opposition—will of course vote with us this evening, not the other way round. As the hon. Member for Bolsover (Mr Skinner) correctly pointed out, exactly the same happened with the Maastricht treaty.

The amendment spoken to so ably by my hon. Friend the Member for Rochester and Strood (Mark Reckless) is absolutely right. It deals not just with the mechanics or the technicalities, but with what is really going on under the surface. The real questions are, “Where is the money coming from?” and “What is the object of this multiannual financial framework?”

I have been to many conferences in the past year in my capacity as Chairman of the European Scrutiny Committee—in Cyprus and Denmark, and, before that, elsewhere—and I have attended similar conferences with my right hon. Friend the Member for Aylesbury (Mr Lidington). They are living on another planet: that is the real problem. The main feature of that big landscape is where we are today. This is part of a picture that must be dealt with.

I know that my right hon. Friend the Prime Minister is conscious of that. He knows that Mr Barroso’s speech calling for a federal Europe, which was made only a short time ago, has put us at a crossroads. We cannot continue to assume that what was being considered before that date still applies. We are now on a different journey. They are on one planet, and we are on another. We have to make a stand, and that is what this is all about.

A letter dated 18 December 2011 from the Prime Minister and from the Prime Ministers of several other member states, included the following passage:

“European public spending cannot be exempt from the considerable efforts made by the Member States to bring their public spending under control.”

We are cutting here; we need growth. They are not cutting, but increasing. That is the point.

[Chris Kelly (Dudley South) (Con)]

I know that my hon. Friend has a great deal of empathy with the private sector. The private sector is the engine of growth in our economy and it becomes more efficient every year, but does my hon. Friend agree that in Brussels the only thing that increases is the appetite for our money?

[Mr Cash]

Absolutely. It is impossible to make any public expenditure—including our contributions to the whole of the public sector: health, education, local government, the lot—unless the money comes from reasonably taxed small and medium-sized enterprises. Yet the whole of the Commission’s paper—which is at the heart of the 2020 strategy and at the heart of why the Commission is asking for this increased amount of money, which it calls an investment for growth—contains only one reference to small and medium-sized businesses, in one line. That is the problem we are up against. We cannot give money to the public sector unless we get it from private enterprise on a reasonably taxed basis.

The Prime Minister’s letter continues:

“The action taken in 2011 to curb”—

“curb”: that is the word he uses—

“annual growth in European payment appropriations should therefore be stepped up progressively over the remaining years of this financial perspective and payment appropriations should increase, at most, by no more than inflation over the next financial perspectives.”

The situation was wrong then, and it has got worse since. That was in December 2011. We are now in October 2012, and we know what the picture is, and it is getting progressively worse. That is why we had to call for a reduction rather than merely what the Prime Minister describes as an

“increase, at most, by no more than inflation over the next financial perspectives.”

[Mr Christopher Chope (Christchurch) (Con)]

Will my hon. Friend take some support from the fact that on 20 June our right hon. Friend the Foreign Secretary told this House he thought reductions in the EU budget of 20% were “highly desirable”?

[Mr Cash]

Absolutely; that is a very good point indeed.

I would like to dig a little deeper into what this money is supposed to be used for. It is all set out in the papers laid before the House for the purposes of this debate. They talk about turning the EU into a “smart”—whatever that means—“sustainable and inclusive economy” delivering

“high levels of employment productivity and social cohesion.”

How on earth are they going to achieve that given the measures they think will produce growth? Almost every single aspect of what they want to deliver is based on increasing grants and subsidies, but not on asking where the money is coming from.

The money comes from our constituents. It comes from the taxpayer. It does not grow on trees. That is what they do not understand. Therefore, the entire strategy on which this multiannual financial framework is based is nonsense. It is an Alice in Wonderland fantasy, as I have repeatedly said when I have had the opportunity to meet the other 27 Chairmen of the national scrutiny committees. I have noticed that there is increasing awareness, too. The hon. Member for Luton North (Kelvin Hopkins) was with me only a few weeks ago, and he noticed the degree of response I was getting from the other member states’ national chairmen. They understood that they were in deep trouble.

The money does not grow on trees in Spain; that is why there are demands for independence from Catalonia. The money does not grow on trees in France or Germany either. The fact is that it has to be found.

[Wayne David]

The hon. Gentleman and I have significant differences about what this country’s approach to the EU should be, but does he agree that the important thing at this moment in time, with every EU member state having to make public expenditure cuts, is that the EU itself should make cuts? That message should go out from both sides of this House.

[Mr Cash]

The hon. Gentleman is right. I do not think this is just a cynical move, even though there is an element of that. As I find when I go to meetings with those in the presidency, there is a recognition: they know they cannot go on spending money that is not there. That is the truth. That is all this argument is really about. It is about the big landscape of whether, like Mr Micawber, we can just hope something will turn up. It will not; it has to be built through real growth policies.

Unfortunately, the report the European Commission produced only a few months ago shows it has not got a clue how to generate that growth. I was also deeply disturbed to see that the amazing report by the European Parliament calling for all these increases was welcomed by the vice-president of the European Commission, Maroš Šefcovic. He said the MFF was “an investment budget” for delivering growth in “the entire EU.” He condemns himself outright simply by endorsing the 150 pages of unadulterated rubbish that came out of the European Parliament in its interim report.

[Mark Reckless]

Even for those in the House who are genuine Keynesians, if our goal is to stimulate the economy is it possible to think of a worse way to spend money than the way the MFF sets out for the EU?

[Mr Cash]

I absolutely agree. The real problem is that their answer is to give more money to the public sector and to ventures and projects that, as the Court of Auditors report shows, increasingly fail. The trouble is that the European project is a failing project.

They will not recognise that, so what are they doing? They are saying, “We are going to go off and have a federal Europe.” Well, let them have it. They can have their federal Europe if they want, but we, in this country, cannot possibly be part of it—that is unthinkable. The Prime Minister knows it is unthinkable, and my genuine belief is that he will come to discover that it would be better to veto this and to ensure it does not go through, because he has already been presented with the crossroads. The crossroads was presented by Mr Barroso, and the crossroads is being presented by the other member states. There is no turning back. We therefore have to say no. We say no to this, we say no to the illegal banking regulations that we have just been looking at and we will be saying no to the proposals for any new treaty. If we are prepared to put our money where our mouth is and actually say that we will not accept this, we will be serving the national interest.

17:20

[Kate Hoey (Vauxhall) (Lab)]

I support the amendment standing in the name of the hon. Member for Rochester and Strood (Mark Reckless); as a signatory to it, I am delighted to do so. I am also delighted that members of my Front-Bench team are, for a change, on the same side as me and my hon. Friends the Member for Luton North (Kelvin Hopkins) and Blackley and Broughton (Graham Stringer), among others. It is nice to see so many people in the Chamber.

We sometimes say, “This shows Parliament at its best.” If this amendment is not passed tonight, we will be showing Parliament at its worst, because a lot people here will not be doing what they really want to do. A lot of people here, on both sides of the House, will be doing what their party has asked them to do. I believe, fundamentally, that the issue of Europe has reached the point where party is not as important as the issue. I genuinely believe that we, in this Parliament, are way behind the public on the question of Europe. I am pleased that things seem to be moving in the direction of the Labour Members and the Government Members who see things as I do. Many of us have worked together on this for many years, going back as far as the time of the Maastricht treaty, when the same pressure was applied by the Labour Whips to vote on it as is probably being applied to Government Members now.

I do not believe that the public would understand the nuances being used here. I refer to the weeny words of the Minister, who was not prepared to give way to me for some reason—I do not know what I have done to upset him—on the issue of why the Government could not support the amendment. He said that it was because the amendment did not contain any criticism of my party when it was in government. We have made criticisms of my party when it was in government—I have done so, as have my hon. Friend the Member for Luton North and various others. Many Labour Members and many others within the Labour party did not support the rebate being removed.

[Kelvin Hopkins]

Many of us have been critical of the giving away of the rebate, both publicly before the last election and since. The Government make much of that event, but I have said to them in this Chamber, “If you feel so seriously about it, why haven’t you demanded it back?” They have had two and a half years to do that.

[Kate Hoey]

I thank my hon. Friend for that intervention. Tonight, we have an opportunity to make it public that there is a united Parliament, for whatever reason and motive. The reality is that we are a united Parliament and we are saying, “We do not want one penny extra spent. We want to see a cut in what the European Union is spending.” I want to see more than that. I want a referendum on our relationship with Europe. I want an end to this nonsense, which we keep putting up with. We could make a decision tonight that says, “We do not want to see an increase—we want to see a cut.” However, come the end of the process, by majority voting, we could be outvoted, no matter how many diplomatic skills we use. I am sure that many hon. Members think that they could do better if they were negotiating, but no matter how good our negotiating skills we may not get what we have asked for. My view is that we should veto at that point and then, when we are sent our bill, we should say no and tell them that we will send what we agreed. We should tell them that we will not send them an increase.

[Conor Burns (Bournemouth West) (Con)]

Given that the Minister and the shadow Minister both said that it is the policy of the Government and Her Majesty’s Opposition that they would wish to see a reduction in the European Union budget and given that there is a motion before the House asking for such a reduction, will not the public find it bizarre if that does not go through tonight?

[Kate Hoey]

In my simple way, that is what I am trying to say. We are beginning to look really out of touch. It is beginning to look as though we are not interested in the people we were elected to represent. I believe that tonight is the night when we can make that difference and really change things.

I must make an apology. I am very lucky that my constituency is literally five minutes away and I agreed some time ago that at 6 o’clock I would light the bonfire on Hallowe’en night. I shall leave to light the bonfire and I shall come back to vote. I hope that on that bonfire there might be something to signify something about the European Union; it would be rather nice if there were. It is not likely, however.

Finally, I ask Members to realise that they should not worry about who is with them in the Lobby tonight. They should not worry about whether they are in the Lobby with people with whom they would rather not be in the Lobby. They should recognise that they are going into that Lobby to represent the people who elected them and should think about what they would want them to do.

[Mr Speaker]

Order. I appreciate that the hon. Lady has a hectic social schedule, to which we have all become privy, and I understand that she will have to leave at some point, but I know that she will want to hear the next speech.

[Kate Hoey]

indicated assent.

[Mr Speaker]

I am extremely grateful to her. I call Mr Peter Bone.

17:27

[Mr Peter Bone (Wellingborough) (Con)]

It is a great pleasure to follow the hon. Member for Vauxhall (Kate Hoey). When the House can hear speeches from the hon. Lady, the hon. Member for Rhondda (Chris Bryant) and my hon. Friends the Members for Stone (Mr Cash) and for Rochester and Strood (Mark Reckless) and we all agree, that is when the House is at its best.

I am delighted if Opposition Members want to vote for a Conservative amendment. That shows great credit to them. I hope that all Members on this side will vote for a Conservative amendment. The problem is that the motion is not a Conservative motion but a coalition motion. I am quite convinced that if we were not in coalition with the Liberal Democrats, the Prime Minister would be voting for the amendment.

[Chris Huhne (Eastleigh) (LD)]

It has nothing to do with whether this is a coalition motion or a Conservative amendment. It is about realism versus unreality. As the hon. Gentleman knows, if someone goes into a negotiation telling people exactly what they are going to do, with no room for movement whatsoever, why on earth should they bother talking to them? We heard the reality from the hon. Member for Stone (Mr Cash) and that is that he, like the hon. Member for Vauxhall (Kate Hoey), wants a crisis for the European Union. This has nothing whatsoever to do with these negotiations.

[Mr Bone]

I must apologise to the Liberal Democrats, because they obviously agree with everything we have said tonight and think that we must strengthen the Prime Minister’s hand in the negotiations. I apologise for giving the false impression that they were going to vote with the Government tonight.

One problem is that this is a Westminster village affair, and I want to know what is happening on the streets in my patch. There is a lady who has been walking the streets of the Corby constituency for eight weeks or so; her name is Christine Emmett and she just happens to be the Conservative candidate there. I wondered what the feedback was on the ground in Corby, and she says:

“I voted ‘no’ to the EEC in 1975, as I did not trust the Common Market (as it then was) would not grow into a political alliance which would diminish our control over our own affairs. The British people voted ‘yes’ and we have lost control of some essential legislation”.

She goes on to say:

“The present terms of membership are unacceptable and unaffordable”—

she speaks for the people in my constituency, too.

[Several hon. Members]

rose—

[Mr Bone]

I shall press on because other Members wish to speak and I want to be as brief as possible.

I think that every Member, whether they vote for the Government’s motion or not, wants a reduced budget. We all think that there should be a real reduction in the EU budget, because how can we tell our constituents that they are suffering cuts so that we can give the European Union money to waste? We have a superb Minister at the Dispatch Box listening to the debate. At its conclusion, I genuinely hope that the Government will be able to accept this modest amendment. Would not that be great? The British people, instead of seeing artificial division, would then know that the whole House was in favour of a reduced budget in real terms, albeit perhaps with the exception of Plaid Cymru Members, who might have done a dirty deal somewhere along the line.

The real issue that I want to talk about is the rebate. I shall give Prime Minister Blair the benefit of the doubt, because when he gave up the rebate, he thought that there would also be a massive cut in common agricultural policy payments, meaning that our net contribution would not go up. According to figures from the House of Commons Library, during the following five years of the Labour Government, our net contribution to the EU was £16 billion. That is a lot to pay for membership of the EU, but unfortunately, since Tony Blair left, our rebate has gone down and there has been no reform of the CAP, so over the period of the coalition Government, as things stand—even without a budget reduction—we will be paying £36.4 billion to be a member of this club. How can we say that we will pay £36.4 billion, and then that we will pay some more to allow for inflation?

[Mr Aidan Burley (Cannock Chase) (Con)]

Is my hon. Friend aware that the “more” figure that we will pay under the Government’s inflationary proposals is £1.3 billion over just the next two and a half years? How many nurses, doctors and teachers would that buy?

[Mr Bone]

I agree entirely.

The issue tonight is not whether I am happy to vote with the hon. Member for Rhondda—

[Chris Bryant]

You always are.

[Mr Bone]

There are no two people in the House who disagree more on the European Union than the hon. Gentleman and I. Today, however, we are voting for what the British people want. When I talk to people in Rushden or Wellingborough, they cannot understand why their council services are being cut at the same time as we plan to spend billions more on the European Union.

Cutting away the rest of the rhetoric, hon. Members must decide whether they will vote for a Conservative amendment calling for a real reduction in the budget, or a coalition motion that effectively calls for an increase, because it allows for inflation. I am sure that, secretly, the Prime Minister would like the whole House to vote for the Conservative amendment, because it would strengthen his hand in the negotiations enormously if he could say, “There is a united House of Commons demanding a reduction in the budget.”

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. To accommodate more Members in the debate, the time limit is being reduced to five minutes, with the usual injury time for interventions.

17:34

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

It is a pleasure to follow the hon. Member for Wellingborough (Mr Bone). I agree with him entirely that the Prime Minister has a wonderful opportunity, if he wishes to grasp it, to use the united stance of the Commons on EU budget cuts to increase his bargaining power in Brussels, but I fear that the Prime Minister’s negotiating position is more about damage limitation than about getting the EU budget reduced. A unique opportunity exists for EU budgetary reform and all due diligence should be directed towards advocating an overall reduction in the EU budget.

The House of Commons Library has set out clearly what the reductions are for each of the Departments over the current comprehensive spending review period. There are reductions of 23% for the Home Office, 27% for the Ministry of Justice, 19% for the Ministry of Defence and 19% for the Department for Work and Pensions. Across the board there is an 11% real reduction in Government spending. In the Northern Ireland Office the reduction is 12%, in the Wales Office 12% and in the Scotland Office 11%. These are real cuts. There is nothing in these figures which allows for a freeze still less an increase to cover inflation.

It is difficult for people in the community, as has been said by previous speakers, to understand why the Prime Minister tells people that in order to get the economy on the right footing, drastic real-terms cuts in the budgets of Government Departments are necessary, affecting front-line services. That message has been sent out by national Governments in the EU, right across the board, yet when it comes to EU expenditure, we are told that the most that we can aspire to is some kind of inflation increase. To the people in the street, to whom the hon. Member for Wellingborough referred, this is not only bizarre, but incomprehensible. They expect the Members whom they send to the House of Commons to stand up for the United Kingdom and for them, and to say that the same rules should apply to spending on the EU as to everybody else.

[Mr Cash]

Does the right hon. Gentleman know that the European Parliament describes the Commission’s proposal as representing a freeze of the multiannual financial framework between 2014 and 2020, and says that it would not be sufficient to finance the existing policies which come out of the treaty of Lisbon? Is there not something ironic in that, in relation to the Government’s motion?

[Mr Dodds]

Absolutely. When it comes to the European Parliament, nothing surprises me. I must speak up in defence of Members of the European Parliament, including the Member from my party, who consistently vote against these federalist ideas and against increases to the budget, and stand up for the people who contact us daily, saying enough is enough.

With reference to what the EU is doing, let us look at some of the areas of expenditure to which this year alone the UK will contribute £15.8 billion and by 2014-15 £19.2 billion, and that is before the increases going forward. A Member referred earlier to the European Parliament and the fact that it does not have a single seat. Ending that wanton inefficiency would equate to £1.26 billion over the seven years of the 2014-20 period, but there seems to be no appetite in the EU to change that.

With respect to quangos and agencies, there are 56 EU quangos, twice the number in operation in 2004. The cost to European taxpayers has increased by 33% in the past two years alone, with an estimated expenditure of €2.48 billion in 2012 alone. We were told that when it came into being, the External Action Service would not cost the British Exchequer any more money, whereas it has done precisely that. If we got rid of that unnecessary body, we would save EU taxpayers more than €480 million every year.

I think the Minister referred to the House of European History, of all things, which, I am told, is aimed at promoting an awareness of European identity since 1946. It will cost £136.5 million by 2015, with British taxpayers contributing £18.6 million. Those are simply a few examples of the absolutely scandalous waste of money towards which our taxpayers are having to contribute year on year through our contributions to the EU budget.

[Bob Stewart (Beckenham) (Con)]

Is this not simply about fairness? It is fair for the European Union to make the same sorts of cuts that we are having to make at home. That is fair and that is what we should pass tonight.

[Mr Dodds]

The hon. Gentleman is absolutely right that this is about fairness. It is also about being seen to connect with the electorate, the people who send us here, as the hon. Member for Vauxhall (Kate Hoey) said. One of the problems with Parliament and politicians generally is that people do not feel that we have any connection with them or relate to their day-to-day problems. The choice before the House tonight is clear: either we vote to send a clear message that enough is enough, we expect what applies to UK Government expenditure and the national budgets of other member states to apply to the European Union, and our choice is to be on the side of the taxpayer and our people, who are out there suffering daily as a result of the cuts—

[Mr Jim Cunningham (Coventry South) (Lab)]

rose—

[Mr Dodds]

I am sorry, but I have no more time to give way and other Members wish to speak.

The choice is whether or not to vote in favour of the Government’s motion, which has been couched in tough terms by the Minister, and I welcome the progression in Government thinking, because when I listened to the Opposition spokesman I was reminded that it was not long ago that we heard representatives of the same party arguing a very different case when it came to European expenditure. I accept that entirely, but the fact of the matter is that there is no reason why this House should not send out a united message saying that what is good enough for Britain and our constituents, for the people we represent, should also be good enough for the European Union and that there should be no special exemption or special rule for it. We must be on the side of taxpayers tonight and vote for the amendment tabled by the hon. Member for Rochester and Strood (Mark Reckless).

17:41

[Stephen Williams (Bristol West) (LD)]

The hon. Member for Vauxhall (Kate Hoey), who I assume has gone to light her bonfire—I am not sure whether Mr Barroso or anyone else will be on top of it, but I hope that she enjoys the heat south of the river—said that the House was at its best when it is united. I entirely agree that the House is at its best when united on an important point of principle in which we all genuinely believe, and some Members are genuinely standing up for what they believe in—the hon. Members for Rochester and Strood (Mark Reckless) and for Wellingborough (Mr Bone), for example, who are genuinely Eurosceptic—but when the public see nakedly opportunistic Opposition motions, that is when the House is at its worst in their eyes, and that is what undermines public confidence in the work of Parliament.

[Chris Leslie]

Will the hon. Gentleman remind the House what he said about tuition fees before the general election?

[Stephen Williams]

This is about a debate we are having now on a budget from 2014 to 2020, not about a position we took in 2009 before any of us knew we were going to be in a coalition Government. This is a position we can decide for ourselves, knowing the circumstances we are currently in. They are entirely different situations.

We are essentially discussing a comprehensive spending review of the European Union from 2014 to 2020, for which the European Commission has asked for a budget of €972 billion. That is roughly €100 billion above what would be a real-terms freeze. That is completely unrealistic at a time when EU member states are under real budgetary pressure, and some more so than others. It would be unacceptable for the United Kingdom to agree an increase of that magnitude, because it would represent roughly £10 billion in extra contributions. Therefore, it is absolutely right that the UK Government are going into the negotiations, in concert with many other member states, asking for a real-terms freeze. That is what is important: the position our Government are taking is in agreement with that of many other member states. It is a position that has a realistic prospect of achieving the success that most of us actually want. Undermining the United Kingdom’s position today will blow a hole in that negotiating position and make it much less likely that we will get the outcome many of us wish to achieve.

[Andrea Leadsom]

Does my hon. Friend agree that it blows a hole in our credibility with our European colleagues regarding not only the budget but other reforms where we have a significant, perhaps once in a lifetime, opportunity to create real structural reform of the EU?

[Stephen Williams]

I absolutely agree, and I will come to that shortly.

The negotiating position of arguing for a real-terms freeze is agreed right across the coalition Government. There is no one more Europhile than the Deputy Prime Minister, who tomorrow is going to make a speech in which he highlights several of the reasonable differences that exist between the coalition parties on our relations with the European Union and makes it absolutely clear that he fully agrees that a real-terms freeze is the right way forward.

My hon. Friend the Member for South Northamptonshire (Andrea Leadsom) mentioned the case for reform. The European Union spends 33.8% of its existing budget, as negotiated in 2005, on the common agricultural policy and 5.7% on a very bloated central administration system, with the caravan moving between Strasbourg and Brussels, and it could make cuts in those areas. Yet it spends only 9.2% of its budget on the competitiveness agenda—on supporting research and development and small and medium-sized enterprises. That is where we want the European Union to spend whatever its agreed budget is in future.

The Government are right to argue against what the European Union calls its “own resources”—in other words, tax revenues directly hypothecated for the EU—and to say that we do not want that to happen with VAT. They are also right to argue against a Europe-wide financial transactions tax. My colleagues and I think that there is a good case to be made for a financial transactions tax across all the global financial centres, but many of those are outside the European Union, most obviously in Switzerland. It is not for the European Union to make the case for an FTT, and it certainly should not be the recipient of any revenues from an FTT should one be imposed in future, because it would then be taking on the personality of a state and a Government, and that is not the vision of the European Union that the Liberal Democrats wish to see. It is also right that the Government should argue for the retention of the British rebate.

Labour’s position is quite extraordinary. The hon. Member for Bolsover (Mr Skinner), who is no longer in his seat, gave the game away by alluding to the Maastricht votes of 20 years ago. Its position is a marriage of genuine Euroscepticism—I accept that—and naked opportunism. We in the coalition Government have waited two and a half years for Labour Front Benchers to tell us which of the cuts that the coalition Government are implementing they agree with, and, if they disagree with all of them, which has been the position thus far, at least to suggest alternatives. There has been total silence. The only cut that they are brave enough to suggest is one that has to be imposed by 26 other member states—they show no bravery at all in suggesting cuts in our own budgets. That is incredible, and for those Labour Members who are Europhiles, it is an embarrassing position in which to find themselves. I can only assume that they have been put there by their more senior Front-Bench colleagues who are not with us at the moment.

Labour Members should know that it is not possible to achieve a real-terms reduction in the MFF. They did not manage it in 2005, when they negotiated an increase. The current leader of the Labour party, the current shadow Chancellor and the current shadow Foreign Secretary were leading members of that Government. Liberal Democrat MPs and Conservative MPs voted against an increase in November 2007. In recent years, our Members of the European Parliament, Liberal Democrat and Conservative, have consistently voted against a real-terms increase in the European budget. Labour Members of the European Parliament have voted against a freeze in the EU budget; all they voted for was extra money for the trade unions. We want the EU to spend more on measures that grow the European economy, deepen the single market and make the EU globally competitive.

17:49

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

I welcome the junior Minister of State and hope he will tell us where the senior Minister of State is this evening.

This has been an excellent debate and we have heard principled contributions from Members of all parties, who hold deep, long-held convictions about Europe and the direction of travel. Anyone who is aware of my view will know that I am the co-chairman of the all-party group on European reform and that I believe that Britain is better off in Europe but that the current organisation is not satisfactory.

To give an example, 1 January saw the introduction of a European-wide ban of battery eggs, for which the UK, under the previous Government, and many other countries had campaigned successfully. However, it became clear that a number of eastern and southern European nations would fail to meet the 1 January deadline. The Environment, Food and Rural Affairs Committee took evidence on the issue last year and, when we asked the European Commission what it would do if the UK chose not to allow these illegal eggs into the country, it said that it would prosecute the United Kingdom, which is an obscene and perverse position to adopt. Saying that it would prosecute a country for upholding Europe’s own laws shows that the Commission has got its priorities wrong.

The Minister discussed cutting structural funds, but I disagree. The solution, as explored by the all-party group, is that if we repatriated the structural fund powers and spent the same amount of money as we hand to Brussels, we would have hundreds of millions of pounds more to spend in Wales, Scotland, the south-west and the south-east.

[Conor Burns]

Given that the hon. Gentleman is going to vote in favour of an amendment calling for spending restraint, does he regret that his party’s Front Benchers did not follow that policy in their 13 years in government?

[Thomas Docherty]

I am surprised that the hon. Gentleman has not made it on to the Government’s Front Bench yet with that kind of devastating critique.

My hon. Friend the Member for Vauxhall (Kate Hoey) said that we will be voting alongside people whom we do not get on with or whom we do not particularly like, but I have been informed by one or two Conservative colleagues that that occasionally happens in the Government Lobbies anyway. I look forward to seeing which Lobby the hon. Gentleman enters later.

[Mr Jim Cunningham]

Does my hon. Friend agree that this is not a debate about whether we should be in or out of Europe? It is about the fact that, on the one hand, the British people have been told to tighten their belts and the Government’s borrowing has gone up, while on the other hand, the Government are leading us into a situation where there will be an increase, one way or another, in the EU budget. That is the real issue and it is not acceptable to the British people.

[Thomas Docherty]

My hon. Friend is correct. Whether people live in Coventry, Bournemouth, Tunbridge Wells, Ribble Valley, Dunfermline or Cardiff, education budgets, child care, housing budgets and defence of the realm are being cut, yet we are expected to hand more and more money to Brussels bureaucrats to spend on vanity projects that will then attack British industry and British farmers. The British public will not understand if Members of this House, who claim that they want the best for the British taxpayer and that they want to support British industry, do not vote according to their principles and their long-held consciences and allow themselves to be corralled by their Whips into voting for this coalition motion.

It is interesting that this is only the second time that we have seen a large Liberal Democrat turnout in the Chamber since the start of this parliamentary Session. The first time was when we debated House of Lords reform. That says it all about the quality of the motion. I urge hon. Members from all parties to listen to their taxpayers, British industry and their consciences and to vote for the amendment.

17:54

[Mr Brooks Newmark (Braintree) (Con)]

I am delighted to follow the hon. Member for Dunfermline and West Fife (Thomas Docherty). I feel rather uncomfortable with what I am about to say, because I agree with pretty much everything that has been said, particularly by Government Members. Of course we all want a real cut—I am sure the Prime Minister, the Chancellor and the Financial Secretary do. The nub of the debate, however, is what my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) said. It is about how the Prime Minister negotiates, and negotiation is about achieving realistic objectives.

I think that the multiannual financial framework, or EU budget to use a simpler term, is insane. For the European Union to ask for a 10% real-terms increase above inflation is insulting to our constituents and to the people of Spain, Italy, Portugal and Ireland, who are being told to pull in their belts. My hon. Friend the Member for The Wrekin (Mark Pritchard) said—I think I am getting this right—that people are being asked to make painful cuts in their household budgets. Each and every one of us has constituents who are being told to pull in their belts, and we all agree with that.

[Mark Pritchard]

I am flattered that my hon. Friend has quoted me. One way in which the Prime Minister’s hand can be strengthened is by having a united Parliament rather than a disunited Parliament when he goes to Brussels to negotiate on my birthday, 22 November.

[Mr Newmark]

I hasten to add that it is my wife’s birthday as well.

Let us discuss and decide today what message the Prime Minister should be given. Clearly he will read Hansard, and he will know the message that the Whips give him and so on, but do we want to bind his hands when he goes into the negotiations? He has already discussed a real-terms freeze with the Germans, French and Dutch, who are buying into the fact that this is a reasonable prospect. Do we want to push him over the edge and ask for something that we know he can never realistically achieve?

[Stewart Hosie (Dundee East) (SNP)]

The real-terms freeze that the hon. Gentleman says is realistic is of course an inflationary rise. Does he really believe that it is unrealistic that the European Union can find modest efficiencies to deliver even a modest cut? When I am to his right on a subject, he is definitely wrong.

[Mr Newmark]

If it was the hon. Gentleman and I negotiating, I am sure we could find some realistic efficiencies. The fact is, however, that for the time being—I say this for the benefit of my hon. Friend the Member for Stone (Mr Cash)—we are in something called the European Union. We therefore have to negotiate with more than 25 other countries.

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

Will my hon. Friend give way?

[Mr Newmark]

No, I think I will proceed.

On the Labour party’s chutzpah and hypocrisy, the hon. Members for Rhondda (Chris Bryant) and for Nottingham East (Chris Leslie) argued for more financial restraint and for looking after taxpayers’ interests, but there was a 47% real-terms increase in the EU budget while Labour was in government. What has suddenly changed their minds? We need not take any lectures from them. Their policies are incoherent, opportunistic and completely lacking in credibility.

That brings me to the nub of the argument: which way will we go? Will we ask the Prime Minister for something that he can achieve, which is a real-terms freeze? That does not mean that he will not do better than that, because I believe he will fight our corner for real-terms cuts. I am sure he is listening to everybody who is fighting for real-terms cuts, or at least to Government Members, but what is his bottom line? What is the red line beyond which we should pull out the veto, which the hon. Member for Nottingham East has not admitted he is willing to use? That red line has to be at least a real-terms freeze. That is what today’s debate is really about.

I ask my right hon. and hon. Friends to consider what message we want to give the Prime Minister. It should be that he should negotiate in the best interests of UK plc. That means fighting for a real-terms cut—I want that, and so do all my right hon. and hon. Friends—but the bottom line should be a real-terms freeze, which I believe is achievable in the negotiations.

17:59

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

You and I, Mr Deputy Speaker, were both Members of this House in 1992-93, when I was one of those pro-Europeans who followed my pro-European party leader, John Smith, and the spokesman for foreign affairs, Lord Robertson, into the Lobby with people whom I would never have described as having the same view as me on Europe and its future. The same thing will happen this evening, but I wish to make it clear that I do so not because I agree with the tenor and tone of the many Europhobic speeches we have heard from Government Members—and some, unfortunately, from this side of the House—but because I believe it is wrong for the European Union to increase its spending at a time when national budgets, not just in this country but in Greece, Spain, Portugal and elsewhere, are being reduced.

This is not the most important debate about the future of Europe that we will face, and we must put it into perspective. Although there is talk of billions of pounds and euros, the EU budget is only 1% of the GDP of all member states. In this country, public spending accounts for more than 40% of our GDP each year, and we must put into perspective the fact that the EU’s total spend is very small.

In his introductory remarks, the Minister referred to the size of the Commission. I was unable to intervene at that point, but let me place it on the record that the European Commission has, in total, between 30,000 and 33,000 employees who serve 27 member states. The Minister’s Department in Her Majesty’s Revenue and Customs alone has about 80,000 employees, and we must get such things into perspective. We do not have a gargantuan European Union bureaucracy hoovering up resources; in fact, the UK Government spend five times as much servicing the interest on the national debt each year than they do in European Union contributions.

[Henry Smith (Crawley) (Con)]

The hon. Gentleman is talking about the administration of the European Commission, which at 30,000 employees I think is still too large. The bulk of the EU budget goes on redistributing money, typically from net contributors such as the United Kingdom to other parts of Europe. Does he feel that we need a little more restraint in that respect as well?

[Mike Gapes]

I agree with that, but I also point out that the UK contribution to the European Union is less than that of Germany. Our net contribution—with the rebate that was retained by the previous Labour Government—is comparable to that made by France, a similar country in terms of size, population and GDP. We are among the net contributors, but the European Union is also about solidarity. One thing that led to the growth of the European Union, and the increased trade and prosperity from which British workers and British companies benefit, is the fact that countries such as Spain and Portugal—and, increasingly, countries such as Slovenia—are growing and benefiting by their membership of the EU.

The EU also makes a contribution to democracy and stability in Europe, for which the Nobel prize committee has rightly—[Interruption.] Oh I see. Here they are; here is the real agenda. The Nobel prize committee has rightly recognised the European Union’s contribution to peace in Europe over the decades. If somebody like Henry Kissinger can get the Nobel peace prize, the European Union certainly deserves it.

[Mr Denis MacShane (Rotherham) (Lab)]

Does my hon. Friend share my hope that the EU—some time, and perhaps this century—will get the Nobel prize for economics?

[Mike Gapes]

I would hope that my right hon. Friend and I—we are of a similar age—will live long enough to see that, but I do not think it will happen immediately. It will require the eurozone to become much more tightly organised than it is today.

Last week, I visited Germany and Norway with the Select Committee on Foreign Affairs. We are considering the future of Europe and the implications for this country of different options that might arise. Two or three years ago, the political debate in Germany was about trying to keep Britain on board and to move with Britain. However, the reality, right across the political spectrum, is that Germany has given up on the UK under the coalition Government. The Germans see their future as being with France and Poland, and their priority will be to save the eurozone at all costs.

That means that the UK will be in an uncomfortable position. The Prime Minister might have signed a joint letter with European leaders in 2010, but the reality in 2012-13 is that Germany is not with us. Anybody who thinks that only Germany is not with us should read the remarks of Radek Sikorski, the Polish Foreign Minister, who gave a radical speech in Oxford just a few weeks ago, in which he used phrases such as:

“Poland wants to be with Germany and France as partners”.

He also said:

“You could, if only you wished, lead Europe’s defence policy…Britain’s leaders need to decide once again how best to use their influence in Europe…The EU is an English-speaking power. The Single Market was a British idea. A British commissioner runs our diplomatic service…But if you refuse, please don’t expect us to help you wreck or paralyze the EU.”

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

Will the hon. Gentleman give way?

[Mike Gapes]

I cannot—I have very little time.

The Polish and German Governments and many others want the UK to stay in the EU as partners, but they will not wreck the EU to keep us. We need to realise that our options are narrowing. The Government are in danger of taking us into an isolationist position.

18:07

[Sir Tony Baldry (Banbury) (Con)]

All Government Members will recognise how deeply shabby Opposition Front Benchers’ behaviour has been. I was a Member of the House when Blair negotiated away a large part of the rebate on the understanding that the common agricultural policy would be reformed. A large part of the rebate disappeared, but the CAP was not reformed, and Labour Members now have the audacity to complain that the CAP needs reform. It is a deeply shabby performance this afternoon by the Labour party and the official Opposition.

I want to address my comments in the short time I have to my hon. Friends. On the specific motion, hon. Members will agree that, if the Prime Minister manages to negotiate a real-terms freeze in the EU budget, it will be the toughest financial negotiated settlement the EU has seen. If he achieves that, he will have achieved something that no one has achieved before. That is a matter of fact.

As the hon. Member for Ilford South (Mike Gapes), who used to chair the Foreign Affairs Committee, said, we are talking about part of an overall picture of negotiations that the Prime Minister will have to undertake over the next few years when renegotiating our position on Europe. As many countries become closer in the eurozone, where will that put us? We must renegotiate.

Colleagues on the Government side of the House have a choice: we either support the Prime Minister or we do not. If colleagues are not prepared to support him, every time they go into a different Lobby from him, they weaken his negotiating hand in Europe. Please let us not accept the blandishments from some that the Prime Minister has a negotiating strategy that he is not willing to show us. I can assure the House that the Prime Minister is perfectly capable at the Dispatch Box of telling the House what he wants to do, what he wants to achieve and where he wants to be supported.

I was a Minister throughout every day of John Major’s Government, and I know just how much that Government were weakened by colleagues persistently going into the Division Lobby voting against the 1992-97 Conservative Government.

[Nadhim Zahawi]

My hon. Friend and the Front-Bench team have articulated the challenge of achieving even a settlement that allows for no increase other than one in line with inflation, and part of that challenge involves building a coalition. It would be completely counter-productive, having got the agreement of Germany, France and the Netherlands, to go back to those countries and say, “Actually, our Parliament’s changed its mind. We want a bit more”, and force their hand even further.

[Sir Tony Baldry]

I agree entirely with my hon. Friend. It is time we started to be grown up. I am sorry if I sound like an old stager but, having lived through the Major years, I must say to my Conservative colleagues that we simply cannot carry on with the sort of self-indulgence that we see on the Order Paper today. [Hon. Members: “Oh!”] No, no. We cannot continue with this self-indulgence.

The reason Blair was able to give away the rebate was largely because we lost the general election in 1997, and one reason we lost the general election was because the nation was not prepared to vote for a party and a Government that they saw as being deeply divided. [Interruption.] The hon. Member for Bishop Auckland (Helen Goodman) might think that amusing, but I do not think that the country thought it amusing that the Labour party was in a position to give away a large part of this nation’s rebate.

The Conservative party has a responsibility to do the best it can for the country, and I have every confidence that the Prime Minister is seeking to do that. He has to renegotiate the whole of the UK’s position within the EU. That will take considerable tact and diplomacy, and he is entitled to consider that he has the support of Conservative Members when he does so.

[Dr Wollaston]

Does my hon. Friend accept that, although in the past the Conservative party was divided on Europe, it is now united? We are all opposed to the budget increase and want to strengthen the hand of the Prime Minister, whom I support absolutely?

[Sir Tony Baldry]

In all honesty, if the hon. Lady goes into a different Division Lobby from the Prime Minister this evening, she will not be helping the Prime Minister or our party. It is as simple as that. The Prime Minister has made it clear what he wants to achieve. If he achieves a freeze in the EU budget, he will have done something that no other Prime Minister has ever managed.

[Mr Burley]

Will my hon. Friend give way?

[Sir Tony Baldry]

No, I am not going to give way.

All that happens on these Benches, whenever the Prime Minister says he is going to achieve something, is that those who are somewhat self-indulgent seek to set him an even higher hurdle—

[Several hon. Members]

rose—

[Sir Tony Baldry]

No, no. They seek to set him an even higher hurdle to jump over. It is unreasonable and unfair. If this party hopes to be in government after the next general election, it has got to get a grip and start supporting the Prime Minister.

18:13

[Mark Hendrick (Preston) (Lab/Co-op)]

I am pleased to follow the hon. Member for Banbury (Sir Tony Baldry), although I took exception to some of his comments about the Opposition’s view.

I have served in Parliament for 12 years, and I supported increases to the EU budget, but this time, with the depth of the recession and a double-dip that was predicted before the general election, clearly the economic conditions are very different. Although the case is being made for a cut on the grounds that the economy is doing badly, I wonder how many Government Members would make the case for an increase when there is growth in the economy and Europe is doing well, as it has in the past.

In times of austerity, it is clear that there is no popular mandate for an above-inflation increase in the multiannual financial framework. The Opposition have outlined the need for a real-terms cut in the budget for 2014 to 2020. I will not revisit the arguments—they have already been articulated by my colleagues—but on the question of the veto, the Prime Minister has no friends in Europe. I was on the Select Committee on Foreign Affairs visit to Berlin; I have spoken to the Germans and others from elsewhere in Europe in recent months. The Prime Minister was bragging today that he has a veto and is not afraid to use it. That is like the madman with a gun—“I’ve got a gun and I’m not afraid to use it”—but the trouble is that the gun is pointing at the Prime Minister’s feet, and he will isolate himself even more as he goes into those important negotiations in November.

I would like to address the need to look at budget reform, particularly the pressing need to retain and strengthen the aid budget delivered through the general EU budget, which is about 70% of the EU’s total spending on aid. The EU institutions are the world’s second largest aid donor behind the US, disbursing $12.6 billion of development assistance in 2011. Combined with the aid provided by each member state, the EU is responsible for some 60% of the world’s official development assistance. That is something to be commended. I am sure I do not need to remind the Financial Secretary, but the coalition agreement states:

“The Government believes that even in these difficult economic times, the UK has a moral responsibility to help the poorest people in the world. We will honour our aid commitments, but at the same time will ensure much greater transparency and scrutiny of aid spending to deliver value for money for British taxpayers and to maximise the impact of our aid budget.”

The European Commission’s “Proposals on external action instruments”, published in June last year, provided the basis for negotiations on development assistance in the multiannual financial framework. The European Commission proposes a 19% real-terms increase in the EU budget-financed development co-operation instrument. I am all for us cutting the contribution for this country; at the same time, I do not think that we as a developed nation should neglect the poorest people in the world. I hope that the Financial Secretary and the Prime Minister, when he goes into those negotiations, will support the Commission in securing a well above-inflation increase in the development co-operation instrument. That would mean an increase from €17.2 billion in 2007 to 2013 to €20.6 billion. I would also like to see budgetisation of the European development fund, which for a number of reasons is outside the European Union budget, in addition to major reform of the common agricultural policy. The CAP amounts to about £45 billion, with the UK contributing around £1 billion. In relation to aid policy, the CAP undermines international trade liberalisation and distorts trade, running counter to the objectives of the aid budget.

It is easy to lose sight of the human tragedy of poverty—the inability to pay for medicines to help a sick child; not knowing where one’s next meal will come from; war-torn countries without the basic infrastructure to support communities. Britain has moral authority in this area, but we can retain it only if we remain committed to a real-terms increase in the EU aid budget and a real-terms decrease in Britain’s contribution to the EU budget.

18:14

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

The speech by the hon. Member for Preston (Mark Hendrick) sounded more like a speech in favour of an increase in the European budget, albeit disguised as a speech in favour of a cut, because that happens to be what he is being asked to vote for today.

I note that passions are high in this debate, not least among my hon. Friend the Member for Banbury (Sir Tony Baldry) and the hon. Member for Ilford South (Mike Gapes). Let me assure them both—because I think they come from the same European stable—that the last thing those of us who support the amendment want to do is wreck Europe or to wreck our relationship with our European partners.

But something very big is happening in British politics—much bigger than this debate. We are debating the European multiannual financial framework, but there is something rather familiar about the positions being adopted by those on the two Front Benches. One could almost imagine that, if they were to change places, each would be making the other’s speech. Indeed, in the last Parliament, one felt that that was exactly what was happening. There is something deeply disconnected about the debates that we have been having in the House about our future relationship with the European Union, and about the aspirations of the British people and what they want that relationship to be.

I would caution my right hon. and hon. Friends against taunting Labour Members over their volte face on this issue. I have no doubt that they have made a volte face on the question of European spending, but for us to accuse them of doing so will cut absolutely no ice with the voters. I would note, however, that the Labour party’s volte face represents a big shift in the politics of this country and in the politics of our relationship with the European Union. Labour is an opposition party that is hungry for power. Even Labour Members can now sense the tide of opinion that is flowing against the European Union among our voters. They are picking up the vibrations from their constituents and from the voters they need in order to get elected, and they have discovered a new principle in order to reflect that: they now want to cut the European budget.

[Mr MacShane]

rose—

[Mr Jenkin]

I give way to my newly Eurosceptic colleague.

[Mr MacShane]

I am deeply grateful to the hon. Gentleman. Whether this is a volte face or a volte farce I am not quite sure, but he is quite right to say that the tide is flowing; it is flowing to Labour and away from the Conservatives.

[Mr Jenkin]

I believe that the Labour party is picking up the anger of the British people about the idea of spending more money on European policies when we are having to cut back on policies of our own.

There is something rather chilling about the exchanges between those on the Front Benches, which tacitly suggest that a veto is a defeat and that it could lead to a worse budgetary outcome for the United Kingdom than could a negotiated settlement. That seemed to be the burden of the argument put by the hon. Member for Nottingham East (Chris Leslie). I should just like to point out to him what that says about the relationship that we now have with the European institutions. Those institutions are so overpowering and so powerful that even the veto of the Prime Minister of the United Kingdom cannot stop the European train on its way to its destination. The British people feel that something has gone wrong with that relationship. This was not the basis on which we were sold membership of the institution, and it was not the basis on which all the assurances were given by successive Governments that each treaty represented no substantial change and was just a “tidying-up exercise”.

[Jacob Rees-Mogg]

My hon. Friend is absolutely right to say that the veto does not really work. Ought we not therefore to be looking to amend the European Communities Act 1972, while recognising that this motion is dealing with the system as it is?

[Mr Jenkin]

I would just point out that we should not try to make ourselves too important in this debate. This is a take-note motion. I have spoken in many debates on such motions. The amendment expresses an opinion on whether the Prime Minister should adopt this little bit of body language or that little bit of body language. It will not make a blind bit of difference to what he does when he goes to the Council of Ministers. The amendment is simply a cry of despair from the British people who want their elected representatives to say something to the Front Benchers of both parties, who have betrayed the British people on the question of our relationship with our European partners throughout the 20 years I have been in Parliament.

The problem in this country is that the governing class is now so out of line with our people’s aspirations for the relationship with our European partners that they are putting the United Kingdom in the worst of all possible worlds. It cannot deliver the engagement of the British state with our European partners on the terms set down in the treaties, and it is not trying to deliver the different terms of agreement with our European partners that the British people would prefer, that our country needs, and that are in the national interest. So wide is this gulf that even the Labour party is picking up the vibrations and is beginning to respond.

[Mike Gapes]

Will the hon. Gentleman give way?

[Mr Jenkin]

I will, because I mentioned the hon. Gentleman in my remarks.

[Mike Gapes]

Does the hon. Gentleman accept that if he got his wish and the UK left the European Union, as did Norway, in order to get access to the single market and to sign up to the acquis, we would pay billions into the EU yet not have any say at all?

[Mr Jenkin]

I do not want to leave the European Union; I want us to engage in a renegotiation of our terms of membership. Now is perhaps not the occasion for such a debate, but it is quite clear that the European Union is becoming a very different kind of European Union—even from the European Union agreed in the Lisbon treaty, let alone from the Common Market, which the British people voted to join all those years ago. It seems to me that if the EU is changing fundamentally and we do not want to be part of a political union, an economic union or part of a currency union or a banking union, we are going to have to change the arrangements by which the EU can legislate to make the laws in our own land.

That seems to me to be absolutely plain and axiomatic, absolutely simple, yet what we have at the moment is a coalition that is paralysed by that coalition—paralysed by an institutionalised disagreement by the two parties in coalition. The renegotiation opportunities at the moment are passing us by. The British people are aware of that paralysis and I do not think that they will put up with it. We are going to finish up having more debates like this, more crises, more difficulties, more dysfunctionality in how Ministers are forced to conduct themselves in the Councils of Europe—and that will put this country in the worst of all possible worlds. To that extent, I agree with the hon. Member for Ilford South.

What this country needs to do is rapidly reassess what relationship we want with the European Union so that our resources can no longer be appropriated in a manner over which even this House, which founded its powers on the control of supply, has no control. As for “own resources”, it is about the European Union having the right to sequester taxation, money and supply from our country, without the consent of this House. I do not think that is what the British people want; it is certainly not good value for money, and they can see that. This relationship is in crisis. The message that a vote for this amendment tonight will convey to the Government is that they are not addressing this crisis with sufficient urgency.

18:27

[Sammy Wilson (East Antrim) (DUP)]

It is a great joy to follow the hon. Member for Harwich and North Essex (Mr Jenkin). In this debate, I believe the people of Northern Ireland would expect me to lay down the marker that if we as citizens of the United Kingdom have to share in the necessary austerity measures required to get us out of our current financial problems, we should expect the same rigours to be placed on the European Union.

I have the honour of serving as Finance Minister in the Northern Ireland Executive. Over the last couple of years, I have had to defend and explain and implement a 40% cut in the capital budget of the Northern Ireland Executive. I have had to resist Ministers who stood out in the streets protesting against cuts to the education budget, the health budget and other budgets, and explain that we were at an end of making money available for all the things we had to do. I think the people would find it difficult if, when it came to the over-fed bureaucracy of Europe, we did not take the same stance. As for the arrogance of the bureaucrats in the European Union—sometimes described as the Bisto bureaucrats who think that the gravy train is still running—we need to put down a marker and say that the years of simply asking for money and getting it are at an end.

Many Members have said today that this is only a cynical exercise, that it will hurt the Prime Minister, that Labour Members are jumping on the bandwagon and that they are a bunch of hypocrites. I must say that I share some of the cynicism about what happened in the past, but this is not about what happened in the past; it is about what we are going to do now. I am sure that if the former leader of my party were here, he would tell the House that there is great joy in heaven over one sinner that cometh to repentance, and that there should be unbounded delight on the other side when a whole party-load of sinners may have come to repentance and renounced their fiscal sins of the past.

Regardless of the motives behind it, the amendment does not weaken but strengthens the Prime Minister’s position. It enables him to go to Europe and say, “The entire House of Commons supports my position, and I have to go back to the House and explain. Either you make changes in the budget, or I cannot carry it in the House of Commons, because I am facing united support for the stance I am taking.”

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

The hon. Gentleman is making his case in typically passionate terms and I am reluctant to interrupt him, but, as a realist, is he aware that the 8% increase in the last multiannual budget was the smallest increase ever agreed in the EU? The chance that Brussels will now accept a real-terms freeze, let alone a cut, is virtually zero, and therefore we are almost inevitably heading for a veto. Is not the only real question whether the Leader of the Opposition joins the Prime Minister and the Deputy Prime Minister in supporting that veto?

[Sammy Wilson]

I have no difficulty with the veto. I do not have to be ambivalent about the veto. Whatever is required in these vital negotiations—whatever leverage is required—must be used. The point I am making is that the best leverage that the Prime Minister can exert in the negotiations is his ability to say, “Regardless of their positions on the party-political spectrum in the House of Commons, all its Members support me in saying that we will not give an extra penny to the European Union, and, furthermore, we want to see a reduction in the amount of money that we give to the European Union.”

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

I agree that we should constrain the amount of money we send to Europe, but in financial terms the difference between the amendment and the original motion could be less than £1 a year. Why divide the House when we all wish to constrain that amount?

[Sammy Wilson]

The hon. Gentleman is wrong. As so much of our rebate is not covered in the new arrangements owing to increases for new member states, our contributions would go up by 5.3% over the seven years even if we opted for and secured a real-terms freeze in the budget. We are talking not about pennies, but about billions of pounds.

The bottom line that is suggested in the motion would actually prove very costly for the British taxpayer, which is why a motion proposing not a real-terms freeze but a real reduction in our contributions to the EU could, and in my view should, gain unanimous support in the House. That is the only way of ensuring that the austerity that people in the United Kingdom have had to experience is also experienced in the European Union. It is not that there are no ways in which money can be saved. For 17 years, the European Union’s accounts could not even be signed off because billions could not be accounted for. The amount of waste that takes place in the EU shows that it is not impossible to make reductions.

I do not know whether I shall be on the right or the wrong side of the vote tonight, in terms of who wins, but I do know that the Lobby that I go through will be the Lobby entered by Members who are standing up for people who have experienced austerity, and experienced it stoically because they believe that it is the right way to ensure the financial soundness of the United Kingdom. I will go through that Lobby because I am on the side of those who want to give the Prime Minister the best hand in the negotiations. I will go through that Lobby for the sake of the people who want to see an end to European and bureaucratic waste. For those reasons, I shall support the amendment.

18:34

[Mark Pritchard (The Wrekin) (Con)]

I support the amendment. Teachers, police officers and nurses in my constituency have told me, “Not a penny more.” Today we paid tribute to our armed forces—those fallen heroes and heroines—but this Government have set in place a pay freeze for our armed forces. In April next year, armed forces salaries will be capped at 1% for the next two years. Is it right, and can we justify it to our constituents, that our brave armed forces, spilling their blood in Afghanistan as we speak this evening, are not going to receive the same treatment as the European Union—a wasteful, profligate and inefficient European Union?

Is it so difficult to conceive that a multiannual budget over the next six or seven years of almost €1 trillion might be able to find some efficiency savings? Our local councils are having to find them, member states are having to find them and, most importantly, our constituents are having to find them. There are increasing numbers of food banks, and people are struggling to pay their utility bills and to put shoes on their children’s feet for the new school year. It is our job to represent our constituents.

I say to Front Benchers that we do not risk doing ourselves a disservice. We are not being self-indulgent, as my hon. Friend the Member for Banbury (Sir Tony Baldry) said. I think it is the ultimate act of self-indulgence to continue to ignore the will of the British people. The British people want us, as their representatives, to stand up to an over-bureaucratic Brussels—an obese Brussels that needs to go on a diet like everyone else, including all our constituents, this Government and member states throughout the European Union. The Prime Minister’s hand can be strengthened by a united Parliament. A disunited Parliament will weaken his negotiating hand.

The Government speak about a real-terms freeze. Let us be truthful: a freeze is not a cut. What is this real-terms freeze? It is not really a freeze as there will be increased cash—an extra £300 million a year, year on year, will be required by the European Union even if the Prime Minister is successful with the so-called real-terms freeze. That sum is the equivalent of two medium-sized district general hospitals in each of our constituencies and of a medium-sized borough council—the same councils we all represent, who are looking for 20% cuts or more. Let us stop dancing on the head of a pin, as the Conservative party so often does. Let us stop playing semantics and being disingenuous with the British people. We are talking about £300 million next year, and hundreds of millions, and billions, of pounds beyond that.

This is the decision we have to make today: are we going to continue to ask families throughout this country to stop putting new shoes on their children’s feet in order to pay for the very large Mercedes fleet in Brussels? That is the choice. This is a moment of truth, and it is no good Eurosceptics on the Government Benches speaking about things in Eurosceptic terms—it is no good our going around parading as Eurosceptics—if our actions defy what we say we believe. At the European elections in 2014, it will be no good our wrapping ourselves in the Union flag if tonight we take it off and wrap ourselves in the stars of the European Union flag.

This is a moment of truth. This is a moment of decision. We can send a united message, as a Parliament and as a nation, to Brussels. Let us make a difference. If we are not making a difference, we might as well all go home.

[Several hon. Members]

rose—

[Mr Speaker]

Order. The time limit on Back-Bench speeches is reduced to four minutes with immediate effect.

18:39

[Mr Denis MacShane (Rotherham) (Lab)]

To every thing there is a season, and a time to every purpose under the heaven. Without indulging in some of stronger language and rhetoric of different colleagues, I say that this may be an important parliamentary moment, because the British people decided in May 2010 not to give any of us a majority. I think they wanted a different kind of Parliament to emerge, one that was a bit freer, a bit more liberal and a bit less whipped; I am a party animal myself and the Whips are necessary, but perhaps tonight some signal can be sent that we are listening.

There are technical points that can and cannot be made. I would dearly love to see, in South Yorkshire or perhaps in Northern Ireland, every public servant’s salary reduced to €100,000—about £80,000. If that salary level was applied, there would be a revolt in Whitehall, and among Cabinet Ministers and senior Ministers of State, if not perhaps among junior Ministers of State.

We have heard the language of “betrayal” used, and I think that is silly, because the country is going through a serious discussion about what its future relationship with Europe will be. The people have never elected Mr Nigel Farage or the UK Independence party to a seat in this House, although they have elected him to the European Parliament. However, his spirit has been present in much of tonight’s debate.

We are facing a fundamental divide, as there are two approaches to European politics. We heard one earlier today, when the ten-minute rule Bill was introduced. It was supported by a large number of Conservative Members and it called for the end to the free movement of people in Europe. It was a well-argued case, but of course it utterly destroys the purpose of the European Union if we are to have passport checks at every border and not allow people to live where they wish.

We are now finding that there is a big debate about the money we spend. I take all the points that have been made about cuts, but we could have the same argument about the Department for International Development’s spending, and I might argue about whether the £13 billion we spent in Afghanistan is money wisely spent. Underneath it all is this dichotomy over Europe. There is a debate about being in or out—an honest debate that we are beginning to have—and another debate among those of us who believe we should stay in the European Union about what kind of European Union there should be.

The voting of money is, of course, what determines what kind of policy we have. This budget is the wrong budget, drawn up by conservatives and cautious, complacent centre-right bureaucrats and politicians. It is inappropriate and it keeps the European budget in the same old tramlines of protectionist common agricultural spending and ineffective regional spending.

[Mr Jenkin]

rose—

[Mr MacShane]

I will not give way. I am very happy with the Speaker’s reduction of the time limit.

Last week, Labour MEPs voted against that budget and for a different priority that would focus on growth, on jobs and on what is needed. That is what I believe should be done, which is why I am happy to vote for the amendment tonight. I am not sure what will happen thereafter. This country will have to face a big question. Tonight it is right that Parliament asserts its authority. That does not mean the end of the debate; it is just the beginning of the debate about whether we stay in the European Union or not.

18:43

[Mr Edward Leigh (Gainsborough) (Con)]

The figures we are talking about are truly enormous. In the three options—the EU proposal, a real-terms freeze and a cash freeze—we are talking about commitments of £990 billion, £885 billion and £771 billion, so these are very important matters, affecting every man and woman in this country. I have to say to my hon. Friend the Member for Banbury (Sir Tony Baldry), with whom I have spent 29 years in this House, that his speech was quite inflammatory. His main line of attack appears to be that those of us who are going to support the amendment are somehow putting our Government at risk by joining with the Labour party. I have heard the argument before; it was actually the argument put by Neville Chamberlain in the Norway debate, when he said that he could rely on his friends. Over the years we have been here, many Members of Parliament have taken the view that principle is sometimes more important than partisanship. We have consistently argued about these matters through difficult times and it is quite wrong to blame us—those who have taken an entirely consistent position— for putting the Government’s political position at risk.

[Martin Horwood (Cheltenham) (LD)]

Given his experience in this House, does the hon. Gentleman not think that nailing one’s colours to a wholly unrealistic negotiating position will weaken the position of the British Government going into this financial negotiation and result in a worse outcome for this country, for his constituents and for Europe? He needs not to lecture us about principle but to consider the genuine reality of the situation.

[Mr Leigh]

Let me first make one more comment to my hon. Friend the Member for Banbury, who made a very important point. He represents the Anglican tendency in this House and I represent the Catholic tendency. If someone goes to confession and repents, we should accept them into our fold. We should not turn them away. If the Labour party has changed its mind, it has repented.

[Sir Tony Baldry]

Sadly, I do not anticipate my hon. Friend ever repenting.

[Mr Leigh]

Well, there we are. Contrary to what the hon. Member for Bolsover (Mr Skinner) said, I do not think that this manoeuvre is entirely cynical. We have come a long way—[Interruption.] People can scoff, but the Labour party is sensing a change of mood in the country. It is entitled as an Opposition party to sense that mood and to feel that the patience of the British people is at its limit as regards giving more money to the European Union. It might be cynical—surely Labour is entitled as an Opposition party to use parliamentary tactics if it wishes—but there might also have been a sea change in attitude in the country and in the House. That sea change is also reflected elsewhere in Europe.

The hon. Member for Cheltenham (Martin Horwood) said that our proposal was totally unrealistic, but he should consider what is happening in our country. Every single Member of Parliament has police officers coming to all our surgeries every week whose pensions have been changed halfway through their time. They are serving shifts at all hours of the day and night, and they are coming to our surgeries because we are having to make real cuts to our police force. As has been said, we are having to make real cuts to our armed forces. Our own people are coming to us and saying that this is surely the time to make a stand. Given what is happening to the budgets in Greece, Spain, Portugal and Ireland, and given that great legions of young people in those countries are unemployed, is it so unreasonable just to ask the leaders of Europe to insist in the Council of Ministers on a real cash freeze? Is that unreasonable? I do not think so—I think it is entirely reasonable.

Our friends in Europe take the House of Commons very seriously. As is known, I am happy to be a Francophile and I watch what happens in the Assemblée Nationale. This debate could not be replicated there. It is being watched, however. This is the House of Commons. We were created to guard the nation’s finances and look after the interests of our own taxpayers. Why cannot the House of Commons, on this great occasion, make a stand on behalf of the UK taxpayers? Why can we not say to our taxpayers that we stand with them? We are having to make appallingly difficult decisions about the police, the armed forces, education and health. All we are saying is that there should be a real freeze in the EU. This is not just about EU civil servants, 40% of whom earn more than £70,000 a year.

[Chris Huhne]

Will the hon. Gentleman give way?

[Mr Leigh]

There is no time, I am afraid.

This is about real people in real places. For instance, I represent a farming constituency. The UK spends £7.1 billion a year on subsidising foreign farmers, giving some £33 billion and receiving £26 billion. On average, the UK receives £188 per hectare, compared with France, Germany and Holland, which receive £236, £251 and £346 respectively. Some 42% of the EU budget is spent on subsidising farming and fishing, despite their accounting for only 2% of European gross annual value. These are real issues that affect real people. The House of Commons now has a chance to take a stand and we should put principle before partisan politics.

18:49

[Paul Blomfield (Sheffield Central) (Lab)]

We should remind ourselves that just as there is a majority in the House, of which I am a part, in favour of a reduction in the EU budget, there is a much larger majority, of which I am also a part, that believes that our future lies at the heart of Europe and with our membership of the European Union.

We should therefore take care—more care than some Members have—with how we frame any debate on the EU budget. We should not frame it, as the Daily Express does, as if all EU spending is bad and that the only purpose of Brussels is to take money from us. I come from a region that has benefited enormously from European structural funds, and we should have spent more time in the debate considering how we can engage positively to shape negotiations on the priorities for the EU budget. I shall make several specific points about research and innovation, to which I hope that the Minister will respond.

EU research and innovation funding contributes 10% of our national science budget, and the budget negotiations give us an important opportunity to shape investment priorities for the benefit of the UK economy. The more the EU invests in research and innovation, the more the UK benefits, because the quality, breadth and depth of UK research puts us in a position whereby we gain disproportionately from European research programmes. Nearly 15% of the EU’s funding from the FP7 framework programme for research has gone to UK researchers, and the total FP7 contribution to UK research is expected to reach €7 billion over the life of the programme. The UK is involved in more successful FP7 projects than either France or Germany, accounting for 40% of all grants to date. We also benefit extensively from the collaboration and research networks that the EU facilitates. Of the 5,105 research projects that have been funded under FP7, 43% include UK partners.

Only about 8% of the proposed budget is allocated to Horizon 2020, which is the replacement for the FP7 programme. That has been presented as an increase, because there are several new projects within Horizon 2020. I think that the Government would support those projects, but on the basis of past negotiations, there is concern among businesses and universities that the research budget is especially vulnerable to cuts. We know that innovation plays an important role in producing growth in the UK, and 54% of the jobs grown between 2000 and 2005 were in innovative companies. However, such companies account for only 6% of UK businesses, and are particularly involved in pharmaceuticals and biotechnical research.

We know that future growth will rely on knowledge-based industries, so I look to the Government to make two commitments: first, that the additional projects in Horizon 2020, which I am sure they would support, will be considered outside the framework; and, secondly, that they will argue the case for protecting the research and innovation budget in the overall negotiations.

[Mr Speaker]

The Minister will be called at 6.55 pm, but until then we will hear from Conor Burns.

18:53

[Conor Burns (Bournemouth West) (Con)]

I am grateful to you, Mr Speaker.

At the beginning of the debate, there was an outbreak of consensus between those on the two Front Benches, when the Minister and the hon. Member for Nottingham East (Chris Leslie) agreed that the Government and the Opposition shared the objective of achieving a real reduction in the EU budget. Such a reduction would not be possible if the EU had gone through the process that all our councils are going through by squeezing out all the fat and getting rid of all unnecessary expenditure, but both Front-Bench spokesmen could cite examples—not least the two Parliaments—of where the EU could still make plenty of savings.

My hon. Friend the Member for Banbury (Sir Tony Baldry) mentioned the experiences of Maastricht, but this is not Maastricht. The Conservative party is united on Europe. We are united in believing that it is doing too much and spending too much. We had the slogan, “We’re all in this together.” How will we be able to go back to our constituencies and look in the eye our electors who are paying hugely more for petrol, food and rail fares?

This House matters again. As a united House of Commons, we have the opportunity to back the Prime Minister by sending him emboldened to the European Council with the clear message from the British people that enough is enough. If we are taking cuts, the European Union must take them, too.

18:54

[Greg Clark]

This has been a debate of passionate contributions, as befits such an important consideration—the next seven years’ budget of the EU. It is right, and many Members have referred to this, that the House should give consideration not just to the aspirations and the good intentions surrounding the European Union, but to the nitty-gritty—the decisions that need to be taken and which affect all our constituents. I am proud to be a Member of a House that will undertake this level of scrutiny.

It comes down to this: we want to see a real-terms cut in the budget. We all want to negotiate for that. That is the position that unites most Members of the House, but in seeking to advance that agenda the Prime Minister has done something historic, something that no Prime Minister during the history of our engagement with the European Union has managed to do, which is to secure from the most powerful allies that we have in the European Union a position that we should negotiate for the first time a cut over seven years in the EU budget, or a maximum of a real-terms freeze. That was agreed two years ago and has been scrutinised by the House in detail. Having put that to the House, it is reasonable for the Prime Minister to go into the negotiating chamber able to deliver on the commitments that he has had from his colleagues there.

It has been made clear that we on the Government Benches regard this as a red line. We will deploy a veto if our conditions are not met. That is widely understood. This debate will be watched outside the Chamber and everyone can be clear about that. We have seen total confusion on the part of the Opposition as to what is a red line. The Leader of the Opposition, the shadow Foreign Secretary and the shadow Chancellor would not confirm that they would even deploy a veto. [Interruption.] The shadow Justice Secretary asks what our position is. Our position is that we would deploy a veto if our conditions and our red lines are not met.

[Mr Burley]

Can the Minister confirm the amount of extra money which, under the Government’s proposals, we will send to the EU over the next two and a half years? According to my calculations and the House of Commons Library, it is an extra £1.3 billion between now and the next general election. Can he confirm that figure or tell the House what the figure is?

[Greg Clark]

It is true that the increase that we are talking about would involve further contributions from the House, but the negotiation that we are entering is to avoid that, to minimise the contribution that we make and to secure the best deal for the taxpayer.

The hon. Member for Bolsover (Mr Skinner), who is not in his seat, referred to the Maastricht debates and the attitude of the official Opposition at the time. If we could have drawn from the behaviour of the Opposition their intention in government, we would have reached a wholly misleading conclusion. During their time in government, from 1998 to 2010, they presided over a 47% increase in the contributions that we made to the EU budget. They surrendered our rebate in return for no reform. The reform that we were expecting was in the common agricultural policy. Our contribution to that increased over the time that they were in power from £48 billion to £56 billion.

We have secured the agreement of member states. We have led the way by managing our national finances. If our negotiating position does not succeed, we are ready, willing and able to veto. We urge the House to stand with us as the Prime Minister goes to negotiate for us.

18:59

The Speaker put the Questions necessary for the disposal of the business to be concluded at that time (Order, 29 October).

Amendment proposed: (a), leave out from ‘stimulate economic growth’ to end and add

‘; so calls on the Government to strengthen its stance so that the next MFF is reduced in real terms.’.—(Mark Reckless.)

Question put, That the amendment be made.

19:00

Division 91

Ayes: 307

---

Labour: 242
Conservative: 51
Scottish National Party: 6
Democratic Unionist Party: 5
Independent: 1
Green Party: 1

Noes: 294

---

Conservative: 235
Liberal Democrat: 55
Plaid Cymru: 2
Alliance: 1

Main Question, as amended, put and agreed to.

Resolved,

That this House takes note of European Union Documents No. 16844/11, No. 16845/11, No. 16846/11, No. 16847/11, No. 16848/11, No. 6708/12 and Addenda 1–3, No. 9007/12, No. 12356/12, and No. 13620/12, relating to the Commission’s proposal on the next Multiannual Financial Framework (MFF), 2014–2020; agrees with the Government that at a time of ongoing economic fragility in Europe and tight constraints on domestic public spending, the Commission’s proposal for substantial spending increases compared with current spend is unacceptable, unrealistic, too large and incompatible with the tough decisions being taken in the UK and in countries across Europe to bring deficits under control; and so calls on the Government to strengthen its stance so that the next MFF is reduced in real terms.

[Mr Speaker]

Order. I should be most grateful if Members who are leaving the Chamber would do so quickly and quietly, so that we can proceed with the remaining business.

Royal Assent

[Mr Speaker]

I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified her Royal Assent to the following Acts:

European Union (Approval of Treaty Amendment Decision) Act 2012

Infrastructure (Financial Assistance) Act 2012

Local Government Finance Act 2012

Mental Health (Approval Functions) Act 2012.

Business without Debate

Wednesday 31st October 2012 Commons Chamber

Electoral Commission (Re-appointment of Chairman)

[Relevant document: Fourth Report 2012 from the Speaker’s Committee on the Electoral Commission, Re-appointment of the Chairman of the Electoral Commission, HC 611.]

Motion made, and Question put forthwith (Order, 16 October, and Standing Order No. 118(6)),

That an humble Address be presented to Her Majesty, praying that Her Majesty will re-appoint Jennifer Watson to the office of chairman of the Electoral Commission with effect from 1 January 2013 for the period ending on 31 December 2016.—(Greg Hands.)

Question agreed to.

[Mr Speaker]

Just before I call the hon. Member for Easington (Grahame M. Morris), may I gently reiterate my exhortation to right hon. and hon. Members who, for whatever reason and quite unaccountably, are leaving the Chamber and do not wish to hear his oration, to do so quickly and quietly, affording him the same courtesy that they would wish to be extended to them in similar circumstances?

Firearms Controls

Wednesday 31st October 2012 Commons Chamber

Motion made, and Question proposed, That the House do now adjourn.—(Greg Hands.)

11:30

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

I am grateful for the opportunity to raise this issue; I know that a number of right hon. and hon. Members on both sides of the House are interested in this subject.

In the early hours of the new year, I was greeted in my constituency by the shocking news that four people had lost their lives in a shooting in the close-knit former mining community of Horden. They were Susan McGoldrick, 47, her sister Alison Turnbull, 44, and niece Tanya Turnbull, 24, as well as the gunman, Michael Atherton, 42, who turned the gun on himself.

Following the shooting, I called for a calm and measured response, but the high emotions at the time were not conducive to constructive debate. In the months that followed, I had the opportunity to meet family members on a number of occasions. They have acted in a considered and dignified manner throughout, and looked for practical improvements that will hopefully avoid such tragic circumstances, and such a tragedy, befalling another family.

A public debate on firearms licensing is still needed, and the time is right for the public and Parliament to consider whether the current level of protection is adequate. It is said that Britain has some of the toughest gun control laws in the world, but we should not be complacent. Current firearms laws consist of 34 separate pieces of legislation, which is complex and difficult to navigate for the police and the public. The Home Office’s official police guidance is more than 200 pages long. The rules are difficult to interpret, and their application can vary greatly across the 43 police forces responsible for issuing firearms licence certificates.

[Keith Vaz (Leicester East) (Lab)]

rose—

[Grahame M. Morris]

I will give way to my right hon. Friend, the Chair of the Home Affairs Committee.

[Keith Vaz]

I congratulate my hon. Friend on securing this debate. He will know that it is two years since the Home Affairs Committee published its report on firearms control and suggested that the 34 pieces of legislation be codified. Does he agree that it is now time to bring those pieces of legislation together, and make it clearer for people who have applied for and received licences, and for those who seek to get one?

[Grahame M. Morris]

I am grateful for that intervention; it was delivered with some authority and I completely agree. The Home Affairs Committee investigation and report into firearms control urged the Government to codify and simplify the law, introduce one licensing system to cover all firearms, and strengthen the current safeguards.

[David Tredinnick (Bosworth) (Con)]

I am grateful to the hon. Gentleman for kindly giving me leave to intervene in his Adjournment debate. I wish to raise the issue of the Olympics, and the inability of our pistol team to train in the UK. Does he agree that although we must consolidate the legislation and perhaps ensure that it works more effectively, we should go back to Lord Cullen’s original suggestion, which would allow gun clubs to keep disabled pistols, so that we can train Olympic athletes of the future in this country?

[Grahame M. Morris]

The hon. Gentleman raises an interesting point and I will come to some suggestions about how we might address that issue.

The Association of Chief Police Officers firearms and explosives licensing working group has called for a single form of certificate that

“remains desirable for safety and economic reasons”.

In terms of public safety, and in contrast to a section 1 firearm, shotgun applicants are not required to demonstrate a good reason for wanting a shotgun. I believe it important that people demonstrate that they have a need or use for a firearm, before they are granted a licence.

In evidence to the Home Affairs Committee, Mrs Gill Marshall-Andrews of the Gun Control Network said:

“The starting point should be that guns are lethal weapons and the onus should be on the applicant, somebody who wants to own a gun, to prove that they are”

a fit person to have one.

[Ian Mearns (Gateshead) (Lab)]

I congratulate my hon. Friend on securing this debate. The House should be concerned about firearms licences and licensees. Just after the summer, it was reported that no fewer than 3,000 legitimately owned and licensed firearms were reported lost, missing or stolen in the previous 12 months.

[Grahame M. Morris]

That alarming statistic is one of a number that should exercise the minds of hon. Members, and it adds weight to the need for a full public debate.

It should no longer be acceptable to have a shotgun without a good reason. A good reason would have to be demonstrated by the same criteria that current firearms certificate holders must meet. Good reasons for holding shotgun licences include dealing with vermin or game, target shooting at an approved venue or club, or for professional use in employment, but evidence is needed to justify those reasons. It is difficult for many, including me, to comprehend why someone would need access to firearms in a domestic setting when there is little need for immediate access to a weapon.

One of the greatest weaknesses identified by the shooting fraternity is the variation in standards across police forces. For that reason, a national licensing authority has been proposed to provide central oversight, and to ensure the consistent application of licensing procedures. Such an authority would also have the advantage of removing the police from the administrative aspect of firearms licensing, and will allow them instead to focus on the enforcement of gun controls. The financial burden of the licensing regime could also be removed from the police while ensuring that public safety remains paramount. In evidence to the Home Affairs Committee, Bedfordshire police presented a cost analysis that showed that the firearms application fees in place since 2000 never represented the true cost to the forces processing applications. Rather than the current firearms certificate fee of £50, a fee of £150 has been proposed. I am not advocating that—an appropriate fee could be determined by any new central licensing authority.

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

I perhaps should know, so my hon. Friend might have to excuse my ignorance, but does the proposed legislation cover air guns, which can be just as dangerous?

[Grahame M. Morris]

There are concerns across the piece. Whether air guns are covered depends on the definition of air gun, but I hope to come to that in a few moments if my hon. Friend bears with me.

Public safety must be the primary aim of gun control legislation, but it is clear that the police, in view of significant budget cuts, can no longer afford to subsidise the licensing system. We heard in the debate a few moments ago of hon. Members’ concerns about 20% cuts in police budgets in their areas.

[Ian Lavery (Wansbeck) (Lab)]

I congratulate my hon. Friend on securing this debate, which is on an emotive point for him. Does he agree that all aspects of firearms control should be a major concern and top of the agenda for prospective police and crime commissioners?

[Grahame M. Morris]

My hon. Friend makes a good point. We are only a few weeks away from the elections for police and crime commissioners. I have discussed the issue with Ron Hogg, who is a PCC candidate in County Durham, and who has some expertise in the matter. It is important that this is a local priority, but I also suggest that we should have a national framework laying down guidelines—something stricter than guidelines, in fact—to be applied evenly. Part of the problem is that we have a patchwork of arrangements.

We cannot do firearms licensing on the cheap at the risk of compromising public safety. There is also a strong case for strengthening the link between the licensing authority and medical professionals when considering an application for or a renewal of a firearms certificate. We need early and proactive intervention when a firearms holder’s mental and physical health deteriorates.

[Chris Williamson (Derby North) (Lab)]

I congratulate my hon. Friend on securing this important debate. Does he agree that public safety would be improved if a prohibition was placed on the private storage of firearms in people’s homes, if people with a firearms certificate were subject to an annual medical test to assess continually whether they were a fit and proper person to hold one, and if a public register was available so that the general public knew who had access to a firearm? The atrocities that we see are often committed by people who have been deemed a fit and proper person when originally given a firearms certificate.

[Grahame M. Morris]

That is a good point well made.

[Karl MᶜCartney (Lincoln) (Con)]

Will the hon. Gentleman give way?

[Grahame M. Morris]

I will respond to the last intervention, and then I will take another one. I do not intend to declare war on the armed wing of the Tory party. I am not opposed to shooting per se. I am saying that people should be able to demonstrate a clear legitimate need before a firearms certificate or shotgun licence is issued.

[Karl MᶜCartney]

I commend the hon. Gentleman for some of the points he has raised, but I find the naivety of the previous intervention worrying, because producing a public register of those who own any sort of firearm might be a thief’s charter. I would like to know what experience of shooting or holding a firearm or shotgun licence he has.

[Grahame M. Morris]

I have no experience. I have never held or shot a gun, but I have experience of a terrible tragedy in my constituency on new year’s day. I am attempting to share my experience with Members and to advocate having a review in the interests of public safety.

[Jim Shannon (Strangford) (DUP)]

I thank the hon. Gentleman for the balanced way he is approaching this subject. I am concerned that the focus seems to be on legitimate firearms holders, the majority of whom are law-abiding. Will he reassure sporting Members and others throughout our local communities who enjoy the sport that this debate is not going down the road to remove firearms from those who have a legitimate right to hold them?

[Grahame M. Morris]

I hope I have made that point. I am not proposing that people with a legitimate need to hold firearms, such as farmers and so on—there is a whole list of such people—not be allowed to hold them. That need should be declared as a reason for holding a certificate, and the police or the licensing authority would take it into account.

In a case in my constituency in 2008, Michael Atherton had his weapons revoked following threats to self-harm, and issues relating to mental health and gun ownership were also a factor in the case of Christopher Foster, who shot his wife, his daughter and himself after confessing suicidal thoughts to his GP.

I understand that the Association of Chief Police Officers and the British Medical Association have an agreement whereby the police alert GPs to any new applications for and renewals of firearms licences. However, concerns remain where an applicant fails to disclose full and accurate medical information at the time of application or renewal. Applicants are required to provide a number of medical details, including whether they suffer from any

“medical condition or disability including alcohol and drug…conditions”.

They also have to declare whether they have ever suffered from epilepsy or been treated for

“depression or any other kind of mental or nervous disorder”.

However, that information is not routinely checked. Licensing officers approach medical professionals only when there are doubts about an applicant’s medical history, although Dr John Canning—again, giving evidence to the Home Affairs Committee on behalf of the BMA—stated that GPs are “not very often” asked to provide medical evidence, although it happens “from time to time”.

Following the case of Christopher Foster, the Independent Police Complaints Commission proposed in 2008 that the licensing force should be required to approach the applicant’s doctor in each case, in order to obtain confirmation that the medical information provided in the application was correct. The omission of information from a firearms application was also an issue in the case of Mark Saunders in 2006, which ended in his being killed by the Metropolitan police. Mr Saunders failed to declare during the application process that he had been treated by a consultant for depression and for his tendency occasionally to drink more than was sensible—indeed, he had been referred by his GP. Unfortunately, on his application for a firearms licence he stated that he had no such health problems.

In my view, the solution is to ensure that each applicant knows that licensing officers will approach their GP as a matter of course to verify statements made on their application about their health, to ensure they are correct and accurate. My proposal would address failures by an applicant to disclose any medical problem that raises questions about their suitability to own and have free access to a firearm. Finally, I call for greater consultation between the licensing authority and those who are or have been a domestic partner of a potential applicant. A similar system is already in place in Canada, where all citizens applying for a firearms licence are required to have their present and past partners in the previous two years sign their application. Refusal to sign for any reason does not automatically mean that the police and licensing authorities will veto an application, but it will trigger further investigation by law enforcement officers. The Canadian requirements merit further exploration, and I would appreciate it if the Minister informed the House of any progress made on this matter.

There has been no knee-jerk reaction. These proposals are considered, practical measures that, if implemented, could allow the consistent application of firearms legislation, strengthen existing safeguards and ensure public safety while maintaining the rights of the shooting fraternity to have access to firearms where there is a good and legitimate purpose for their use.

19:34

[The Minister for Policing and Criminal Justice (Damian Green)]

I congratulate the hon. Member for Easington (Grahame M. Morris) both on securing the debate and on the tone in which he has addressed this issue, following the tragic events in his constituency. The shootings he talked about shocked the whole country. Obviously our thoughts remain with the family and friends of the victims. I agree with him: it is right that Government and Parliament should reflect on what lessons might be learned from these fortunately rare, but nevertheless tragic events, and how best we can protect public safety. I and the whole House—indeed, it is good to see so many people at an Adjournment debate—share his view that we need to approach the issues in a calm and measured way.

As the hon. Gentleman will be aware, Durham constabulary has asked the Independent Police Complaints Commission to investigate the events leading to the shootings. There has not yet been a coroner’s inquest into the deaths. Because of the investigation and a future inquest, the House will appreciate the need for me to avoid saying anything that might be prejudicial in relation to the circumstances of this case.

I understand that there have been complexities with the IPCC investigation, although it is working through those matters as fast as possible and the investigation is now close to completion. The final report is now being finalised and it will be shared with the families shortly. Publication of the report will, however, depend on the time scales for the inquest and the wishes of the coroner. The Government will consider carefully the results of the inquest and of the IPCC investigation, paying careful attention to any specific recommendations that they might make and any implications for wider firearms policy, to which I will now turn as I try to address the specific points that the hon. Gentleman has raised.

The Government have always made it clear that controls on firearms should be targeted fairly and proportionately, and that they should strike the right balance by securing public safety without bearing down unnecessarily on legitimate users. With this in mind, I have arranged meetings with a range of stakeholders since assuming responsibility for this work. I met Deputy Chief Constable Andy Marsh, the Association of Chief Police Officers’ lead on firearms, this week, and we discussed a number of the issues that the hon. Gentleman has raised today.

Following the tragic shootings in Cumbria in 2010, the Government undertook to take a fresh look at firearms law and subsequently considered the recommendations of the Home Affairs Select Committee, which looked comprehensively at the whole range of issues. The Government published our response to the Committee’s report in September 2011. Our response sets out a number of commitments in response to the Committee’s recommendations. The Government will update the Committee, and the House, shortly on progress on those recommendations.

As the hon. Gentleman has said, it is generally recognised that the UK has comparatively low levels of gun crime, and some of the strictest gun laws in the world. It is true that these laws are complex, and I would therefore like to give a brief overview of the main controls that are in place. There are two main categories of firearms licensed by the police. First, there are those that are controlled under section 1 of the Firearms Act 1968. They are typically target shooting rifles and rifles used for hunting or vermin control. The second category is shotguns, typically used by farmers and for clay pigeon shooting. Both are possessed by means of separate certificates that are valid for five years. There is a third category of firearm, generally referred to as prohibited weapons, and these can be possessed only with the written authority of the Secretary of State.

My hon. Friend the Member for Bosworth (David Tredinnick) raised the issue of training for Olympic pistol shooters. In advance of the London games, the Home Secretary provided an exemption for this third category of firearms to allow the Team GB shooting team to train here. She is currently in the process of issuing new authorities to British pistol squad members to train for the 2014 Commonwealth games. This is of course subject to the usual checks on applicants and to ensuring that training is confined to suitably secure ranges. The Government will look at arrangements for the 2016 Olympic games in due course.

The hon. Member for Easington raised concerns about how the licensing process operates. I would like to say something about the processes involved—again, without making reference to the specific circumstances of this case. The procedures are similar for the issue of a shotgun certificate but there are some material differences. First and foremost, the police must be satisfied that the applicant can be trusted to possess shotguns without danger to public safety. Unlike with section 1 firearms, the applicant does not have to show good reason to have a shotgun, but the police may refuse to grant a certificate if they are satisfied that he has no good reason to have one. This is a different control, but it still allows the police to refuse applicants who have dubious reasons for wanting shotguns.

[Ian Mearns]

I raised a point with my hon. Friend the Member for Easington (Grahame M. Morris) about the number of firearms that have been lost or stolen in the past year. I understand that the figure was about 3,000. In the light of that, would the people who have lost their firearms or had them stolen have their licences reviewed?

[Damian Green]

That would be a matter for the individual force concerned. It is clearly a matter that the police forces that do the licensing, who are responsible and sensitive about these things, would take serious note of.

The hon. Member for Easington mentioned national control of firearms and the proposal for a national licensing authority. There is a danger that a central authority might lose touch with the sort of local information that the police need. In his report on the Dunblane tragedy, Lord Cullen recommended that licensing functions should remain with the police. Previous suggestions to replace the current police licensing system with a central civilianised licensing authority have been rejected as more costly and less efficient than the present system.

Although the Government are not in favour of a national firearms control board, the Home Office guidance to the police on firearms legislation—the hon. Gentleman mentioned it, and it is indeed long and complex—is being revised and updated to help ensure that licensing procedures are applied consistently across forces. This is an important piece of work, responding directly to the Home Affairs Select Committee’s wish for more consistency. In particular, we will highlight the need to take full account of any incidences of domestic violence when considering applications for the grant or renewal of certificates. The comments that I have heard this evening will be particularly pertinent to that.

[Tessa Munt (Wells) (LD)]

Does the Minister agree that cost is not an issue here? Where people use firearms for recreation, there is no excuse whatever for the process to be subsidised. It is not a matter of cost; it is purely a matter of process—and the costs should be covered by those who require a licence.

[Damian Green]

The ultimate driver, frankly, is safety; that is what underlies the system. On the issue of cost, the Home Office has received a detailed report from ACPO proposing new firearms fees to allow forces to recover the cost of firearms licensing. In considering the proposal, the Government will look both at the quality of service licence holders receive, which is relevant, and will discuss with ACPO the scope for making some of the current processes more efficient and effective. That will take into account the need to manage risk and ensure public protection.

As we indicated in our response to the Select Committee, we do not consider that separate licensing for shotguns and firearms is causing difficulties. Applying a good reason test in the same way for both categories could be problematic. For example, unlike target shooters, shotgun owners do not always belong to clubs that could vouch that they had shot regularly. However, I assure the House that we will keep this issue under review. As I indicated earlier, the local police must satisfy themselves that an applicant for a certificate is fit to be entrusted with a firearm, and will not present a danger to public safety. This is a particularly heavy responsibility and sits right at the heart of the licensing process. Such is the basis of my discussions with ACPO.

One of the most important points raised by the hon. Gentleman was about the need for medical checks on those who have access to firearms. I completely agree that it is important that the police are made aware of medical conditions that affect a person’s suitability to possess firearms. Both the hon. Gentleman and I will therefore—

19:48

House adjourned without Question put (Standing Order No. 9(7)).