House of Commons

Tuesday 5th March 2013 Commons Chamber

Tuesday 5 March 2013

The House met at half-past Eleven o’clock

Prayers

Tuesday 5th March 2013 Commons Chamber

[Mr Speaker in the Chair]

Business before Questions

London Local Authorities and Transport for London (No. 2) Bill [Lords] (By Order)

Consideration of Bill, as amended, opposed and deferred until Tuesday 12 March (Standing Order No. 20).

Oral Answers to Questions

Tuesday 5th March 2013 Commons Chamber

The Secretary of State was asked—

[Pat Glass (North West Durham) (Lab)]

1. What recent assessment he has made of the political situation in Tunisia.

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

14. What recent assessment he has made of the political situation in Tunisia.

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

We continue to watch events in Tunisia closely. We condemn the assassination of Opposition leader Chokri Belaid. We have watched the peaceful transference of the premiership from Prime Minister Jebali to Prime Minister designate Laarayedh, which has been accompanied by strong statements by those in Tunisia about their adherence to democracy and building democratic institutions.

[Pat Glass]

What is the Minister’s assessment of the likelihood of the presidential elections proceeding as planned?

[Alistair Burt]

Matters relating to dates and timings of the constitution and everything else remain unclear. We have seen nothing at this stage to suggest that any date should be affected, but a new Government have not yet been formed. The Prime Minister designate has until the end of this week to create a Government. There may be an extension after that, but hopes are high that that Government will be confirmed. It will then be easier to see what dates will follow for the other parts of the democratic process of rebuilding.

[Graham Stringer]

I do not want to accuse the Minister of being complacent, because I tend to agree with him on Tunisia, but there is no constitution and no set date for the elections. Before the leader of the Opposition was assassinated, he said that anybody criticising the Government would be taken out, in effect, and there is video evidence of direct links between the ruling party and al-Qaeda. Should the Minister not reassess his policy?

[Alistair Burt]

I am not quite sure what reassessment the hon. Gentleman is asking for. As I have said, we are monitoring events as closely as we can. We are engaged with a variety of projects for democracy building in Tunisia, yet the constitutional processes being undergone are for Tunisians themselves. I spoke to our deputy head of mission just this morning. The streets are calm; people are expecting a Government to be formed at the end of the week. They are well aware of the difficulties of forming the Government and of the pressures between the political parties, but as he said, there are grounds for some optimism. These are obviously difficult days for Tunisia, but the fact that the process has been handled democratically and peacefully to date is much to be welcomed, and we will continue to encourage it.

[Richard Ottaway (Croydon South) (Con)]

I am sure the Minister can agree that Tunisia has made remarkable progress in its transition to democracy. For quite some time it has led the way in the region, but the inevitable wobble has now happened. Can he say what role the Deauville partnership has in helping the political, social and economic transition to democracy?

[Alistair Burt]

I very much appreciate what my hon. Friend says. There has been good progress, but we must all be clear that each state is different. These events in the Arab world will take time and there will inevitably be progress, both forwards and backwards. Tunisia is facing its own difficulties, but facing up to them well. The Prime Minister has made it clear that, as part of our responsibilities for the G8, the Deauville partnership will be reinvigorated to ensure that economic support is available to countries in transition. We believe that the G8 process this year will be able to deliver economic benefits to countries in transition such as Tunisia, which will be of enormous help to them.

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

Does my hon. Friend agree that building a stable democracy takes a long time? After all, it has taken us 800 years and it is far from perfect. Should not those of us who support the democratic changes in north Africa and the middle east therefore exercise both patience and perseverance?

[Alistair Burt]

My hon. Friend puts it very well. There is a great risk of trying to see all political developments through the prism of 24-hour news or a rolling news programme. These things will not be settled quickly. I suspect that we will not know the outcome of the Arab spring even by the time most of us have finished our period in Parliament. My hon. Friend is right: this will need patience. Equally, the commitment of those such as the United Kingdom to democracy-building institutions—which we are involved in through the Arab partnership and other partners—is a vital part of the process, if it is to be a success.

[Ian Lucas (Wrexham) (Lab)]

When President Marzouki came to Britain last autumn, he stressed the vital importance of establishing a broad-based constitution. In view of the difficult atmosphere following the death of Chokri Belaid, what specific actions are the UK Government taking to support the development of democracy, perhaps through Arab Partnership projects? This is an absolutely crucial time for Tunisia.

[Alistair Burt]

It certainly is. The hon. Gentleman is right to point to our engagement, through Arab Partnership, in various democracy-building processes. We are expecting a number of projects to be developed during the course of this year, at a cost of some £2.5 million, and we will be looking to develop projects on election monitoring, on the support of political parties and on democracy building. We are constantly looking, with the Tunisians, at what they will find most effective. Last year, one of the most effective projects was to help them to move their state broadcasting company into a public broadcasting company. Such efforts to open up democracy to more people are a vital part of the process that we hope will lead to the establishment of a new constitution in the time scale already set out by the Tunisians.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

21. There are 60 British companies currently operating in Tunisia, compared with 1,800 French ones. What steps is my hon. Friend’s Department undertaking with UK Trade & Investment to ensure greater British economic engagement with Tunisia?

[Alistair Burt]

We continue to encourage more UKTI missions to Tunisia. Through the G8 process, there will be a major investment conference later this year for all those countries involved in transition, at which UK companies will be able to look at the opportunities that are available to them in Tunisia. We want UK companies to be prepared to take more risk. We are sometimes told by nations abroad that they see more of other countries’ companies than our own, but we do not believe that that is necessarily the case. We want to encourage British companies to become involved, and Tunisia presents a series of fine opportunities.

[Nia Griffith (Llanelli) (Lab)]

2. What recent steps the Government have taken to improve the prospects for a two-state solution to the conflict between Israel and Palestine.

[Ian Mearns (Gateshead) (Lab)]

5. What recent steps the Government have taken to improve the prospects for a two-state solution to the conflict between Israel and Palestine.

[Steve Brine (Winchester) (Con)]

6. What recent assessment he has made of prospects for the middle east peace process.

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

7. What recent discussions he has had with his Israeli and Palestinian counterparts to encourage the resumption of negotiations.

[Chris Williamson (Derby North) (Lab)]

13. What recent assessment he has made of the prospects for a two-state solution to the conflict between Israel and Palestine.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

There is a clear need for the United States to lead an effort to revive the peace process. This was top of the agenda of my recent discussions with Secretary Kerry, and I welcome the focus that he has brought to bear on the issue since his appointment. We will make every effort to mobilise European and Arab states behind decisive moves for peace.

[Nia Griffith]

Does the Secretary of State agree that the starting point for negotiations should be the legal status quo—that is, that the whole of the west bank and east Jerusalem, within the 1967 borders, is Palestinian land, as agreed unanimously by the United Nations Security Council in resolution 242—and not the facts on the ground created by illegal settlement building?

[Mr Hague]

Across the House, all of us have commented clearly about illegal settlement building on occupied land, but I think the starting point for negotiations has to be a common political will. That needs to be there in Israel, where a new Government are being formed, and among Palestinians, who continue to discuss reconciliation among each other. The true starting point is a common willingness to enter again into negotiations and to develop the middle east peace process, with the leadership of the United States but with the support of us all.

[Ian Mearns]

The Foreign Secretary seems to expect the Palestinians to have the patience of Job. He might be aware that, in the coming months, Israel is set to demolish hundreds of homes in the Palestinian town of Silwan to make way for a tourist attraction. Is he also aware that that is the single largest proposed demolition of Palestinian homes since 1967? What will he do to try to instil a sense of reality among the Israeli authorities to stop this unlawful theft of Palestinian land, which can only hinder the search for a two-state solution?

[Mr Hague]

The hon. Gentleman is right to say that such actions hinder the search for a two-state solution. Our condemnation of illegal settlement building and of demolitions on occupied land has been very clear across the House, as I have said. The important thing in the coming months is to move beyond that and to get into successful negotiations. The only answer, in the end, will be an agreed two-state solution, and the time for that is slipping away. The hon. Gentleman rightly mentioned patience. The world has been patient, but the time in which a two-state solution can be agreed is now slipping away, partly because of changing facts on the ground. That demonstrates the urgency, and I believe, in the light of all the discussions I have had with Secretary Kerry so far, that he is fully seized of the importance and urgency of the issue.

[Steve Brine]

I know that the Foreign Secretary is very much of the view that time is not on our side, and he has just reiterated that this morning. With that in mind, will he update Members on the situation in Lebanon, which I know he visited last week.

[Mr Hague]

I visited Lebanon the week before last, and it is a country whose stability we want to support. While I was there, I announced additional support for the Lebanese armed forces as well as for the Special Tribunal for Lebanon. We do our best to contribute to the stability of the Lebanese state, but that is often fragile—not least because of what is happening in Syria at the moment. I believe that we have many friends in Lebanon and that our announcements were strongly welcomed there.

[Luciana Berger]

As the right hon. Gentleman will know, the Israeli Prime Minister has recently given Tzipi Livni Cabinet responsibility for negotiations with the Palestinians. Does the Foreign Secretary agree that the appointment of a known vocal campaigner for a two-state solution is a welcome development? When will he or his Ministers meet Tzipi Livni and her Palestinian counterparts to see how Her Majesty’s Government could extend support for negotiations?

[Mr Hague]

Of course we should and do welcome the appointment of Mrs Livni, although I stress that the final composition and make-up of the Israeli coalition has not yet been agreed—these things have not been finalised. Mrs Livni has worked hard in the past to try to bring about negotiations on a two-state solution. We are indeed in regular touch with her and have been even when she was out of government. The negotiations, which failed to reach a conclusion by 1 March now have a further 14 days to produce an Israeli Government by 15 March. We hope that, whatever the composition of that Government, they will be committed to serious negotiations and have the same sense of urgency that we in this House have just expressed.

[Chris Williamson]

Does the Foreign Secretary accept that a freeze on settlement building is not a precondition imposed by the Palestinians, but a requirement imposed by international law?

[Mr Hague]

From what I have said many times about the illegality of settlement building on occupied land it will be clear to the hon. Gentleman where we stand on matters of international law. Now, however, we have to find a solution to all of this, and that will come only from a successful negotiation between Israelis and Palestinians. I do not know anyone who thinks that there will be any other way of bringing about an end to building on occupied land and peace both for Israelis and Palestinians. That is what we want to promote: settlements are obviously a major issue in any such negotiation.

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

My right hon. Friend said a moment or two ago that the possibility of a two-state solution was slipping away. Does he understand that a large number of people, including well-informed commentators and analysts, believe that that time has now gone. If the position now is that the two-state solution is incapable of achievement, what are the prospects for any stability in Israel in the future?

[Mr Hague]

If, indeed, that possibility has gone, the prospects for stability in the whole region—for Israel and others—would be greatly worsened. We should be clear about that, as it is part of the argument to Israeli leaders to get them to use the time remaining for a two-state solution to be brought about. On that, I differ from my right hon. and learned Friend in that while I think this may be the last chance for a two-state solution and that the time is slipping away, I do not think that the time for it has yet gone. That is why it was at the top of the agenda in all our discussions with the United States at the beginning of this year. We will do everything we can to support American efforts as President Obama arrives in Israel in three weeks’ time.

[Robert Halfon (Harlow) (Con)]

When the Israelis unilaterally withdrew from Gaza, the result was 7,000 missiles from Hamas on to Israeli towns and cities. Does my right hon. Friend agree that any negotiation on the administered territory on the west bank should be accompanied by a guarantee from Hamas of an end to its terrorism?

[Mr Hague]

It is very important that rocket fire comes to an end. I am very concerned at reports of rockets being fired from Gaza into Israel last week, which was the first such incident since the ceasefire agreement in November. We call on all parties to respect in full the November ceasefire. We have consistently condemned the firing of rockets into Israel, which is not, of course, a helpful backdrop to peace negotiations.

[Mr Crispin Blunt (Reigate) (Con)]

I share the Foreign Secretary’s view that this is the last chance for a decisive move for peace. Is it not time to make it clear to the Israeli authorities that if it does not work on this occasion—if this move for peace ends as all the others have—the flagrant breach of international law that is represented by illegal settlements over 46 years, since 1967, will finally have to be met by some serious consequences, from the European Union and from ourselves?

[Mr Hague]

It will be important for EU nations, including us, and for Arab nations to give careful and well-calibrated support to the American efforts. I have already been discussing that with Secretary Kerry. We need to allow time and space for this American effort to develop as President Obama visits the region later in the month, but I believe that it will important for us to be able to say in concrete terms, at crucial stages of any negotiations that may develop, what we will do to support the process and to incentivise the parties involved. Of course, it may also be open to us to disincentivise—if I may use that word—those parties at crucial moments.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

In the context of conditions for peace, the right hon. Gentleman may not be aware that last Saturday, in Palestine, I visited the mothers and surviving family members—for some have been killed by the Israelis—of Ayman Ismail, who is being held in administrative detention and has been on hunger strike for 246 days, and of Samer Issawi, who is being held on trumped-up charges after being tried twice, once by a civil court which said that he should be released tomorrow and once by a military court which is holding him for 20 years, He has been on hunger strike for 223 days, and is in a critical condition. Will the right hon. Gentleman make clear to Netanyahu that if these men die, their blood will be on his hands?

[Mr Hague]

I think we can be absolutely clear that it is important for justice to be properly done and human rights to be observed on all occasions, for a justice system to be properly upheld, and for problems that have arisen in relation to hunger strikes—of which we have seen many in recent times—to be dealt with through successful talks between the Israeli authorities and those concerned whenever possible. We have urged that. There have been such successful talks in the past, and I hope that the same can happen in this case.

[Mr James Clappison (Hertsmere) (Con)]

3. What recent representations he has received on the activities of Hezbollah.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

On 18 February, the Bulgarian Foreign Minister told European Union Foreign Ministers that the Bulgarian Government took it as a justified assumption that two members of Hezbollah’s military wing had been involved in the terrorist attack in Burgas last July. Since then we have received representations from the United States and Israel about Hezbollah’s activity, and we have called on our European partners to respond robustly to terrorist actions on European soil.

[Mr Clappison]

I warmly welcome what the Foreign Secretary has said. This was a terrorist attack which cost the lives of six people, tourists innocently going about their business. Is it not high time the European Union acted against Hezbollah and banned it in its entirety? Otherwise, will not the EU be left looking a little bit casual, if not shoddy, in its approach to terrorism?

[Mr Hague]

As my hon. Friend knows, we are clear about this. The United Kingdom proscribed Hezbollah’s external security organisation back in 2001, and extended that proscription to the military wing in 2008. We are now discussing the issue in the European Union, and we would like to see the EU follow what we have done. We are engaged in active discussion with EU countries. Some are supportive of this, some are awaiting evidence from Bulgaria before making a decision, and some have other concerns. We are seeking to persuade them that those concerns are not warranted, and that the European Union should take a decisive position.

[Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)]

24. The recent murder of Israeli tourists, together with a Bulgarian national, in Bulgaria is just the latest in a string of terrorist attacks by Hezbollah, from Argentina in 1994 to Cyprus and Turkey in 2011. Just what will it take for Europe to act against this terrorist organisation?

[Mr Hague]

As the hon. Lady will gather, that is what we are discussing in the European Union. My Bulgarian colleague briefed us on the matter at the last meeting of the Foreign Affairs Council, and we are now having the discussions that I just described. As I say, some countries wish to look at the evidence in more detail, and some have other concerns about the impact on relations with Lebanon. However, I made it clear on my recent visit to Lebanon that we supported the Lebanese authorities’ statement that they would co-operate fully with the investigation and that there is no need for any decision we make about Hezbollah to have a damaging impact on Lebanon’s stability.

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

Hezbollah makes no distinction between its military activities and its political activities, so why does the EU feel the need to make such a distinction before it reaches a view about sanctions against Hezbollah?

[Mr Hague]

The United Kingdom made that distinction and we believe that those wings are organisationally distinct, even if they both come under the same overall leadership. It is important to recognise that Hezbollah’s political wing is and will remain an important part of Lebanon’s political scene, and we have to be able to act in the interests of the stability of Lebanon. We do not believe that an EU consensus could be arrived at on the designation of the whole of Hezbollah.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

I have listened carefully to the answers offered by the Foreign Secretary, and on this matter I sense that there is genuine cross-party agreement across the House. He says that active discussions are under way with European partners on the proscription of Hezbollah’s military wing, but that some countries are looking at further evidence. Given the terms of the report published by the Bulgarians on 5 February and the discussions that the Bulgarian Minister has had with other European colleagues, will the Foreign Secretary tell the House what further discussions he is going to have, particularly with the French and with others? What assurance would they need in order to be able to match the action that, with our support, the British Government have taken?

[Mr Hague]

Of course, we are in active discussion with other European partners, including France. As I say, some are immediately supportive of designation, as we are, but some want to look in more detail at the evidence, although plenty of evidence is available. Some have concerns about the impact on the stability of Lebanon—concerns that I think are unfounded—on EU relations with Lebanon or on European troops serving in the UN mission in southern Lebanon, the United Nations Interim Force In Lebanon. So there are a variety of reasons for this, which I do not agree with, and it is clear that the right hon. Gentleman does not agree with them either. I shall, thus, quote the strong cross-party support in this House in the Government’s further discussions about this issue.

[Sheila Gilmore (Edinburgh East) (Lab)]

4. What steps the Government are taking to secure international agreement on a comprehensive arms trade treaty at the UN conference in March 2013.

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

The United Kingdom remains a determined driver towards a robust and effective arms trade treaty, as it has been for many years, particularly in the run-up to the conference in New York later this month. We are actively engaged in lobbying various other states, and we will continue to do that throughout the conference, both in New York and from London.

[Sheila Gilmore]

Just 10 days ago, in a debate in this House, the Foreign Secretary made a powerful speech on tackling sexual violence in conflicts. One way of turning those warm words into action would be by strengthening the draft text of the arms trade treaty, which calls on states only to “consider taking feasible measures” to avoid arms being used in gender violence. Will the Minister make getting those words strengthened in the treaty a priority?

[Alistair Burt]

We are looking actively to strengthen the treaty in a variety of places and to close off whatever loopholes we can. Tackling gender violence remains of exceptional importance to the United Kingdom and wherever there is a possibility of strengthening the text in relation to that, we will do so.

[Mark Pritchard (The Wrekin) (Con)]

I congratulate the Government on campaigning for a universal treaty and on ensuring that national reports are declared openly and transparently. But does the Minister agree that in two or three weeks’ time the draft text of the treaty needs to include all arms and weapons transfers?

[Alistair Burt]

The key priority for the United Kingdom is to make sure, first, that we do not lose the strength of the text that was almost agreed last July. We also want to ensure that we can clarify and strengthen the text wherever possible, and transfers is indeed one of the priorities that we will be looking at in seeking to improve the text.

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

The UK director of Amnesty International has said that there are tighter international controls on the global trade in bananas than there are on arms. Will the Minister confirm that the UK Government will take this opportunity to push very hard for a very effective arms treaty that applies to all weapons and munitions and that ensures proper monitoring and an enhanced end-user certificate system?

[Alistair Burt]

The inclusion of all small arms and light weapons in the treaty is fundamental for us. I have had regular meetings with the director of Amnesty; I know her views and they are very similar to ours. It is vital that we get the broadest and most effective arms trade treaty out of New York. We will not be able to secure everything we would wish and we will not sign something just because it is a piece of paper. We want to ensure that it is robust and effective for those who use it and for end-users, too.

[Duncan Hames (Chippenham) (LD)]

It is said that around the world someone dies on average every minute as a result of armed violence, including 50,000 people who will have died last July while the arms trade treaty negotiations stalled. What prospect of American support for an international arms trade treaty did the Minister and the Foreign Secretary discern from their talks with Secretary Kerry during his visit last week?

[Alistair Burt]

We very much want the United States to be a party to the agreement, but we know—as is well known—that they have issues with some items. The Secretary of State was made well aware by my right hon. Friend the Foreign Secretary of the importance we attach to the arms trade treaty. The United States is, of course, keeping its negotiating position carefully guarded in the run-up to the negotiations, as one would expect. We are very keen that the United States should be able to sign the agreement and, of course, that it should meet our objectives of being robust and effective.

[Kerry McCarthy (Bristol East) (Lab)]

I was a little disappointed to hear that no Minister from our Department for International Development would be attending the arms trade treaty talks later this month. Given that armed violence is estimated to cost Africa $18 billion a year, will the Minister assure me that tackling poverty and the extent to which arms transfers undermine socio-economic development will be at the top of his list of priorities when he goes to New York?

[Alistair Burt]

As the hon. Lady rightly says, I am going to New York. It is not possible for a Minister from DFID to go on this occasion, but they went last July. The Minister of State, Department for International Development, has been determined in all his efforts over the course of the past year to pursue our interests in the treaty and will continue to work the phones even while other people are in New York. There is no lack of engagement from DFID and the Government’s determination, supported, we know, by the whole House, will continue throughout the conference.

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

8. What recent discussions he has had with his European counterparts on the possibility of an intergovernmental conference on EU treaty change.

[The Minister for Europe (Mr David Lidington)]

I am in regular contact with my European opposite numbers on a range of issues, including on the reforms being discussed to bring stability to the eurozone and wider changes to the European Union.

[Seema Malhotra]

Given that the Minister is unable to give any indication of a time scale for any potential intergovernmental conference on EU treaty change, what does he say to businesses in my constituency that have raised their concerns that uncertainty over the relationship with the EU could harm trade with the continent and threaten their viability?

[Mr Lidington]

I would say to businesses in the hon. Lady’s constituency that I hope that they will warmly welcome the efforts the Government are making to strengthen the single market in Europe, to promote free trade with the rest of the world and to cut the cost of European regulation on businesses of all sizes.

[Martin Horwood (Cheltenham) (LD)]

Will the Minister embrace collaboration rather than confrontation in Europe and welcome last week’s call for smarter regulation, more cost-efficiency, more free trade agreements and many other European reforms that are possible with or without a treaty issued by the Deputy Prime Minister and Liberals in government in the Netherlands, Germany, Belgium, Finland, Denmark, Sweden, Estonia, Romania and the UK?

[Mr Lidington]

There was indeed a great deal in that statement with which I, coming from a different political family, would find myself in disagreement—[Interruption.] I mean in complete agreement—although perhaps I disagreed with a few points. It is striking that when I talk to my European counterparts, from whatever political family they come, there is a common sense of the urgency of Europe’s collectively getting to grips with the challenges of global competition and taking the steps on deregulation and the promotion of free markets and free trade that will bring more jobs and prosperity to everyone in this continent.

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

Treaty change requires the agreement of all member states. However, the European Council President said last week in London that there was

“not much appetite . . . around the leaders table”

for opening the treaties. The Dutch Foreign Minister said:

“We will do everything to avoid treaty change”.

The French are not keen. The Germans are not keen. Which allies has the Minister found for treaty change?

[Mr Lidington]

I am sorry if the hon. Lady feels that the treaty of Lisbon is so perfect that it needs no reform at all. In respect of the President of the European Council’s comment, he has said before that he does not think that any treaty change is likely for the next couple of years, and I do not disagree with that opinion, but if the hon. Lady looks again at the report of the four Presidents, if she looks again at President Barroso’s blueprint for European reform, she will find there a proposal for substantial changes to the way the EU operates that would not be possible without changes to the treaties.

[Margot James (Stourbridge) (Con)]

We are seeing some positive results and progress in areas such as the EU budget, fisheries and the extension of the working time directive. Does my right hon. Friend agree that the ongoing process of negotiation and alliance building is a vital part of realising the reforms needed in the EU and Britain’s relationship with its European partners?

[Mr Lidington]

I completely agree with what my hon. Friend says. The achievement of the first-ever reduction in a European financial framework, coupled with the agreement on the ban on the obscene practice of discarding fish—something for which this country has fought for many years—is clear evidence not only that this Government are committed to working with our partners in Europe to achieve common objectives, but that we are succeeding in delivering outcomes that should be welcomed right across the House and by everybody in this country.

[Sir Bob Russell (Colchester) (LD)]

9. What recent discussions he has had with the Government of Israel on illegal settlements in the occupied west bank.

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

We take regular opportunities to talk to the Government of the state of Israel about settlement policy which, as the House heard earlier, we consider to be illegal and an obstacle to peace. My most recent opportunity was a meeting with the Israeli ambassador last Friday.

[Sir Bob Russell]

Against the worrying echoes of the southern states of the USA 50 years ago and of apartheid South Africa 25 years ago, the Government of Israel introduced segregated buses for Israeli settlers living illegally on the west bank and for the indigenous Palestinian population. Appeasing the racist regime in Israel must stop. Will the Minister, with his European Union colleagues, end our cosy relationship in view of such behaviour?

[Alistair Burt]

As always, recognising the context of Israel and the occupied Palestinian territories, particularly in relation to some of the hopes expressed by my right hon. Friend the Foreign Secretary earlier, means acknowledging how difficult the circumstances are, but also points to the consequences of there not being a settlement and of actions being pursued that continue to place Israel in a difficult position with world opinion. The longer the status quo is believed to be realistic, the more dangerous things become. We must all lend our efforts to the determination expressed by a number of states that this year must be definitive if we wish to see Palestinians and Israelis live in the sort of peace and harmony that we would all expect to bring an effective settlement to that region.

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

Further to an earlier question, is not the crux of the matter that the Israeli Government, and previous Israeli Governments, do not believe that there will be any serious consequences as a result of what they do? Can one understand the sheer anger, resentment and frustration of the Palestinians who see no political progress at all? What would we do if we were in the same position as the Palestinians in the occupied territories?

[Alistair Burt]

The crux of the matter remains the extraordinary distrust and low levels of confidence between Israelis and Palestinians in relation to security matters and the long effects of the occupation, which has been so immensely damaging to both. As my right hon. Friend the Foreign Secretary said, we fear that unless there is effective action this year, the opportunity for a two-state solution is slipping away, the barrier between Israeli and Palestinian that we have all seen growing in our time in the House is getting more and more severe, and the opportunities, therefore, for people to live together in the future are getting more and more remote. The anger is understood. The fear of lack of security on the Israeli side is understood. That is why this year has to be definitive to make serious progress.

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

20. Is it not the case that in no other country would we allow large numbers of migrants to occupy its land, denying the land to local people? Why is so much energy put into the likes of Syria after two years, when nothing appears to be done about Palestine’s west bank, and in particular East Jerusalem, after 40 years?

[Alistair Burt]

I cannot accept the premise of the question that nothing is done in relation to this long-standing and deeply divisive issue. The United Kingdom has been a supporter of the Palestinian Authority and of its work towards statehood. We have condemned the possibility of settlements arising in new areas of East Jerusalem, we have condemned settlement building in East Jerusalem, and we continue to take the view that settlements are illegal and an obstruction to peace. As my right hon. Friend the Foreign Secretary has said during the course of these questions, this year must be definitive in making progress on both sides, so that the context of a secure Israel next to a viable Palestinian state becomes a reality before that window is lost and the situation becomes even more grave.

[Mr Andy Slaughter (Hammersmith) (Lab)]

The Minister rightly condemns illegal settlements, administrative detention and the demolition of Palestinian homes, but it appears that he cannot do very much. What he can do something about is the import of illegal goods from those settlements, which are running at eight times the level of imports from all Palestinians, as a recent report called “Trading Away Peace”, with which I believe he is familiar, by 22 non-governmental organisations, said. Will he now take steps to prevent the import of goods from illegal settlements to the UK?

[Alistair Burt]

We continue to work with European partners on the possibility of extending voluntary labelling so that people can make their choices. We do not believe in a boycott of goods, but we believe in clear labelling so that people can see where goods have come from. We are certainly keen to ensure that no goods from settlement areas find their way into the European Union by being labelled as Israeli, and we are determined to ensure that that does not happen.

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

10. What assessment he has made of the outcome of the recent summit at Chequers attended by the Presidents of Afghanistan and Pakistan.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

The Chequers summit on 3 and 4 February brought together the political and security leaderships from Afghanistan and Pakistan. Both sides committed themselves to taking all necessary measures to achieve a peace settlement over the next six months, called on the Taliban to open a political office in Doha, and reaffirmed their commitment to a strategic partnership with each other. We will continue to support the two Governments in bringing about peace, taking into account the stability of the whole region.

[Paul Uppal]

I think that all of us in the House would echo the sentiments of the US ambassador to Pakistan, who said that he wished it to be a stable, prosperous and democratic country. Very much in that vein, given that she is a sizeable and important power in that region, what steps is my right hon. Friend taking to ensure that radical Islamist elements within that country do not destabilise her nuclear role?

[Mr Hague]

Across the House we are all very strong supporters of a democratic Pakistan. Pakistan is coming to a very important moment with a general election where, for the first time, a democratically elected Government will have served their full term to be succeeded by another democratically elected Government. The United Kingdom, of course, does a great deal to support Pakistan, particularly with the huge programme of the Department for International Development. That in turn is particularly focused on primary education in Pakistan, and we also seek to boost trade and investment.

[Derek Twigg (Halton) (Lab)]

In view of what the Foreign Secretary has just said, will he give us his assessment of the state of play in terms of what help elements of the Pakistani security force are still giving to the Taliban and insurgents?

[Mr Hague]

One important aspect of the Chequers summit was that the Pakistani security establishment was there, representing the leadership of the army and the Inter-Services Intelligence. Their clarity and their support for pursuing a peace process, and for working with Afghanistan and with us in order to do so, were abundantly clear. This is therefore now the context in which Pakistan is looking at the Taliban. It wants the Taliban to come into reconciliation and peace.

[Mr Speaker]

I think that the strength and knee muscles of the hon. Member for Canterbury (Mr Brazier) now deserve recognition.

[Mr Julian Brazier (Canterbury) (Con)]

Thank you, Mr Speaker; that is an interesting accolade.

I congratulate my right hon. Friend the Foreign Secretary on that extraordinary summit between two powers that were very unlikely to share a room together even a few months ago. I also congratulate our embassy in Kabul on the extraordinary work it is doing to promote the commercial side of Afghanistan, particularly the mining projects, which in the long run are the key to prosperity for the country.

[Mr Hague]

Both points are very important. The embassy is absolutely working hard on such projects. On relations between Afghanistan and Pakistan, one must never be complacent, and much work remains to be done. The two Governments, with our encouragement, have achieved a bigger improvement in their relations in the past six months than at any time in the previous 10 or 20 years. That gives us something to work on.

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

11. What progress he has made in developing proposals to repatriate powers from the EU.

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

15. What progress he has made in developing proposals to repatriate powers from the EU.

[The Minister for Europe (Mr David Lidington)]

The Government have already made progress on securing reforms to the EU, by ending Britain’s obligation to bail out eurozone members, by ensuring that the smallest businesses are exempted from EU regulations, by securing protections on banking union and by achieving a shift in fisheries policy towards local and regional management.

[Mr Bain]

But did President Van Rompuy not have a good point last week when he said that, rather than prioritising treaty change, the Government should be leading the charge for growth in Europe? With our economy having grown by a dismal 0.2% last year, should the Minister not take that advice rather than trying to weaken the rights of work for millions of employees across Britain?

[Mr Lidington]

It is this Government’s commitment to growth, jobs and prosperity in Europe that lay behind the achievement of the EU’s free trade agreements with the Republic of Korea and with Singapore, attained during the lifetime of this coalition Government, and it is the firm alliance between our Prime Minister and the German Chancellor that is driving forward, with the Commission, moves in Europe towards an historic transatlantic trade deal. I wish that the Opposition were sometimes a little less grudging.

[Shabana Mahmood]

Does the Minister agree that seeking to repatriate powers in the areas of employment and social affairs would not be about regaining powers from Europe, but rather about taking away the rights of working people here at home?

[Mr Lidington]

I sincerely hope that the hon. Lady is not seeking, by means of that question, to suggest that she supports an end to our opt-out from the 48-hour working week under the working time directive. I hope that she is not being complacent about the European Court of Justice judgments that have caused such difficulties for the national health service and for the social care sector, problems that are not unique to the United Kingdom and concerns about which are shared by many other member states.

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

Has the Minister drawn any conclusion from the fact that at last Thursday’s Eastleigh by-election a majority of voters voted for candidates who want to see the United Kingdom repatriate all powers from the European Union?

[Mr Lidington]

I think that what the voters in every constituency in the country will be looking for is a Government who actually deliver results for the people of the United Kingdom, at both the economic and political level, in Europe and globally.

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

Does the regionalisation of fisheries waters not show that we can repatriate powers under the present treaty and that that augurs well for the future repatriation of powers to the United Kingdom?

[Mr Lidington]

I believe that there are many reforms that can be achieved within the current treaty framework and further reforms that, in due course, would be best settled within the framework of treaty amendments.

[Mr Speaker]

Last but not least, Mark Hendrick.

[Mark Hendrick (Preston) (Lab/Co-op)]

12. What discussions he has had with the Governments of Mali and France on protection of British civilian and military personnel in Mali.

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

Force protection for the small UK military team supporting the C-17 operation in Bamako is being provided by the French as part of the wider Mali operation. Protection for the EU training mission, to which the UK has offered both military and civilian personnel, is being provided by French and Czech military personnel. We do not envisage UK personnel fulfilling a force protection role.

[Mark Hendrick]

I thank the Minister for his answer. What lessons have been learnt from the EU mission in Somalia, which was relatively successful in keeping terrorists out of the security services, as opposed to a rather less successful exercise in Afghanistan in which many allied servicemen lost their lives as a result of terrorists entering the security services?

[Mark Simmonds]

The hon. Gentleman is correct to say that we learn lessons from EU trading missions where they are taking place. Lessons have been learnt from Somalia. However, there are also differences, one of which is that we are going to infuse into the EU trading mission to Mali some civilian trainers who will focus on the Foreign Secretary’s prevention of sexual violence in conflict initiative to make sure that the Malian army understands the importance of that as well as the importance of humanitarian law and human rights.

[Tim Loughton (East Worthing and Shoreham) (Con)]

T1. If he will make a statement on his departmental responsibilities.

[The Secretary of State for Foreign and Commonwealth Affairs (Mr William Hague)]

This morning I returned from Mali, where I met its President and Prime Minister to urge early progress on a political process and reconciliation with all communities in their country. I also met and thanked members of our armed forces who have given logistical support to France and are now beginning to form the EU military training mission.

[Tim Loughton]

May I take the Foreign Secretary to the other side of the world and declare an interest as a member of the Tibet Society? He will be aware that there have now been more than 100 self-immolations in Tibet. He will also be aware of the big crackdown and harsh prison sentences for protestors, including families of the victims. I hope that he is also aware that next Wednesday there will be a big lobby by Tibetans coming to this House. What is he doing to support the growing number of Tibetan refugees, many of whom are escaping across the mountains to Dharamsala? In particular, what help can we give through the British Council to assist in education about and preservation of the Tibetan language and culture, which are being so brutally repressed by China in Tibet?

[Mr Hague]

rose—

[Mr Speaker]

Preferably the answer will be shorter than the question.

[Mr Hague]

In a very short answer, Mr Speaker, we do indeed have serious concerns about the recent wave of self-immolations and urge the Chinese authorities to show restraint towards Tibetan protestors. As my hon. Friend knows, we believe in meaningful dialogue between the Dalai Lama’s representatives and the Chinese authorities as the best way to address and resolve the underlying grievances. There is no change in our policy towards Tibet, which we regard as part of the People’s Republic of China. However, we are always concerned about human rights issues and—in the interests of brevity, Mr Speaker—we will take an additional look at the points that my hon. Friend raises.

[Mr Douglas Alexander (Paisley and Renfrewshire South) (Lab)]

In the light of the latest round of the P5 plus 1 talks held last week in Kazakhstan, will the Foreign Secretary update the House on progress? In particular, will he share with the House, if he feels able, some of the specific guarantees that the UK Government would be looking to achieve from the Iranians as part of these important discussions, given that being clear about the objectives increases the likelihood of success in the negotiations?

[Mr Hague]

These discussions took place in Almaty last week, on 26 and 27 February, and they were successful enough for further meetings to be agreed. Meetings of officials will take place in early April, also in Kazakhstan. Of course, it is pleasing that it is worth while having those further meetings. In the E3 plus 3 we have put a revised offer to the Iranians. However, that revised offer would involve both sides taking actions that then build confidence for further negotiations, without our thinking that we can resolve the entire problem in one move—one negotiation. We hope that Iran will continue to take a strong interest and a constructive role in these negotiations. It is too early to tell whether the Iranian position is to do that or to play for time, as has often happened in the past.

[Mr Alexander]

I note that the Foreign Secretary says that it is too early to tell about these negotiations and that the issue cannot be resolved in one go. I certainly recognise both those points. In recent days there has been quite a lot of speculation about the prospects for bilateral negotiations between the United States and Iran. Will he share the Government’s thinking as to the likelihood of a grander bargain between those two powers taking place in the months ahead?

[Mr Hague]

The United Kingdom is, of course, open to bilateral discussions, which are difficult in our case because of the unavoidable closure of embassies. Nevertheless, I have from time to time met the Iranian Foreign Minister and we are open to the idea of other members of the E3 plus 3 having bilateral discussions with Iran. Such discussions sometimes take place at the margins of the E3 plus 3 meetings. It is important for Iran to know that we are seeking to settle the nuclear issue—Iran would, of course, have all the rights of a country under the non-proliferation treaty—and that the western world is not embarked on regime change in Iran. That sincerely is what we are trying to do. Any bilateral discussions that make that clear and allow negotiations to proceed more successfully on that basis would, of course, be welcome.

[Andrew Stunell (Hazel Grove) (LD)]

T3. My constituent Mr Percival is one of many who have been robbed by property fraud in Cyprus following the default of the Alpha bank. Will a Minister meet me to discuss with the Greek and Cypriot authorities what might be done to rectify this disgrace?

[The Minister for Europe (Mr David Lidington)]

Ministers at the Foreign and Commonwealth Office and our high commissioner in Cyprus regularly raise property issues with the Cypriot authorities. I have made a commitment to meet members of the all-party group on the defence of the interests of British property owners in Cyprus to discuss the particular case to which my right hon. Friend has referred and the broader issues. I would be very happy to talk to him in that context.

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

T4. The Foreign Secretary advised the House in a written ministerial statement that the Government would consult European Union partners on strengthening EU sanctions. Will he update us on those discussions and on what impact further sanctions would have on the North Korean leadership and the North Korean people?

[The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)]

The situation in North Korea following the nuclear test a few weeks ago is extremely serious. I summoned the North Korean ambassador and had subsequent discussions in Seoul in South Korea when I attended the presidential inauguration of President Park. We continue to work with EU partners and the UN in order to introduce a tougher sanctions regime for Pyongyang.

[Bob Stewart (Beckenham) (Con)]

T5. Twenty-seven years ago, the arrival in Uganda of President Museveni’s regime seemed to herald a new dawn for the country. Last week I was visited by Bishop Zac Niringiye, the assistant bishop of Kampala, who used to be a parish priest at Christ Church, Beckenham. Bishop Niringiye, who was himself arrested three weeks ago, briefed me on the appalling levels of Government corruption now endemic in the country. What can Her Majesty’s Government do to succour the drive to end corruption in Uganda?

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

My hon. Friend is absolutely right to highlight the threat that corruption poses both in Uganda and across the African continent. We remain concerned about the situation in Uganda and he may be aware that the Department for International Development temporarily froze all UK aid going through the Ugandan Prime Minister’s office. The UK, along with other donors, is supporting the Government of Uganda’s action plan, which will be reviewed next April.

[Pamela Nash (Airdrie and Shotts) (Lab)]

T7. Have the Foreign Secretary or the Foreign Office had any recent discussions with the European Commission about Scotland’s membership of the EU should it choose to leave the UK? If so, will he update the House?

[Mr Lidington]

No, we have not had discussions with the European Commission, but we have made it clear in published documents that the great weight of international legal advice and precedent is that an independent Scotland would have to negotiate its membership of the European Union and other international organisations. In the case of the EU, that would, of course, require the unanimous consent of all member states for every term of that membership.

[Sarah Teather (Brent Central) (LD)]

T6. I recently visited Gaza as part of a cross-party delegation with Interpal. While there I was alarmed to witness, on three different occasions, the shooting at and intimidation of Palestinian fishing boats that appeared to be clearly inside the six-mile limit agreed by the ceasefire. Earlier, the Secretary of State roundly condemned, as is right and proper, the firing of rockets into Israel, but does he agree that peace depends on both sides sticking to the terms of the ceasefire, including Israeli naval ships?

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

Yes indeed; the terms of the ceasefire must be adhered to by all. The opportunity for Gaza to get greater economic independence and a resumption of normal trade to and from Gaza will be of huge benefit. That package needs to hold together. Israel needs to have security in its southern area, but Gaza also deserves an important boost to its economy so that matters can move forward. The ceasefire must certainly hold.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

I hope that the Minister sees a continuing important role for the nation state in Europe. Will he do all in his power to protect very small states such as Luxembourg, which has a successful economy, so that they can continue to do things their separate way, without any further loss of sovereign powers in any possible EU treaty change?

[Mr Lidington]

In my experience, Luxembourg’s Ministers are extremely vigorous and effective in protecting the interests of Luxembourg. However, I would add that the United Kingdom, as one of the biggest member states of the European Union, is usually able to exercise rather greater influence and to mobilise coalitions more effectively than a small country on its own, particularly one that might just have joined the EU.

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

T8. May I draw the attention of my right hon. Friend to the Fresh Start manifesto and, in particular, to the section on the budget? Will he confirm that we will insist that MEPs vote on the multi-annual financial framework in public, rather than in private as has been proposed by the European Parliament?

[Mr Lidington]

Elected representatives, whether in the European Parliament or this place, should be accountable to the people who elect them in the first place. A secret vote is a denial of that democratic accountability. I hope that Labour Members will exercise the maximum possible public pressure on the socialist group in the European Parliament to stand by that principle of political accountability, to which the Conservative party is committed.

[Jeremy Corbyn (Islington North) (Lab)]

Like the hon. Members for Brent Central (Sarah Teather) and for Kettering (Mr Hollobone), I was on an Interpal delegation to Gaza last week. I would be grateful if the Minister could tell us what is being done to lift the blockade on Gaza so that the terrible water situation can be addressed. Sewage cannot be processed, fresh water is unobtainable because of the pollution of the aquifer, and the material to set up a desalination plant or something like it cannot be brought in to provide a decent standard of living for the people of Gaza.

[Alistair Burt]

Following the end of the conflict towards the end of last year, there have been renewed efforts to ensure that Gaza progresses towards a normal economic situation and that the resources that are needed to rebuild the infrastructure can go into Gaza. The United Kingdom is clear that unless that happens, the divide between Gaza and Israel will remain. It is essential that that work proceeds and that the UK plays a full part in urging those changes.

[David Mowat (Warrington South) (Con)]

T9. Twice in the past year, the UK has failed to vote at the UN to support the aspiration of Palestinians for their own state as part of a two-state solution. On each occasion, the reason given was that we did not wish to undermine a future US-led peace process. May we have an update on the time scale for that? When do Ministers think they might be able to vote in a different direction?

[Alistair Burt]

As my right hon. Friend the Foreign Secretary made clear in response to earlier questions, Secretary of State Kerry will visit Israel and Palestine shortly, as will President Obama. It is clear that there is a re-engagement all round with the issues that will affect the middle east peace process. We remain clear that this is a priority for the region and for the world, and we will give every assistance to that process.

[Dr William McCrea (South Antrim) (DUP)]

Will the Secretary of State tell the House whether the Government have set out a clear list of powers that the Government desire to repatriate from the EU? In the light of that, are negotiations going on with our EU colleagues about the process that would be necessary to achieve that end?

[Mr Lidington]

As a coalition Government, we are committed to a programme of significant reform of the European Union, as has been set out in many speeches and public statements by Ministers throughout the Government. The question of a treaty renegotiation will be put to the electorate in the Conservative party’s 2015 manifesto.

[Karen Lumley (Redditch) (Con)]

Following the arrest this morning of former President Nasheed in the Maldives, will the Minister update the House on the situation in that country?

[Alistair Burt]

Yes, and I had a report from our high commission in Colombo earlier today. We understand that former President Nasheed was rearrested earlier this morning, and he has access to lawyers. At present we remain puzzled about the turn of events. It was widely believed that an arrangement was in place following former President Nasheed leaving the Indian high commission a couple of weeks ago, in relation to his trial and his part in the forthcoming elections. We are watching the situation carefully and have made it clear to the Maldivian authorities that no harm must be oriented towards the former President.

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

Given earlier references to the regionalisation of fisheries policy, is the Minister hopeful that we will achieve the objective whereby regional advisory councils can make decisions on fish quota allocations and fisheries management?

[Mr Lidington]

In the light of the vote in the European Parliament the other week and the more recent decision at the Council of Ministers, the Government are confident but not complacent—I think that is how I would put it. I assure the hon. Lady that the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), working in close consultation with all three devolved Administrations in the United Kingdom, is determined to do his utmost to deliver the kind of deal that she and I wish to see.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am sorry to disappoint colleagues but even a two-hour session for Foreign Office questions would probably not be sufficient. We must move on.

Romanians and Bulgarians (Benefits)

Tuesday 5th March 2013 Commons Chamber

12:35

[Mr Frank Field (Birkenhead) (Lab)]

(Urgent Question): To ask the Secretary of State for Work and Pensions if he will make a statement on what actions the Government are planning to restrict welfare to newcomers from Bulgaria and Romania from 1 January next year.

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

May I congratulate the right hon. Gentleman on getting his urgent question on the second time of trying? He is a model of persistence and I, of course, was over the moon about his persistence.

The right hon. Gentleman has raised an important question and I want to deal with some aspects of it. First, however, I will set the scene as to what we are trying to deal with. I understand that Labour Front Benchers now admit that they fundamentally got it wrong on immigration, but the scope to which they got it wrong is why we have this issue. Between 1997 and 2010, net migration to the UK was some 2.2 million people—larger than the city of Birmingham. Interestingly, from 2004 to 2010, 1.1 million European economic area nationals registered to work in the UK. After the prediction of what was likely to happen, the scope of the problem is far greater than anything the Labour party wanted to tell the public. Most of all, I congratulate my right hon. Friend the Home Secretary and her team in the coalition for having begun the process of reducing net migration to Britain for the first time in a long time.

For the benefit of the House and in line with the right hon. Gentleman’s request—I know he particularly wanted me to answer that bit first, so having dealt with it I will get on with the rest of my answer—let me explain the current arrangement. A lot of nonsense is talked about what we are and are not capable of. First, people must pass the habitual residence test, introduced by the previous Government, before being entitled to claim income-related benefits. The current system was put in place in 2004 and has basically two elements—a legal right to reside and an assessment of factual evidence of habitual residence. As we know, EU citizens have the right to live in another member state as long as they are a qualified person, which basically means a worker, self-employed person, jobseeker, self-sufficient person or student. Tax credits have, I am afraid, been open to abuse outside that system from day one because the rules allow anybody from within the European economic area to claim self-employed status and receive full entitlement immediately. The Government are trying to wrestle with that problem, and I will return to it.

We are currently facing—not for the first time—a legal challenge from the European Commission because our habitual residence test states that people must prove they live in the UK habitually before they get access to benefits. It seems strange to me that anyone should be surprised that a habitual residence test requires that a person should live in the UK habitually, but we sometimes live in that George Orwellian political language world, which the Commission seems to foster with great alacrity.

Secondly, on exportability, under the EU co-ordination rules, benefits under the main categories of social security are exportable—that is, payable elsewhere in the European economic area. So that we clear up the confusion, let me say that that includes, notably, child benefit, for example, and has for a while. We therefore pay child benefit to children who live in other EU states when their parents are working here. That causes a lot of concern, and quite legitimately so. When both parents work but in different countries, the EU rules apparently determine who has primary responsibility for paying, but any difference in entitlement is netted off. So, for example, if someone comes from Poland and works over here, the child support that we pay here is netted out against what they might have received had they been paid in Poland, and the net amount is therefore paid across. That is the existing rule. The UK system is obviously more generous, and that is why it pays people in a sense to be here, getting those benefits.

I recognise there are some real issues here. We are in the midst of looking at those issues with other countries as well, and I want to mention which ones are on the schedule. The Government are concerned that, although some protections are in place, they are not enough. That is particularly worrying given the issue, which the right hon. Gentleman raises, of 1 January 2014. So we are trying to look carefully at where the system is falling down at the moment, and I am exploring a series of options. Today, for example, I have called for another meeting of a series of European nations that share our concerns. Some people might have noticed today that Germany has woken up at last to the reality that it might face a large net migration. We are due to meet its representatives and others from around the EU to try to ensure that we deal with this. I do not believe that it is acceptable that we go on with it—I have told the European Commission that—and we will resist it.

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

What about answering the question?

[Mr Duncan Smith]

I am answering the question. To be frank, the real question for the hon. Gentleman is why he sat with a Government who, for over 10 years, made such a shambles and a mess of this.

The reality is that we are trying, for example, to figure out the rules that allow us to prevent individuals from staying in the UK for only a short time before claiming benefits—a rule that existed under the last Government. We are looking at the tests about accommodation and the length of time people spend here. We want to look at things such the leasing arrangements they have for their housing and over what length of time, and even at challenging the narrow and short-term definition of “habitual” used by the European Court of Justice. In other words, we are trying to lock people out from coming here solely for the purpose of claiming benefits.

I have to tell Opposition Members, who were making a noise just a second ago, that one of the big problems is that the last Government did not collect any data on how many migrants actually claimed benefits here. We have changed that. We are now totalling up who is here and who will claim benefits, and we will be on top of those figures.

In conclusion—I know the right hon. Member for Birkenhead (Mr Field) wants to ask some further questions—there are a number of things we need to do. We need to tighten up immediately the rules about habitual residency. We need to tighten up the rules about accommodation and the leasing length of time. We need to tighten up and start the process of arguing hugely with the Commission that it is quite wrong to net out things such as child benefit and pay the higher level to people whose families do not even come with them into the country to work. Finally, many nations in Europe are just as angry as we are about this, and we have been meeting them since last summer and reaching a common purpose to deal with the Commission and force it to recognise that any further changes it wants to make, including by taking us to court over the British residency rules, are not acceptable. We will tighten up. I refuse to accept the Commission’s rules. I will not give way on the habitual residency test, and we will tighten up on net migration.

[Mr Field]

May I thank the Secretary of State for his answers, but might I now try to pin him down on four issues? Does he accept that, if the word “crisis” is used, it is a crisis that successive Governments have engendered by moving welfare from the basis that people had to make contributions to receive benefits to one where they receive them if their income proves needs? Is not his universal credit just one more move in that direction? When will the House know what further restrictions will be placed on universal credit to prevent it from being claimed immediately by people who arrive in this country? Does he not accept that the current situation—basically, a means-tested welfare state—is inconsistent with our European Union treaty obligations and is against the Prime Minister’s wish that we should be open for trade but not an easy touch? Are the Government now going to rescind the directions issued by primary care commissioning groups as Parliament rose for the summer last year, which instructed doctors that they had to take people on to their books if they had been here for 24 hours, including people here illegally? When will the Government act on that?

Will the Government use the powers they do have to instruct authorities that in allocating social housing, they must pay due attention to the length of time people have been waiting and to their good behaviour; and that they have a duty to publish data—on which the Government will insist—on whether social housing is being allocated to non-British citizens?

Finally, given that there are already 150,000 Romanians and Bulgarians here legally, and that they are arriving here at a rate of 25,000 a month, does he not accept that the answer he has just given us will prove ineffective against the movement that might well come after 1 January 2014? Will he therefore tell the House when he expects to report on what measures the Government will take? Will he ask for a whole day’s debate, so that the House can improve them before we rise for this summer’s recess?

[Mr Duncan Smith]

I have known the right hon. Gentleman for a considerable time and have huge respect for him that goes beyond party affiliation. I will deal with those four points, but I want to deal with a point he made right at the end.

I absolutely agree with the right hon. Gentleman that this is something of a crisis. For the past two years, I have been fighting a rearguard action against what was left to me by the previous Government. [Interruption.] Opposition Members can moan, but let us put the facts as they are: I inherited a habitual residency test that simply is not fit for purpose. We are trying to tighten that up dramatically and I am being infracted by the European Union for doing so. Before Opposition Members start lecturing us, let us remember what they left. The right hon. Gentleman is, however, absolutely right—I am with him on this—to describe this as a crisis.

The right hon. Gentleman made an important point about the contributory issue on welfare. Tax credits took things faster in that direction, which is why self-employed people coming in to the country are immediately able to claim tax credits even if they are doing only a little bit of work—we talked about The Big Issue sellers and so on. That is one area we have to look at in relation to universal credit, but I take the opposite view from him. Universal credit gives us an opportunity to redefine the nature of that benefit by absorbing the tax credit issue, taking away the right of individuals coming in from overseas to claim on that basis, and redefining it as something much more in line with our obligations, while being able to lock out many migrants who would come and claim immediately. I am happy to discuss that with him further, but I believe we will be able to make that move, which I am looking at at the moment.

The right hon. Gentleman is right to say that GPs and the health service often overstate their responsibilities to migrants. I talked to the Secretary of State for Health about this issue about a week ago, and he is looking carefully at issuing clear instructions that they do not have to do this. It is my view and belief that that is the case, and it is about making it clear that they do not feel they will be challenged. It is a little like health and safety rules—people over-interpret the situation. In fact, things are never as tough as that, and we need to provide strong guidance.

The right hon. Gentleman is also right about being clear to local government. I am working with the Secretary of State for Communities and Local Government to ensure that we publish and are clear about the number of people from overseas who are taking social housing ahead of those who have waited a long time in the queue. This is part of what we are trying to change—I agree and I will do that.

I am very happy to meet the right hon. Gentleman and to work with any colleague, from either side of the House, to make common purpose to tighten up our arrangements so that we do not have a problem when 1 January 2014 arrives. However, a little humility is required from Opposition Front Benchers in recognising that they signed the accession treaty that left us with this problem. It was they who created the habitual residency test that left the door open, and I wish they would apologise and work with us, rather than complain the whole time.

[Nicholas Soames (Mid Sussex) (Con)]

Does my right hon. Friend agree that the economic benefit to Romanian and Bulgarian families of migrating to the UK is roughly double that to a Polish family, so the scale of his task is huge indeed? When he meets his European colleagues who share the same anxieties, will he see whether they have a different phrase and judgment for the habitual residence rules?

[Mr Duncan Smith]

I will, and I am at the moment. Since last year, we have been talking to colleagues in various countries, including Germany, about the need to deal with the Commission’s view. In a sense, the Commission is using free movement to enter the realm, I think, of social security, which has never been within its remit, and we have to challenge that. Up until now, Germany has been a little more ambivalent, but interestingly in the past two or three weeks it has suddenly begun to change its tune, and other countries, such as Spain, are coming into the group too. We have asked for urgent meetings immediately with that group—in the next two weeks—and I will raise this matter with it.

[Stephen Timms (East Ham) (Lab)]

I, too, welcome the urgent question from my right hon. Friend the Member for Birkenhead (Mr Field), but I am sorry that the Secretary of State answered it in such partisan terms.

The benefits system needs to be fair, and to be seen to be fair. Over many decades, people have come to the UK and made a huge contribution to our economy and our society. The Government now need to look at the benefits and services to be provided, given the prospect of future European migration. We need a sensible and serious debate about credible changes, but the Secretary of State seems only to be floating some rather vague ideas without any sense of whether they can be delivered.

The Secretary of State plans to introduce universal credit from October, but roll-out has already been drastically delayed and fundamental questions are now being asked about the deliverability of the IT. If, as he suggested a moment ago, the Government are to change the rules in the system ahead of implementation, they risk making the delivery of universal credit even more chaotic than it is already set to be. Will he explain how the changes he now envisages will fit in with what is supposed to be being introduced already?

Over the weekend, we were tantalised with hints from Ministers that they wanted the system to be more contributory, but the changes they have made so far, as my right hon. Friend pointed out, are making it less contributory. Has the Secretary of State had a change of heart in favour of a more contributory approach? One other suggestion floated is for the introduction of ID cards. Are these the same ID cards that Ministers announced were scrapped straight after the election? Furthermore, will he and his colleagues do a much better job of enforcing the minimum wage? There have been no prosecutions for minimum wage infringements over the past two years, which has been part of the problem. Will he now put that right?

[Mr Duncan Smith]

The changes are long overdue, and I would like to know why the right hon. Gentleman did not explain why the last Government did nothing about resolving the issue. He says that we should not be partisan, but he just has made a very partisan statement when an apology was all he needed to make. He needed only to say that he was sorry for the mess Labour left us in.

What we are talking about will have no practical effect on the implementation of universal credit, which, by the way, is proceeding exactly in accordance with plans. On the contributory principle—this is the point I wanted to make to the right hon. Member for Birkenhead—there is no magic wand. Let us bear it in mind that if it was a blanket contributory principle, we would end up paying a lot of benefits, such as winter fuel payments—an issue that, as the right hon. Member for East Ham (Stephen Timms) knows, was not resolved by his Government—to lots of people who had long since departed Britain. We are considering the matter, and universal credit will give us an ideal opportunity to embrace tax credits and, through this requirement, to start the process of change so that we can resist the pressure of paying tax credits—because they would no longer exist—to people who come to the UK for the first time and claim to be self-employed. That is the area I am looking at.

We need no lectures from the right hon. Gentleman about prosecutions for minimum wage infringements. The last Government’s record on this was so bad I wonder why the Opposition bother mentioning it at the Dispatch Box. We are trying to change it, and will change it, whereas the last Government gave way on every single issue in Europe from the moment they arrived.

[Mr John Redwood (Wokingham) (Con)]

Why can the Secretary of State not propose to the House that we legislate to say that no one can get benefits unless they can demonstrate a suitable contribution record or have spent at least 10 years in full-time education in the UK?

[Mr Duncan Smith]

As I said earlier, that is the direction of travel we are trying to head in. We are trying to change the rules, in order to make the test covering the period someone spends here and the commitment they make to the UK much tougher. We are wrestling with the habitual residence test, but it is weak in parts because it makes no requirements concerning the length of time someone commits to being in the country. That is an area we have to, and will, challenge. I want to change those rules so that the European Court recognises that someone needs to make a commitment to the country they are in before they can start drawing down.

[Chris Bryant (Rhondda) (Lab)]

I remind the Secretary of State that it was not just the Labour party that supported the accession of Bulgaria and Romania, but every single Member of the House at the time—there was not even a vote—so this is something for us all to engage with. I suggest that it is deeply irresponsible to keep briefing newspapers and providing lots of hints—nudge, nudge, wink, wink—but then not to come to the Chamber with concrete proposals. In the last two years, there has not been a single prosecution for breach of the national minimum wage, even though 13% of those working in care homes in this country are on less than the national minimum wage. Is it not time the Government sorted that out, so that fewer people choose to come here?

[Mr Duncan Smith]

I just do not agree with the hon. Gentleman. It’s great, isn’t it? In government, they wanted to take the credit for everything, but in opposition they do not want to take the blame when things then go wrong. They negotiated the treaty, so they bear the responsibility. I have to pick up the pieces, and we are going to do that. Under universal credit, we will hugely tighten up on self-employed people, shutting the door to many of those whom he allowed to come in and claim benefits in the first place.

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

The Secretary of State is right to seek to deal with what is clearly a wholly unsatisfactory and confusing situation, but does he agree that some people are seeking deliberately to misrepresent the current reality and so are fuelling fear, which can lead to prejudice and hatred? Does he agree that we need better information about the situation?

[Mr Duncan Smith]

I agree with my hon. Friend. I would simply make the point that we have to deal with the reality. Our system does not deal with the problem of people coming here solely to claim benefits. We are always keen for people who have something to add to come to the UK and add their talents and skills to help us build the economy—that has always been the principle—but we do not agree that people should find an open door and a way of coming in just to take money to which they never contributed. That is the key issue. I agree with his point, but responsibility rests with those who used to defend, but now spend their time attacking, the very position they created.

[Kate Hoey (Vauxhall) (Lab)]

Is not the simple truth that we cannot do anything much about any of these problems? The Secretary of State might come up with one or two little changes, but the only thing that will give us back control of our own borders is leaving the European Union.

[Mr Duncan Smith]

As the hon. Lady knows, given my track record, I bow to nobody in my scepticism about many of these treaties. Under the Prime Minister, we have made it clear that, should my party get elected into government next time round, a very serious renegotiation will take place, with the option of an in-out referendum. Personally, I think that is exactly the right position. This is one of the key areas over which we want to get back a lot of control, and only my right hon. Friend the Prime Minister has been bold enough to say we will do that, and test ourselves against that.

[Mr Edward Leigh (Gainsborough) (Con)]

I love the Secretary of State, but frankly his answer was so long and complicated that one would need a degree in social security to understand it—I did not understand it. As a recent by-election showed, the people are hurting and they want a clear answer from the Government. Why do the Government not do as my right hon. Friend the Member for Wokingham (Mr Redwood) and the right hon. Member for Birkenhead (Mr Field) suggested and either move to a contributory system or say, “We will not pay you benefits until you have stayed here for a number of years”? If the European Court sues us, bring it on, and that will make our case for renegotiation.

[Mr Duncan Smith]

I am always grateful for my hon. Friend’s support in these matters. I recall that he used to be in a Government busy voting for the Maastricht treaty when I was rebelling against it, so, with respect, I will do whatever I can and I do not bow before anybody in my determination to say no to the European Commission.

[Mark Hendrick (Preston) (Lab/Co-op)]

There has been a huge amount of exaggeration of the scale of the problem. Bulgaria and Romania are a fraction of the size of Poland. Most Romanians are more likely to go to Spain or Italy. Is this not more to do with Conservative voters migrating to UKIP?

[Mr Duncan Smith]

I am actually a little surprised that the hon. Gentleman makes any reference to the Eastleigh by-election, when the Labour party’s position was an absolute disaster. This is not about that; the reality is simply that we need to ensure that the procedures are tightened up, mostly because of fairness to those who pay their taxes in Britain, who work hard and do not want to see social housing and all these other areas going to people who never made a commitment to this country. This is simply about fairness. We were left a bad position. I am trying to change it, while being infracted by the European Commission and saying no to it at the same time.

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

The Secretary of State repeatedly talks of the infraction process, which is surely just a fine. No one has ever paid any of these fines. Please, please, please: just say no, tell the Commission to sod off and do not pay the fine.

[Mr Duncan Smith]

If my hon. Friend does not mind, I will skip the language and keep to the sentiment.

[Mr Speaker]

Order. I can say only that I experienced a moment of deafness—partly because somebody else was wittering on at me—but I have the impression that perhaps something rather tasteless was said. I trust that the person concerned will wash his or her mouth out without delay.

[Ian Lucas (Wrexham) (Lab)]

Will the Secretary of State clarify whether the Government are considering removing rights to NHS treatment for British citizens, in an effort to restrict access to EU migrants? This has been reported over the past few days, as part of his party’s reaction to events last Thursday.

[Mr Duncan Smith]

My view is that that is not the case. It is a matter for the Secretary of State for Health. I recognise that the hon. Gentleman will have to raise it with him, but I am not aware of any such discussions or any such facts being placed in front of me. I would certainly not be keen for that to happen, but as the hon. Gentleman will be aware—as will the right hon. Member for Birkenhead, whose track record on this is arguably unimpeachable—we have a big problem and we have to face it, not because we are scaring people, but because we have to deal with it.

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

I welcome the Secretary of State’s toughening up. I certainly trust him to fight in a tough and effective way in Brussels, but does he understand that many of our constituents find it grotesquely offensive that Brussels officials are telling this Parliament who it can and cannot pay benefits to? In that spirit, will he confirm that this is an area of EU competence that this Government will ask to opt out of?

[Mr Duncan Smith]

I agree with my hon. Friend that it is invidious that areas that I have always believed were outwith the Commission’s normal competences are being sucked in by using other things—this is to do with the free movement. More could have been done and the issue should have been raised at a much higher level. It is quite good that other nations—mostly northern European nations, but also Spain—are now deeply concerned about the ratchet process. We are meeting them and there are the beginnings of a real resistance to it.

On what will happen in any negotiation, I am clearly not in a position to commit my right hon. Friend the Prime Minister on whatever may happen in future.

[Sammy Wilson (East Antrim) (DUP)]

I welcome the fact that the Government are now tackling the legacy they were left, as far as benefits for foreigners are concerned, but does the Minister not see the contradiction in the Government’s stance at present? We are talking tough at home while—according to Romanian Ministers—giving assurances that those who come from Romania will be given full access to benefits, on the same basis as UK citizens. Does he not see that as an incentive for Romanians to come here and dip into the financial honeypot that they see?

[Mr Duncan Smith]

That is exactly what I am trying to deal with, but not just for Romanians. This goes across the board for what anybody in the European economic area can do when they come here. The problem has been in existence for some time, as the right hon. Member for Birkenhead said. I now have to sweep up after the lord mayor’s show and deal with what has been left behind, after the last Government did nothing at all about the problem. I will do it; I am absolutely determined to.

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

This is clearly not a problem of the Secretary of State’s making. Given that the average salary in this country is five to six times what it is in Romania and Bulgaria, will he do what he can to ensure cross-departmental co-operation, so that we do not face the situation we had in 2004, when Departments were simply out of the loop?

[Mr Duncan Smith]

Absolutely. In fact, we have already had a number of meetings with the Prime Minister and coalition colleagues about tightening up between Departments and understanding where one Department’s position knocks on to another. The first thing is to get rid of the silo mentality that existed and create a pan-Government position. The next thing is not to talk tough here and soft abroad, but to work with the Foreign Office to be as tough over there as we are back here. That is the process that is now being engaged.

[Jim Shannon (Strangford) (DUP)]

The Minister will be aware that large numbers of migrants are bypassing France, Italy and Germany to get to the United Kingdom, almost in haste. What discussions has he had with other EU countries to find the reason for bypassing other countries? Is it that the benefits system in the United Kingdom is much more generous than those anywhere else in Europe?

[Mr Duncan Smith]

We have had meetings about this issue with about 17 countries, all at the same time. I would list them all, but they include meetings with officials from Bulgaria, the Czech Republic, Estonia, Ireland, Germany, France and Poland. We have had meetings with all of them. There is no common position for them all, but a sub-set of those most likely to be affected—I understand that Germany and Spain are where most of the Romanians tend to be going at the moment—are very concerned about what may happen. We are discussing with them exactly how to respond. Reality is now striking many and I think the door is open for us to make a serious move on this issue.

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

I commend the Secretary of State and the Government for addressing this issue, which has never been addressed before. The principle is simple: UK citizens are entitled to the benefits that come with the contribution system we inherit, whereas EU citizens—those from Ireland perhaps are excepted, because of the common travel area—should not expect greater benefits here than UK citizens should expect in other EU countries. If we could get to that position, everybody would understand it and there would be greater justice and far fewer complaints.

[Mr Duncan Smith]

I agree with my right hon. Friend. The point he makes—it is one I have made before—is that there is not an easy solution to what the Commission wants, which is to try to drive free movement as the sole and most important element in this process. However, it fails to recognise that all the nation states have very different social security systems. Many of those nations are finally beginning to say, with us, that this cannot be driven through like a coach and horses, because we control our social security systems. We have different ways of contributing and we use tax differently, so the argument we are making—I believe we will win it—is that we must be left to make those decisions. Obviously when people want to come and work, we want them to do that; the issue is when they come not to work. I think we have a strong position on changing that.

[Jason McCartney (Colne Valley) (Con)]

I welcome the significant fall in net migration, which is down a third since the general election. It is important to note that 30% of total migration was from European economic area nationals. We have already talked about Romanians and Bulgarians coming here under self-employed status. Does my right hon. Friend agree that a key issue is those coming here under self-employed status having top-up benefits?

[Mr Duncan Smith]

It has been a problem for some time—this is the point I am trying to make—that the open door comes through on the tax credit system, whereas self-employed people have been able to make that claim. This is the Big Issue seller question that has been going around—I am very positive about The Big Issue, by the way; this is just about who we pay to do that. The reality is that universal credit opens up an opportunity for us to tighten up those measures, and we will tighten up hugely on access through universal credit for legitimately self-employed people who are unable to declare any kind of income that we might recognise as real.

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

There is always a danger, when we are discussing a problem such as this, that we give the impression that all immigrants are coming to this country for our benefits system. Will my right hon. Friend confirm that the vast majority of eastern European immigrants into the UK are coming here to work and to contribute to our society, and that they should be welcomed?

[Mr Duncan Smith]

The reality is that most people who come here come here to work. They come here because they think the job prospects are greater; that is the real attraction. The truth is that, in the last 10 years, we simply did not know what was happening because the last Government refused to collect figures on those from other countries who were claiming benefit. We were therefore unable to answer that question. The first thing we did was to change that, and we now collect the data. We are now beginning to know what the facts are.

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

For the sake of taxpayers in my constituency, I sincerely hope that the Secretary of State succeeds in his negotiations to redefine the eligibility rules, but does he agree that if for some reason he inexplicably fails it will only encourage more people to vote to leave the European Union when we have the in/out referendum?

[Mr Duncan Smith]

My hon. Friend makes a very good point. The reality is that it is issues such as this that drive people away from the concept of the success of the European Union, if that is what they had believed. The more the Commission decides to interfere in areas such as this, the more damage it does to those who are pro-European. I personally have been quite sceptical about the process for a considerable period, but even I can recognise that this damages the concept of a European Union that works for all its members and that is about trade and co-operation and ensuring that the people who live in the European Union get benefits according to what they have contributed.

[Christopher Pincher (Tamworth) (Con)]

My constituents will be appalled to learn that the last Government failed to collect any data on the benefits being paid to migrants. Will my right hon. Friend give me a rough assessment of the cost to the Exchequer of the benefits being paid out, so that the British taxpayer can have some idea of the costs that were being imposed on them by the last Government?

[Mr Duncan Smith]

I am dying to do that. We want to know who has actually been claiming benefits, but we really do not know that from the figures. The last Government did not want to know. It was almost a deliberate policy not to have the figures available so that people would not know how many were coming in and claiming benefits. That will change. We are an open Government and we will publish the figures. We will be very clear and we will see the size of the problem that we have to resolve.

[Mr Philip Hollobone (Kettering) (Con)]

My constituents are absolutely furious that the UK’s borders are being flung open in this way. Do Her Majesty’s Government have any idea at all about how many Romanians and Bulgarians might be coming our way? Do they know and are not telling us, or have they not made an estimate? Have they contacted the Romanian and Bulgarian Governments to find out their estimates of the number of their citizens who will be coming to our shores?

[Mr Duncan Smith]

As I recall, the last Government put together a set of figures on Polish migration that were fundamentally wrong. The best way to deal with this is to make the systems much tighter and much better focused, so that we can deal with whatever numbers want to come here and ensure that they do not come here to claim benefits. I have said before and I say again that the last Government did not want to know how many of those people were claiming benefits. That is now changing.

[Nick de Bois (Enfield North) (Con)]

The Secretary of State is to be congratulated on his robust approach in trying to build a coalition of European partners to deal with this matter. How confident is he that he will be able to reach agreement before the end of the year? If such agreement is not forthcoming, will he press ahead robustly with whatever unilateral measures he can?

[Mr Duncan Smith]

We need to reach an agreement within that time scale, so I really am going to push the accelerator pedal down. I have already called for an urgent meeting with those other countries that have agreed to meet us to discuss the issue. We also need to talk to the Commission. The Minister of State, my hon. Friend the Member for Fareham (Mr Hoban), is hugely responsible for this area, and I will do whatever I can in an arbitrary manner to make sure that nothing else takes place.

[Glyn Davies (Montgomeryshire) (Con)]

We need a society in which immigration takes place at a level and on the conditions that the people of Britain, with their typical generosity, find acceptable. Does my right hon. Friend agree, however, that unless we develop a firm grip on immigration and pay benefits only according to the rules set by this Parliament, we will not achieve a settled society in Britain?

[Mr Duncan Smith]

The whole point is that there is a contract between those who pay their taxes and those who need to receive benefits. That is implicit in everything we do in regard to welfare payments in the UK, and it should be implicit in the way the European Commission looks at individual nation states and understands their relationships with their own citizens. That is the issue that I want to take forward. The Commission needs to think carefully about driving hard just on free movement, without recognising that individual countries have very different systems. We need the leeway to implement those systems as necessary while still observing free movement for those who want to become employed.

NHS Commissioning Board

Tuesday 5th March 2013 Commons Chamber

13:15

[Andy Burnham (Leigh) (Lab)]

(Urgent Question): To ask the Secretary of State for Health if he will make a statement on comments by the deputy medical director of the NHS Commissioning Board on the regulations on procurement, patient choice and competition under section 75 of the Health and Social Care Act 2012.

[The Minister of State, Department of Health (Norman Lamb)]

I know that the right hon. Member for Leigh (Andy Burnham) and others have raised concerns about the effect of the regulations and I would like to address them in my response. First, however, I would like to make it absolutely clear that the regulations must be fully in line with the assurances given to the House during the passage of the Health and Social Care Bill. The former Secretary of State, my right hon. Friend the Member for South Cambridgeshire (Mr Lansley), said to clinical commissioning groups in 2012 that

“commissioners, not the Secretary of State and not the regulators, should decide when and how competition should be used to serve…patients interests”.

That must be the case. I made it clear in Health questions last week that we would review the regulations to ensure that that was the case and that they were not open to any misinterpretation.

The right hon. Member for Leigh himself gave guidance to primary care trusts which made this clear in 2010:

“Where there is only one capable provider for a particular bundle of services or the objective of the procurement is to secure services to meet an immediate interim clinical need there will be a case for Single Tender Action (i.e. uncontested procurement). By definition, an immediate or urgent scenario will be exceptional and likely to only arise on clinical safety grounds or for example, where existing services have been suspended following intervention by the Care Quality Commission.”

The next bit is very important.

“A decision to procure through single tender should always take account of the potential to secure better value by investing in a competitive process, as long as this is justified by the scale and importance of the opportunity (i.e. it has to be worth it).”

[Interruption.] Those were the comments of the right hon. Member for Leigh.

In the Government’s response to the Future Forum report, we committed to ensuring that the regulations would simply continue that approach. However, I fully recognise that the wording of the regulations has inadvertently created confusion and generated significant concerns about their effect. I have therefore listened to people’s concerns and my Department is acting quickly to improve the drafting so that there can be no doubt that the regulations go no further than the set of principles and rules that we inherited from the previous Labour Government. Following our commitment in response to the Future Forum report, the co-operation and competition panel has been transferred to Monitor. That will ensure consistency in the application of the rules.

Concerns have been raised that commissioners would need to tender all services. That is not our intention and we will amend the regulations to remove any doubt and to clarify that the position remains the same as at present and as stated in my right hon. Friend the former Secretary of State’s letter of 2012.

Concerns have been raised that Monitor would use the regulations to force commissioners to tender competitively. However, I recognise that the wording of the regulations has created uncertainty, so we will amend them to put this beyond doubt. Concerns have also been raised that competition would be allowed to trump integration and co-operation. The Future Forum recognised that competition and integration are not mutually exclusive. Competition, as the Government made clear during the passage of the Bill, can only be a means to improve services for patients—not an end in itself. What is important is what is in patients’ best interests. Where there is co-operation and integration, there would be nothing in the regulations to prevent this. Integration is a key tool that commissioners are under a duty to use to improve services for patients. We will amend the regulations to make that point absolutely clear.

[Andy Burnham]

In less than four weeks’ time, new GP commissioners take control, yet today there is complete confusion about the job they are being asked to do. Following comments by the deputy medical director of the NHS Commissioning Board and the statement we have just heard, coalition policy on competition in the NHS is in utter chaos. It beggars belief that almost three years after the White Paper introduced by the right hon. Member for South Cambridgeshire (Mr Lansley) and after all the upheaval he inflicted on the NHS, there is still no clarity on policy today. They are in this mess because the “doctors will decide” mantra was always a fig leaf for their true ideological purpose of driving competition and privatisation into the heart of the NHS.

We notice that the Secretary of State is not here today, but perhaps the Minister will remind him of the statement his predecessor made to GPs:

“I know many of you may have read that you will be forced to fragment services, or to put services out to tender. This is absolutely not the case.”

I am tempted to ask: if the aim is to revert to the position we held, why on earth bring forward a 300 page Bill to rewrite the entire legal basis of the national health service? The truth is that they have been found out trying to sneak through the back door privatisation proposals that the Minister’s predecessors were forced to rule out to save their discredited Bill. In that light, does the Minister accept that it will not be good enough to bring these proposals back with a few cosmetic changes? Will he give a categorical assurance that there will now be a fundamental rewrite to reflect to the letter commitments given to the House and to the professions?

More broadly, we now need urgent clarification, in a full and detailed statement, of what Government policy on competition actually is. Will the Minister today send the clearest message to clinicians that they will control whether or not to use competitive tenders, and will he fulfil the pledge by his leader to protect the NHS from the full glare of EU competition law? If the Government still want to argue for more private providers in the NHS, is he confident that this will not restrict whistleblowing as it has in other outsourced public services?

Will they also respond today to the research of the Nuffield Trust, which shows that more competition in the NHS has resulted in falling productivity? A quarter of a million people who signed the 38 Degrees petition have forced the Government into yet another humiliating U-turn, but there will be lingering distrust at the fact that they had the audacity even to attempt this. The simple truth is this: the British public have never given them permission to put the NHS up for sale. Until they acknowledge that, we will never tire of reminding them.

[Norman Lamb]

I sense that the right hon. Gentleman’s speech was written before he heard what I had to say. If he had listened to it, he would know that we recognise concerns about the drafting and whether it absolutely meets the commitments already made. We want to be certain that the commitments made in this place during the passage of the Bill are met. Indeed, when the Secretary of State wrote to clinical commissioning groups in 2012, he made it absolutely clear that those groups would not be forced to go out to tender. We will make sure that that is met. [Interruption.] If Opposition Members had simply listened to what I said, they would have avoided coming up with a set of questions that completely ignored my points.

The right hon. Gentleman referred to the question of quality of care. From my point of view, poor care should be condemned wherever it happens, and he needs to remember that the scandal of Mid Staffordshire hospital happened under his and his party’s watch. The poor quality of care uncovered in that NHS hospital is completely unacceptable—just as unacceptable as poor quality care from any private provider at all. Let us be clear about that.

There will be no privatisation of the NHS under this Government. Furthermore, there will be no special favours for the private sector, which were provided under the right hon. Gentleman’s Government. It was his Government who gave £250 million to private providers of independent sector treatment centres—whether or not they delivered care. There will be no special favours under this Government’s new rules. No clinical commissioning group will be forced into competitive tender. The rules will be absolutely clear, and we shall publish the amended regulations shortly.

[Mr Stephen Dorrell (Charnwood) (Con)]

Does my hon. Friend agree that the effect of his response to the urgent question this afternoon is to say that this Government are pursuing precisely the same policy as their predecessor on competition for the provision of NHS services? Does he further agree that that demonstrates that the cloud of rhetoric surrounding the passage of the Health and Social Care Act 2012 was so much hot air?

[Norman Lamb]

I absolutely agree with my right hon. Friend. There has been a lot of cant and hypocrisy in this debate. The guidance given by the previous Government to primary care trusts in 2010 makes absolutely clear their commitment to competition. That shows how crazy this debate has become. We will ensure that the debate is balanced and that the interest of the patient trumps everything else, as it should.

[Lilian Greenwood (Nottingham South) (Lab)]

My constituents’ view is absolutely clear: they do not want back-door privatisation of our national health service. I am pleased that the Minister is making a U-turn on these regulations, but given the chaos of recent days, how could anyone trust this Government with our NHS?

[Norman Lamb]

When the hon. Lady talks about back-door privatisation of the NHS, I am not sure of her view of the previous Government’s commitment to spend £250 million on independent sector treatment centres, whether or not they undertook any operations. I am not sure that she agreed with it, but that is what her Government did. There will be no privatisation of the NHS, and the rules we introduce will make it absolutely clear that the power lies with clinical commissioning groups to use the tools available to them—co-operation and integration, but also competition where it drives up standards, just as her Government recommended.

[Chris Skidmore (Kingswood) (Con)]

Last year, the right hon. Member for Leigh (Andy Burnham) claimed that there were less than 72 hours to save the NHS. Yesterday, when referring on his Twitter feed to the regulations, he claimed that there were two weeks to save the NHS. Does not the Minister believe that in fewer than 140 characters, the right hon. Gentleman has shredded any credibility that he might once have had? [Interruption.]

[Norman Lamb]

I think my hon. Friend makes a valuable point. [Interruption.]

[Helen Jones (Warrington North) (Lab)]

Last week, the Leader of the House insisted that the regulations did not—

[Mr Speaker]

Order. I apologise for interrupting the hon. Lady, but there is too much noisy chuntering from both sides of the House, including from Members whom I have previously told to keep it to themselves. They cannot think that they are different or separate because they feel strongly about something—that way, we get to cacophony. Members should keep the chuntering to themselves, ask a question and listen to others with a degree of courtesy.

[Helen Jones]

Last week, during business questions, the Leader of the House said that the regulations would not introduce compulsory competitive tendering in the NHS; today the Minister has said that he will have to revise them in case they do. Is it not a fact that the Government actually do not have a clue about what they are doing? If the Minister wishes to disprove that, will he tell us exactly what changes he will make to the regulations—or will this just be like the pause in the Health and Social Care Bill, after which it carried on regardless?

[Norman Lamb]

The Leader of the House was absolutely correct in stating—[Interruption.] If the hon. Lady will listen to my answer, she may benefit from it. The Leader of the House made it absolutely clear in the House last week that the regulations would not introduce compulsory competitive tendering. We are amending them because there was legitimate and understandable concern about the impact of some of the provisions. We will make the position clear so that the policy intent of the Health and Social Care Act is implemented faithfully in these regulations.

[John Pugh (Southport) (LD)]

The Labour regulations are not perfect, and neither the regulations introduced by Labour nor those initially proposed by the coalition Government in section 75 will do in any sense. Do we not need regulations that embody the assurances given to peers and to GPs themselves during the passage of the Health and Social Care Bill, and not a charter for privatisation?

[Norman Lamb]

We will make absolutely sure that the amended regulations meet faithfully the commitments given in the Upper House during the passage of the Bill, and in the letter sent to clinical commissioning groups by the former Secretary of State following the legislation.

[Mr Kevin Barron (Rother Valley) (Lab)]

During the passage of the Health and Social Care Bill, the Government withdrew clauses that promoted competition and replaced them with clauses that would prevent anti-competitive behaviour. I never understood that at the time. Is it not the case that compulsory competitive tendering is the intention of the regulations and the intention of the original Act?

[Norman Lamb]

The right hon. Gentleman’s own Government had guidance in place precisely to address anti-competitive behaviour. Let me again reiterate that these regulations will not introduce compulsory competitive tendering. The amendments that we will table will make it absolutely clear that the power rests with clinical commissioning groups, and not with the Government, Monitor or anyone else.

[Mr Crispin Blunt (Reigate) (Con)]

My hon. Friend will have heard the charge of audacity from the shadow Health Secretary, whose expertise and qualities in this area should be acknowledged to place him in a league of his own. If there is still no clarity on the competitive position, which has not moved on from that of the last Administration, the responsibility lies precisely over there, on the Opposition Benches.

[Norman Lamb]

I take the point, but I again reiterate that the rules and guidelines for commissioners will remain exactly as they were under the last Government and under the right hon. Member for Leigh as Secretary of State.

[Mr Gregory Campbell (East Londonderry) (DUP)]

The Minister referred to the amending of regulations. Will he tell us first when that is likely to happen, and secondly how it will ensure that the cloud of uncertainty hanging over the NHS is dispelled?

[Norman Lamb]

The amended regulations will be published within days. I entirely agree with the hon. Gentleman that it is important for clinical commissioning groups to have absolute clarity, so that they can prepare for the date in April when they take responsibility.

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

What my constituents want is first-class health care, free at the point of delivery. Will the Minister confirm that the Government want that too?

[Norman Lamb]

I absolutely confirm that the patient’s interest must always trump everything else. Sometimes it is right to challenge existing services which are not providing a good enough service for patients, and we must encourage clinical commissioning groups to do that. Whether poor care is in the public or the private sector, it should always be condemned, and we should always put the interests of the patient first.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

If I understood the Minister correctly, he is withdrawing the regulations in order to rewrite them so that we are back where we were under the Labour Government. Does he now wish, with hindsight, that he had never started this?

[Norman Lamb]

Absolutely not. The legislation and the regulations will faithfully implement our policy intent, which is to put clinicians at the heart of decision making in the NHS and to make the interests of the patient paramount.

[Paul Burstow (Sutton and Cheam) (LD)]

I thank the Minister for his statement, and especially for confirming that the regulations will be rewritten to put it beyond doubt that the patient’s interest always trumps competition in these circumstances. Will he also confirm that any tendering arrangements currently operating in the NHS are operating under legislation introduced by the last Labour Government?

[Norman Lamb]

My right hon. Friend is right on all counts. As he says, the patient’s interest must trump everything else. One of the things that we will reinforce in the amended regulations is the paramount importance of integrated care. We legislated for that for the first time through the Health and Social Care Act, which the Care and Support Bill will reinforce and which, indeed, is reinforced by the mandate of the NHS. The Government’s whole intent is to drive a fundamental shift to integrated care for the benefit of the patient.

[Mr Andy Slaughter (Hammersmith) (Lab)]

The Minister has been put up by the Secretary of State to explain the Government’s incompetence, which he may be ideally placed to do. Will he tell us what will happen if the four accident and emergency units in west London close and replacement services are taken over by companies, such as Harmoni and Care UK, which are unfit to run them? That can still happen under his redraft. Will he confirm that members of clinical commissioning groups who have financial interests in the private providers that are bidding should not decide what should replace public services when they are inevitably handed over to the private sector?

[Norman Lamb]

The regulations as currently drafted are absolutely clear about the importance of avoiding the conflicts of interests that the hon. Gentleman has described.

[Nick de Bois (Enfield North) (Con)]

Does the Minister agree that the mantra that we are hearing from Opposition Members confirms that their party remains obsessed with process and means rather than outcomes for patients, which are what drive this party and our reforms?

[Norman Lamb]

Indeed. That is precisely the lesson to be learnt from Mid Staffordshire hospital and the Francis report. The last Administration and the top-down culture of targets lost sight of the importance of the quality of care for patients, but the current Government are absolutely intent on always putting the patient first, and that is what this legislation is about.

[Kevin Brennan (Cardiff West) (Lab)]

The Government seem to be saying, “There is nothing wrong with the regulations that we have laid, so we must amend them as a matter of urgency.” Will the Minister tell us when that decision was made, and why the Secretary of State has not come to make a statement to the House about it rather than the Minister’s having to come here as a result of an Opposition urgent question?

[Norman Lamb]

I made it clear during Health questions last week that I was anxious to ensure that the regulations faithfully implemented the commitments that had been given in the other place during the passage of the Health and Social Care Bill, and indeed we have worked since then to ensure that the regulations achieve that. I believe that we need to make it absolutely clear that clinical commissioning groups will not be forced into competitive tendering, which is why we are amending the regulations. That is entirely sensible and entirely rational.

[Jason McCartney (Colne Valley) (Con)]

Will the Minister take no lectures from the Labour party, which oversaw the downgrading of the maternity unit at Huddersfield royal infirmary, and will he reassure my constituents that patient care will always be put first in this universal health service, free at the point of delivery?

[Norman Lamb]

I congratulate my hon. Friend on getting an issue of local concern into his question. He is entirely right: I will take no lessons from the Opposition, given what happened when they were in government, and patients’ interests must indeed always come first.

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

Will the Minister tell me which part of the NHS preferred provider status, which was introduced by the last Labour Government, his Government do not understand?

[Norman Lamb]

According to my recollection, at the last general election all three parties committed themselves to any willing provider. The degree of hypocrisy that we sometimes encounter beggars belief.

[Andrew George (St Ives) (LD)]

Because I had feared that the regulations as currently drafted would result in an NHS driven by profit rather than concern for patient care, I welcomed my hon. Friend’s statement. However, he said that he would base the future draft on the principles set out by the last Labour Government, who favoured the private sector over the NHS. Can he reassure me that the redrafted regulations will enable commissioners to encourage collaboration and the integration of health services, and that that will trump competition on many occasions?

[Norman Lamb]

I am grateful to my hon. Friend for that question. I should make it clear that we have enhanced the position that we inherited by absolutely reinforcing the importance of co-operation and integration for the first time—that was not part of any legislation under the previous Labour Government. Our Government are totally committed to legislating on and then enacting the importance of co-operation and integration, as he rightly says.

[Derek Twigg (Halton) (Lab)]

On 15 March 2011, the then Minister of State, the right hon. Member for Chelmsford (Mr Burns), said that in the NHS

“UK and EU competition laws will increasingly become applicable.”––[Official Report, Health and Social Care Public Bill Committee, 15 March 2011; c. 718.]

How can this Minister assure us that the amended regulations he intends to introduce will prevent a successful legal challenge from a private provider against a clinical commissioning group’s decision not to put out a service to tender?

[Norman Lamb]

The regulations will help substantially in ensuring that CCGs maintain control over the judgments they make in the interests of patients. European competition law existed as much under the previous Government as it does under this one, and these regulations will help to protect CCGs against those powers.

[Jim Shannon (Strangford) (DUP)]

I thank the Minister for his statement. Will he assure us that competition will be at the core of what he is trying to achieve? Will the Government prioritise clinical outcomes, with targets to deliver and an increasing number of patients to be looked after?

[Norman Lamb]

I apologise, but I simply did not hear the question.

[Mr Speaker]

We wish it to be heard. The hon. Member for Strangford (Jim Shannon) must always be heard when he is on his feet. Let us hear it.

[Jim Shannon]

Perhaps I should give a lesson in Northern Ireland-speak. Will the Minister assure us that competition will be at the core of what he is trying to achieve and that the Government will prioritise clinical outcomes, with targets to deliver and an increasing number of patients to be looked after?

[Norman Lamb]

Competition should only ever be used to enhance the interests of the patient and to improve patient care; it is not an end in itself, and that must always be the case. These regulations will ensure that that is the case and that other vital factors such as co-operation and integration must be taken into account by CCGs in making their judgments.

[Alison McGovern (Wirral South) (Lab)]

This top-down reorganisation has, from day one, been a chaotic waste of time, money and effort. Now that the Minister has made a U-turn, will he make things clear, so that I can tell all the professionals and patients in the Wirral what his policy is? Will he say when he will bring to this House a statement of what the Government’s policy is on competition in the NHS?

[Norman Lamb]

I repeat that we will be publishing amended regulations within days and that the Government’s reforms are about putting the clinician centre stage in decisions about how money is spent, rather than unaccountable bureaucrats, as happened in primary care trusts up and down the country. The reforms are also about ensuring that the patient’s interests and patient care are always uppermost in the minds of everyone making decisions about the use of money in the NHS.

[Bill Esterson (Sefton Central) (Lab)]

As my constituent Terry Eastham told me, the regulations, as they stand, make privatisation of the NHS swift and inevitable. The Minister says that he is confident that his changes will guarantee that private companies will not be able to challenge CCGs to demand full and open competition. Will he give that assurance now and explain how the changes he is proposing will make absolutely certain of that?

[Norman Lamb]

It is absolutely not the case that the regulations, as currently drafted, drive the privatisation of the NHS. As the hon. Gentleman will discover in the next few days, the amended regulations will make it abundantly clear that CCGs will be in the driving seat—the letter from the former Secretary of State made that clear back in 2012. They will take into account the importance of co-operation, integration and putting the patient’s interest first.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

On competition and integration, my hon. Friend the Member for Walsall South (Valerie Vaz) and I spent some time this morning talking to academics from Sweden, who told us how competition and fragmentation were preventing them from moving ahead with integration. The Minister should be concerned about the integration of health care and social care, so will he address that point? We will certainly never make progress on integrating health care and social care if we move ahead with all this privatisation, which will lead to a lot more fragmentation. Leaving that aside, 70 of my constituents also think this is just the wrong way to go.

[Norman Lamb]

This Government will ensure that there is no unfair competition, such as existed under the previous Government, whereby private providers got handed guaranteed income on a plate, irrespective of whether or not they did the work. I am clear that nothing in our legislation will prevent a real drive towards integrated care, to which the hon. Lady and I share a commitment.

[Valerie Vaz (Walsall South) (Lab)]

Will the Minister say whether there was a mistake in the instructions given to parliamentary counsel in drafting these regulations? Will he also tell us which Minister signed them off?

[Norman Lamb]

This comes down to a question of the legal drafting and a legitimate concern that the regulations did not meet the policy objectives set out clearly in the Health and Social Care Act and during the course of the debates on it in Parliament. We simply want to ensure that that objective is faithfully met.

[Alex Cunningham (Stockton North) (Lab)]

Professor Steve Field, who chaired the NHS Future Forum and is now deputy medical director of the NHS Commissioning Board, has said that the Government must make it clear how the regulations are “consistent with the commitments” they gave him. He said that he was clear that there must be “no backtracking” by the Government on the commitments that they gave the NHS Future Forum. The Minister suggested that he will satisfy those demands, and the demands of commissioners and doctors across the country. Is he really guaranteeing to do that today?

[Norman Lamb]

I thank the hon. Gentleman for the question. I spoke directly to Steve Field about this yesterday and I am absolutely satisfied that the amended regulations will totally meet the commitments made during the passage of the Bill in the other place.

[Mr Speaker]

I am grateful to the Minister and to colleagues.

Army Basing Plan

Tuesday 5th March 2013 Commons Chamber

13:47

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

With permission, Mr Speaker, I would like to make a statement on the future basing of the British Army. To assist right hon. and hon. Members in understanding the detail of the changes I shall announce and the effects on their constituencies, I have placed in the Libraries of both Houses, and on the Ministry of Defence website, documents setting them out. I understand that copies of the documents will, with your permission, Mr Speaker, be distributed in the Chamber during the course of this statement.

In 2010, we set out in the strategic defence and security review the configuration of forces that the UK would require to meet the future threats, and we committed to have completed the return of UK troops from Germany by 2020. Last summer, I announced to the House the structure of the Regular Army component of Future Force 2020. Today, I can announce the future pattern of basing of the Regular Army in the UK, so that our servicemen and women, and their families and the communities that host Army units, have clarity about where they will be based in the future and when moves are likely to occur.

As the House will recall, in July 2011 the then Defence Secretary set out our initial plans for the future of the MOD estate, on which we will accommodate, train and prepare our armed forces. Those plans have been significantly refined over the intervening 18 months and reflect the fully developed military advice on the optimum affordable basing lay-down to accommodate the Army in the future strategy. This announcement honours our commitment to bring all our troops home from Germany by 2020, with all but the 4,400 troops of 20 Brigade home by Christmas 2016. It supports the Army 2020 structure, the integrated reserves training model and the generation of the Army’s future military capability. It also delivers a £1.8 billion investment in the UK economy in infrastructure and accommodation, and annual savings of £240 million in reduced costs and in improved efficiency of training and maintenance operations, on top of the £100 million-plus annual saving generated by the previously announced moves from Germany.

The return of the British Army from Germany marks the end of an era and I want to put on record the huge debt of gratitude we owe to the German Government and the German people for the support, both moral and material, they have shown our armed forces over more than six decades.

In fact, that return has already begun. In 2010, 20,000 British service personnel were based in Germany, together with their dependants and civilian staff. Already that number of service personnel has been reduced to fewer than 16,000, with significant force elements having already relocated, such as Headquarters Allied Rapid Reaction Corps, which has moved to Innsworth, Gloucestershire. Planning for completion of the return is well advanced. We are on track to reduce our presence in Germany by more than 70% by 2015 against our SDSR target of 50%. The long-term retention of a small training presence in Germany, utilising NATO training facilities, is under active consideration, but we will be closing all major unit locations.

This is not just about rebasing the Army from Germany. It is about providing a basing plan for Army 2020 in the UK that will allow the Army to generate its military capability in the optimal way. As the plan has developed, two key principles have emerged to inform it. First, the armoured infantry brigades of the reaction force should coalesce around a single location. We have concluded that Salisbury plain training area is the only place in the country where we have the capability to carry out the complex and demanding training exercises that they need to conduct. Having all three brigades located in close proximity around the plain will enable them to train and fight more effectively and will present significant opportunities for efficiency in equipment support and people management. Secondly, the Army should retain a UK-wide footprint, maintaining the vital link to civil society, fostering closer links between reserve units and their partnered regular units and supporting nationwide recruitment and engagement.

Guided by those two principles, the Army has identified the lay-down that represents the best value for money in the utilisation of existing estate and the minimisation of running costs. The focus will be on increasing consolidation around seven centres: at Salisbury plain training area, where we will invest over £800 million; in the north-east of England, centred on Catterick; at Aldershot; around Edinburgh and Leuchars; at Colchester and Swanton Morley in the east of England; in the west midlands around Stafford and Donnington; and in the east midlands, focused on Cottesmore and North Luffenham, where £180 million will be invested. We will do all that while maintaining a regional presence in other parts of the country.

Consolidating around the seven centres will significantly reduce the need for moves, ending the culture of routine UK rotation and giving Army personnel and their families greater certainty about where they will live and work with real benefits in terms of increased stability, access to long-term spousal employment opportunities, continuity in schooling for Army children and the chance to set down roots and access the benefits of home ownership.

The announcement will maintain the broad pattern of Army activity in Scotland, Wales and Northern Ireland. With 45 Commando Royal Marines remaining in Arbroath for the foreseeable future, the measures announced today will see an increase of about 600-plus in total regular armed forces numbers north of the border against the July 2011 baseline, even as the armed forces reduce in size by about 17% overall. In both Wales and Northern Ireland, overall numbers will reduce by approximately 400.

The announcement sets out our firm plans for the lay-down of the British Army, subject of course to gaining the necessary planning, environmental and other regulatory approvals. They are underpinned by a capital investment from the defence budget of £1.8 billion, including £1 billion of investment in new living accommodation to provide 7,800 single living spaces and 1,900 new and refurbished units of family accommodation. The investment will provide a welcome stimulus to the UK construction industry and, taken together with the significant purchasing power currently going into the German economy that will be diverted to the UK, will help to create jobs across the regions and nations of the UK.

The Ministry of Defence plays a major role in the Government’s public land release programme and will be looking to release additional land and surplus service family accommodation where it is no longer needed. Under the plan, the armed forces will be leaving a number of locations. The disposal plans will be subject to further detailed work and will also be subject to the completion of the plans for the reserve estate in due course. However, I can confirm that we plan to dispose of Howe barracks in Canterbury, Claro barracks in Ripon and parts of Copthorne barracks in Shrewsbury. In Scotland, we will be disposing of Craigiehall barracks, as well as elements of Redford barracks and Forthside barracks in Stirling. Kirknewton will not now be developed as an Army base but Dreghorn will remain as one.

The MOD also intends to close Cawdor barracks at Brawdy in Wales, which is no longer fit for purpose, with 14 Signal Regiment relocating to St Athan, not before 2018, as part of a regional consolidation of the defence presence on that site that will also allow commercial development and job creation by the Welsh Assembly Government, with whom we are working collaboratively, in support of the enterprise zone.

The local communities in each of those areas have been hugely supportive of the military presence over many years. The loss of historic ties will be much regretted and, on behalf of the Army, I want to thank those communities for their generous hosting.

As part of our continued scrutiny of the central London estate, we will be pursuing options to vacate Hyde Park barracks and re-provide for the Household Cavalry Mounted Regiment elsewhere within central London, allowing for disposal of that prime development site, provided that the regiment’s requirements can be met and it proves value for money to do so.

Those disposals, and other planned disposals, will bring substantial receipts which have already been factored into the MOD’s future budgets and will significantly reduce the operating costs of the MOD estate.

I have focused on the future basing of the regular Army but I am conscious that many right hon. and hon. Members will also be interested in the reserves and in our plans for reserve basing, as well as the future basing plans for the other services, the training estate and logistics operations. My right hon. Friend the Minister for the Armed Forces will be making announcements shortly concerning other routine changes elsewhere in the MOD estate across the UK and I will update the House before the summer recess on the future basing plans for the reserves.

This announcement represents a costed and funded plan to bring our Army back from Germany, deliver the basing lay-down for Army 2020 and provide the accommodation our troops deserve, fulfilling our commitments to consolidate the Army estate and providing certainty to Army personnel and their families about where they will be based in the future. It is a plan that is driven by the Army’s requirement to generate military capability in the most effective and efficient way as it reconfigures for contingent operations based almost entirely in the UK. It represents a significant step forward towards the achievement of Future Force 2020 and delivers substantial year-on-year savings to defence in the future and a significant boost to the UK economy, and to the construction industry in particular, right now. I commend the statement to the House.

13:58

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

I thank the Secretary of State for providing advance sight of his statement earlier today. While the strategic defence review did not survive its first contact with world events, the assumptions within it did not survive contact with the Secretary of State. The country remembers that the Government were elected on a promise of a bigger Army. The SDSR promised five multi-role brigades and cut 7,000 troops. Army 2020 is based on a cut of 20,000 troops and promises seven infantry brigades.

In that context, we welcome a steady, costed withdrawal of UK troops from Germany. Today’s announcement will impact on Army deployability, our ability to meet planning assumptions, service families’ livelihoods and the integration of service personnel with local communities. That is why I want to ask some detailed questions of the Secretary of State about how to make these measures successful.

On Germany, the right hon. Gentleman says the total cost of returning troops from Germany is £1.8 billion. Will he spell out specifically where this money has been found and say whether any cuts to the MOD non-equipment budget are being made as a result? Undisclosed underspends cannot be the gift that keeps on giving for the Secretary of State, and all those in the military who have recently lost their jobs will want to know that today’s announcement has not been funded at their expense. Will he say how much is allocated to each of the RAF bases being converted to make them fit for the Army, and for each of them, when the conversion will be completed? The public will also want specifics on how the £240 million savings will be achieved and in which year they will begin to accrue.

It is vital there is a positive impact on the local communities to which our forces and their dependants will be returning. How many new homes for soldiers and families will be ready by 2016? It is hard to see this being achieved in the time frame set out. Given that MOD figures show there are 7,000 service children currently being educated in Germany, will the Secretary of State say what will happen to those whose new homes will not be built in time? There will be an expectation that the Secretary of State can today guarantee that no one returning will be forced to take on expensive private rented accommodation because the specified new accommodation is not ready.

It is essential that local services can provide for our military families. Will the Secretary of State say what assessment he has made about the local impact of returning military families specifically in the areas surrounding the seven permanent bases referred to today, and what discussions he has had with his counterparts in the Department of Health and the Department for Education, as well as the devolved Administrations? With the grant to local government falling by a third over the current spending review period, which Department will meet the additional costs to local authorities?

Can the Secretary of State confirm that he has had the requisite discussions with German authorities about these plans? What will the cost be of redundancy of the civilian force in Germany? Although there is much less strategic need for our forces to be based in Germany, it can still play an important role in providing training facilities. How does he envisage this function being supplemented if it is no longer available there?

With reference to lay-down, there will be real disappointment at closures across the UK today, from Canterbury, Ripon and Shrewsbury to Brawdy, where historic bonds are being broken. The Secretary of State says that his disposal plans will bring in substantial receipts, which have already been factored into future MOD budgets. After the Government’s 4G debacle, he will forgive the public if they wait for further details before taking that assertion at face value.

The armed forces remain crucial to Scotland’s future but today the Government have reneged on their promise. Although there is positive news about the return of the Royal Scots Dragoon Guards and the Royal Marines staying in Arbroath, a previous pledge of thousands more troops to Scotland has become a plan for just hundreds. This is a real blow to Scotland and will not be forgotten.

UK defence planning assumptions rely on doubling our number of reservists by 2018. Despite this, there is uncertainty over employer engagement, workplace protections and missed recruitment targets. It is disappointing that today we heard little of where reserve units will train or of the fate of existing units. The Army 2020 plan on which today’s announcement is based remains in jeopardy while these issues are unresolved.

In conclusion, UK troops have been stationed in Germany for almost 70 years and we support their return home, but this will, as I know the Secretary of State would expect, be matched by detailed scrutiny. So I hope he will be able to outline further the implications of today’s announcement for personnel and their families, as well as for local communities, which will, I am sure, give our returning troops a warm and patriotic welcome upon their return.

[Mr Hammond]

I hope the document that has been distributed will answer some of the right hon. Gentleman’s questions, particularly about providing the certainty that personnel and their families will want in terms of where they are going and when they are going to go there. I note that his references at the beginning of his remarks about multi-role brigades and the subsequent evolution of the Army force to match the resources available made no reference whatever to the legacy that we inherited from the previous Government, which has been one of the key drivers in our efforts to deal with the challenges ahead.

Let me try to deal with some of the right hon. Gentleman’s perfectly legitimate questions. He asked me about the £1.8 billion capital spend. Essentially, he sought assurance that this money had not been found at the expense of the budget for employing our forces. It is, of course, a capital budget quite separate from the resource departmental expenditure limit budgets of the Department and it is largely a budget that was in the Defence Infrastructure Organisation’s capital spend programme, supplemented by some of the capital underspend from last year, which we have been allowed to carry forward.

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

It will be taken away from Army housing.

[Mr Hammond]

I have just told the House that we are investing £1 billion in Army housing. That will be alongside the existing programme of refurbishment of Army housing, which will continue.

The right hon. Member for East Renfrewshire (Mr Murphy) asked me about the pattern of investment in RAF bases. There will be very substantial investment in both Leuchars and Cottesmore. I am happy to write to him with the precise estimated figures for both bases, but he will understand that this is subject to contractual negotiations as we develop the detailed plans for those individual bases.

The right hon. Gentleman asked when the £240 million annual savings start to accrue. They reach that full level by 2019 but they start to accrue immediately, within the next year, and they build up steadily to the 2019 figure. [Interruption.] The hon. Member for North Durham (Mr Jones) says they cannot. The savings start to accrue as soon as we start to close down infrastructure in Germany—[Interruption.] The hon. Gentleman has been in government. One would think he would understand the difference between a capital expenditure programme and the accrual of resource savings, which will begin as soon as we start drawing down infrastructure in Germany.

The right hon. Member for East Renfrewshire asked me quite legitimately about the phasing of the development of accommodation, the supporting local infrastructure and the timing of relocation. This, of course, has been a major driver of the programme that is set out in the document circulated. In most cases new accommodation will be provided before units relocate. In some cases, as he will see from the document, it will be necessary for a returning unit to locate temporarily in another facility while the ultimate destination is fully completed, with the infrastructure and the accommodation that it requires. He will notice as well that the most substantial move to the Salisbury plain—20th Armoured Brigade—is the last move to take place, in 2018-19. That reflects the fact that substantial infrastructure investment will be required—£800 million of MOD investment, together with investment by the Department for Communities and Local Government, the Department of Health and the Department for Education to provide the supporting local infrastructure.

The German authorities have been fully informed throughout the process. I spoke to my German counterpart yesterday. He expressed his regret at the decision but he is understanding of it. My right hon. Friend the Minister for the Armed Forces spoke this morning to the Minister-Presidents of the German Länder affected. The right hon. Gentleman asked about training in Germany. As I think I said, we are pursuing the option of taking up a very generous invitation by the German Government to continue using training estate in Germany to train with the Bundeswehr and other NATO allies. The current plan envisages about 100 personnel remaining in Germany as the core of a residual training presence.

Of course I accept that there will be disappointment in the towns and communities where there are to be base closures, but if we are to deliver the armed forces that this country needs within the budgets that are available to support them, we have to deliver that military capability efficiently, and isolated single bases do not allow us to do that. The lay-down that I have set out in these documents is the optimum value-for-money strategy that will allow the military to deliver the capability that we require.

In Scotland, it is indeed good news that the Royal Scots Dragoon Guards will go to Leuchars and that 45 Commando Royal Marines will remain at Arbroath. The right hon. Gentleman mentioned the reference to thousands of additional troops going to Scotland. That was when we were still talking of a 94,000-strong Army. The end result in dealing with the legacy that we inherited from the Labour party was an 82,000-strong Army, which is affordable and sustainable, and can be properly equipped and supported, unlike the forces that the previous Government fielded.

Finally, on the question of reserves, we will be publishing a White Paper shortly, and following that I will make a further statement to the House about the reserve estate.

[Dr Liam Fox (North Somerset) (Con)]

I congratulate my right hon. Friend on completing a difficult jigsaw puzzle that Labour was never able to manage, and ensuring that the Ministry of Defence spending is boosting economic activity in this country, not on the continent. Does he agree that the ability to spread this force footprint across the United Kingdom and the large sums involved, fatally undermines the case of the Scottish nationalists that Scotland would ever be better off trying to fund its own armed forces?

[Mr Hammond]

I do agree with my right hon. Friend, and we will no doubt hear in a moment from the representatives of the Scottish National party. I find their posturing on this slightly incredible when their agenda is about taking Scotland out of the United Kingdom, removing our Army, our Air Force, our Navy and our marines completely from Scottish soil.

[Jenny Chapman (Darlington) (Lab)]

My constituency of Darlington is very close to Catterick garrison and we are proud to help to accommodate and educate Army children in our town, but the right hon. Gentleman will understand that at times that can put pressure on local services. What specific discussions will he have with local authorities near the seven bases that he has referred to to try to make sure that these children are welcomed back from Germany in the way that we would want?

[Mr Hammond]

We have had discussions with colleagues from the Departments for Education and Communities and Local Government and the Department of Health, and we believe that on the time scales set out here, the additional infrastructure required, which is relatively modest with the exception of the Salisbury plain area that receives more than 4,000 additional troops, will be deliverable over the time scales set out in the document that I have circulated.

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

You know, Mr Speaker, that my interest in these matters is directly related to the fate of Royal Air Force Leuchars in my constituency. You may also be interested to know that I almost need not have attended the statement since full details are contained in this morning’s edition of the Dundee Courier, a daily newspaper circulating in my constituency.

Let us make no mistake and let us be in no doubt, the decision to transfer Typhoons from Leuchars to Lossiemouth is a political decision, and I do not repent of my view that to base air defence aircraft away from centres of population and away from sensitive installations, such as nuclear power stations, is both operationally and strategically inept. I hope that we never have cause to regret doing so.

I assure my right hon. Friend that the local community of Leuchars will go out of its way to establish a warm and co-operative relationship with the Army. But does he also understand that the considerable disappointment there is that the numbers announced today are significantly less than those that were promised before? When will the Army be fully deployed at Leuchars, and will there be any gap between the departure of the Air Force and the arrival of the Army? Today, will he give us, and in particular my constituents, his guarantee that the damaging uncertainty of the last 20 months is now at an end?

[Mr Speaker]

There are many questions there for the Secretary of State. If he thinks, in attending to them, that he can throw any light upon what appears on the face of the observation of the right hon. and learned Gentleman to be a leak of Government policy, I am sure we shall all be immensely obliged to him.

[Mr Hammond]

It does indeed appear to be a leak in the Dundee Courier; I have its front page here. It is an inaccurate leak: the headline refers to a tank regiment. Of course, the Royal Scots Dragoon Guards is not a tank regiment.

I assure my right hon. and learned Friend that there will be no gap in the drawdown between RAF personnel and the build-up of Army personnel at Leuchars. This will take place in stages throughout 2015. By the end of 2015, the Army will be fully in place and the RAF will have vacated it.

My right hon. and learned Friend will also be interested to know that the plan provides for the runway at Leuchars to be maintained as an operational runway with a contingent of about 50 RAF personnel remaining on the base. This will operate as a diversionary runway for the Typhoon squadrons at Lossiemouth. That does mean that the air show will go ahead this year and that the runway will be there in future to make flying from Leuchars possible.

[Hugh Bayley (York Central) (Lab)]

How many military and civilian personnel will move to York as a result of a welcome decision to move Headquarters 1st Division to York? How many will be lost as a result of the decision to move 15 Brigade to Catterick? Will the Secretary of State clarify whether he means York Outer or York Central? For instance, he says that 2 Signal Regiment is currently based in York Outer; in fact it is based at Imphal barracks in York Central. I would like clarification on those points.

[Mr Hammond]

There are some detailed questions there. I hope that the retention of Imphal barracks in York puts to rest a concern that I know there has been in the city. There will be a marginal increase in the numbers of Army personnel at Imphal as a result of this statement. If the hon. Gentleman will allow me, I will check the figures on the other bases he mentioned in surrounding constituencies and drop him a note later this afternoon.

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

I very much welcome the extra stability that the announcement will make in the lives of service personnel and their families. The people of Wiltshire will very much welcome the extra 4,000 soldiers to come there and the resulting investment in the infrastructure. Will the Secretary of State take this opportunity to reconfirm that the tri-service technical training base, which is due to move into RAF Lyneham by 2015, will go ahead as planned?

[Mr Hammond]

I can assure my hon. Friend that it is going ahead as planned. It is under way now. As I said in my statement, my right hon. Friend the Minister for the Armed Forces will be making an announcement in due course about other moves on the technical training estate.

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

I join the right hon. and learned Member for North East Fife (Sir Menzies Campbell) in saying that the Royal Electrical and Mechanical Engineers and the Royal Scots Dragoons will get a warm Fife welcome when they arrive, but may I press the Secretary of State to say why the decision has been taken not to proceed with MOD Caledonia?

[Mr Hammond]

As I think the hon. Gentleman is aware, Caledonia will remain as a naval facility without any Army presence. The Army plan has been looked at from the bottom up by the Army. The considerations are particularly around patterns of training activity, so that units that need to train together are located together. Because we are severely capital constrained, we have had to look at how to make the best use of the existing estate infrastructure, which in some cases has meant not going ahead with proposals that would have involved significant new capital investment. But this is an Army-designed, military-led plan that will allow us to generate our military capability at the best value to the taxpayer.

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

The closing of Claro barracks in Ripon is an extremely sad day for the city, which since around 1914 has provided to British troops a tremendous support and morale boost at all times, whether they are at conflict or at home. I pay particular tribute to the cathedral in Ripon and to the city council, which has given freedom of the city to a large number of our troops. Will my right hon. Friend meet me in the coming weeks to discuss how we can make the most of the military site in Ripon economically, and to see whether there are areas of military presence that we can retain there?

[Mr Hammond]

I am very happy to meet my hon. Friend. I should reassure him that despite the closure of Claro barracks, the adjacent defence training estate site, Deverell barracks, and the associated training areas in Laver Banks and Ripon park will not be affected by this announcement.

On the disposal of the Claro barracks site, as with all the sites that are wholly or partially for disposal, the Defence Infrastructure Organisation will engage with local stakeholders and local planning authorities and endeavour to dispose of them in a way that maximises the receipt to defence, but also protects the interests of the local community and maximises the beneficial economic impact of development on those sites.

[Angus Robertson (Moray) (SNP)]

I thank the Secretary of State for advance sight of his statement, welcome the return of troops from Germany and pay tribute to them for their decades of service there and to the German communities that hosted them, but the statement marks the breaking of a raft of defence promises in relation to Scotland. Will he clarify that the UK Government are not returning 6,500 to 7,000 troops from Germany to Scotland, as promised, that they are not building new barracks at Kirknewton, as promised, that they are not opening a new training area, as promised, and that they are not delivering the Army personnel levels promised for Leuchars, but that they are closing the Sterling headquarters of 51st Infantry Brigade and HQ Scotland? The Ministry of Defence has acknowledged that over the past decade there has been a 28% cut in the number of defence personnel in Scotland, compared with an 11% cut across the UK as a whole. The Army return to Scotland was supposed to offset the loss of the RAF and increase the defence footprint, so will the Secretary of State confirm that across the services, and taking into account the RAF changes, there will in fact be fewer personnel, not more, and certainly fewer than the 15,000 planned for an independent Scotland?

[Mr Hammond]

We have already discussed the story in The Courier today, “Tank regiment rolls into Leuchars base”, and the story in The Scotsman, “Scotland to keep Royal Marines base at Arbroath”. One would think that the hon. Gentleman might have something positive to say about that. When my right hon. Friend the Member for North Somerset (Dr Fox) made his statement in July 2011, the hon. Gentleman, as he might remember, accused the Government of planning to remove the Royal Marines from Scotland completely and close Fort George, neither of which has happened. It is true that the decision has been taken not to develop Kirknewton, but the balancing factor is the retention of Dreghorn as an Army barracks. The hon. Gentleman’s assertion about personnel numbers in Scotland is incorrect. My right hon. Friend the Member for North Somerset made his statement on 18 July 2011, and I have checked the numbers against that baseline. The total number of armed forces personnel in Scotland will be just over 600 higher than the baseline. I have also made a little calculation of the proportion of our armed forces personnel who will be based in Scotland, compared with the proportion of the population of the United Kingdom in Scotland. By my calculation, 8.39% of the UK population is in Scotland and 8.65% of our armed forces will be in Scotland by the end of this programme.

[Penny Mordaunt (Portsmouth North) (Con)]

I welcome the certainty that the statement will give regular Army personnel and their families. I hope that the Secretary of State will further enhance his reputation as the champion of good return on investment for the defence budget by confirming that any new building will be good quality and built to provide comfortable homes for decades to come. Historically that has not always been the case.

[Mr Hammond]

Of course, new build and refurbished accommodation will be to the highest grade 1 standard of military accommodation. With respect to my hon. Friend, I suspect that part of our problem with accommodation is that some of it was originally built to last rather too long, so we are struggling to refurbish and patch up old buildings, some of which are around 100 or 150 years old. Building new building to modern standards is the way forward to provide the kind of accommodation that our troops deserve and that our covenant promises them.

[Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)]

This is indeed an historic announcement. The British troops and their families will be greatly missed by the German people. My understanding is that the original treaty required two years’ written notice of the intention to withdraw and a commitment to pay for any environmental clean-up. Has the Secretary of State given that written notice, and what calculation has he made of the environmental clean-up costs?

[Mr Hammond]

I cannot give the hon. Lady a definitive answer on the written notice, but my discussions with the German authorities make it clear that they have been aware of our intentions for many years. They are completely comfortable with what we are doing, although of course they regret the fact that we are leaving Germany. We will of course be responsible for remediation of the barrack sites being handed back to the German federal authorities and work is already ongoing with the German authorities on scoping for exactly what is required, which will be different according to the intended future use of the locations.

[Daniel Kawczynski (Shrewsbury and Atcham) (Con)]

Shrewsbury, the county town of Shropshire, has a long and proud tradition of hosting the Army, so this news comes as a great disappointment to me and to the people of the town. Will the Secretary of State meet me and the leader of the town council, who represents Copthorne, to discuss how the site, which is in the centre of town, can be used to bring maximum prosperity to the people of Shrewsbury? Will he assure me that everything will be done to ensure that there will be provision for Territorial Army reservists at Copthorne barracks?

[Mr Hammond]

We expect to release part of the Copthorne site for disposal. The final details will be announced once we have completed the reserves basing review. It is possible that part of the site will be required for the Territorial Army’s reserve estate. As with all sites for disposal, the Defence Infrastructure Organisation will engage with local stakeholders. I will be happy to meet my hon. Friend and the leader of his local authority. It is in our interests, as well as those of the local communities, to ensure there is an appropriate future use for the bases that are closing in order to maximise local prosperity and jobs.

[Sarah Champion (Rotherham) (Lab)]

Will the Secretary of State clarify whether the move from Germany represents a shift in strategy for the UK’s international footprint? If so, what are the implications for the UK personnel based in Cyprus and Northern Ireland?

[Mr Hammond]

None whatsoever is the simple answer. The withdrawal of our forces from Germany represents the logical conclusion of the ending of the cold war some 20-odd years ago. Keeping a large standing force in Germany is expensive and no longer serves its original strategic purposes. As our Army becomes smaller, the diseconomies of scale of having two separate centres for armoured vehicle training, for example, and consequently two separate centres for armoured vehicle maintenance, become unsupportable. This is a logical final move following the conclusion of the cold war era.

[Mr Julian Brazier (Canterbury) (Con)]

The closing of Howe barracks is clearly a blow to the local community, as the 5th Battalion the Royal Regiment of Scotland made a huge contribution to the community, and indeed a number of its members have given life and limb. Nevertheless, the logic of my right hon. Friend’s announcement is clear. In looking to part 2 of his statement, which will be made before the summer recess, may I urge him to consider two things? First, it is very important that the TA is based where it has historically recruited and where it can recruit and that that is not distorted by pairing arrangements with regular units, important though they may be. Secondly, it is critical that we keep our training areas going, particularly the smaller ones, because otherwise we will find that the new model will become unviable.

[Mr Hammond]

First, today’s announcement says nothing about the training estate. If announcements about the training estate need to be made, my right hon. Friend the Minister for the Armed Forces will make them. I recognise the tension my hon. Friend outlines between the need to have reserve accommodation in the areas where we recruit and the need to enable joint training for regulars and reserves, which is at the heart of our new model for the reserve forces. I can assure him that resolving that tension is at the core of the work going on and will inform the reserve basing review, which I will announce to the House before the summer recess.

[Dr William McCrea (South Antrim) (DUP)]

Northern Ireland has a long history of providing our Army with a lot of recruits. Will the Secretary of State reconsider the reduction of approximately 400 in the overall number of armed personnel in Northern Ireland proposed in the announcement, and recognise Northern Ireland as a part of the consolidation process? Army personnel and their families have found Northern Ireland a great place in which to live and educate their children. We have a lot of capacity, and at a time of financial restraint it is surely wise to use that.

[Mr Hammond]

I am grateful to the hon. Gentleman for his comments. He will recognise that part of the reductions in the 2020 numbers for armed forces personnel in all four countries of the Union results from the civilianisation of the search and rescue service. When we talk about reductions of 400 personnel in Wales and Northern Ireland, we must recognise that a significant proportion of that number is represented by the transfer of search and rescue services to a civilian contractor.

[Sir Bob Russell (Colchester) (LD)]

Clearly, I welcome the inclusion of Colchester as one of the seven centres where the Army is to be consolidated. The Secretary of State refers to investing £1 billion in new living accommodation, but the refurbishment of the existing houses has simultaneously been halted. Will he lift that moratorium?

[Mr Hammond]

Some additional money has been provided by the Chancellor in, I think, the last Budget, and a refurbishment programme is continuing with that finance. The £1 billion is in addition to the baseline programme of Defence Infrastructure Organisation maintenance and upgrading, which has a two-year pause partly ameliorated by the Chancellor’s additional contribution. Those two programmes will run in parallel.

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

Will the Secretary of State confirm that of the 165 Army units listed in the basing review, only one will be located in Wales? How much of the £1.8 billion MOD relocation fund will be spent in Wales?

[Mr Hammond]

I do not think that is right; I am conferring with my right hon. Friend the Minister for the Armed Forces. I am happy to write to the hon. Gentleman to confirm to him, as set out in the document, exactly what the lay-down will be in Wales after the completion of this move.

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

May I welcome the Defence Secretary’s recent statement to the Treasury that it should stop basing its tanks on the MOD lawn? May I congratulate him on an entry in the basing plan that seems to suggest that Marchwood military port in New Forest East will continue as the military port for the Army for the indefinite future?

[Mr Hammond]

I would not want to encourage my hon. Friend to draw that conclusion. Marchwood military port is scheduled for disposal, and—this is not part of this announcement, of course—it may well still be used by the Army but under the ownership of a civilian contractor.

[Stewart Hosie (Dundee East) (SNP)]

The Secretary of State said that the consolidation of the Army bases in Scotland would be around Leuchars and Edinburgh. He also made the welcome announcement that 45 Commando would remain in Arbroath, presumably at RM Condor. He then went on to say that the decisions on the training estate would be announced by the Armed Forces Minister later. May I urge him to ensure that those decisions are taken logically, and gently remind him that the excellent base and range at Barry Buddon in my constituency sits between Leuchars and Condor and ought to remain a very valuable part of the training estate in future?

[Mr Hammond]

I welcome the hon. Gentleman’s contribution to this debate. I have to say it is a delight to be in a Parliament where Members are arguing for military establishments in their constituencies. Many of my colleagues in NATO and EU countries do not enjoy that same level of parliamentary and public support for the armed forces. I am grateful to all Members of the House for that.

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

I welcome my right hon. Friend’s announcement that once again, Fulwood barracks will be home to a regular unit as the site of 3 Medical Regiment. These new units will need not only housing and barracks but training areas. Is my right hon. Friend looking for further training areas on top of the existing military estate?

[Mr Hammond]

We do not expect, in overall terms, to be looking for additional training areas. Clearly, the Army and the armed forces are getting smaller, and one would expect us to be consolidating training rather than expanding it. I would therefore not encourage my hon. Friend to think in terms of expansion of training areas.

[Sammy Wilson (East Antrim) (DUP)]

I am sure the Minister appreciates that the countries representing the fringe of the United Kingdom will feel they have been somewhat abandoned in this announcement. May I ask him about the cost of all this? Given that, as a result of the legacy of Operation Banner in Northern Ireland, there has been substantial investment by the military, especially in family housing and so on, why has he turned his back on some of the investment that is already available in Northern Ireland and not decided to relocate some of the units at Palace barracks or Thiepval barracks?

[Mr Hammond]

The hon. Gentleman is right that there is some vacant accommodation at Thiepval, and the Army looked very carefully at the possibility of further location at Lisburn. However, the equation is complex. It is about not only utilising existing estate but the operational cost of having troops on that estate—the cost of getting them to the training areas where they need to operate. Overall, the value for money case points to the solution I have set out, even though that means that some vacant accommodation will remain at Thiepval.

[Mike Crockart (Edinburgh West) (LD)]

In July 2011 I described the plans announced for the Edinburgh estate as “historical vandalism”, so I welcome today’s partial retreat, while still being saddened by the continued closure of Craigiehall in my constituency. Will my right hon. Friend say more about the help to be given to the communities and individuals affected by closures, such as the 100 staff at Craigiehall? Will he now commit to giving proper answers to the 82 parliamentary questions I have asked over the past 20 months to try to see whether this new plan works any better than the last one?

[Mr Hammond]

I hope the hon. Gentleman is not suggesting that he has 82 unanswered parliamentary questions; if so, I would be extremely interested to hear about it. The closure of Craigiehall results in a reduction of 27 military personnel on the site but, as he rightly says, there will also be some civilians there. As of today, we will engage with the trade unions in the usual way to talk about how we manage the impact of these closures on civilian staff, and we will of course do everything we can to minimise the effects.

[John Glen (Salisbury) (Con)]

I warmly welcome the Secretary of State’s announcement of £800 million of investment in and around Salisbury plain, which will also be welcomed by my hon. Friend the Member for Devizes (Claire Perry). Will he set out the profile of the spending of that £800 million and assure my constituents and the people of south Wiltshire that there will be a significant dividend in extra civilian jobs over the coming years?

[Mr Hammond]

The expansion of the military facilities on and around Salisbury plain, and the additional military numbers to be based there, certainly implies an increase in civilian employment as a consequence. I cannot give my hon. Friend an exact profile of the investment in Salisbury at the moment, but I can tell him that the move of 20 Armoured Brigade will take place towards the back end of the programme. That reflects the fact that there is a very big investment programme to be completed. Partly for technical and planning reasons and partly for financing reasons, it will be somewhat slower to get under way than some of the smaller investments we are making elsewhere. It will therefore be towards the second half of the programme that he sees that investment going into the area.

[Mr Crispin Blunt (Reigate) (Con)]

My right hon. Friend will understand that if, like me, one was born in a British military hospital in Germany, lived there as a child, and then served there as an adult in the British Army of the Rhine, the importance of this statement, certainly in personal terms, can hardly be overestimated. Charting as it does the plan for ending the contribution of the British Army of the Rhine, it is a very profound thing that he has brought to the House today.

May I ask the Secretary of State two things? First, will he ensure that the arrangements made with the German towns that have played host to the British Army for so long are kept under close ministerial oversight and that proper compliments are paid to them? Secondly, and substantively, will he and my right hon. Friend the Minister for the Armed Forces make sure that the plans for the necessary, very substantial investment around the Salisbury area are executed to a scale and a standard that we will be able to look back on with pride in decades to come, rather than future Administrations having to put right a failure of investment over the next few years?

[Mr Hammond]

Let me deal with the last point first. I am clear that the accommodation we build and the technical facilities we construct must be of a high quality and fit for purpose. I do not, however, intend this £1.8 billion to form a cornucopia for architects.

On the question of Germany, my hon. Friend is absolutely right. We need to plan carefully how we end the relationship with the many German towns that have hosted the British Army. The Army in Germany is very much on the front foot on this. We are aware of the significant impact, particularly in the Bergen-Hohne area, which, by German standards, is relatively less well off. We are looking, where appropriate, at what can be left behind as a physical memorial to the British Army presence in Germany. A series of events will be organised with local communities, and Ministers and senior military personnel will expect to attend them and provide a fitting tribute to the support the German people have given us.

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

I welcome the Secretary of State’s statement. Will he say a little more about the training implications for British forces coming from Germany, with particular regard to his reference to potentially retaining training facilities in Germany? What sort of time scale does he have in mind for the establishment of training facilities?

[Mr Hammond]

It is not a question of us retaining training facilities. We definitely will not retain British-run training facilities. However, the Bundeswehr operates NATO training facilities in Germany and we have been offered the use of them. One of the challenges the Army high command faces as part of this process, with the end of our combat operations in Afghanistan, is how to provide a suitably stimulating environment for young recruits coming into the Army. It is clear to us that an element of overseas training has to be part of that equation. We have overseas training facilities in Kenya, Cyprus and Canada and, as I discovered last week, superb Arctic training facilities in Norway, but over the coming months we will consider whether to take up the offer to use the NATO facilities in Germany.

[Guy Opperman (Hexham) (Con)]

People in Northumberland will be delighted that our long campaign to retain Albemarle barracks has been successful, for which I thank the Secretary of State. We will welcome the 3rd Regiment Royal Horse Artillery as much as we have supported the 39th Regiment Royal Artillery. I visited Albemarle again only three weeks ago. Will the Secretary of State meet me again to ensure that the present troops have the broadband, local transport and mobile facilities they need and that future, post-2015 troops will have the facilities they should enjoy as well?

[Mr Hammond]

I am sure that my right hon. Friend the Minister for the Armed Forces, who has responsibility for such matters, will be very happy to meet my hon. Friend to talk about those issues.

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

Having served in Germany twice, I know that this is an important announcement. In welcoming the basing plan, I suggest to the Secretary of State that its success will be contingent in part on the ability of 30,000 royal reservists to plug the gap left by the loss of 20,000 regular troops. Given that some of us have concerns about the cost and recruitment assumptions underlying the reservist plan, is it the Secretary of State’s intention to publish or keep the House regularly updated on the costs of implementing it?

[Mr Hammond]

That is slightly off the beam of the regular Army basing announcement. It is certainly my intention, once the recruiting campaign for reserves gets under way this year, to publish routinely—I think quarterly would be most appropriate—the recruiting data for the reserves. My hon. Friend is right that success in delivering our reserves programme is a crucial part of the Army 2020 plan. I will reflect on his suggestion that the cost of the reserve programme should be published, although I am not so sure it will be that easy to identify and isolate it.

[George Freeman (Mid Norfolk) (Con)]

I warmly welcome the announcement and congratulate the Secretary of State on the quiet competence he and his team have shown in putting it together, which is in stark contrast to the disgraceful financial planning we inherited from the Labour party. I particularly welcome the announcement that Swanton Morley in my constituency will be the home of the Queen’s Dragoon Guards, whom we will welcome as we did the Light Dragoons, and one of the seven consolidated centres. For some strange reason, that did not appear in the written statement, so will the Secretary of State confirm that I have understood him correctly?

[Mr Hammond]

I can indeed confirm that the 1st Battalion the Queen’s Dragoon Guards will be going to Swanton Morley and that Swanton Morley, together with Colchester, will form one of the seven hubs.

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

I thank the Secretary of State for the certainty and security he has given to the St Athan site. Bringing the Royal Signals to St Athan is welcome news, because the community has been on something of a rollercoaster ride in recent years. I also pay tribute to the Armed Forces Minister for the interest he showed when he met community leaders last year and said he would do everything possible. How many armed forces personnel will bringing the Royal Signals to St Athan attract to the site, and how much capital investment is needed?

[Mr Hammond]

The investment at St Athan will be in excess of £50 million. I cannot give my hon. Friend a more precise figure because of commercial issues relating to negotiations and contracts. The moves I have announced today will bring some 560 additional personnel to the site, taking the total liability on it to about 1,250. I say to my hon. Friend, who has been an ardent campaigner on this issue, that the consolidation of 14 Signal Regiment on the St Athan site represents a very important step in resolving the site’s future. The work we have done with the Welsh Assembly Government sets out a very good route to securing the site in the future, both for military use and for civilian development

[Jeremy Lefroy (Stafford) (Con)]

I thank my right hon. Friend for his statement. The people of Stafford will warmly welcome the two additional Signals Regiments to be based at MOD Stafford from 2015. Will he assure me that the construction of housing and creation of school places can now go ahead without delay?

[Mr Hammond]

Yes, I can assure my hon. Friend that the necessary accommodation will be constructed in time for the planned redeployment to Stafford.

[Jason McCartney (Colne Valley) (Con)]

Having been brought up on RAF bases at home and abroad, including RAF Wildenrath and RAF Rheindahlen, I welcome the certainty that today’s statement brings for forces families. The 1st Battalion of my locally recruited regiment, the Yorkshire Regiment, will remain in Warminster, while the 2nd Battalion will relocate from Münster to Cyprus. Will my right hon. Friend confirm that there will be investment in married quarter and single living accommodation overseas in Cyprus as well as at home?

[Mr Hammond]

The single living and married quarter accommodation in Cyprus is of a very high quality. My hon. Friend may have been there and may know that substantial investment has been made recently in new single living accommodation blocks, so I am not sure that any further investment is planned to accommodate this rotational battalion at the Cyprus garrison.

[Richard Drax (South Dorset) (Con)]

May I suggest that the pressure on realistic training facilities overseas will increase as the demand for training in a smaller area in the United Kingdom also increases? Will the Secretary of State reassure me and Her Majesty’s armed forces that there will be no cutbacks on training, particularly overseas, including multi-arms training and live-fire training, so that our armed forces can be given the most realistic training possible in a suitable environment?

[Mr Hammond]

When billions of pounds are spent annually on equipment and manpower, we are conscious of the importance of ensuring that we hone that equipment and manpower by exercising and training it. It was unfortunate that the previous Government had to cut in-year operational activity in order to balance the books. I hope the measures we have taken and those I have announced today mean that we will never get into that position.

New Member

Tuesday 5th March 2013 Commons Chamber

The following Member took and subscribed the Oath required by law:

Mike Thornton, for Eastleigh.

Mid Staffordshire NHS Foundation Trust

Tuesday 5th March 2013 Commons Chamber

Application for emergency debate (Standing Order No. 24)

14:51

[Jeremy Lefroy (Stafford) (Con)]

I seek leave to call for a debate on a specific and important matter that I believe should have urgent consideration: the appointment by Monitor of a trust special administrator for the Mid Staffordshire NHS Foundation Trust and the proposed changes to hospital services in Stafford and Cannock. There are four reasons why such a debate is vital.

First, this is the first such appointment to a foundation trust under the Health and Social Care Act 2012. Given the seriousness of the decisions, I urge Monitor to ensure that there is the longest possible period of consultation and that the trust special administrator has the option to consider proposals other than those that have been set out, none of which are acceptable to me or my constituents. I welcome the reassurance that the administrator’s priority is to deliver high-quality services to patients.

Secondly, although some of the reasons for the administration are particular to Mid Staffordshire, the most important reasons are not. The pressure being placed on mid-sized and even large acute trusts by the squeezing of the emergency and acute tariffs since 2009 is huge. Mid Staffs, which had £21 million of extra funding injected into it last year, may be the first trust this has happened to, but if the squeeze continues, it may be the first of many. The House urgently needs the opportunity to debate NHS tariffs for emergency and acute care, the demand for which is rising annually.

Thirdly, the proposed changes to hospital services in the area served by Mid Staffordshire, including Cannock Chase, Stone and south Staffordshire, are not acceptable. They will increase health inequalities, contrary to section 4 of the Health and Social Care Act 2012, by reducing access, especially for those on low incomes and those without access to private transport. The changes will put tens of thousands of my constituents much further away from emergency, acute and maternity services.

Finally, the impact of some of the changes will be felt much further afield. The surrounding hospitals are already operating at or near capacity. The idea that they can take on large numbers of additional patients without it damaging the services for their local populations is highly questionable.

I have always accepted that there need to be changes and that the trust in its present form needs to alter. However, the current proposals, which differ from those made by several reports over the past three years by Professor Sir George Alberti and others, go much too far. The services provided by the trust have improved considerably in the past three years. I urge the people of Stafford, Cannock and the surrounding areas to make full use of them to show the administrator just how indispensable they are.

[Mr Speaker]

The hon. Gentleman asks leave to propose a debate on a specific and important matter that should have urgent consideration: namely, the proposed appointment of a special administrator for the Mid Staffordshire NHS Foundation Trust. I have listened carefully to his application and conclude that the matter does not, on this occasion, meet the criteria of Standing Order No. 24. I thank him for his contribution.

Points of Order

Tuesday 5th March 2013 Commons Chamber

14:54

[Angus Robertson (Moray) (SNP)]

On a point of order, Mr Speaker. Following a point of order yesterday about the basing review, you told me that ministerial statements of public policy should be made first in the House and asked that if I had compelling evidence of briefing, I should bring it forward. I forwarded to your office this morning four examples of newspapers that had been briefed. That was illustrated by the right hon. and learned Member for North East Fife (Sir Menzies Campbell) in the preceding statement. Given the blatant advanced briefing by the Ministry of Defence about the statement, what are you able to do?

[Mr Speaker]

I am grateful to the hon. Gentleman for his point of order. I have not yet had the opportunity to study the material in question, for reasons that will be apparent to all. I shall, of course, do so and will revert to him if it proves necessary.

[Mr William Cash (Stone) (Con)]

On a point of order, Mr Speaker. Further to the rejection of the proposal put forward by my hon. Friend the Member for Stafford (Jeremy Lefroy), there is an important question relating to the Francis report that I have raised repeatedly with the Leader of the House. An urgent debate is needed. If a debate cannot be granted in respect of Mid Staffordshire and Monitor, one is certainly required in the context of the Francis report as a matter of urgency on the Floor of the House and in Government time. Would you agree?

[Mr Speaker]

I am grateful to the hon. Gentleman. We appreciate his display of a sense of humour in these circumstances. I will say two things to him. First, strictly speaking, points of order do not arise pursuant to refused Standing Order No. 24 applications. I was willing to hear him, as who could be denied that particular privilege? He made his point with his usual force and eloquence, and it will doubtless have been heard very clearly by those on the Treasury Bench. The hon. Gentleman will have been in the House for 29 years in June, so he knows that there are many opportunities to pursue matters; there is rarely just one opportunity. He is as persistent a woodpecker as the hon. Member for New Forest East (Dr Lewis), who also feels impelled to raise a point of order.

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

On a point of order, Mr Speaker. On a different subject, I am sure that you will have noticed the unprecedented number of Liberal Democrat right hon. and hon. Members who suddenly appeared in the Chamber, as if by magic, just before the swearing in of the new Member, only to evaporate just as rapidly so that normal service could be resumed as soon as possible. Is there any way within the rules of order that I can place that remarkable phenomenon on the record for the benefit of history?

[Mr Speaker]

No, but the hon. Gentleman has already done so. If he is going to raise an obviously bogus point of order, he should at least make the effort to contrive an air of solemnity, rather than looking so ostentatiously cheeky.

Property Blight Compensation

Tuesday 5th March 2013 Commons Chamber

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

14:58

[Mrs Caroline Spelman (Meriden) (Con)]

I beg to move,

That leave be given to bring in a Bill to require the Secretary of State to amend legislation to allow for noise contours to be used as a measure of property blight caused by national infrastructure projects; and for connected purposes.

Having represented a constituency at the heart of the midlands motorway network for almost 16 years, I have seen the impact of successive efforts to improve the national transport infrastructure, often with harsh consequences for local residents. Early in my tenure, I visited a family whose home was just beyond the threshold for compensation on the hard shoulder of the M42, despite the fact that the motorway noise blighted their property as much as their next-door neighbours who got compensation. The M42 has vastly exceeded its intended capacity and the hard shoulder is now used for active traffic management, so the property would now be eligible on simple metreage.

A few years later, the White Paper on aviation proposed a second runway at Birmingham airport, which came as a bolt from the blue for local residents. Immediately, they had difficulty selling their homes, yet no statutory compensation was available.

The airport came up with a proposed voluntary compensation scheme based on noise contours rather than straight metreage from the runway, which gained broad public support. The airport maps the noise contour of every flight, so there is a strong scientific base for estimating noise nuisance and taking account of the prevailing winds. Most recently, the proposal of HS2 has brought a new blight to villages and a council estate in my constituency. Once again, statutory blight laws mean that compensation will not be paid until one year after HS2 opens in 2026, except on the grounds of hardship, which are, of course, discretionary. That adds yet more uncertainty. Although blight is often most severe when uncertainty is at its highest, and when HS2 is built the impact on properties will probably be much less than feared, the blight is now.

Large infrastructure schemes can take a huge amount of time to progress from the initial announcement to completion of the scheme. During that process, the scheme will often change as more information becomes available, although home owners or landowners do not know that at the time. As the Country Land and Business Association points out, farmers and landowners are prevented from making important business decisions, sometimes for a whole generation. That impacts not only on those individuals, but on their suppliers and markets.

Statutory blight and compulsory purchase provisions do not encourage an acquiring authority to conclude compensation negotiations quickly. Although provisions for paying interest on outstanding claims are available, the statutory rate is 0% and the landowner foots the loss at a cost of 5% per annum. Some claims will remain outstanding for 10 years. For example, some landowners have still not been compensated for the building of the M6 toll road.

The Land Compensation Act 1973 makes provision for compensation for the depreciation of property values caused by physical effects such as noise, but such compensation is available only a year after the infrastructure is built. The blight is now, and current metreage-based compensation does not help those who may feel the same physical effects of the scheme as their neighbour, but are a few extra metres away.

I believe compensation should be paid in advance of the railway opening, in anticipation of the nuisance it will cause as modelled by noise contours. If accurate scientific information about the physical effects of the line on properties was made available, it would ensure that residents receive proper compensation, reduce the level of uncertainty about the effect of the line, and therefore reduce blight. We must be clearer about noise data sooner and clear up the fear that causes generalised blight.

The HS2 voluntary compensation scheme is an example of how the rigidity of the metreage approach does not address blight. Homes within 60 metres of the track are safeguarded by compulsory purchase provisions, and those within 120 metres can be purchased on a voluntary basis. However, the eligibility criteria ignore the prevailing wind direction or contours in the land that shield or aggravate noise. My Bill is designed to make the eligibility for compensation fairer and more scientifically based, and create parity between roads, rail and airports. Such a proposal does not detract from the property bond proposed by other pressure groups seeking better terms of compensation for those affected. I am aware of the broad base of support for the property bond compensation scheme that would tackle the root cause of property—the loss in property market confidence.

To give one example from many, my constituents, Mr and Mrs Hickin of Berkswell, live about 500 metres north of the HS2 line past their village. Their interest-only mortgage must be repaid in 2015 and they had planned to downsize to a smaller property and pay off the debt. Despite being on the market for nearly three years and reducing the price of their home by £90,000, they have received no offers and live with the worry that they will not be able to meet their financial obligations. Other constituents whose properties have been on the market for several years have not received any offers, even when dramatically reducing the price. That is not unusual among affected constituencies such as those of my neighbour, my hon. Friend the Member for Kenilworth and Southam (Jeremy Wright) and my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan). On average, properties have lost 20% of their value. The exceptional hardship scheme suffers from a lack of credibility. The Government will be consulting on phase 2 of that, so why not bring it forward and consult on amendments to phase 1?

When Birmingham airport proposed its voluntary compensation scheme, it was designed to support the sale of property within a defined boundary of the noise contour with a bond. The level of noise recognised by the aviation industry to trigger voluntary compensation is 66 dB. The boundary of eligibility was drawn with sensitivity around semi-detached properties where one property might be eligible but the other not, so as to avoid the kind of rigidity I experienced with motorway compensation. The bond was based on an independent valuation of the difference between the base price before the announcement and the reduced price thereafter. An independent commissioner was appointed to review any complaints that compensation had been incorrectly calculated and applied.

I believe that model offers a more scientific basis for eligibility for property bonds and would allow many people now experiencing blight from major national infrastructure projects to receive fair recognition and move on with their lives. Essentially, it would bring forward part 1 payments under the Land Compensation Act.

In conclusion, blight laws must be reviewed and changed to help those who, through no fault of their own, are blighted by decisions made in Westminster. In the long term, HS2 is vital for this country’s economic progression and for the west midlands economy in particular, but we should not balance the books on the backs of home owners and landowners whose property may reduce in value. Adding flexibility to the way blight is measured, removing the strict metreage classification in the current compensation scheme, and recognising the loss in value through a property bond would be a welcome reform for many.

Question put and agreed to.

Ordered,

That Mrs Caroline Spelman, Mr Graham Brady, Andrea Leadsom, Mrs Cheryl Gillan, Dan Byles and Mrs Anne Main present the Bill.

Mrs Caroline Spelman accordingly presented the Bill.

Bill read the First time; to be read a Second time on Friday 26 April, and to be printed (Bill 144)

Estimates Day

Tuesday 5th March 2013 Commons Chamber

[2nd allotted day]

supplementary estimates 2012-13

Ministry of justice

Tuesday 5th March 2013 Commons Chamber

Budget and Structure of the Ministry of Justice

Tuesday 5th March 2013 Commons Chamber

[Relevant Documents: The Second Report from the Justice Committee on the budget and structure of the Ministry of Justice, HC 97, and the Government response, Cm 8433.]

Motion made and Question proposed,

That, for the year ending with 31 March 2013, for expenditure by the Ministry of Justice—

(1) further resources, not exceeding £1,157,003,000, be authorised for use for current purposes as set out in HC 894,

(2) the resources authorised for use for capital purposes be reduced by £19,950,000 as so set out, and

(3) a further sum, not exceeding £385,095,000, be granted to Her Majesty to be issued by the Treasury out of the Consolidated Fund and applied for expenditure on the use of resources authorised by Parliament.—(Greg Hands.)

15:07

[Sir Alan Beith (Berwick-upon-Tweed) (LD)]

Today is an estimates day and the presence of pound signs and a lot of noughts on the Order Paper tends to frighten Members away, when really it ought to draw them in to see what on earth the Government are doing with very large amounts of taxpayers’ money. Repeated attempts by zealous reformers to make Parliament pay more attention to expenditure have still not, I think, achieved the degree of success that many of us would like. I am pleased to have the opportunity to open this debate on the Ministry of Justice’s supplementary estimate for 2012-13, with particular reference to the report published by the Justice Committee on the budget and structure of the Ministry of Justice.

This is the first debate on the Ministry’s estimates since it was established in 2007, and I gather that the Minister who will respond is one of two in the Department who were formerly members of the Justice Committee—well, three if we count the Minister for Policing and Criminal Justice, the right hon. Member for Ashford (Damian Green). We are infiltrating our Committee members into relevant positions, which I hope will lead to almost all our recommendations being carried out.

The Ministry’s resource departmental expenditure limit for this financial year amounted to £8.2 billion. The supplementary estimate that provides the occasion for this debate adds a net £379 million in programme expenditure to that total, but MOJ spending, if not huge, relates to crucial areas of great public concern and interest: prisons, probation and legal aid. Most of the expenditure that the Ministry is responsible for is incurred in programmes administered by agencies and non-departmental public bodies. The broad figures of the budget show that the National Offender Management Service—prisons and probation—receives £3.4 billion, that the Legal Services Commission, which deals with legal aid, receives just under £2 billion, that the Courts Service receives £1.3 billion, that the Youth Justice Board receives £300 million and that the Criminal Injuries Compensation Authority receives £282 million. Between them, they account for the lion’s share of the Ministry’s budget.

I said that the supplementary estimate added a net £379 million to the main estimate resource expenditure limit. I will write on behalf of the Justice Committee to seek some further information on the components of the increase, as well as on increases in resource annually managed expenditure; but, in the meantime, it would be helpful if the Minister responded with some of the reasons for the £159 million increase for NOMS in the resource departmental expenditure limit, which is mysteriously described in the Ministry’s memorandum as due to “emergency cost pressures”. Last year, £51 million was included in the supplementary estimate under exactly the same heading. What are those pressures? Is that money part of the £1.2 billion funding agreed in 2007 for prison capacity, following the Carter review, and, if so, when was it carried over into the current comprehensive spending review period and what will the money be spent on?

The supplementary estimate includes provision for a net extra £750 million in round terms in resource annually managed expenditure, the largest elements of which are impairments on the court estate, £326 million, and impairments on the prison estate, £252 million. I hope that the Minister can explain why those elements are there.

I shall turn to the main conclusions of my Committee’s wide-ranging report. We took evidence in the first half of last year and reported in August 2012, and the Government responded in October. We visited the Department during our inquiry, and we did so in an innovative way that I commend to other Committees. We simply said, “We don’t want a formalised tour. We wish to enter every part of the Department and, on a second day, NOMS, and all we want is someone who has got the keys to every door in the building.” That is what we did, and we just wandered about every part of the Department, talked to staff and got a clear picture from them—interestingly, it was to the Department’s credit—of their commitment to the transforming justice programme. We just landed on anyone and asked, “What are you doing? What is your role in all this?” That gave us a much better feel than formal presentations sometimes do for how the Department was functioning, and it was to the Department’s benefit.

We have regularly taken evidence and reported on the annual reports produced by the Ministry. On the broader relationship between expenditure and policy, our predecessor Committee in early 2010 produced a seminal report on the case for justice reinvestment—a strategy for the transfer of resources away from custody to the prevention of crime and the reduction of reoffending. It remains my firm belief that the blueprint set out in that report is the only sensible way forward for a long-term criminal justice policy. Some elements of that philosophy are present in Government policy today, but quite a lot more could be included.

Our report focused on managerial and operational matters, but it also covered some important questions of policy, particularly on the commissioning of prison and probation services and payment by results. Our inquiry was the first major examination of the activities of the Ministry and its associated public bodies. We looked at the background to the setting up of the Ministry, its internal governance, budgetary provision, financial management, commissioning and procurement, the relationship with other public bodies, Departments and the judiciary and the prospects for achieving the Ministry’s radical long-term policies of transforming justice at a time of severe public expenditure retrenchment.

Some of the subjects that we covered, such as the Ministry’s financial management and procurement capacity, may seem technical, but when things go wrong with those functions, as happened recently in the shambolic outsourcing of court interpreting services, excoriated by the Public Accounts Committee and by us, the political fallout and the effect on public confidence in the judicial system can be deeply harmful.

We concluded in our report that the Ministry’s structure and performance had improved since its creation and that progress had been made in integrating the Department, but many of the improvements had been from a low starting point and there had been criticisms and failures. The culture in which the focus was on policy creation previously had changed to an increasing recognition of the importance of programme management. The Department had developed a greater understanding of its cost drivers, although it still did not have sufficient management control of its finances.

We noted that the Ministry had sought to bring its sponsored bodies under closer central control and make them more accountable to Ministers and had streamlined senior management structures and reduced the duplication of functions. We called for further structural change to create an integrated system of offender management, involving the commissioning of both prison and probation services in defined geographical areas. In fact, we look like ending up with roughly the opposite: national commissioning of prisons, which is what we already have, and now of probation, as part of the Government’s probation proposals. The Lord Chancellor defended that on the grounds that, at this stage at any rate, the limited available experience needs to be concentrated to carry out that commissioning function, but that seems to us to be entirely the wrong strategy. The commissioning of ways to deal with offenders really needs to be associated with all the other agencies that are situated in an area. The prisons, police and crime commissioners, local authority social services departments and housing authorities need to work together, as they have done in youth offender teams, for example, to achieve the best results locally.

We expressed doubt about whether the Ministry had sufficient skills capacity to implement the radical change of approach, with the greater outsourcing of the delivery of services, and we pointed to a danger that the way payment by results would be commissioned might undermine the work of voluntary sector organisations, which play, and need to play, a vital role in the justice sector. I think that Ministers have got that message. I am less sure whether they can implement it properly. There is certainly considerable anxiety across the voluntary sector, where so much of the skill and commitment that is required to change offenders’ lives is available. We drew attention to the wide range of public, private and voluntary organisations that need to work together if the wider justice system is to operate more effectively and efficiently when resources are so constrained.

It is difficult to think of any part of the Department’s activities that are not affected by the process of transformation, which has been under way and has gathered pace. In particular, the proposals in transforming rehabilitation document will entirely re-fashion the terrain of probation services. There are welcome plans to extend rehabilitation to prisoners serving sentences of under 12 months who currently receive no such provision. We pitch them back into society with no realistic expectation that they will turn away from a life of crime merely because they have spent a limited time in prison.

More controversially, the plans include contracting out to the private and voluntary sectors of the majority of work with offenders in the community currently overseen by probation trusts. This rehabilitation revolution agenda is in addition to a huge amount of change occurring across other parts of the Ministry’s core business: changes in legal aid entitlement and in the status of the Legal Services Commission, which has moved physically into the headquarters building in Petty France and is becoming an executive agency under closer central control. The Ministry is closing a number of magistrates courts. It has announced plans to transform youth custody by introducing secure colleges. In family justice, Children and Family Court Advisory and Support Service will transfer back to MOJ control effectively from the Department for Education.

On prisons and probation policy, I think we all share the same goal of reducing offending and reoffending, which in turn will free resources currently spent on keeping people in prison, to maintain progress and to have a virtuous circle, rather than the vicious cycle that the system now has. But we remain to be persuaded that the Ministry has at its centre the right people to steer through this monumental transformation process. Most importantly, does it have people with the commercial, technical and legal skills necessary to embark upon a huge range of highly complex and sometimes novel commercial projects?

The transformation agenda coincides with a period when the Ministry, like most Departments, is being tasked with making very large savings. By the end of the spending review period—by the end of the 2014-15 financial year—it needs to make annual real-terms savings of more than £2 billion against its spending review baseline. According to the National Audit Office’s departmental overview, the Ministry still has some way to go to meet its cost reduction target. It aims to make front-line savings of around 10% over the spending review period—it has already saved £244 million—and to reduce back-office costs by around a third, which will contribute about £1 billion towards its target.

The Ministry has projected legal aid savings of about £320 million annually by 2014-15 and sentencing savings of £51 million by the same year, from the changes introduced under the Legal Aid, Sentencing and Punishment of Offenders Act 2012. A further statement from the Minister today gives an accelerated timetable for proposals yet to be spelled out in relation to criminal legal add. Obviously, we will be closely interested in what comes out. We have some indications that things such as cost recovery from offenders will form part of that. Of course, there has been more coverage today in reference to the President of the Supreme Court and anxieties in the judiciary—of course, such anxieties are widespread among lawyers and voluntary organisations—about the effect of the legal changes.

I will make a personal comment, which I think is broadly shared by the Committee. It is widely recognised that we cannot go one having the most expensive legal aid system in the common law world with no real prospect of restraining its potential increase. The Government had to do something, and any Government would have had to do something.

Secondly, and this is a view that the Committee expressed strongly in a previous report, the welfare and tribunal systems are part of the problem. The extent of legal advice necessary in much of the tribunal system indicates a weakness in the way services are delivered in the first place, and in the tribunal system. We ought to have a system under which people receive the right benefit to start with, and, if they do not, the tribunal system should obtain directly the information required to judge the matter correctly. Where Departments in particular fail to achieve that objective and generate a lot of failed appeals—failed on the Department’s side—they should contribute to the cost. It should not be the MOJ budget that bears the cost, but the Department that is not doing its job properly. Change is required in this area.

Savings of approximately £50 million per year are expected from changes to criminal injuries compensation criteria, and there will be other, lesser savings from the closure of courts and prisons, and from rationalising the administration of the Ministry itself and its sponsored bodies. Restructuring the NOMS headquarters is expected to save £91 million. At the same time, there are cost implications to changes that the Ministry is making. Is there any costing for the plan to extend rehabilitation to short-sentenced prisoners? That is welcome, but we have not seen any plans for how it will be paid for. How feasible will it be to fund it by introducing competition into probation?

The Ministry has little control of many things that determine its cost, such as the demand for prison places. One has to ask: how would its transformation and cost-cutting agendas be affected by an unforeseen event. Into that category fell the national riots—they are described as national riots, but it may be fairer to describe them as riots in a number of cities—that occurred in 2011 and generated significant expenditure in the court service and in the prison system.

The Ministry is moving forward with its radical plans for transforming rehabilitation. Payment by results, for example, has not yet been tested in the field of criminal justice. There are a number of pilots up and running, but we do not know what their outcome will be. The Secretary of State clearly feels that to wait, probably for many years, for the outcome of the pilots is to wait too long—he is impatient to get on with developing payment by results. One has to ask, however, how can the Ministry know that it is rolling out programmes that will work and not waste money? How can it learn from the programmes that are up and running, even though we are not at the stage to receive final conclusions?

My Committee took evidence from the Secretary of State last week on the transforming rehabilitation proposals, and put some of those questions to him, including the concern that he makes full use of the voluntary sector that has so much to contribute. Since then, there have been some reports in the press of doubts in the Treasury on whether the payments by results programme can achieve its predicted financial outcomes. I think that those reports came out accidentally in a conference or a seminar on related issues, but they indicate that not everybody is confident that the Ministry can achieve that kind of saving from the programme.

Much depends on getting the basics of financial management right, and our report devoted considerable attention to the effectiveness of financial management in the Ministry and its sponsored bodies. The Ministry did not produce its resource accounts for 2009-10 and 2010-11 before the summer recess, and blamed the accounting arrangements of probation trusts. Last year the Department’s accounts were submitted before the recess, but still after the deadline set by the Treasury. The Committee considered that to be unacceptable.

The Committee was also critical of the regular qualification of the Legal Services Commission’s accounts because of error rates in overpayments—£35.7 million in 2011-12—and called for it to establish a clear plan to reduce those rates significantly.

Our final main concern related to the accounts contained in the Her Majesty’s Courts Service trust’s statement. The Comptroller and Auditor General issued a disclaimer of opinion on those accounts, meaning that he could not say whether they gave a true and fair view. Its chief executive explained that the Courts Service’s accounting system was not able to handle the requirement placed on it by the Treasury to produce an auditable report. The Secretary of State said that the £3 million it would cost to put that right would not represent good value for money.

The Committee was highly critical of the lack of financial management competence in the Ministry and its sponsored bodies. We said that there was “unacceptable complacency” and a “defeatist mindset”. That is strong language, but the Committee think it is justified. The Committee thinks that the Ministry is now taking financial management more seriously, including centralisation and standardisation of processes and standardised forms. The LSC is implementing a new IT system. Frankly, we were horrified when the LSC told us that it could not possibly ask all solicitors to submit claims online, in a world where you and I, Mr Deputy Speaker, and most other people have to use online procedures. This is having to change, thank goodness. The Ministry, however, still faces an uphill struggle with IT legacy systems and its estates. In particular, in the courts many IT systems are old and require a great deal of effort and input to work at all. There is a question regarding whether any useful analysis has taken place to determine whether investing in capital projects now would save money in the longer term.

On European-related issues, the Committee said that the maintenance of separate teams in the MOJ and the Home Office to deal with European, international justice and home affairs issues was a duplication of effort, and that they should be merged. The Ministry has not accepted this recommendation, which seems so obvious to us.

The Government, with some fanfare, announced that they would exercise their right, under protocol 36 of the Lisbon treaty, to opt-out en bloc from justice and home affairs measures, and would consult parliamentary Committees, my Committee included, on their proposals regarding which ones they would opt back into. Up until now, negligible information has been forthcoming from the Government on their plans. The Committee, and other Committees, have had nothing on which to carry out any work. I emphasise strongly that my Committee expects to be provided with the time it requires to scrutinise the Government’s opt-out proposals. The same applies to the other affected Committees too, and we have written jointly on that.

The Ministry of Justice has not yet shown itself able to achieve the full savings to which it has committed, despite some tough decisions and some welcome improvements. The Department is trying to achieve major change, a process that always involves front-end costs with the hope of later savings. We should not be wasting taxpayers’ money on ineffective use of the prison system, where half of those released from prison reoffend within a year—for those on short sentences the figure is 60%. We should not lose sight of the long-term objective, which is to cut crime and reduce reoffending to such an extent that much less money has to be spent on the consequences of crime, whether in the criminal justice system or beyond. For that to happen, we need to spend money to ensure that people are not drawn into crime in the first place. The troubled families programme and early-years education are examples of what the Government are doing and need to build on if we are to cut not only the costs of crime, but the misery it brings to those of our constituents who are victims of crime. We are spending their taxes on trying to keep them safe from crime. That money needs to be spent wisely and that is why it is important that we debate it today.

15:28

[Gareth Johnson (Dartford) (Con)]

It is a pleasure to follow the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). This might not be the most eagerly awaited debate the Chamber has ever seen, but the funding of the Ministry of Justice is an extremely important issue, and although I am a new member of the Justice Committee, in my short time I have seen how daunting is the MOJ’s task of balancing the books.

The MOJ aims at having less reoffending, more rehabilitation and a better court, prisons and probation service, and all with less money. I do not envy the Secretary of State’s position, but I know that in endeavouring to meet the task he will consider all areas for savings. One area being considered is funding work opportunities for inmates in custody. It is right that we provide employment opportunities in prisons. Taking part in work programmes helps offenders to retain or—where it is lacking—adopt a work ethic, increases work-based skills, makes inmates more employable on release and reduces reoffending rates. We must ensure that it does not undercut companies not working with offenders or take jobs away from the law-abiding, but giving prisoners work opportunities in custody could help not just inmates, but victims of crime. If the money earned by prisoners can be shared between rehabilitation and payments to victims, there is a dual gain to be made.

It is not only prison work schemes, however, that provide these opportunities. The National Offender Management Service has been identified as a department that could undergo further restructuring. Managing the rehabilitation of offenders is one of the most crucial aspects of the Ministry’s work, and the MOJ is right that someone is not best placed to help prevent reoffending just because they are employed by it. Very often, private companies or charities can assist with the rehabilitation of offenders, so it is worth considering—and, in suitable cases, adopting—the tendering of work currently carried out by the probation service. If payment by results actually gets results, it is worth pursuing, and giving a financial incentive to those who carry out rehabilitative work can only help to reduce reoffending rates. For the first time, we can say that if offending rates are not reduced, taxpayers’ money will not be spent. That seems right to me.

[Jenny Chapman (Darlington) (Lab)]

I am sorry, but the hon. Gentleman seems to be suggesting that companies with PBR contracts will not be paid if they do not achieve results. I am sure the Minister will correct me if I am wrong, but that is not going to be the case.

[Gareth Johnson]

As I understand the system, there will be payment by results. If the results are not achieved, there will be a financial consequence for that company. We will be able to say, “If there are no results, the taxpayer will not have to shoulder the full burden.” To draw an analogy, we would not expect the Ministry of Defence to pay for guns that do not fire, so why should we expect the MOJ to pay when anti-reoffending programmes do not work? We should pay for what works, not for what does not work.

[Rehman Chishti (Gillingham and Rainham) (Con)]

Does my hon. Friend agree with the MOJ that we should consider other means of resolving disputes, such as mediation, rather than going down the avenue of tribunals and courts, which cost a lot of money?

[Gareth Johnson]

My hon. Friend makes an important point. There is more scope, particularly in family courts, for the increased use of mediation and perhaps non-judicial disposals. We want to see court processes in appropriate cases, but nevertheless we could consider ways of avoiding them, if it is correct to do so.

I was reassured by the Secretary of State’s comments to the Justice Committee last week, when he confirmed that the probation service could also tender for contracts to work with offenders. That is right. The public want less crime; what is less important to them is who achieves it. Whether it is the probation service, a charity or private company matters little; what is vital is that whoever helps offenders to stay on the straight and narrow is successful in that important quest. Payment by results is potentially groundbreaking for the MOJ, but I concede that the devil will be in the detail. We need to ensure that cherry-picking cannot prevail, for example, and that the system recognises tangible improvements in a repeat offender’s behaviour, rather than progress towards good behaviour.

Successive Governments have tried to tackle the so-called revolving door of reoffending—the tendency to come back into the system time and time again, particularly following short-term custodial sentences. There are two approaches to the problem. We can either curtail short prison terms, letting people off without custodial sentences and not having any short-term prisoners, or we can work with such offenders, both in custody and on release. I support the latter approach. It has not been done in the past, but the commitment now to ensure the supervision of such offenders on release is the right approach and very much to be welcomed. The involvement of charitable and private sector organisations in such work has made it affordable. I believe it will be more successful for their presence.

However, it is not just the work of prisons that we need to review; it is also the courts. I worked in the Court Service and saw a very changing environment. In fact, three of the five courthouses I worked in are no longer courthouses, but restaurants, accommodation and so on—I think one is a Zizzi. They have changed beyond all recognition. Although it is sad to see that happening to old courthouses, it is right for the Department continuously to assess the value for money it provides for the taxpayer. It has a difficult balancing act to perform, between the value for money it provides on one side and the interests of justice on the other. Witnesses cannot be expected to travel long distances to vast super-courts. Justice delivered locally is still an important doctrine.

The virtual courts system has been highlighted as a good way for the Department to save money. However, I would urge caution on this approach. Virtual courts can actually cost more. We therefore need an intelligent and targeted use of the system, rather than a blanket approach. I am probably the only Member of Parliament who has used the virtual courts system—I guess I should declare an interest—and I have seen not only its strengths and weaknesses, but its expense to the Department. I am pleased that the Department is also looking at different ways in which magistrates courts can operate. It makes sense to allow them to keep more cases for themselves. That will enable savings to be made without compromising justice. In limited circumstances, magistrates can already sentence adult offenders to 12 months. If we trust them to give such sentences for some cases, why not for all cases? In some courts, the same magistrates who can sentence a 14-year-old to up to two years cannot give an adult more than six months. That needs to change.

The challenges for the Department are substantial. In playing its part in tackling the country’s debt, it needs to find savings, yet they have to be made without compromising justice or the safety of the public. The first job of every Government is to protect the public. I pay tribute to the Department for the enormous strides it has made of late in doing just that, while at the same time finding significant savings in its budget.

15:38

[Jenny Chapman (Darlington) (Lab)]

It is a pleasure to take part in what has become a rather select gathering, considering the report from the Select Committee on Justice and the estimates for the Ministry of Justice.

It is a pleasure to follow the hon. Member for Dartford (Gareth Johnson). I agreed with a large amount of what he said, although I encourage him to look carefully at PBR. He will find that the reward element, which is the bit companies get should they achieve their targets—we are still not clear what the targets might look like—could be as little as 5% of the value of the contracts. He might find that quite poor or average performance could get 95% of the payment anyway, which is not quite what we are leading people to believe.

It is also a great pleasure to follow the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith), who presented his report clearly and fairly, and very politely, given some of the criticisms that he made of the Department. I congratulate him and his Committee on their report on the budget and structure of the Ministry of Justice. I found it an interesting read, but I imagine that it was at times an uncomfortable read for Ministers.

I want to touch on several important subjects: a dysfunctional financial Department, inadequate leadership, evidence-free policy, no progress on improvements for women offenders or for victims of crime, and an overall lack of impact on outcomes in the past three years. In the first paragraph of the report, Members observe that

“this period has been marked by criticism of and, in cases such as the performance of the Legal Services Commission (LSC), failure by, the Department.”

Looking at finance in particular, the Department’s finance team has been performing particularly badly—not that anyone would know it from the Department’s own assessment of its performance, which states that it has

“put a renewed focus on improving financial management across the entire Department.”

The Department has, however, missed the Government’s deadline for submitting accounts for the third year running. If the Ministry were a charity, the Charity Commission would be considering removing its charitable status.

The Government have been reduced to ill-thought-through attempts at random savings through redundancies, and it is striking that the Department’s future budget targets depend on making significant numbers of staff redundant even though the Department does not yet have the necessary resources to fund the redundancy payments. That is chaotic, and one reason for the chaos is the £140 million hole in the Ministry of Justice budget following Ministers’ climb downs on plans to change sentences. I am reminded in particular of the proposed sentence discount for guilty pleas in rape cases, which was abandoned.

The Ministry has to make a massive budget saving, yet it is flailing around attempting to find people to sack. Unfortunately, it risks undermining its ability to do its job. The Chair of the Public Accounts Committee, my right hon. Friend the Member for Barking (Margaret Hodge), said this morning:

“"We are concerned about safety and decency in some prisons…Assaults on staff, self-harm and escapes from contractor escorts have all increased.”

She went on to say:

“We were not reassured that the Agency has done enough to address the risks to safety, decency and standards in prisons and in community services arising from staffing cuts implemented to meet financial targets.”

On offender management in the community, probation trusts, the Probation Association, the National Association of Probation Officers and, significantly, all but a couple of the police and crime commissioners are opposed to the Government’s attempts to squeeze savings out of the Department through the sell-off of probation services by contracting out the supervision of medium and low-risk offenders in the community. I believe that the Ministry of Justice’s proposals in that area are as yet uncosted.

Ministers also have no idea of the extra cost of their plans to supervise offenders serving sentences of less than a year, or whether they will make any difference at all to outcomes. We know from experience that commissioning is not one of the Ministry of Justice’s strengths. The commissioning car crash involving the court interpreters Applied Language Solutions and Capita is something that I am sure officials and Ministers would rather forget, but it illustrates the point that commissioning is not one of the Department’s strengths.

The voluntary sector is likely to get frozen out of rehabilitation services. The Secretary of State has repeatedly said that he wants smaller, voluntary sector and other providers to take on more work relating to the rehabilitation of offenders. There is no argument there, except that the National Audit Office has observed in its response to the Government’s consultation that this desired level playing field is unlikely to materialise. It states:

“Large contracts within the criminal justice system are already held by a few large firms, who could exploit this synergy, compared to smaller or newer players. The Ministry needs to consider whether the size of the contract areas will create barriers to entry for some smaller providers, given the need for greater investment and exposure to risk that these will entail.”

Exactly what is the rationale behind the Government’s proposed 16 areas for probation services, because nobody I speak to seems to know?

The Department has to admit that it has a tendency to favour policy announcements at the expense of delivery. We have had announcements on prisoner working, improved services for victims, revolutionising rehabilitation, mentoring and drug-free prisons. These are all great announcements, and the Government have had no argument from any of us about them, but we are left feeling a little disappointed that the Minister’s hyperbole about a rehabilitation revolution is just that. So far, it is all rhetoric and, I am afraid, no reality. Prisoners are not working more; they are spending longer than ever locked in their cells; and the chief inspector of prisons says he can find no evidence of the rehabilitation revolution—[Interruption.] The Minister says that it is not true, but I have the figures in front of me. If he wants to contradict me in his remarks, I may well wish to intervene on him later.

The justice mandarins are simply not running things properly. The Select Committee says that Ministers need to alter the balance from policy creation to programme implementation, and it is right. Will Ministers tell us how many serving senior officials in the Department meet this criteria and how many of them have experience of managing these projects successfully at a sufficiently senior level? The Department says it wants cultural change through transforming justice, but it is not clear from its own report how many senior managers really have these skills. It believes it will save money by closing older prisons. The Secretary of State says he wants to build a new “supermax” prison, but does he have a budget for it, what is his timetable and where is it going to be?

Perhaps the most important unanswered question is this: at the end of the reforms, what will be happening on the ground that is so different from what happens now? What is the big idea? Where is the evidence to back any of this up? Among all the announcements and statements about restructuring, outsourcing, commissioning, paying by results and reforming, where is the real change that is going to make a difference?

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

There is recognition on both sides of the House for the work that National Grid has done on reoffending. It has taken more than 2,000 offenders, given them work, mentored them and found bank accounts for them—the right hon. Member for East Ham (Stephen Timms) is a great proponent of that. That proves that someone does not have to be a senior official in the Ministry of Justice to be able to bring forward a good idea that massively reduces reoffending.

[Jenny Chapman]

The hon. Gentleman makes a good point. We can all cite anecdotes and examples of very good practice, but anecdotes remain just that. There is no systemic sharing of good practice. These opportunities should be assessed, evaluated and made available for all the offenders who need them, but the truth is that they are not. According to the Public Accounts Committee, senior officials at the MOJ have a poor record of managing commissioning, so I am not sure about trying to transform the service through that method. At the moment, there is not enough evidence of a good track record to be able to put much confidence in their ability to do that. The problem with the reforms is that they are all of structure rather than of practice. The Government are rightly disappointed in reoffending rates of around 50%, but for nearly three years they have done nothing of any substance to improve the situation.

Let me deal now with payment by results. Instead of importing a failed policy from the Department for Work and Pensions to the MOJ, why not take a closer look at what works in preventing reoffending? For all the academic studies and Government data, the truth is that there is precious little understanding of what really makes a difference. Plenty of organisations are prepared to tell us that what they are doing works and are prepared to buy reports to prove it, but there is very little objective analysis of outcomes of programmes and interventions. As a result of scrapping probation service PBR pilots, the Government are failing to use evidence that they should have to help them to decide where to spend their money. When the Secretary of State cancelled the pilots, he said, “Sometimes you just have to go with your beliefs.” There we have it: Chris Grayling, Secretary of State for Justice, our very own mystic Meg.

This simply is not good enough. Interventions in health, for example, are assessed. They are monitored and evaluated before public money is used to provide them, and the same should apply to interventions in criminal justice. The rate of reoffending is stubbornly high, so why are the Government not doing what can be done in health? Why are they not asking for interventions to be evaluated and funded only if they prove to be effective, and then insisting that only what works should be delivered in our prisons and in community sentences? There is too much okay practice, and too little sharing of the very best ideas.

We need to know which are the best interventions, which are the best providers of services, and which are the best prisons. We need a value-added measure for criminal justice. The Government should be investing in ways of assessing the performance of establishments, based on the profile of inmates entering prisons and their future reoffending. Establishments should be accountable for their performance: the best should be given greater freedom to innovate, and the worst should be closed down. Farming out the supervision of medium-risk offenders to private sector providers with no idea whether that will work any better than the current arrangements is reckless, ideologically driven and dangerous, and the Government should think again. They are not showing any interest in practice on the ground, but are preoccupied with structures in the organisations without any evidence that they will make any difference.

The Government’s performance in the management of this Department has been woeful. The Department has failed to submit its accounts on time three years running, it has been subject to withering criticism from the National Audit Office over its ability to commission, it has scrapped PBR pilots—thus losing any evidence that payment by results works—and it has failed to show that its mandarins can manage projects and implement policy.

15:52

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

Let me start by thanking my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), the Chairman of the Select Committee, for introducing this short but very high-quality and wide-ranging debate. I am also grateful to him for the way in which his Committee drew up the report, and for the scrutiny that it provides of the Department more broadly.

As the House knows, parliamentary scrutiny of Government Departments is crucial to ensuring that they deliver Government policy properly and offer value for money. We have talked about both those things this afternoon. A large number of subjects have been covered, and I shall try to deal with as many as possible. I shall also say a little about the Department’s priorities, which have also been mentioned today.

Last year’s comprehensive report by the Justice Committee on the budget and structure of the Department focused on many of the changes that it has made to bring it closer to the goal of delivering a justice system that is more effective, less costly and more responsive to the public. At a time of continued financial pressure—to which my right hon. Friend rightly referred—finding ways of improving services while delivering even more value for money is, of course, of paramount importance.

There has been a renewed focus on improving financial management throughout the Department, which means that it is set to reduce spending by about £2.5 billion each year over the spending review period. It will achieve that by means of a range of measures to drive down the costs to the taxpayer. On the efficiency side, that has included rationalisation of the Ministry of Justice head office, streamlining our structures and processes, and rationalisation of the court estate. We have also delivered savings through policy reforms, including the reforms of legal aid funding—which have been mentioned—and the criminal injuries compensation scheme. As the Select Committee has acknowledged, the Department has protected front-line services by making the bulk of its savings—some 60%—through ways of working more efficiently. The Department also laid its 2011-12 accounts unqualified, before the summer recess and ahead of the timetable it had originally planned. That demonstrates a significant improvement on previous performance, but there is room for further improvement and the Department is looking to provide that this year.

My right hon. Friend the Member for Berwick-upon-Tweed raised two specific points about the estimates, the first of which related to the explanation for the £159 million extra for the National Offender Management Service. As he will appreciate, a number of pressures that arise during the year were not part of the MOJ baseline used in the spending review negotiations. Such additional cost pressures will include not only inflationary impacts, but funding for voluntary staff exits—he will understand that there has been considerable change on that front in the past 12 months.

My right hon. Friend’s other point related to the impairments to the court and prison estate. As he knows, the Valuation Office Agency carries out regular reviews of that estate, and the recent downturns in the property market mean that that re-evaluation has obviously had an impact on the Department’s budget. The figure of £520 million or so is substantially explained by that change.

Let me talk a little about the justice system we are trying to design. Creating a transformed justice system requires the Department to go beyond improving its financial management. If we are to construct a justice system that punishes the guilty, protects liberties and rehabilitates offenders, the MOJ needs to continue to work at pace to drive an ambitious reform agenda. Despite the determination of those working within the justice system, there is too much litigation, too many people are reoffending and too much money is spent on systems. So by 2015 the Department will provide services in a completely different way. We are committed to transforming rehabilitation to reduce reoffending—I will discuss that in some detail later— to driving down costs across the prison estate to ensure that it delivers maximum value for taxpayers; making sure that the youth justice estate is appropriate and cost-effective; rationalising the court estate and identifying further efficiencies across the criminal justice system; and continuing to drive down the cost of legal aid and ensure it is focused on those cases that require it. That is what transforming justice looks like.

One of my top priorities within that is the transformation of rehabilitation. That has had a good deal of attention in this debate, so let me deal with the points that have been made. As the House knows, we have consulted on proposals that could open up approximately £1 billion of services to a diverse market; give greater scope for providers to innovate, with payment by results acting as an incentive to focus on rehabilitating offenders, as my hon. Friend the Member for Dartford (Gareth Johnson) was explaining; and change how the commissioning of services is managed.

[Jenny Chapman]

Will the Minister clarify a point for us, because hon. Members who are listening to this debate will not be clear about it? What percentage of the value of the contract will be paid upon the achievement of the targets?

[Jeremy Wright]

The hon. Lady knows that we are carefully considering the design of the system, so we will need to determine the appropriate percentage. She will also recognise that it is not going to be 100%, because anyone taking on this work will need to implement the orders of the court and to fulfil licence requirements. The fact that it will not be 100% may have some bearing on the discussion we have been having about the accessibility of this new landscape to smaller organisations, particularly those in the voluntary sector. We will settle on the precise figure having listened to those who may be involved in this landscape, and others, to make sure that we get it right.

Let me deal with some of the points made by the Chairman of the Select Committee. He raised the concern that he and his Committee have about having national as opposed to local commissioning, and I appreciate that that represents a change. It is explained simply by the need to ensure that the necessary expertise and abilities to commission on a payment-by-results basis are held by those doing the commissioning. We think it is difficult to see how that can be done on a local basis, but we think it is important, just as he does, that there are local elements in the commissioning process and that local intelligence is included in deciding what needs to be commissioned. We want to design a system—I hope he will see this coming through the process—that enables us to include that local understanding as well as greater expertise on payment by results. He is also right to say that we must design a system that allows voluntary sector organisations to participate actively.

[Sir Alan Beith]

I am grateful to the Minister for seeking to clarify this point. Let us analyse it a bit further. If the local partnerships that know the local situation best can design what the contract should be about, it is perfectly proper that they should turn to a national body that has expertise in how to include the measurements of results and so on. I would be worried, however, if the national commissioning body was also the body that said, “What you need in Blackburn is this.” That decision should be taken locally, even if the expertise must be drawn on from a central body.

[Jeremy Wright]

Yes, I understand that entirely. I am saying that it will be important under the system that we are trying to design for local requirements to find their way through the system so that they can be clearly understood. We will try very hard to ensure that that can be done.

Let me return to the voluntary sector organisations, on which we have rightly spent a bit of time in the debate. There are probably two areas in which we need to be careful to ensure that the design of the system is right. The first is in the assessment of the bids that are made for the rehabilitative work that we are discussing. When we consider the bids, we will want to be satisfied not just about their quality and price but about the sustainability of the relationships brought forward as part of the bids. We anticipate that a large number of bids will include more than one organisation and will often include smaller voluntary and community sector organisations. We will want to be persuaded when assessing those bids that the smaller voluntary and community sector organisations will have a sustainable future in the course of the contract. We will want to ensure that the design is right and that we keep our eyes on what is happening in contract management. It is partly about assessing the bids when they come in and partly about assessing how they are implemented over the lifetime of the contract.

[Jenny Chapman]

I think the phrase the Minister is looking for is “bid candy”. I think he is trying to say that he would like there to be more involvement from not-for-profit, third sector and voluntary organisations, but is it not the truth that he has no idea at all of the number of organisations working with offenders in the criminal justice system? He does not know how many there are or what exactly they are doing, so how will he know whether there is more involvement after his reforms?

[Jeremy Wright]

The House will note the hon. Lady’s traditional fondness for central control, but we are not a fan of that. She is right that there is an issue about what is likely to be called “bid candy” in this context, but what she is missing is that that is precisely why it is important for us to consider not just the initial cost and attractiveness of the bid but the sustainability of what might be called the supply chain. We want to design that into the system for precisely the reasons she has given.

Let me move on to the issue raised by my right hon. Friend the Member for Berwick-upon-Tweed about prisoners who receive sentences of 12 months or less. There is broad agreement when the subject is raised that it is a good idea to bring within the ambit of rehabilitative services those offenders who receive such sentences, as at the moment very little provision is made for them. He is right to say that it will come at a cost, but it is difficult to be precise about the cost of that provision, which was another point raised by the hon. Member for Darlington (Jenny Chapman). Until we have finished designing a provision, we will not know precisely what it will cost.

Another aspect that needs to be clarified by the design process is the sanctions regime. Part of the cost will be incurred by deciding what to do if someone who is under such a sentence and who will be expected to participate in rehabilitation after that sentence does not comply. We must go through a number of processes in the design of the scheme before we can be more precise about the costs, but we confidently expect the cost of incorporating those 46,000 extra offenders will be covered by the savings we can make by competing rehabilitative services for medium and lower-risk offenders. That is one of the central advantages of taking that course.

My right hon. Friend also made the point that it is important to have in the management of the Department the right people with the rights skills to carry out the work we are asking them to. He is right, of course. He will almost certainly know from his review of the work of the Department that we have set up a capability steering group to consider those issues. One of the major issues for us to address is skills in programme and project management. We are very conscious of the need to make sure not just that we bring in new people with those skills where we need to do that, but that we give those skills to existing staff who will come into contact with programmes of various sizes and shapes.

[Nick Smith (Blaenau Gwent) (Lab)]

From the Select Committee’s report I thought the emphasis on delivery and implementation was strong. However, I looked at the Government’s response to the Select Committee’s criticisms and, on the issue of project management, it felt very thin. How many of the Department’s senior managers have project management qualifications so that they can introduce this new culture of delivery?

[Jeremy Wright]

As I said, we recognise the need to make sure not just that we bring in new people who have these skills, but that existing staff gain those skills, so taking a snapshot of how many have a particular qualification at this point may not be the most helpful way of looking at the issue. We are trying to make sure that civil servants who want and need these skills are given them, and that where there are gaps in the Department and particular skills are required, we plug those gaps.

Let me move on to talk about prison costs. We are keen to push down those costs. Across the custodial estate our strategy is to ensure that we have sufficient places to meet the demand of the courts, while securing best value for money for the taxpayer. We are committed to driving down the cost of imprisonment and to closing old and inefficient accommodation, which will contribute significantly to that. I am surprised that the hon. Lady expressed doubts that such an approach would save money. It seems clear that it would do so. The reason—

[Jenny Chapman]

rose—

[Jeremy Wright]

If the hon. Lady will forgive me, I will explain and then I will give way.

It is a straightforward point that older accommodation is more expensive to run and to maintain. Newer accommodation is much cheaper in both respects. That is one reason why we want to transfer from an older estate to a newer estate. It is not the only reason, but if the hon. Lady wants to intervene, I will give way.

[Jenny Chapman]

My doubt was based on assertions from the Secretary of State that there is going to be some “supermax” prison, yet there is a lack of information about how much that would cost, when it would be built and where it would be. I would be interested to hear the Minister’s response to those questions. If they cannot be answered, I will keep my doubts.

[Jeremy Wright]

The hon. Lady is entitled to her doubts but she needs to be fair. We have said that we will look at the feasibility of providing just that sort of prison, although I would not use the language that she used. We are looking for a system of imprisoning offenders that is most efficient for the taxpayer, but not just in financial terms. Also—this is what I was going on to say—newer estate is much more susceptible to providing work in prisons, as my hon. Friend the Member for Dartford (Gareth Johnson) described, and the rehabilitative agenda that we all want to see outside as well as inside the prison gates. I can reassure the hon. Lady that once we have had the chance to have a look at the sites that we might want to pursue for a larger prison and at the economics of doing it, we will give her all the detail she could possibly want, but we are not going to rush into it because, perhaps unlike our predecessors, we do not believe in spending money hand over fist until we get it right. We will make sure that we have got it right first; then we will bring forward our proposals.

Let me move on briefly to youth justice, which was mentioned by the Chairman of the Select Committee. As he said, in February we published our plans for the future of youth custody. Young people who commit serious and persistent offences need to be properly punished and it is right that they are sentenced to custody, but custody is not delivering good enough results. The costs of youth custody are very high, yet 73% of young people leaving custody go on to reoffend within a year. It is not acceptable to spend so much yet get such poor outcomes. That is why we launched our vision for secure colleges that refocus a young person’s time in custody so that it is education with detention, rather than detention with education as an afterthought.

My hon. Friend the Member for Dartford and the Chair of the Select Committee mentioned the court estate, reform of which is key to a transformed justice system. In identifying ways in which it could operate more efficiently, the Ministry has closed 132 courts—84 magistrates courts and 46 county courts. However, we recognise that there is a need to carry on looking at how our estate is most effectively utilised, and we will want to keep in mind the points that were raised on that. Spending money to keep underused and unsuitable courts and tribunals open is not a good use of taxpayers’ money, so we continue to keep the use of our estate under review to ensure that it meets operational requirements.

The Select Committee is also right to emphasise how important co-operation across the criminal justice is for improving outcomes. In July last year, we set out important reforms now under way across the criminal justice system in the “Swift and Sure Justice” White Paper. We are building on those reforms to ensure that victims have a louder voice and that the criminal justice system commands public confidence.

[Jenny Chapman]

I cannot let that point go without observing that the new victims commissioner will be working 10 hours a month. Is that sufficient to give victims the voice they need?

[Jeremy Wright]

I do not believe that it is the number of hours spent on the job that matters, but what one does in them. The effectiveness of this particular victims commissioner will become apparent. We think we have an excellent candidate for the job and that she will do a first-class job for victims. I am sure that the hon. Lady will support her in that work as she does it.

We want to make optimum use of the available resources so that the criminal justice system is quicker, less bureaucratic and more efficient. Therefore we are working closely with the Home Secretary and the Attorney-General to ensure that we all look at the whole system to tackle its weaknesses. My right hon. Friend the Member for Berwick-upon-Tweed was right to say that the Ministry of Justice cannot solve all these problems on its own. We are, as he knows, often described as a downstream Department, and we need to work with other Departments, not just those that I have mentioned, to ensure that we all do the right things to bring down offending and reoffending. He will know that we will shortly publish a criminal justice strategy and action plan to set out how we will deliver further change.

Legal aid is a fundamental part of our legal system but, as the Chair of the Select Committee rightly said, resources are not limitless and publicly funded legal support should be reserved for cases where there is genuine need. The Legal Aid Sentencing and Punishment of Offenders Act 2012 contains reforms that focus help on those cases where there is a genuine need of assistance from the state, and those proposals will be implemented in April. We are determined to protect fundamental rights of access to justice, but we must tackle an over-reliance on the courts and legal system at taxpayers’ expense. That involves directing people towards less stressful and less adversarial means of resolving their disputes wherever possible. I was taken with my right hon. Friend’s point, with which I entirely agree, that if we necessitate the use of lawyers in some of these tribunals, and those tribunals are not operating as they should, that was not the intention and it should not be the way in which we proceed in the future.

We are keen that in addition to transforming the services delivered by the Department, it transforms itself so that it has the right skills structures and agility to operate optimally. As my right hon. Friend and the rest of the Select Committee know well, in 2010, the Department reviewed its operating model, which resulted in more streamlined structures and a reduced work force. However, further reform is required if we are to live within our means in future and operate in the most effective and efficient way possible. We have therefore commissioned a review of the business structures and functions across the Ministry of Justice. That includes our agencies and arm’s length bodies. The review will look closely and critically at the ways in which services are commissioned and provided. In doing so, we want the digital-by-default agenda to be put at the heart of the Ministry’s operations, and for creative ways to embody and implement the principles of civil service reform to be found.

I know that the Select Committee has previously recommended that the different parts of the Department be further integrated. My right hon. Friend referred specifically to the European teams today, and I entirely understand his reasons for doing so. A range of different expertise is represented by different people in different departments, so although we will look closely at any opportunities for rationalisation, in this context, as it happens, the opportunities for rationalisation are not as great as they may at first appear. However, the question of greater integration more generally, as well as the delaying of grade and management structures that the JSC has also sought, is firmly within the scope of the review that we are carrying out.

I thank my hon. Friend the Member for Dartford for his remarks. He is entirely right that work in prisons is a fundamental part of improving the services we offer in custody and beyond. He is right that working in a prison context allows offenders to develop not only the hard skills but the soft skills that might make them more employable. The idea of working a standard day or more hours in the week are hugely attractive from that point of view. I can tell the hon. Member for Darlington, who I know was concerned about this, that we are delivering more worked hours by prisoners in the prison estate than we were previously. Of course there is more work to be done, but we are heading in the right direction.

[Jenny Chapman]

I am grateful to the hon. Gentleman for giving way, because it is important that we understand what is really happening. There is an idea that our prisons are somehow becoming little hives of industry in which prisoners are beavering away, but they are not. In about half the categories of prison in this country prisoners are actually spending more time banged up in their cells and less time doing purposeful activity. Perhaps most worryingly, that includes prisons for young offenders. Officials need to be a little more upfront with the Minister on that issue.

[Jeremy Wright]

I have made it clear that we do not believe that we have done all we need to do on that front. I think that it is important to link a number of things. We need to ensure that the prison regime is conducive to work and that prisoners are incentivised to work, rather than to be idle. We are looking at both things, but the prison system needs to deliver more hours and a more regularised working day, for reasons the hon. Lady will entirely appreciate. We want to ensure that we get prisoners as close to the normality of the outside world as we can while they serve their sentence so that they have a better chance of being employed after they leave.

[Michael Ellis (Northampton North) (Con)]

Does my hon. Friend agree that it is a bit rich for the Opposition to talk about investment in the Prison Service? Throughout the Labour Government’s 13 years in office there was minimal investment and deep overcrowding, so we are having to rectify a lot of the damage done by that failure to invest.

[Jeremy Wright]

I was going to move on a little later to the damage that we are trying to undo, but my hon. Friend is right that we have not inherited a beneficial legacy. I am afraid that there is considerable work to be done with the prison estate, as in so many areas of Government, because of the mess left behind. I will return to that in a moment, because the hon. Member for Darlington made a few comments that I think need to be addressed.

My hon. Friend the Member for Dartford was right to describe the potential of payment by results, which is at the heart of our proposals. We believe that payment by results has a place in the reforms we are making because we think that it is important to pay for outcomes, not simply for processes. He rightly described why we want to ensure that people are rewarded for getting the outcomes we need them to get, and in this context that is a simple outcome to describe, although perhaps not quite so simple to design in the system: a reduction in reoffending. That means fewer victims, less misery for communities and less cost to taxpayers, which are eminently desirable outcomes.

My hon. Friend was right to focus on the challenges we face in designing the system. We need to avoid cherry-picking and “creaming and parking”, which effectively means looking after only those whom it is easiest to turn away from offending. We are conscious of the need to design our system to avoid those perverse incentives and will do so. He is right that payment by results is the way to deliver those better outcomes.

[Nick Smith]

It is good that payment by results will be introduced into the Prison Service, but surely the Minister must accept that it would have been better if the Secretary of State had piloted the ideas he proposes to introduce to ensure that they and that the principles he talks about work. Payment by results might be effective, but surely pilots would have let us know what works.

[Jeremy Wright]

It is a myth that no learning is available about payment by results, even from pilots. It is not always necessary to complete a pilot in order to get something from it. A good deal of learning is available to us from the pilots that have been in operation and, indeed, from the operation of payment by results elsewhere in government. We will take that learning with us in designing the scheme that we are attempting to put in place. The truth is that we could pilot for ever. Piloting in this context is an excuse to do nothing, and we do not intend to adopt that approach because we want to take action to drive down high rates of reoffending. We want to see innovation; we want people to come forward with new ideas within this system. If we expected to have to pilot every single one of those new ideas, we could pilot for ever and never make progress. We do not accept that that is the right way to deal with reoffending rates that are far too high.

Let me return to the point raised by the hon. Member for Darlington and my hon. Friend the Member for Northampton North (Michael Ellis). When we listen to the hon. Lady and her colleagues say that there are difficult budgetary pressures, that the Department is having to cut costs, and how regrettable all that is, we should not allow her to forget the reasons we are having to make these difficult decisions. One would think that we had inherited a benign economic legacy involving piles of cash that we stubbornly refuse to spend, but that is simply not the case. We inherited a note on a Treasury letterhead saying, “I’m sorry there’s no more money”, and a pile of debt. We are doing our very best to deal with the mess that her party left.

[Jenny Chapman]

As I have acknowledged, the Department has a very difficult financial task ahead because of the decisions of the previous Secretary of State. The Minister admits that some of the commitments he has made are uncosted and that he has no idea whether their outcomes will be good value for money. I am trying to help him by pointing that out and steering him in what might be a more sound financial direction.

[Jeremy Wright]

I am extremely grateful for the hon. Lady’s help, but she is missing the point. The problems that we face with the finances of this Department and the Government more broadly have nothing to do with the previous Conservative Secretary of State for Justice; they are to do with the behaviour of the previous Labour Government. That is why we are in the mess we are in, and we are doing our best to get ourselves and the country out of it.

The hon. Lady mentioned the size of the contract package areas and asked about the proposal for 16 of them. We asked respondents to the consultation that has recently concluded whether they believe that that is the appropriate number, and we will consider what they said. It is a starting point, and we will see whether people believe that it is a sensible one. I am sure that there will be arguments about whether we have drawn the map in the right way, and we will consider all those in deciding whether we have reached the right conclusions. We will need contract package areas that are large enough to enable payment by results to operate effectively while not losing the local partnerships and connections that my right hon. Friend the Member for Berwick-upon-Tweed mentioned.

Proving what works is clearly crucial in the context of payment by results, and the hon. Lady is right to raise that. She will have seen in our proposals that we are interested in the idea of a justice data lab that will enable those providing rehabilitative services to understand exactly the effects and benefits of what they are doing. In the end, the test of what works will be whether the desired outcomes are achieved. As my hon. Friend the Member for Dartford rightly said, if they are not achieved, the full contract value will not be paid. That is at the heart of payment by results, and that is why we believe that it is a productive way to go forward.

The Ministry of Justice has made great strides in delivering a justice system that is more effective, less costly, and more responsive to the public. The ministerial team has a clear vision for continuing to transform the justice system over the remainder of this Parliament and beyond. I believe that we can deliver better rehabilitation of offenders, a smarter system of detaining and educating teenage offenders, a cheaper and better prison system, and a legal aid and criminal justice system that commands public confidence—and that, at the same time, we can bring costs down.

I hope that the many Members who take an interest in the Ministry of Justice’s activities—they have not all participated in this debate—recognise the improvements that have been made to how the Department organises itself and delivers its services. I know that the Department remains committed to building on these improvements and working with Ministers to deliver our vision for a transformed justice system.

Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).

Department for Communities and Local Government

Tuesday 5th March 2013 Commons Chamber

New Housing Supply

Tuesday 5th March 2013 Commons Chamber

[Relevant Documents: The Eleventh Report from the Communities and Local Government Committee, Session 2010-12, on Financing of new housing supply, HC 1652, and the Government response, Cm 8401.]

Motion made, and Question proposed,

That, for the year ending with 31 March 2013, for expenditure by the Department for Communities and Local Government—

(1) further resources, not exceeding £464,869,000, be authorised for use for current purposes as set out in HC 894,

(2) the resources authorised for use for capital purposes be reduced by £1,212,893,000 as so set out, and

(3) the sums authorised for issue out of the Consolidated Fund be reduced by £339,615,000 as so set out.—(Mark Lancaster.)

16:25

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

It is with pleasure that I speak to the report produced by the Communities and Local Government Committee, “Financing of new housing supply”, which we published last May and to which the Government responded in July. Today provides an opportunity to consider the report’s recommendations and the Government’s response to them. I hope their response today will be more enthusiastic than the written response they gave in July. A new Minister, the Under-Secretary of State for Communities and Local Government, the right hon. Member for Bath (Mr Foster), is now in place, so he might manage to achieve that. We can also consider certain things that have happened since the report was produced about 10 months ago, and see how they may have changed our recommendations or, indeed, strengthened their case.

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

If it is of assistance to the Chair of the Committee, I am prepared, in the light of developments over the past 12 months, to place an update of the Department’s response to its report in the Library of the House of Commons later today.

[Mr Betts]

I thank the Minister for that and we look forward with anticipation to reading what he has to say. We will do so closely, and the Committee might give it further consideration.

The report, which was signed up to by all members of the Committee on a cross-party basis, tried to consider the issues in the longer term. I am pleased to see in the Chamber several members of the Committee, both past and present, whom I hope will be able to catch your eye, Mr Deputy Speaker.

We started off from the basic position that we have not been building enough homes in this country for a long time. The basic requirement is about 250,000 homes a year, based on household formation, plus an increasing number to make up for the backlog of past under-investment. Since the report was published, we have had the figures for housing starts in 2012. There were 115,620 housing completions, up 1% on the previous year, and 98,280 housing starts, an 11% reduction. Therefore, if our recommendations were correct a year ago, they are probably just as correct now.

This is not a short-term problem. The report acknowledges that even at the height of building in the mid-2000s, we were building a maximum of only 170,000 homes a year, which was not sufficient, either. The private house-building industry has never managed to build more than 150,000 homes a year, so the likelihood of being able to rely on it to deliver the extra homes is probably very small indeed.

We also know that historically, the percentage of owner-occupied properties has been falling since about 2002. That represents a change. The number of private rented properties has been rising considerably and is now slightly greater than the number of social rented properties.

We can also see the consequences of the failures over a long period and of the immediate problems of 2008 and beyond, including young people in particular being unable to afford a mortgage and increasing waiting lists for social housing. People with heart-rending stories who ought to be given a house immediately visit our surgeries every week, but they cannot all have priority because there are not enough homes to go round. Rents in the private sector are also rising. I will not say too much about the private rented sector today, because we are in the middle of a further inquiry into it and what we should do. We look forward to having Ministers before us at the end of that inquiry.

While we were conducting the inquiry into new housing supply, the Government produced their housing strategy for England. It contained measures that everyone could support, such as the release of public sector land. It also included the NewBuy scheme, on which we were promised an update after 12 months. I am not sure how much there is to update us on, but the Minister may be able to give us a few figures.

The Committee concluded that we needed a long-term strategy. There is an issue with homes, but there is also the immediate issue of jobs and growth. The National Housing Federation gave us the interesting figures that every affordable home built in this country provides £108,000 in added value to the economy and creates 2.3 jobs. We should bear that in mind. We also concluded that we needed radical changes. Members of the Committee recognised that we needed to be brave and think outside the box in coming to our conclusions.

We made a number of proposals because we recognised that there was no silver bullet, magic solution or switch that could be flicked in Whitehall that would make everything okay the following day.

[Mr Stewart Jackson (Peterborough) (Con)]

Has the hon. Gentleman given any thought to the problem in the planning system of land banking, whereby many approved planning applications remain unactioned? Local authorities have put significant amounts of money into those sites, for example via supplementary planning documents, but they are now idle. Were they to be actioned, it would go some way towards ameliorating the housing shortage.

[Mr Betts]

The hon. Gentleman helpfully anticipates my next point.

The Committee concentrated on funding issues because that was the remit of the report. However, we said in passing, as we did in our report on the national planning policy framework, that we did not believe there was evidence that planning was the obstacle to growth. We accepted the point, which the Local Government Association has made again recently, that there are 400,000 planning permissions for new homes that have not been activated. Getting at those is a major challenge that we should talk about. I do not believe that the measures in the Growth and Infrastructure Bill will deal with that problem, although that did not form part of our report because it has been published since our inquiry. The LGA also says that 87% of all the planning applications made last year were given permission. Planning is therefore not the problem.

There is a potential long-term problem, which I have raised with Housing Ministers on a number of occasions, if local plans become the heart of the planning system, as they ought to be. Many local authorities ought to speed up the process of getting those plans in place, because they are a crucial part of the planning system. The problem is what we should do if the housing numbers in the local plans do not add up to a figure that meets the national housing requirements. I asked the previous Minister for Housing that question on a number of occasions and he never seemed to have an answer.

I congratulate the new planning Minister, the Under-Secretary of State for Communities and Local Government, the hon. Member for Grantham and Stamford (Nick Boles), who came to the Select Committee a couple of weeks ago with Lord Taylor of Goss Moor, who was reviewing the supplementary planning guidance. At the top of their list of issues that were not addressed properly in the supplementary planning guidance was the need for a consistent measure of housing need that could be incorporated into local plans on a consistent basis. That will be a helpful move. It will take time for it to be effective, but there is a recognition that the abolition of regional spatial strategies and the total reliance on local plans has created a disconnect with the national targets.

[Mr Jackson]

The hon. Gentleman is being most generous in giving way. Does he agree that when developers have made a value judgment to bank a portfolio of land because the market is failing, there is no fiscal incentive for them to develop that land? We know about housing need, but the Treasury and others are giving no incentives in terms of supply. Perhaps we should consider tax changes as a catalyst for development.

[Mr Betts]

That is not something the Select Committee looked at. I will pass it over to the Treasury Committee, just as Ministers pass matters over Treasury Ministers.

There is, however, a worse problem in certain areas. I have been advised by Les Sturch, the director of planning at Sheffield council, but this is also happening in other councils. Because of market changes in housing, many developers are saying that although certain sites have—or could get—planning permission because the land is owned for housing in a local plan, they are not developable in economic terms. Local authorities therefore have to revisit their local plans and look for new housing sites in more favourable areas. That is a real problem and will put pressure on green open spaces because developers will say, “These sites are much more attractive to develop in the current climate.” Ministers must address that problem in the planning system, or else Members will be knocking on ministerial doors and saying, “Why do I have to provide lots more housing sites in my constituency when so many sites have not been built on, even though they have planning permission or could get it if developers applied?” That is a longer-term problem.

We recognised that public funding will, of course, be limited for the foreseeable future, so we looked at the private sector and markets to see what was available. There is a long-term problem. Everyone has said that such housing is an obvious form of investment, but sums have traditionally shown that investors believe they can get a 6% return, although they need 8%. There is therefore a gap, and evidence to the Committee suggested that that is why developments have tended not to happen.

However, there is increasing evidence that developments are beginning. The Greater Manchester Pension Fund is working with Greater Manchester council to provide homes, and Aviva pension fund and Derwent Homes are coming forward with schemes. Places for People gave evidence to the Committee.

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

The hon. Gentleman refers to the scheme in Greater Manchester, but does he agree that there is great scope for local authorities to take on more borrowing capacity and leverage pension funds in order to invest further in houses of different sorts?

[Mr Betts]

Absolutely, and I was going to welcome the Government’s consultation on relaxing restrictions on local authority pension funds to provide more scope to invest in infrastructure, particularly housing projects. That helpful move forward should be welcomed.

The Committee also considered a bigger deal—a housing investment bank, for example, or an extension of the Green investment bank. Lots of good initiatives scattered around the country are beginning, but small projects often find it difficult to access institutional funds, and small pension funds do not want to get too heavily involved in lending to one particular scheme. A housing investment bank could link up investors who might want to invest—including smaller investors—with borrowers and smaller schemes, and the risk could be spread across those schemes, thereby making the investment more attractive.

[Ian Lucas (Wrexham) (Lab)]

On speaking to builders in my constituency, it is clear that small-scale construction is supported by individuals buying properties to let, rather than first-time buyers. It seems that considerable numbers of people who want to invest are currently using the buy-to-let market but might be interested in a new type of investment vehicle, provided there was a satisfactory return.

[Mr Betts]

Yes, and as well as individuals, some potential larger housing providers, which are going to talk to the Committee as part of our private sector inquiry, are anxious to access institutional investment. They want to build properties and manage them in the long term, which is an interesting way forward for the private rented sector. A housing investment bank could provide a significant push in that area.

The Committee visited the Netherlands, which has a similar arrangement. Interestingly, their Government underwrite and guarantee funding that is raised and borrowed by their equivalent of housing associations, but it does not count as Government borrowing. The Government’s response to our proposal on some form of investment bank was that they would keep it under consideration. So, after a year, what has the Minister considered? I am sure that the answer will form an interesting part of his response.

Since then, the Future Homes Commission, which the Royal Institute of British Architects was instrumental in proposing, has had a similar idea: a £10 billion local housing development fund provided by 15 local authority pension funds. The Government told us in response that they would await the Montague report. Of course, Montague said that he did not believe that guarantees were appropriate because they distort the market. The Government have since introduced their £10 billion housing guarantee. They waited for Montague, heard what he said and promptly dismissed it. That is probably an unfair characterisation of the process.

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

My hon. Friend makes an interesting point about the guarantee, but is not the most extraordinary thing that the guarantee was announced last summer as a key measure to get shovel-ready schemes going quickly, and here we are, nine months later, and not a single scheme has benefited from the guarantee? It is simply a fig leaf to cover the Government’s embarrassment.

[Mr Betts]

I am sure that the Minister will have a response on when the guarantee will get the shovels digging. The idea of a guarantee is not a bad one if it works, but perhaps it should be linked to some wider proposal for an investment bank. Something that came out in our recommendations is that, if there is a limited amount of public money, it can sometimes work for the best by assisting to leverage in private funding and by providing some guarantee for that private funding. We can then make the most of the two sources of funding together.

[George Hollingbery (Meon Valley) (Con)]

rose—

[Mr Betts]

Of course, I will give way to an ex-member of the Select Committee.

[George Hollingbery]

Will the hon. Gentleman develop some thoughts on how the enormous social housing assets on the books of housing associations might be leveraged? Perhaps he will reflect for a moment on the potential difficulties of governance structures and on having hybrid public-private bodies that would guarantee the public role of housing associations but allow access to private capital.

[Mr Betts]

On the second point, I can see the problems. I do not think that we went into that issue in detail. I have been involved in such bodies in the past, and the important thing is to recognise that, yes, there can be issues and to try to resolve them right at the beginning. I will say a little more about housing associations in a second if the hon. Gentleman will allow me.

We looked at real estate investment trusts, which are close to the Minister’s heart—or perhaps not quite so close. We wondered why, after years of having them, no one seemed to be using them, certainly not for housing purposes. We had some challenges about how the Treasury treats investment and trading profits for tax purposes and whether that could be changed. It appears that the Government have gone a bit cold on REITs and do not see them as a solution, but I am sure that we will hear more from the Minister.

On social housing, there was a recognition—we might have different views about its appropriateness—that the Government had cut social housing funding over the comprehensive spending review period by 60%. Effectively, the Government are relying on housing associations in particular to increase rents towards 80% of market values on new properties and perhaps on existing properties to help to fund their balance sheets. Rents are rising to take up the slack from the reduced social housing grant that is available.

The National Housing Federation and housing associations told us clearly that they were concerned that this model would not last much beyond 2015. They did not think that was workable in the long term. They asked for some certainty about what would happen, so that they could enter into borrowing arrangements. The Minister for Housing told us in his response that he accepted that point and that the Government would look at it closely. It would be helpful to know what the Government’s response is now, because it is clearly an issue.

Moody’s has downgraded the credit ratings of 26 housing associations, and we are getting to the tricky issue of direct payments, which the Select Committee considered. The National Housing Federation certainly told us that it thought that a number of associations would end up paying more in borrowing costs because of the associated problem of rising arrears. We welcome the Government’s commitment to the pilots, which are going ahead, and we have had further information during our more recent inquiry into the impact of welfare reform on local authorities. We will reach some further conclusions about the direct payment issue. Clearly, the Government must be aware of the impact on housing associations.

Returning to the point the hon. Member for Meon Valley (George Hollingbery) raised a few moments ago, the Committee recognised that there are a number of ways to get more leverage from housing association assets, and people gave evidence on what they were doing in that regard. It is interesting that only yesterday the G15, the 15 big housing associations in London, made an announcement about a common investment vehicle to raise money to enter the private sector housing market. That is one way in which the solidity of their balance sheets is helping them to raise money for a purpose that should, in the longer term, be self-funding. These are interesting ideas.

The Committee also looked at the housing grant. The so-called grant is sat on the books of housing associations and is counted as a debt. Changing that to a genuine grant or equity could release a lot of funds for investment, and is clearly supported by the housing association movement. We suggested that the Government look at that, because we recognised that there could be problems with overloading some associations in some circumstances with too much debt. Nevertheless, we thought that in principle it was an idea worth considering. We hope Ministers will look at it, because some of the stronger, more robust housing associations might want to pursue it. We have to be cautious, however. What might be right for associations such as the G15 in London, where the private market is buoyant and rents are appropriately high, will not be right in other parts of the country where there is not the same ability to leverage funds. We have to be careful and recognise that a one-size-fits-all solution is not necessarily available.

The Committee looked at the role of local authorities. They have not been great contributors to new house building in recent years, and we ought to change that. We welcome the housing revenue account reforms, because they give local authorities the opportunity to take investment decisions, but why, of all the investments made by local authorities, is housing the only form of investment that is controlled beyond prudential rules? Why is it different? It is a ring-fenced account. It should be in the other direction: it is a safer form of borrowing for authorities. It is not only the Local Government Association, but councils such as Westminster, Kensington and Chelsea and Hammersmith and Fulham that are saying, “Get rid of the artificial cap that has been put on housing revenue account borrowing. Why is it there? Why can we not rely on the prudential rules that are in place for all other forms of local authority borrowing?” Ministers always have fall-back powers under the Local Government Act 2003 if they need them. Why can that not be relaxed to allow more borrowing and building?

[Heidi Alexander (Lewisham East) (Lab)]

Is my hon. Friend aware that in lifting a cap, local authorities could deliver 600,000 new homes over a five-year period if additional borrowing was available to them? Sorry, that should be 60,000.

[Mr Betts]

I would be more supportive of the 600,000 figure, but we probably cannot deliver that with the money available. My hon. Friend is absolutely right. She anticipates the “Let’s Get Building” report produced by the National Federation of ALMOs, the LGA and the Chartered Institute of Housing, among others. It makes the point that if the cap was lifted the amount of borrowing local authorities could enter into would rise from £2.8 billion to £7 billion. That would allow the building of 60,000 homes and put a lot of people into work. It just seems to be a simple solution. It does not require the Treasury to go out and find any money to subsidise that borrowing, because it is a ring-fenced account, a trading account, and Ministers need to accept that.

The Committee’s report suggests that some authorities may not want to go ahead, because they do not have a housing need. Why can there not be a swapping or trading of borrowing amounts between local authorities? The Government allow and encourage sharing between local authorities on a whole range of areas, so why not on this too? We raised with them the possibility—we did not say they should definitely do it—of changing Government borrowing rules in respect of the general Government financial deficit. To return to our visit to the Netherlands, the Dutch Government guarantee housing borrowing for housing associations, yet it does not count as Government borrowing. It is a problem in this country that Treasury restrictions weigh heavily on local authority borrowing, particularly in this area.

We welcomed the proposed new models of governance for arm’s length management organisations, which, with more tenant involvement and more co-operative-type structures, could borrow in the private markets, as housing associations do. We also made recommendations concerning the right to buy—about trying to ensure one-for-one replacements and about how the Government could help facilitate that—and giving more freedom to local authorities in terms of discounts in areas of great housing stress and to housing associations that might want to enter the right to buy, where they think it right for their portfolios—that comes back to the point about using portfolios in a way that benefits housing associations. We face the great challenge of moving to a better situation in which we subsidise building, not benefits. That is a long-term problem going back to the 1980s—and even earlier—and the change from subsidising the building of homes to subsidising the high rents of people living in those homes. That is a major challenge for all of us.

[George Hollingbery]

I am grateful to the hon. Gentleman. He is being very generous with his time. In a discussion on this subject last night, a structural problem in the market was raised: a lot of social housing is leveraged out of market housing, so in a time of much lower market housing production it is more difficult to build social housing. This point was not in his Committee’s report, but does he think that a change is required there?

[Mr Betts]

There is a problem when market housing is not being built. It is because of the over-reliance on section 106 housing in the past. I know the Government have proposals to encourage, if not force, local authorities to renegotiate the terms of 106 agreements to make market housing more viable. I have reservations about that—it was not something the Select Committee considered in particular—although we recommended that any changes to 106 agreements be left to local discretion. The hon. Gentleman makes a valid point, however, about the comfort of relying on section 106 agreements to provide housing. There are two problems with that: first, when the market collapses, there is not the alternative balance of social housing to replace it in the construction industry, so that element falls at the same time, and secondly social houses are not necessarily needed in exactly the same places as market houses.

[Mark Pawsey (Rugby) (Con)]

I am sure that the hon. Gentleman will agree that for some time local authorities have had the power to renegotiate their section 106 agreements in order to move away from an arbitrary set figure for social housing. Perhaps the Government should be encouraging local authorities to do that, rather than dictating to them.

[Mr Betts]

That is absolutely right. I completely agree with the hon. Gentleman. As we know, many local authorities of all political persuasions are doing just that and being sensible about it.

The Committee made a recommendation about self-build—or rather self-contracting, which is what we probably saw at the massive site at in Almere. When I was told, “You’re going to see a self-build”, I expected to see the teacher, the bank manager and the postman in their wellies and overalls on a Sunday morning digging away and laying the bricks, but that was not what we saw. We saw a local authority site on which individuals had bought plots at a given price and with limited restrictions on what they could do—some areas were reserved for bungalows and others had a three-storey height limit, and obviously there was a boundary to the site. These individuals had either contracted a local builder or designed their own homes on the internet, as we saw at one place we visited. In effect, they had contracted their own homes. That seemed a brilliant way forward. I see no reason why we cannot build 50,000 self-build homes in this country, instead of the 10,000 we build at present. That could go a long way to meeting the gap. We found that people were satisfied because they had the homes they wanted with the money they had. They did not have to have something off the shelf that did not really meet their needs. Their homes were being built for only 75% of the cost of a similar home from a volume builder.

There are clearly challenges in getting the whole thing up and running. I welcome the Government’s £30 million of funding to try to encourage such activity. How far have we got? I have not yet been invited to the turning of the first sod on such a site, let alone the first home to be finally built and opened, so I suspect we have not made as much progress as we might have. I think all members of the Committee who went were enthused by self-build and thought it was a good way forward. It needs a push from the Government and local authorities to release land—it might need the Ministry of Defence to release some—but it seemed an excellent way forward. Self-build also helps small builders, who have been hit more by the recession of the last few years than the volume builders have, because they cannot get funding from the banks and face real difficulties. The challenge with self-contracting is to get the building societies and the banks to understand that they can lend money on a house that does not yet exist and—because people have to live in one home while the other is being built—to put bridging arrangements in place. In the end, however, people end up with something that costs only 75% of its market value, so we really ought to push on self-build.

Our report is not a complete solution to all our housing problems. It is not right in every respect, but it contains a number of proposals, and if the Government made a clear commitment to implementing them—not necessarily all of them, but a significant number—that would go a long way towards delivering the 250,000 new homes that this country so badly requires.

16:56

[George Hollingbery (Meon Valley) (Con)]

I have the unenviable task of following the eloquence of the Chairman of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), who spoke without notes and made extremely important points about the report. If he will excuse me, I will not be quite as rigorous or eloquent.

Housing is obviously an incredibly important issue for us all, not just for getting future generations somewhere decent to live, but for this country’s future economic prosperity. Without substantial improvement in our building rates and the production of new housing supply, our economy will struggle to grow, and we need it to grow. The Chartered Institute of Housing released a report just this month that said that home ownership was unachievable for many young people. The report suggested that since 1992 it is down 67% among those aged 25 to 34. That is a pretty stunning statistic. The average age of the first-time buyer is now approaching 40, at 37.5. It now takes 83 months to save the deposit required to buy a house, compared with the 30 months it took 10 years ago.

At present, investors, builders and the market seem reluctant to invest in new housing, despite large waiting lists. Locally, we have 3,000 people on the housing waiting list in Winchester, 2,900 in east Hampshire and 4,500 in Havant. These are prosperous areas of the country, where one might expect the lists to be rather shorter. The current economic cycle has led us to a situation in which lenders are reluctant to lend, builders find it difficult to build and buyers find it difficult to buy.

[Mr Stewart Jackson]

My hon. Friend is making a powerful point. Does he agree that a key issue is not that lenders do not wish to advance moneys, but that they do not have the appropriate flexible intermediate products to support intermediate housing across the country? Those unable to lay their hands on a 30% deposit, for instance, are therefore in a difficult position and are having to look at social rent or affordable rent, rather than an intermediate product.

[George Hollingbery]

That is indeed the case; my hon. Friend will forgive me if I come to that in a moment.

Several Government schemes are helping. They have been slow to start, but they are now moving forward. With the exception of areas such as London, uncertainty has also meant that potential buyers have been unwilling to take on what is frankly one of the biggest financial decisions of their lives. If we look rationally at the decision to buy a house at the moment, is this really the time to take on, say, £200,000 of debt? People might not be sure about their job or their future. Can it be an enormous surprise that an awful lot of people are very reluctant to take on such a commitment at this time? Frankly, I do not think so.

Despite low interest rates and a number of Government schemes—such as Firstbuy, NewBuy, “Buy now, build later”, intermediate rent and others—there is an acceptance that more still needs to be done. To date, nearly 3,000 homes have been sold through the NewBuy scheme, but, at a time when we are deleveraging our economy, the financing of new housing is undoubtedly going to continue to be a challenge.

Some reports suggest that up to 50% of new starts being contemplated by certain major house builders are down to NewBuy. The scheme seems to be taking effect, with 60 house builders now offering products through it. The figures for January 2013 show that new housing starts under NewBuy are 30% up on the same time last year. The progress is definitely slow, but there is some encouragement. Given the fact that taking on a debt is a serious commitment at this time, that is not bad going.

An article in the Financial Times today alludes to that point, and to some of the other measures that the coalition plans to introduce, and I shall quote from one or two parts of it:

“The prime minister and his deputy are set to make a joint appearance on the eve of the March 20 Budget to make several announcements, including shared equity schemes, social housing and support for first-time buyers…At the housing launch, Mr Cameron and Mr Clegg will flourish the promise of ‘garden towns’, more flats above shops and an expanded private rented sector. Ministers have discussed the radical option of extending an existing scheme, NewBuy, which allows people to buy homes with a deposit of 5 per cent, from new developments to older homes.”

I would just comment that a couple of those announcements do not seem to be that new, but I hope that when they are made in a couple of weeks’ time, they will be made with a little more commitment and determination than they were before.

[Mr Jackson]

They are keen on recycling.

[George Hollingbery]

Indeed.

The coalition has rightly taken a localised approach that incentivises housing policy, and good work is taking place on freeing up public land and opening up new opportunities to increase supply. Changes to the housing revenue account devolve real power and budgets to local councils to deliver housing, although, as the Chairman of the Select Committee pointed out, some freedom in relation to the caps on borrowing requirements would be welcome.

Areas such as Denmead in my constituency have become pilots for the Government’s neighbourhood planning approach, and some are contemplating more housing than has been allocated to them in the local plan. That is to be welcomed. The new homes bonus has also been a welcome incentive to encourage extra housing. To date, Winchester city council has received £1.5 million under that scheme, East Hampshire has had £1.4 million and Havant has had just shy of £500,000. This financial boost, allowing councils to invest directly in new homes, has also benefited the two unitary authorities of Southampton and Portsmouth, which have received £2.5 million and £1.7 million respectively. Those are only a few examples from the package of measures included in the Government’s housing strategy, which is designed to help increase supply. It has to be admitted that the measures have had a slow start, but they are welcome. They are the right idea, and the Government are doing a great deal to try to push the market forward.

What more should the Government do? The report that we are examining today concluded that there is no panacea or silver bullet to solve the problem of our housing deficit. I have no doubt that the Committee’s 33 recommendations will have been looked at more carefully by now, and I look forward to the Minister clarifying which of them he is considering.

At the heart of the report lie two themes: encouraging institutional investment and promoting action from local authorities. The Select Committee’s report is clear on the first theme of encouraging institutional investment, and I shall quote from it at some length:

“Institutions and structures that have traditionally ignored housing should be encouraged to invest. Increased investment from large financial institutions and pension funds may not be a panacea, but could make a significant contribution to the building of new homes in both the private and social rented sectors. Public sector bodies and housing associations should take steps to encourage institutional investment. Vehicles such as Real Estate Investment Trusts should be revamped to encourage investment in housing. The Government should also consider whether the remit of the Green Investment Bank can be expanded to cover housing and, potentially, wider infrastructure projects.”

As we have heard, the local authorities in the Association of Greater Manchester Authorities area are working to leverage their pension funds into investing directly in housing. That is something that their pensioners should welcome. Pension funds need long-term, steady returns and if public moneys can be leveraged to produce more of that in such a creative way, we should all welcome it.

The Select Committee’s report also builds on the good work that organisations such as the Joseph Rowntree Foundation have been doing. The Committee believes that we should be unlocking institutional investment and allowing for real delivery into the sector. It was noted, however, that progress in that area has been slow, and that institutional funds were somewhat difficult to access. The Government recently commissioned the Montague report, which focused in particular on the private rented sector. The report reinforces the concept of push and pull factors that can serve either to incentivise or to discourage investment.

Locally to Meon Valley, Winchester city council and Grainger, which I think is one of the more innovative suppliers in the private sector rented market, have been working on managing these factors while delivering the west of Waterlooville development right in my constituency. I was the chairman responsible for the delivery of the vehicle for this development while a city councillor in Winchester. The council has been looking at section 106 and community infrastructure levy obligations among many other factors to make sure that this development is a success. I know that planning and housing Ministers are looking into this difficult area of policy to try to free up the rules to ensure that the build-to-let market is freed up, allowing more accommodation to be built.

[Mr Jackson]

My hon. Friend is making a polished contribution, but does he agree that the big hole in the report is the issue of extra care? Given the demographic time bomb, the number of over-85s will double in the next 20-odd years. At the moment, housing associations shoulder the burden for producing appropriate accommodation for elderly people in extra care facilities without any particular tax incentives or assistance from any other agencies, including institutional investors.

[George Hollingbery]

I am grateful to my hon. Friend for making that point. I chaired a conference in Winchester only six months ago on exactly that issue, and I have made representations to the planning Minister, my hon. Friend the Member for Grantham and Stamford (Nick Boles), saying that at the very least we need some incentives or recommendations in the national planning policy framework for local authorities to examine the need for provision for older people. It seems to me that in the long term that is the way to get the very best out of existing housing stock, let alone to provide good housing stock for older people in the longer term. I agree wholeheartedly with my hon. Friend the Member for Peterborough (Mr Jackson) and believe this area needs to be looked at across government to make sure that we plan more carefully for the needs of older people.

The second theme is the importance of local authorities and how much more can be done by them and by housing associations. In Hampshire, we are starting to see local authorities make a real difference in housing provision. In February, Isle of Wight council introduced a scheme to help first-time buyers, while Southampton has an estate regeneration project that is making great strides. Real differences are emerging in housing starts and in some areas schemes are proving seriously successful—in fact, occasionally, too successful. I have not encountered this personally, but I have recently been told that Wigan council had to close its £1 million scheme to help first-time buyers after only a month because all its funding had been used up. Further afield, the Scottish Government are introducing a £20 million scheme to help people with shared ownership. This is another way of incentivising supply that should not be ignored. The Government need to get behind local authorities and create a repository of knowledge and good practice that can be shared right across the local government community. I have no doubt that the Local Government Association will be involved in work of that sort.

The Select Committee talks about two areas that could make a real difference. It makes suggestions on looking at increasing the borrowing limits for housing revenue accounts, as well as on promoting the right to buy. The Select Committee Chairman has covered the increase in borrowing limits reasonably thoroughly so I shall not go back there, but the latest figures show a slight increase in right-to-buy requests in Southampton, Portsmouth, Fareham and Winchester. Much remains to be done in this area, but we discussed at some length in the Select Committee the need for one-for-one replacement to be guaranteed in certain circumstances, particularly in small rural villages. If we do not replace a social house with another social house—and nowadays, frankly, it might be the only social house in a small village—there will be no social housing left at all, which is an important issue.

Another area of note is provision of housing for older people, but I have covered the issue and as I said it was mentioned in today’s Financial Times article.

Housing has a significant potential to help economic growth. In 2009, the Chartered Institute of Housing wrote a report suggesting that buy-to-let alone contributed £5.2 billion to the economy in just the south-east of England. The importance of housing in respect of the general economy cannot be underestimated. Realising the growth required in the housing supply market is tough, given the economic circumstances we face, but it is vital that we encourage housing associations and local authorities to take action to promote growth.

The Government are making real strides. Lots of schemes are beginning to work, and I welcome them all. The issue is not just about the need for more housing, however, as it is about the future of our economy as a whole. It has to remain absolutely at the heart of Government policy if we are to get our economy back on its feet and if growth is to be achieved. I hope that the announcements mentioned in the Financial Times prior to the Budget genuinely provide a kick-start to the industry. As far as I am concerned, it is very much needed for all of our futures.

17:09

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

Let me begin by drawing attention to my interest as declared in the Register of Members’ Financial Interests. Let me also congratulate the Chairman of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), on his excellent introduction to the debate, in which he highlighted a number of issues on which I think there is a large measure of consensus.

It is a pleasure to follow the hon. Member for Meon Valley (George Hollingbery). I did not agree with everything he said, but there was also a large measure of consensus between the views that he expressed and those that I shall express in my own speech. It is curiously frustrating that, at a time when there is such a large measure of consensus between those who have looked seriously at the issue of housing and what needs to be done, the housing position in the country is so lamentable.

Our output level is falling. According to the DCLG’s own statistics, in 2012 we started only 98,000 homes. That is not just massively below the 230,000 level that is generally recognised to be necessary, but 11% down on the inadequate levels achieved in 2011. An already bad situation is getting worse, not better. According to the latest figures from the National House Building Council—I received my copy only yesterday:

“NHBC data show private sector housing starts down 13% in the three months to the end of January, compared with the same period a year earlier.”

We must ask why that is happening. A number of contributory factors have already been identified, but I think that four are fundamentally important. The first, on which the hon. Member for Meon Valley focused, is a lack of confidence in the market. People are very cautious about investing at the moment, which is hardly surprising given the state of the economy and their nervousness about whether they will have a job, and also their nervousness about whether the house that they are thinking of buying will be worth as much in a year or two. Prices in many parts of the country—I do not include inner London, where the circumstances are probably rather exceptional—have been iffy. In some places they have declined and in others they have shown modest growth, but there is little ground for real confidence. I am not advocating a return to the hyper-inflation in house prices that we encountered during the booms of the 1970s, 1980s and the noughties, because they were unsustainable, but at a time when there is no confidence at all, it will be difficult to get the market going because people simply will not invest.

Secondly, when people are prepared to take the risk, they face real difficulties in obtaining mortgage finance. It is a classic instance of our reacting to over-generous lending during the boom years by allowing the pendulum to swing too far in the opposite direction, and to get stuck in a position where it becomes a serious obstacle. Anyone who has looked closely at the figures will have noted that many people who are currently struggling with high rents in the private sector could probably support the cost of a mortgage easily if they were able to get one, but the demands in terms of deposit requirements or the interest rates charged in the case of high loan-to-value mortgages make that impossible.

Yesterday the hon. Member for Rugby (Mark Pawsey) and I attended the launch of that much-respected document “UK Housing Review”. Looking through the rather voluminous set of useful housing data, I spotted the latest figures relating to the current mortgage cost-to-income ratios for first-time buyers. They are at a very low level: 17.6%, one of the lowest levels in the last 30 years. The figure was 24.6% in 2007, at the end of a boom, and 26.9% in 1990, at the end of another boom. It is not that house buyers need a disproportionate level of income to pay a mortgage, if they can get one—as I have said, some are paying rather more in rent than it would cost them to service a mortgage—but that we have to find a means of helping people to obtain a mortgage if they are prevented from getting one.

Thirdly, there has been a drastic fall in public investment. The Chair of the Select Committee highlighted the Government’s decision, as part of the spending review announcement early in their lifetime, to cut spending on social and affordable housing by 60%. Output has, inevitably, plummeted, with housing association starts in the latest 12 months totalling just 19,500, which is 23% down on the equivalent period for 2010-11. Affordable housing is doing worse than the housing market overall, which is obviously a particular concern for all those people who depend on obtaining accommodation at a reasonable rate.

The fourth element in this overall package is the very uncertain planning environment, which is entirely of the Government’s creation. They decided to tear up the previous planning framework and to create a new planning system. Many of us warned before the last election that not only was that likely to cause uncertainty, which would be damaging to development and to confidence, but it would open the door to an awful lot of nimby instincts among people who have, for a variety of reasons, been opposed to new housing development. I am afraid that the evidence clearly shows that that is what has happened. Councils are planning 272,000 fewer homes than would previously have been expected, according to Tetlow King Planning, and the level of new planning consents going through remains massively below the level required to meet the country’s needs. So there is a problem with planning as well as with the other factors that I have identified.

[George Hollingbery]

I am wondering whether the right hon. Gentleman might reflect a little more on those remarks. The provisions of the national planning policy framework make it clear that if a local council does not have a five-year housing supply, a permission is almost certain to be granted, wherever it is. I have just spent three interesting weeks in Eastleigh, where an application was allowed in the middle of the campaign for exactly that reason. Does he suspect that one reason for the number of planning applications being down is that lots of developers know that they cannot actually build the houses so applying for those permissions is a little futile at the moment? When they do want them, the NPPF’s requirement on having a five-year housing supply is making sure that they happen.

[Mr Raynsford]

The hon. Gentleman makes a perfectly fair point, but I put it to him that confidence is the crucial element in planning. If developers are to do the very expensive work necessary to put a planning application together, they have to feel confident that they have a reasonable prospect of success. A very uncertain climate has been created by the abolition, or partial abolition, of the regional spatial strategies; the lengthy row about what the NPPF would say; and the subsequent chopping and changing that have taken place, including the ill-considered measures in the ill-named Growth and Infrastructure Bill, which, once again, tinker with the planning procedure only months after it was put in place. That inevitably creates uncertainty, to which we can add the uncertainty about whether councils have got their local plans together in time. There has rightly been a lot of pressure on them to get their plans in place, but some have been less good than others at doing that. There is also clear pressure coming from various sources; the hon. Gentleman will have noticed in the context of the Eastleigh by-election that some members of his party were clearly keen not to agree to the particular planning for the housing scheme to which he referred. In that situation, there will inevitably be less scope for securing planning consent—or less incentive to apply for planning consent—than would otherwise be the case.

[George Hollingbery]

I ought to point out that I actually spoke against that particular application, although I have not done the same in respect of many applications in my own district. The point remains that Eastleigh borough council has not got an extant local plan; its last one expired and its new one has not yet been approved. It does not have an identified five-year land supply and the NPPF’s provision about having one came into effect immediately, so the council recognised that it had absolutely no option but to grant the permission. So the mechanisms are in place, and most councils will find it difficult to resist such applications now.

[Mr Raynsford]

I will not prolong this exchange, because we have already discussed the matter at length and I wish to cover other issues. All I say to the hon. Gentleman is that we should watch what happens, but I am not confident that we will see a large upsurge in the number of planning applications and consents.

[Mr Foster]

May I remind the right hon. Gentleman that it was the Liberal Democrat administration who introduced the plan, that they did so during the by-election campaign and that the Liberal Democrats won that by-election?

[Mr Raynsford]

I am interested by the agreement between the coalition partners but it reinforces my point about the lack of certainty being a deterrent.

[Mark Pawsey]

The right hon. Gentleman referred earlier to the regional spatial strategies. Does he consider them a success?

[Mr Raynsford]

When the regional spatial strategies were in place, the housing output was substantially higher than we are seeing now. Government Members sometimes forget that from 2000 to 2007, before the impact of the recession, there was continuing year-on-year growth in the supply of housing. It reached 180,000 new starts in 2007, since when it fell—not because of planning but because of the recession—so that we are now seeing starts of fewer than 100,000. I would not say that the regional spatial strategies were entirely satisfactory, but the output of housing under them was substantially higher than it is today.

I have spent too long, I think, on those issues and I need to move on. Behind the statistics I have talked about are a huge number of human tragedies: all the young families unable to get a home within their means, all the people trapped in hopelessly overcrowded or squalid conditions, the huge numbers languishing on local authority housing waiting lists and the number of homeless households, which has been rising again after many years in the noughties during which the numbers came down.

Quite apart from the human consequences, there are economic consequences, too. As our economy is in difficulty— everyone who has spoken has acknowledged that housing has a critical role to play in helping to boost the economy—we must consider ways of helping to increase the output of housing. What should we do? First, we must ensure that the economic climate is one in which people can feel more confident about investing, in which people are willing to buy homes and in which house builders are willing to invest more in development. That is fundamental. Whatever else we do will make some difference, but it will not make an adequate difference if the economy is not strong. We need to turn around the economy first of all.

Secondly, we must ensure that housing is directly assisted by measures that can ensure that confidence returns and that houses are provided by developers and bought by people who want to get a mortgage. I have talked about the tight restrictions on mortgage availability and the fact that it seems to me that the pendulum has swung too far in the other direction after the boom years when the restrictions were excessively loose. We must send a powerful message that the test should be whether people have the means and the capacity to repay the debt, rather than the loan-to-value percentage that is too often used in a mechanistic way by lenders to determine credit-worthiness. If we focused more on people’s ability to repay, we could relax some of the restrictions that prevent people without the adequate means for a deposit from getting into owner-occupation.

We also need to do a lot more to assist those people who cannot afford outright home ownership but would be happy to buy a share in a property. Over 30-odd years, various schemes for shared ownership, shared equity and low-cost home ownership have had some success, but they have tended to be marginal. Although NewBuy and Firstbuy are perfectly admirable schemes in their way, they are still relatively marginal. The Prime Minister talked about NewBuy helping 100,000 people when it was launched, so when we hear from the hon. Member for Meon Valley that some 3,000 homes have been delivered so far that puts it in context. It is important and significant, but it is relatively marginal.

We must also ensure that there are other options to help people who are not looking for a new home purchase. I am cautious about the idea of extending the NewBuy formula to existing homes. I think about—I am sorry, it is one of the problems of being old—a scheme known as DIYSO, do-it-yourself shared ownership. Those who have long memories of housing will recall it. It was very popular. People liked the idea of being able to go out and select their own home and get a shared-ownership mortgage on that home. It did, however, prove extremely expensive. It also had an element of risk because there was no guarantee that it would be a newly completed home that was subject to the various checks that apply to a new home. In some cases the properties that were being bought under the DIYSO scheme were not suitable. I can hear the attraction of the message. I read it, like the hon. Member for Meon Valley, in today’s Financial Times, but I caution against putting too many eggs in that basket. However, it is important that we renovate existing homes and make them available for people, possibly through shared-ownership/shared-equity means, as well as building new homes.

I shall talk briefly about energy efficiency and housing. This is an area where there has been a great deal of poor information, inadequate information and prejudice. I feel very nervous that the voices that are hostile to improving the energy efficiency of housing are getting in the ascendancy. Some rather pernicious views are being put forward that somehow this is putting an impossible burden on house builders. The example that I will take is a simple one. It is a scheme known as AIMC4, which has been put together with the participation of some of the largest house builders, including Barratt. The purpose was to demonstrate that they could build a code level 4 home under the code for sustainable homes for no more than the cost of a code level 3 home. That scheme has succeeded; they have demonstrated that it is possible.

That is the challenge we should adopt to ensure that our new homes are built to a high standard, that they achieve energy efficiency, that they contribute to our commitments to reducing global warming and that they do so in an economic and cost-effective way. We should not to try to ditch the whole commitment to the greening of our existing housing stock and improving the standard of our new housing. That is a very important message. Also, there is the economic message that this will help the economy, because green investment and the development of some of the industries that will support more energy-efficient housing will be helpful to the UK economy.

I agree very much with the hon. Member for Meon Valley about the importance of housing for older people and providing them with appropriate housing which, in turn, can release homes that are currently under-occupied. There is something rather unfortunate about a Government demonising many tenants in social housing who are occupying one bedroom more than they might need, on some pretty tight definitions of need, when two children of the same sex are expected to share a bedroom right up to the age of 16, and two children of different sexes under the age of 10 are expected to share a single bedroom, so no single bedrooms for children are allowed.

That definition is being used to justify some pretty punitive cuts in benefit while at the same time there is a huge level of under-occupation among older people, particularly in the owner-occupied sector but also in the rented sector, on which no action is being taken. That seems to me to be unfair and it is a policy that will not achieve the effect that it should.

[Mr Foster]

May I remind the right hon. Gentleman that the very rules that he is deriding are the ones that applied to those in receipt of housing benefit in the privately rented sector through all 13 years of his Labour Government?

[Mr Raynsford]

I am afraid the right hon. Gentleman is wrong. Can he tell me whether elderly people are exempt from those rules in the private rented sector? They are not. That is the point that I was making. If this was a serious policy to try to reduce under-occupation, it would apply more widely, as I said, and it would also apply to people over retirement age. The rules being implemented by the Government apply only to people below retirement age, even though the Government know that it is predominantly among older people that under-occupation is a problem. I will be quite open and say that the right policy would have been to consider a deduction, but only if two factors apply. First, there should be an option to move to smaller accommodation, but in many cases there simply is not that option and it is grossly unfair to cut people’s benefit where they have no chance of moving to smaller accommodation. Secondly, it should apply only where people have two bedrooms more than they require because of the tight space and occupancy standards that apply. That should apply to everyone, including those over retirement age. That would be a far more effective policy in achieving the objective of getting better use of our stock than the policy that the Government are pursuing. I make that point in addition to my general point about providing more suitable accommodation for older people in order to free up accommodation that is under-occupied.

I support what the Chair of the Select Committee said about removing the cap on council investment. That is nonsense. When councils have the scope to borrow more under the prudential borrowing regime, when there are safeguards in place through that regime, and when local government debt is at an historically low level, it is absurd to deny the option of creating the means to get further investment in new housing. There should certainly be more support for that and a removal of the cap. There should also be a willingness to engage with housing associations about what happens in the post-2015 world, because they are literally running out of time and running out of scope for continuing development. It will be an utter tragedy if one of the more successful organisations producing housing in this country in recent years simply grind to a halt in terms of their traditional product of social housing because of the absence of a Government programme. There are real needs in terms of the social housing sector as well as the owner-occupied sector.

I come now to the strange beast of the new homes bonus. This is a rather expensive element of Government policy. Already it has cost £1.3 billion. Some of that has been taken from Peter to pay Paul because some of it is recycled from local authorities to other local authorities, but about three quarters of a billion is additional Government money. That £1.3 billion will rise to £3.3 billion because the scheme involves payment over six years. That commitment to £3.3 billion is a lot of money and, at the present rate of growth, the scheme will involve more expenditure than the total Government investment on affordable homes over the lifetime of this Parliament, so it is worth examining how it is operating. I have already referred to the disastrous and declining level of new housing starts, so it is clear that the scheme is not affecting those. The total level of new planning consents last year was 115,000, and in the first three quarters of 2012, 95,000. It seems likely that it might reach a level of about 125,000 when we have the figures for 2012, but that compares with 212,000 in 2007 and 134,000 in 2010. The Government will have been presiding over a lower level of consents for residential planning than ever before, which is extraordinary when they are spending £3.3 billion in supposed incentives to encourage more planning consents.

[Mark Pawsey]

The right hon. Gentleman and I had an exchange on this at the Chartered Institute of Housing event only yesterday. The fact that my local authority will benefit from the new homes bonus has greatly contributed to local people accepting the principle of a substantial new housing development in the community. That is not included in the right hon. Gentleman’s figures because the application has not yet come in, but it will benefit my community because the local authority will have the funds generated by the new homes bonus to put towards facilities for the community as a whole. That is one reason why it is taking a while; the applications have not yet come in. The right hon. Gentleman needs to be rather more patient than he has been so far.

[Mr Raynsford]

As I said to the hon. Member for Meon Valley, let us look at that in a year’s time, when we will have more evidence. However, I must say that it is taking a very long time for something that is supposedly, to use the Government’s own phrase, a “powerful incentive” for authorities to give planning consent for new housing. I hear what the hon. Gentleman says about his local authority, but I am afraid that the figures do not support his optimism. For the 17 authorities that have received the largest amount of new homes bonus—this is all based on an answer to a parliamentary question I asked the Housing Minister earlier this year—the level of major residential schemes getting planning consent in 2011-12 was 607, compared with 969 in 2005-06, a 37% reduction and 10% below the previous year, so there was no growth at all. It does not look convincing for a very large outlay of public money. The £3.3 billion, if it were applied to direct investment in new housing, would certainly be likely to achieve far better consequences.

I put it to the Government that if they are keen to stimulate house building and the economy, greater investment in housing will be necessary. What has been put forward by the Select Committee and argued for by Members on both sides of the House this afternoon is a way forward that could get us out of the mess we are in and ensure an increased level of house building. That will meet important social needs and help to revive our economy. The case for it is overwhelming. I sincerely hope that the Government will recognise that the current policy is not the right way forward. We need a change of policy and we need some of the policies we have been talking about today to be put into effect to secure that increase in house building.

17:36

[Mark Pawsey (Rugby) (Con)]

It is a pleasure to follow the right hon. Member for Greenwich and Woolwich (Mr Raynsford), whom I know has spoken on housing in this Chamber for many years. It is also a pleasure to speak as a member of the Communities and Local Government Committee, whose report we are debating. I pay tribute to its Chair, the hon. Member for Sheffield South East (Mr Betts), who brought together Members from both sides of the House in the Committee to produce a report that we were all happy to put our names to. He referred earlier to the report’s key finding, which is that there is no “silver bullet” for removing the housing deficit our country faces. The report goes on to state:

“Many of the measures in the Government’s housing strategy will provide a welcome boost in the short to medium term”.

I hope to demonstrate that the pessimism exhibited by the right hon. Member for Greenwich and Woolwich is misplaced.

We know the serious problems we face. Many Members have referred to the need for some 230,000 new homes every year until 2033 just to cope with the increase in household formation. The other factor we must take into account in our deliberations is the state of the economy that the Government inherited. Of course, there will be many areas relating to the financing of new housing where the Government would wish to spend more to achieve more, but we must recognise that at present that is simply not possible. Housing is important not only for providing homes for our people, but for our economy. The previous Housing Minister reminded us that every 100,000 houses built adds 1% to GDP. We certainly need that growth in our economy. The National Housing Federation, which provided a briefing for the debate, tells us that every affordable home built generates an additional £108,000 in the economy and creates 2.3 jobs.

I will speak about each sector in turn: the Government’s initiative in the private sector, the importance of the private rented sector, and changes the Government are making to the social sector. I make no apology for starting with owner-occupation, because fulfilling people’s aspiration to own their own home is a key principle for Conservative Members. As the Prime Minister said in his party conference speech last year,

“We are the party of home ownership.”

Over the past few years home ownership, which currently stands at 65%, has been falling. Lots of statistics abound. My hon. Friend the Member for Meon Valley (George Hollingbery) said that the average age of a first-time buyer is now about 37. It is therefore entirely appropriate that the Government have brought forward schemes to stimulate owner-occupation, of which three are key: NewBuy, First Buy and Funding for Lending. The Select Committee report suggested that the Government should review NewBuy after its first year of operation. When I talk to house builders, I sense that a degree of momentum is building up behind the scheme. Forty builders and six lenders have signed up to it so far, and in November last year the Home Builders Federation estimated that 2,000 reservations had been made.

Statistics show that there were 6,780 sales in the first 13 months of the First Buy scheme. The Government are committed to increasing the funds available to it: the Chancellor announced in last year’s autumn statement that an additional £280 million will be available on top of the £900 million announced in the 2011 Budget. That should help 16,500 first-time buyers.

There has been evidence in the past couple of days that Funding for Lending is not finding its way into industry as fast as we might like, but it is starting to work its way through to mortgages. The Bank of England’s “Credit Conditions Survey”, published on 3 January, found that lenders were intending to increase their mortgage lending significantly in the first few months of 2013 thanks to the funds they can now borrow under Funding for Lending. On 22 January, the BBC ran a news item pointing out that house loans have risen to their highest level in five years—which suggests loans are easier to come by—quoting Halifax’s chief economist, Martin Ellis, as saying that this is due to the scheme. Mr Ellis says that the benefits of the scheme are now feeding through to the mortgage market. He states:

“I suspect Funding for Lending is having an effect…The scheme has only been in place since last summer, but it’s helping to support, and push up, the level of sales.”

In addition to Government schemes, there are local authority schemes. My hon. Friend the Member for Meon Valley referred to schemes in other parts of the country. I might add that my local authority, Rugby borough council, in conjunction with Lloyds bank, has introduced the Lend a Hand scheme, which lets people borrow with a 5% deposit and puts in a fund of £1 million that will enable 40 buyers to buy their first home.

Much of what people know about house building revolves around anecdotal evidence. Over the past couple of weeks I have picked up two bits of anecdotal evidence in my constituency. The first arose from a visit I made to a volume house builder who told me that since Christmas, inquiries and sales on the development he is marketing have been at their highest level for many years. The second is not so positive. A young man came to see me in my surgery. He has finished his apprenticeship and is on a very good salary of £38,000 working for one of Britain’s best companies. He is at an age and in a position where he is ready to buy his first home, but regrettably he has never borrowed. He bought his car and met all his expenditure out of savings. He is unable to get a mortgage because, not having borrowed, he is unable to demonstrate the ability to pay off a loan. He knows what he needs to do—to take out a loan and repay it on time. This has put back by six months to a year that young man’s aspiration to get started on the housing ladder.

In referring to people’s aspiration and desire to own their own home, it is important to talk about the right to buy. Recent statistics show that the reinvigoration of this Government’s scheme has doubled right-to-buy sales from 1,041 between July and September 2012 to 2,010 between October and December 2012. That means that 3,495 council-owned properties have been sold to tenants since the scheme was launched last April, which is a third more than the whole of the previous year and the highest number of sales since 2007. I know that some in this Chamber will think that that is not a good thing, but I think it is because it enables people to get started.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I doubt whether anybody in this Chamber thinks that the principle of someone being able to buy their own property is a bad thing, but does the hon. Gentleman agree that what is a bad thing is that a third of right-to-buy properties are now owned by private landlords?

[Mark Pawsey]

The properties have been sold and that provides for a mix of tenure among that housing. I do not see any difficulty with that. It is a perfectly sensible right.

The hon. Gentleman moves us on to the private rented sector. The Committee’s report says that the Government should focus on helping small private landlords to

“expand their portfolios and invest in new build housing.”

The Chairman of the Committee reminded the House that we have just started our inquiry into the private rented sector, and I look forward to a similar debate on that report in the coming months and years.

It is important to note that the private rented sector should no longer be seen as the poor cousin to home ownership. For many people, renting privately has become a preferred choice, because they want the flexibility the sector can provide. In many instances, private renting is becoming a new norm. More than 8 million people in England now rent from a private landlord, an increase of more than 69% over the past 10 years, as the sector has moved from accounting for 9% of housing to 18%. Interestingly, the Chartered Institute of Housing has suggested in its presentations that that figure could rise to 25%. I accept that, in many instances, renters would prefer to be in other tenure—they would prefer to be an owner-occupier or in social rented accommodation—but private renting has its benefits, particularly for those who want flexibility and do not want the responsibility of maintaining the fabric of a building through owner-occupation.

The Committee looked at institutional investment in the private rented sector, and I am pleased that the Government commissioned the Montague report, which shows their commitment to dealing with housing issues. The report’s key recommendation—it was also a key recommendation of the Committee report—was the need to attract institutional investment into the system.

One of the issues we discovered when taking evidence is that institutions are not keen to invest directly in the residential sector because of the amount of management and administration that looking after residential property entails. It is striking that institutions invest in commercial buildings because of the lower management costs involved. They send out a rent demand once a quarter, for example, and are able to pass on repair obligations to occupiers. A tie-up between housing associations and institutional investors might be possible. Housing associations are very good and have demonstrated over many years a strong track record in managing social rented accommodation. I do not see why they cannot offer their services to institutional investors, whereby the investor owns a stock of private rented accommodation and tells the housing association, “You’ve got the skills and the experience to manage it.” That is a business opportunity for the housing association sector, if it wishes to take it up. I would be interested in hearing any thoughts the Minister may have on that issue.

The Select Committee talked about the need to make it easier for landlords to let homes, and about build-to-let developments built specifically for the private rented sector. Sir Adrian’s report highlighted the potential for investment and said the Government should consider providing incentives to encourage the development of build-to-let business models. I am pleased the Government have made a commitment to that sector. A press release from the Minister for Housing launched a £200 million fund to boost the construction of new homes specifically for private rent.

Any remarks on the social housing sector need to have regard to the changes to the Government’s welfare system, which were referred to by the right hon. Member for Greenwich and Woolwich. I will draw attention to some striking figures. There are currently 2 million households in England on housing waiting lists and 250,000 families living in overcrowded accommodation. Under the last Government, local authority housing waiting lists rose from 1 million in April 1997 to 1.8 million in April 2010. However, nearly a third of working-age social tenants on housing benefits are living in accommodation that is too big for their needs. That equates to nearly 1 million spare rooms that are being paid for by the taxpayer, denying many hundreds of thousands of people the chance to house their family adequately. I am sure we all agree that every family deserves the chance to be housed comfortably. Hard-working taxpayers, many of whom face tough choices of their own, will have a view about these properties.

[Mr Slaughter]

I will leave it to the hon. Gentleman to resolve for himself the moral certainty with which he blames existing social tenants for the housing crisis. What percentage of the people who are subject to the bedroom tax does he think have been offered smaller accommodation? I will give him a clue: in Hammersmith, the figure is 5%.

[Mark Pawsey]

I accept that that is a concern. Indeed, the issue arose in the Select Committee’s report on the effect of changes to the welfare system that the stock is not available for people to move to. That point clearly needs to be considered.

I had the opportunity to talk about many of the welfare reform issues when I visited sites in my constituency managed by Orbit, a social housing provider. I was taken around by Elaine Johnson. I congratulate Orbit on the high quality of the leaflet it has prepared on the effects of the changes.

It is not possible to talk about the supply and financing of housing without having regard to the planning system. As all speakers have said, we need to create more supply. The changes the Government made to the planning system in the national planning policy framework have been criticised in this debate. However, the presumption in favour of delay has gone and has been replaced by a presumption in favour of sustainable development. The Select Committee’s view on the final version of the NPPF was interesting.

I was pleased to see the planning Minister, the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles) in his place earlier, but I am disappointed he is not here now, because I regret that the Government have recently been tinkering with the system after the implementation of the NPPF. That has not been particularly helpful. Changes bring a degree of uncertainty and it is important to allow the new planning system to bed in. Some of the Government’s proposals, such as changing the regulations on converting properties from office to residential use, and changing permitted development rights regarding the size of extensions and, more recently, the right to light, are not helpful. I understand what the Government are trying to do; the aim is clearly a further freeing up of the planning system, but I fear that some of the changes may be counter-productive and will not lead to the growth we need in the sector. In fact, they could lead to more uncertainty in planning.

One recent Government development, however, is most welcome. In the autumn statement the Chancellor announced a new £474 million local infrastructure fund to support investment in key local projects and crucial sites. That is of particular interest in my constituency, and I recently met the Housing Minister, the local authority and developers, to consider a site where the development of a new road will be a key part of building 6,200 new homes. Money from that fund will provide additional housing.

In conclusion, I welcome the report by the Communities and Local Government Committee and it is right to say that the problem of housing will not get sorted overnight. I believe, however, that we are already starting to see the benefits of Government policy through the First Buy and NewBuy schemes, funding for lending, and changes in the right to buy. I commend the Government on the measures they have introduced, which show that they view house building as one of the most important factors in getting our country growing again.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Three Members wish to catch my eye and the winding-up speeches will start at half-past 6. If Members constrain their speeches to about 11 minutes everybody will get a fair share of the time remaining.

17:56

[Mr Andy Slaughter (Hammersmith) (Lab)]

I will certainly do that, Mr Deputy Speaker, and I apologise to the Minister if, given that we are going the distance, I have to leave before he speaks because I have a meeting before 7 pm.

I am sitting alongside my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford) and the Chairman of the Communities and Local Government Committee, and that is as near as I will come to pretending expertise in my comments. Instead, I will give a consumer’s view of this subject, based on my experience as a constituency MP. My constituency admittedly has some of the highest housing costs in the country and—not unrelated to that—some of the greatest housing stresses and needs, but it is not untypical of London and other high-value areas, particularly in the south of the country.

As someone who has spent 20 years trying to build housing that is affordable to local people, I know that even at the best of times that is not easy because of land prices; subsidy is always difficult, particularly at the moment. Nevertheless, there is currently a development boom in west London, and it is envisaged that in three opportunity area sites in my small borough, 22,000 new properties will be built over the next 10 years or so. Those are the major sites but there are many other similar sites.

Housing policy states that at both regional and local level, 40% of houses built should be affordable, which is right. A third of existing housing stock in my constituency is affordable social housing, owned by the local authority or a housing association. At the same time, however, 11,000 people are on the waiting list because of severe overcrowding, conditions in the private rented sector and homelessness—I said that 11,000 people are on the housing waiting list and they will be for another four weeks until it is abolished on 1 April. Some 1,500 people will then possibly be rehoused at the subjective discretion of the local authority, depending on their individual merits as assessed on things such as community contribution, previous employment and matters not specifically related specifically to need. Other aspects of the Localism Act 2011 are being introduced with alacrity on short-term tenancies, affordable rents and other matters that, for the first time in generations, put at risk the right to a secure, affordable home for many people.

In those circumstances, one would think that using existing resources would be a priority, but in fact the local policy in my constituency says that there should be no new social housing because too much is available. Therefore, when social housing properties become vacant for any reason, they are liable to be sold. Consequently, the stock is not increasing; it is diminishing. When those 10,000 or 11,000 people go from the waiting list, they will not disappear; they will still be there, often living in conditions of severe housing need.

The bedroom tax has been proposed as though it could be an option to build new affordable housing, but, as I said in my earlier intervention, of 824 council households in my borough subject to the bedroom tax only 48 will be helped, according to the council’s figures, and other social landlords have another 1,840 such households. The people who are moving or who are likely to have moved are those who have been subject to the caps on local housing allowance—540 families so far—and those who are likely to be subject to the overall benefit cap when it is introduced, not now in April but later in the year, sometime between April and September. The date is yet to be revealed. Again, the local authority estimates that that will affect another 800 families.

Where will those people move to if they can no longer afford to live in west London? One answer is Peterborough. I saw a headline on the BBC News site two weeks ago: “Plan to move London homeless to Peterborough is ‘social cleansing’ says MP”. I was perhaps not surprised by that—I thought that perhaps the shadow Housing Minister had been using the media effectively, as he often does, or that my hon. Friend the Member for Westminster North (Ms Buck) or someone of that ilk had done so—but the article says:

“Plans to allow a London council to build homes in Peterborough for its tenants have been criticised by an MP as ‘social cleaning’. Peterborough MP”—

it names the hon. Member for Peterborough (Mr Jackson), who was here earlier but is not in his place now—

“said he could see ‘no advantages for the city’. ‘This is about social cleansing in Kensington and Chelsea,’ he said.”

Those of us who have said for many years that this process of social cleansing has been under way in Conservative boroughs, particularly in west London, dating from the Porter era and subsequently, and who were partially vindicated by the Mayor of London’s former pronouncements now have it written in stone from the hon. Member for Peterborough that that is happening.

In other words, people who are in housing need who could be helped in whatever difficulty are becoming the victims of political ideology and the strategy to alter the social and economic make-up of the area in which they or their families have often lived for generations.

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

Many young professional people live in the hon. Gentleman’s constituency. In fact, the first flat that I lived in when I started my working life in London was in Shepherd’s Bush. They will rent in the private sector and not be in receipt of housing benefit. If their circumstances change, they get no protection from market conditions. They have largely no redress on the state if they are still in work. Is he saying that they should be included in his socialised model?

[Mr Slaughter]

The Conservative party is always levelling down, rather than levelling up. The introduction of a competitive, envious spirit to try to make people compete against someone one rung above or below them on the housing ladder is quite an invidious route to take. Of course, I support young families and young single people. They are working and paying taxes, but so are the majority of people in receipt of housing benefit. People on low incomes simply cannot afford astronomical private sector rents. I am glad that the hon. Gentleman intervened when he did because I was just going on to that point.

If we know who the victims are, we unfortunately know who the beneficiaries are. I was quite shocked to read a feature article in the Daily Mirror this morning. It was about a joint investigation by the Daily Mirror and GMB trade union into private landlords who had bought up council properties. That is the source of the statistic, which I gave earlier, that a third of right-to-buy properties that had been quite properly bought by their former tenants are now in the hands of private landlords. What sort of private landlords? One example given in the article is Charles Gow, the multi-millionaire son of a former Tory Housing Minister who, as the report reveals, owns 40 flats in one south London estate alone. The profiteering of private landlords, who buy up former social flats on council estates and individual council properties at a relatively low cost, is now rife. What does that mean? It means that they are able to charge market rents to tenants placed in those properties by local authorities. Those tenants then have to claim housing benefit—not because they are unemployed, but because they cannot, even on a more than average wage, afford the astronomical rent.

The average rent in my constituency is £335 for a one-bedroom flat, £467 for a two-bedroom flat, £770 for a three-bedroom house, and £934 for a four-bedroom house—per week. Social rents are between 15% and 25% of those levels. There is the obscenity. A social tenant in a secure and assured tenancy pays the rent in full by earning a decent average wage, or even, possibly, a low wage. Living next door is a similar family who have been in temporary accommodation for three or four years, who are paying a rent that is four or five times more to a private landlord, and which is being subsidised by housing benefit. The Government’s answer is, “Let’s evict the family by placing a cap on the benefit.” The Government’s answer should be, “Why are we not providing affordable housing for working families”, as every previous generation did irrespective of which party was in control? That is what lies at the heart of today’s debate.

I cannot fault what my right hon. and hon. Friends have said on policy and in their critique of the Government’s housing policy, but I am afraid it comes down to what I spend every Monday morning doing: trying to console increasingly large numbers of people who have been living for years, sometimes many years, in severely overcrowded and unfit housing conditions. At the end of that long wait, they now face not getting what they would have got even 10 years ago—a secure tenancy at an affordable rent for them to bring up their families, something to which everybody aspires—but the prospect of eviction first into a disgusting and dangerous hostel, and then being moved hundreds of miles away from their family network, schools and jobs to somewhere completely alien. I say that with no disrespect to Peterborough; I am sure it is a lovely place to live. However, if someone’s school, job, home, family and community are near Shepherd’s Bush, why should they be forced to move?

Those are the human issues, as well as the financial issues, that the Government need to address. I hope the Minister has read the report in the Daily Mirror and has seen who is currently benefiting from the Government’s policies. I hope that when he replies he will be able to tell us that there will be some movement.

18:08

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

This has been a comprehensive debate, with great expertise from all parts of the House. I join other hon. Members in congratulating the Chair of the Select Committee, the hon. Member for Sheffield South East (Mr Betts), on an excellent report, which is forward-looking and raises many interesting issues. It poses a number of questions to the Government, and we look forward to hearing the Minister’s reply. I will touch on just one or two aspects of the report.

Today’s debate has already dwelt on the Government’s reforms to the housing targets and the important shift away from the regional spatial strategies towards local plans. It is much better to have local authorities with their own clear plans advocating, rather than resisting, development in their areas. Under the regional spatial strategies, local authorities fought housing targets, used every opportunity to resist housing development and stood up to the last Government in doing so. It is much better to have a system under which local authorities are given incentives to allow development in their areas and, instead of fighting development, are forced to make the case for it. I appreciate that people have raised questions about that point and that several local authorities are still finalising their local plans and targets. The plan by my district council, Shepway, in Kent, which is still being finalised, has at its heart a housing figure greater than the previous target under the regional spatial strategy. It is taking a sensible look at the opportunities for community infrastructure that can arise from development. That is the right way to go.

The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Grantham and Stamford (Nick Boles), who has responsibility for planning, was in his place earlier, and I make this point for his benefit—so I hope he will check Hansard—and the Minister’s. I ask them both to consider the impact of infrastructure development in communities and on the local economy and housing. I realise that DCLG is considering the planning application for the expansion of Lydd airport in my constituency, which was approved by the district council three years ago. Since then, there has been a public inquiry and we now await the Minister’s decision, which is eagerly anticipated by me, the district council and many in the Bromley Marsh area and Lydd. It would be an enormous boost to the local economy to allow the controlled expansion of the airport to go ahead. Other transport infrastructure around it could make the area considerably more attractive to inward investment, including in new housing, and help to create new jobs, all of which are needed by the community. I ask the Minister to consider the application carefully, make it a priority, which I know he has done, and give us a timely answer. People desperately need to know where the Government stand on the expansion of Lydd airport.

The other Government reform I wanted to touch on was the liberalisation of planning consent for spaces above shops in town centres. This recognises that our town centres are changing and becoming mixed-use spaces for leisure, retail, work and residence. This could breathe new life back into our town centres. We have a lot of empty office space in many of our town centres, particularly in towns such as Folkestone in my constituency, and I think this would be a good use of space. If we can simplify the planning process and get that empty commercial space being used by residents who need it for residential property, it would be a good thing for residents and town centres.

Some of the specifics in the Select Committee report pose an interesting question concerning social housing and those in the private rented sector who claim housing benefit. Why, despite having a market with no lack of demand and a lot of Government spending underpinning it, do we have an inadequate level of supply? Why do we not have a system where we work with that demand and use it to expand supply? The report hits on interesting ways of doing that. The Committee Chair raised the interesting issue of councils borrowing to fund housing expansion. I would be interested to hear the Minister’s views on that.

Obviously, that exists within the current economic climate, with the country having borrowed too much, so it is right that the Government are concerned and careful about allowing too much further borrowing to take place, but it would be interesting to know what other schemes are available, particularly involving institutions, to invest in housing models. The report made some interesting suggestions for how we could bring together housing associations to manage and build properties, institutional investors with ready funds to lock away in long-term investments and local authorities prepared to work with those two bodies as partners. The funds are probably available from institutional investors and pensions funds that could invest—over not just 30 years, but 60 years—in new housing programmes. Local authorities have no shortage of tenants to fill the spaces. Any private landlord or investor will know that what they want: high levels of occupancy. If the local authority can largely guarantee occupancy of such properties, that will make them an attractive investment. Housing associations can manage such schemes to bring those elements together, so that the institution does not have to put in place a management arm and the local authority gets accommodation.

I know that some models have been put forward. I believe that Barking and Dagenham council in London has looked at putting in place a model—some local authorities in Kent are now looking at this too—whereby the institutional investor effectively builds properties for the council, which supplies the tenants and then gets to keep the housing at the end. There is the question—this was raised in the Committee’s report—of what guaranteed rate of return the institutional investor has to be given. What rental increase does the local authority have to guarantee? Is it inflation or inflation plus a small percentage increase over a 50 or 60-year period? That has to be carefully considered, but given that in such models local authorities would control the housing stock at the end—either to sell to the tenants or manage for the foreseeable future—they may be able to manage the risk of being locked into guaranteeing a certain rate of rent against the value of assets.

These models are very interesting. Indeed, it would be interesting to hear Ministers’ views on such schemes. As they are new, local authorities might need encouragement and advice to enter into such partnerships, but they pass the common-sense test. There are large amounts of cash sitting in institutions, and we have a social housing sector with an enormous need for new capacity and an almost limitless number of tenants to fill the spaces. That suggests that these elements could successfully come together in a tantalising and interesting solution to many of the problems that the report looks at. The Committee’s report also touches on direct borrowing from the markets, through municipal bonds or local government bonds, as it were. That could be a different way, but if we can bring these elements of institutional finance together to meet the enormous need that is out there, that could be an attractive solution.

Finally, I want to touch on investment in the private rented sector. Throughout this debate hon. Members have referenced case work in their constituencies involving people in housing need who live in squalor and poor accommodation in the private rented sector and claim housing benefit to do so. We discussed this issue in a Westminster Hall debate last week. I feel strongly that it is wrong to pay out housing benefit to slum landlords—people who maintain their properties in a poor state. They know that their tenants cannot afford the cost of moving out or a deposit. I had a case in my constituency where the cost of simply moving from one two-bedroom flat in Folkestone to another—the cost of a deposit, added to the letting agent’s fees—could be over £1,000. People simply cannot find that money. Bad landlords know that and they know they can get away with not maintaining their properties to a sufficient standard.

Local authorities have the power to intervene under the Housing Act 2004, which was passed by the last Government, but there are understandably limits to their enforcement capabilities. The one thing we do control, however, is the money supply for the housing benefit paid either directly to tenants or to landlords. If we could turn off the tap to bad landlords who will not take action to improve their properties, we would have an opportunity to put pressure on the private rented sector and those landlords, to ensure that such properties are maintained at least to a standard whereby they do not fall foul of one of the category 1 or category 2 hazards under the 2004 Act—largely, that people are not living in severe damp and severe cold. There should be no excuse for that. Putting this right is probably relatively low-cost for landlords. If they were faced with losing two or three months’ rent, they would find the money to put such properties right pretty quickly. That would do an awful lot to improve their tenants’ quality of life.

There is nothing wrong with private sector landlords offering accommodation to people on social rent or those renting with housing benefit, but they have the right to expect such properties to be maintained properly. I think all Members are far too aware of social housing tenants who are trapped in the system, living in poor quality accommodation. Months if not years can go by before anything is done to put it right. In controlling the money supply, we have the opportunity to do that and, in doing so, to correct some of the market failures in the system—empowering tenants to move around it more freely by making moving costs more affordable—and give them a better standard and decency of accommodation in the first place.

The Committee’s report has thrown up a number of interesting questions. I will certainly be interested to hear whether the Minister will produce an updated Government response to it, which I am sure we would all read with interest.

18:19

[Heidi Alexander (Lewisham East) (Lab)]

It is a pleasure to follow the hon. Member for Folkestone and Hythe (Damian Collins). I did not agree with everything he said, but I certainly agree with his last point that it is just plain wrong that, in the 21st century, we are paying money through housing benefit to slum landlords. I will probably pick up on that theme later.

I congratulate the Chair of the Select Committee, my hon. Friend the Member for Sheffield South East (Mr Betts), on opening the debate. I was a member of the Committee when we conducted the inquiry and the report was written up, and I think it should provide the Government with a lot of food for thought. I will be interested to hear what the Minister has to say in his updated response.

This Friday, I will do my advice surgery in my constituency, and I can guarantee that I will speak to at least five people who have come to talk to me about problems with housing. There could be up to 10 such people on Friday, but I know that during the course of a year, I speak to hundreds of people about their housing circumstances. More often than not, I speak to mums who come with their children and who are living in desperately overcrowded accommodation. I sometimes see whole families who are living in just one room. These people are often working, sometimes with part-time jobs, but they are living in completely unacceptable housing conditions and I believe that Members of this House, and the Government, have a duty to address the appalling conditions that many of my constituents live in.

In the three years that I have been doing my advice surgeries as a Member of Parliament, not once has anyone come to see me about a housing problem who could afford to buy a house in Lewisham. The average cost of a property there is £260,000, but the average salary is in the region of £29,000. Furthermore, the vast majority of people who come to see me at my advice surgeries cannot afford to buy through the part-buy, part-rent arrangements either. Many of the shared ownership schemes that housing associations run in London are completely out of the reach of many of my constituents, because the salary required in order to access the schemes is many times the amount that many of my constituents earn; and yet we have a situation in which people are paying out huge amounts of money in the private rented sector, often to live in very poor conditions.

I want to focus on the need to build social rented housing in London. The reality of what has happened under this Government is that the number of affordable homes being built has collapsed. Nationally, 34,000 fewer affordable homes were started in 2011-12 than in the previous year. That represents a 68% drop. We should not be surprised about that, because one of this Government’s first actions when they came to power was to cut the national affordable house building programme by 60%. They signalled their intentions for the supply of new affordable housing when they made that decision.

Of course, that money also enables other housing to be built. What I mean by that is that some of the grant that goes into developments to deliver social or affordable housing enables a mixed-use scheme with mixed tenures to be created. Last year, when the Prime Minister and the Secretary of State for Communities and Local Government launched their NewBuy scheme, they chose to come to Lewisham. They stood in a development there that had been constructed only because of a £25 million grant from the Homes and Communities Agency. The scheme, which is providing nearly 800 new homes—about 200 of which are affordable—was coming out of the ground only because of the capital grant from that agency.

I cannot overstate the need to build social rented homes in London, yet in the period between April and September 2011, only 56 new homes for rent were started by councils or housing associations. That was 56 in a six-month period in a city of 7 million people. That is not acceptable.

My own local authority, Labour-run Lewisham council, is due to build 250 new homes, but that is a drop in the ocean compared with the number of families on the housing register there. We have talked about ways of getting more finance into building affordable homes, and I support the comments made on the need to lift the borrowing cap placed on local authorities.

I ask the Minister to consider what more the Government could do about the number of overseas buyers purchasing property in London. Roughly 60% of new-build homes in London are being bought by foreign investors, which is ramping up the London housing market, pushing prices even further away from my constituents. If London is seen to be a safe haven for foreign investors in the London property market, we must surely be able to find a way to capture some of that investment in our great capital city to plough back into the delivery of affordable homes.

[Ms Karen Buck (Westminster North) (Lab)]

Does my hon. Friend share my concern about the scale of the buy-to-let market in ex-social housing in particular? Does she share my shock that there can be two next-door properties, of which one will be in the social rented sector at a rent of, say, £100 a week, while the other will be in the buy-to-let market in social housing with a rent of £500, £600 or in some cases even £700 a week? In what way does that provide any kind of value for money?

[Heidi Alexander]

I totally agree with my hon. Friend, and our hon. Friend the Member for Hammersmith (Mr Slaughter) made a similar point. We are lining the pockets of private landlords on an industrial scale. There are no two ways about it.

Another suggestion I would put to the Minister relates to public land. The Government often talk about releasing public land to deliver new homes. There is a lot of rhetoric about this, and we do not see a huge amount of progress. In my constituency, we are experiencing the possibility of Lewisham hospital having two thirds of its land and buildings sold off. There are many hospitals in London for which significant land disposals are going to take place. What discussions has the Minister had with his colleagues in the Department of Health? If these disposals are going to happen—let me be clear that I am very much against it for Lewisham—can we secure requirements for 50% of the land to be used for affordable housing, as these are considerable sites of public land?

I would like feedback from the Minister on what he is doing with other public sector bodies to parcel up land to make it available to small and medium-sized builders. When this country was building the amount of housing it needed to meet the demand many decades ago, we saw small and medium-sized builders providing a far greater proportion of the homes built. At the moment, 75% of new homes come from seven of the largest house builders. If we could find a way of parcelling up the public sector land, enabling small and medium-sized builders to get hold of it for building purposes, that could be a win-win situation.

[Mr Richard Bacon (South Norfolk) (Con)]

I am listening with interest to what the hon. Lady says about finding new ways to parcel up land. Is she aware that local authorities have an obligation—I add that quite a few of them are not aware of it—to measure demand for self-build in their areas, and then to say what they are going to do about it? If we look at the experience of other countries such as the Netherlands, Germany and France, we find that a much higher proportion of total building is done not by large house builders, but by people for themselves, in some cases with the help of local authorities.

[Heidi Alexander]

One of the recommendations in the Select Committee’s report is that the opportunities for self-build do exist. I will conclude on that note, grateful for having had the opportunity to contribute to the debate.

18:29

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

The Select Committee’s report was produced on an all-party basis, under the admirable chairmanship of my hon. Friend the Member for Sheffield South East (Mr Betts), and we welcome much of it. As for the Government’s response thus far, it is not all bad and not everything has failed to work, but when it comes to rising to the challenge outlined in the report, the facts speak for themselves.

House building fell by 11% in 2012, the number of housing completions has fallen in both years since the general election, and homelessness is up by a third. We have a mortgage market in which people struggle to obtain mortgages, and a rapidly growing private rented sector in which there are many good landlords but also big problems relating to affordability, security and quality. As was pointed out by the hon. Member for Folkestone and Hythe (Damian Collins), that has serious implications, including for the members of “Generation Rent” and their ability to save to realise their dreams of buying a home.

I am the first to acknowledge that the biggest housing crisis in a generation does not date back to May 2010, but, having said that, I should point out that in 2010 we warned what the consequences of the crisis would be. My hon. Friend the Member for Lewisham East (Heidi Alexander) was absolutely right: the £4 billion cut in affordable housing investment resulted in a 68% collapse in affordable house building and a 97% collapse in council house building, at the worst possible time. That serious mistake, combined with the economic mismanagement of the economy more generally, has created a real problem of public confidence. People must decide whether or not to risk taking out a mortgage, and those who are prepared to do so struggle to obtain one.

As was pointed out by my right hon. Friend the Member for Greenwich and Woolwich (Mr Raynsford), the impact of those cuts in public investment has been extremely serious. The number of housing association starts has fallen by 23% to 19,500 in the last year, and the uncertainty created by changes in the planning system has not helped. The planning system was in need of reform, but it is clear that it was never as big a problem as some have pretended. Indeed, the hon. Member for Peterborough (Mr Jackson) made the very good point that, although there is land with existing planning permission capable of sustaining 470,000 homes, those homes are simply not being built.

We understand that, after a succession of initiatives, which I shall say more about shortly, a further Get Britain Building launch may be imminent. We are told that the Prime Minister and the Deputy Prime Minister may well don their wellies and high-visibility jackets to visit a building site. Thus far, however, the facts speak for themselves. Overwhelmingly, the Government’s approach has not worked: it lacks ambition, and it has been ludicrously spun. If we had a house for every press statement issued by the last housing Minister, the right hon. Member for Welwyn Hatfield (Grant Shapps), we would not have a housing crisis. It is downright cheeky, for example, to claim that the proposal to provide 170,000 affordable homes was realised as a consequence of this Government’s actions, when the National Audit Office has made the very good point that 70,000 of those homes were commissioned and paid for by a Labour Government.

Not all the Government’s measures are bad. On the contrary, Firstbuy has been a modest success, and, in principle, the guaranteeing of balance sheets for institutional investment in the private rented sector is a welcome step in the right direction. Although I felt that my right hon. Friend the Member for Greenwich and Woolwich was right to inject a note of realism into the debate by pointing out that there had been painfully little progress so far, we support the measure on a cross-party basis, and believe that it should proceed to its subsequent stages. However, we need to look at what has been trumpeted. When NewBuy was launched it was said that 100,000 homes would be provided, but according to the latest figure just 1,500 have been provided. Had we had the same rate of progress as we saw in the first tranche of figures, it would have taken 200 years to realise that 100,000 homes objective.

My right hon. Friend, in his typically forensic fashion, dissected the original claim about the new homes bonus, which was that

“there will be at least 400,000 additional homes as a direct result of the bonus.”—[Official Report, 4 February 2013; Vol. 558, c. 12.]

Based on the figures thus far, it is not possible to detect a growth in the number of planning permissions or total approvals, the output of new homes or the starts. Indeed, the new homes bonus has other problems: it is both unfair, in terms of transferring public moneys from north to south, and inefficient, in terms of the amount of money that actually gets spent on building homes.

In a difficult situation—I stress again that the facts speak for themselves—there is a real risk that some of the Government’s next stage reforms will make things worse. Let me give two examples of such reforms, the first lot of which are the changes to the planning system. The Select Committee is right to say that the issue of whether or not to vary the requirement in terms of social or affordable house building is best left to the local level, but instead, rejecting localism in favour of Leninism, clause 5 of the Growth and Infrastructure Bill introduces review mechanisms that might rob local authorities of the sensible ability to renegotiate where appropriate. The point was put to me in Plymouth, Exeter and Bristol last week that there is the additional danger of delay, as some developers wait for the new arrangements to kick in.

My second example is the total impact of welfare reform, which I saw in Plymouth in some detail last week. Let us consider the bedroom tax. Not only does it have a human impact—one family whose son has been serving in three tours in Afghanistan, going backwards and forwards, will be hit by the bedroom tax, as will the disabled and the carers—but it will have perverse outcomes. If people are pushed into the private rented sector, there is the potential for rents to be higher, which increases the housing benefit bill and the potential for greater homelessness. In Plymouth alone, the totality of the changes will take £30 million out of the local economy. There is growing and disturbing evidence of the potential of this now to have an impact on new builds—on supply—because of write-offs of bad debt and the burden of cost being imposed on housing associations and local authorities.

The hon. Member for Meon Valley (George Hollingbery), in one of the many thoughtful contributions that have been made by hon. Members from across the Chamber, rightly made the point about the importance of house building to the economy. History tells us that from the depression, through war and the building of modern Britain in the ’50s and ’60s, to the recovery from recession in 2008, a major programme of house building has always been at the heart of economic recovery in our country—public and private—and that it is not possible to have a sustainable economic recovery without a major programme of house building. The CBI rightly makes the point that the 100,000 affordable homes will see 1% added to GDP.

Let me deal with some of the Select Committee’s recommendations. It rightly makes a number of intelligent points about how we finance a major uplift in supply. It is right to argue strongly in favour of post-2015 certainty, including both rent models, making a crucial point about the need to commit grant and investment. It is right to say that we need progressively to shift from what we have at the moment—plenty of public investment in housing but 95p in every pound going on housing benefit—to bricks and mortar. It is right to recognise that, over and above what we commit to by way of grant and investment, we need innovatory forms of funding housing supply and therefore the potential, for example, for institutional funding. I have been involved in some interesting examples in that regard. The hon. Member for Folkestone and Hythe mentioned Barking and Dagenham, to which I would add what Manchester is doing and what I just heard about in Enfield, where local government pension scheme moneys are being used to build 200-plus council homes.

The Select Committee is also right to advance a debate that we badly need to have about the potential for what local authorities can achieve if we set them free and if we have a true localism approach. Earlier, reference was made to the potential for 60,000 homes to be built as a consequence.

The Committee is also right to argue in favour of a debate that we now need to have about a housing investment bank. In the summer of last year, the leader of my party proposed a British investment bank with a focus on manufacturing and housing. The Committee discusses the potential for a housing investment bank, pointing out some of the international experience that shows why that can help.

The Committee is also right when it talks about innovation by housing associations, such as retail bonds, greater leverage of assets and equity sharing with local authorities, as well as when it makes the point that it is important that we have the admirable G15—the big—while realising the potential of the small. I see that in my constituency through the admirable Castle Vale community housing association. My hon. Friend the Member for Lewisham East was also right about the important and neglected role of small and medium-sized builders in providing the capacity to ensure the uplift in supply we need to see.

On land, the Committee is right to advance the argument that we must reduce the up-front costs of building. The notion of build now, pay later therefore has a great deal to recommend it. The Committee is right to refer to Government land, which thus far has been something of a holy grail. Things have not happened quite as has been suggested time and time again, but no doubt the Minister will convince the House that he is determined to put that right.

On innovative forms of supply, the Committee is right to advance the potential of self-build, the interesting experience in Holland and the role of small and medium-sized builders in that process.

The Committee’s next inquiry will be into the private rented sector, a subject that was also referred to in this inquiry. That fact is very welcome given the clear problems of affordability, security and quality in the sector and, as the hon. Member for Folkestone and Hythe said, the clear problems associated with too many rogue landlords and too many rogue letting agents. That is important both in its own right and in the context of a more stable sector enjoying greater security and more affordable rents because of the impact on supply. Let me quote briefly from a startling Scottish Widows report, which is out today:

“The property market is becoming out of reach for many renters. Our latest research found that at people’s current savings rate, a first time buyer will take almost 13 years to save the £27,984 required for the average deposit.

With property ownership seeming like a distant dream, our research suggests that many renters may have given up on property ownership with just 29% actively saving to put a deposit on a home.”

I refer to those figures because I think that the Committee is wise to move on to the issue of a very different model for the private rented sector for the future—the sector undoubtedly has a role to play in meeting housing need, but it must change if it is to do so.

In conclusion, let me return to what was said by my right hon. Friend the Member for Greenwich and Woolwich and many others. All people should have a decent home at a price they can afford to rent or buy, at all tenures, but the crucial point is how we locate it in the context of economic recovery in our country. Sustainable economic recovery will not happen unless we have a major programme of public and private house building.

There are other outcomes in areas such as health and well-being and educational attainment, and an interesting debate took place about housing options for older people, but all roads lead back to housing. We have the biggest housing crisis in a generation and an economy that is bumping along the bottom. The Government badly need to come forward with a serious strategy for getting Britain building, and not yet another false dawn.

18:44

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

It is a great pleasure, as ever, to follow the hon. Member for Birmingham, Erdington (Jack Dromey). I always enjoy hearing his housing speech. Indeed, I heard it only on Friday, when we were together in Bristol. As ever, he makes some interesting and useful points, as did a number of those on the Opposition Benches. If I do not have an opportunity to respond to all the points that hon. Members on both sides of the House have raised, I will write to them.

The hon. Member for Lewisham East (Heidi Alexander) made some very helpful remarks about the need to look at the bundling of land together. I will of course look into the discussions that we have or have not had with the Department of Health in relation to the land to which she refers. Although from time to time I am critical of much of what the right hon. Member for Greenwich and Woolwich (Mr Raynsford) says, I was delighted to hear him make a robust argument for the great value of further improvements in the energy efficiency of our buildings. Although the hon. Member for Hammersmith (Mr Slaughter), who is no longer in his place, was very critical of right to buy, he raised a number of points that the Government would do well to attend to.

Above all, I pay tribute to the excellent Chairman of the Communities and Local Government Committee, the hon. Member for Sheffield South East (Mr Betts), who opened the debate with what my hon. Friend the Member for Meon Valley (George Hollingbery) described as an eloquent contribution. Indeed it was. It was eloquent in giving just praise to the report that the Select Committee produced more than a year ago. As I said to the hon. Gentleman in an intervention, in the light of the fact that a year has passed since that report, I have made available in the Library an updated response from the Government, which I hope he and members of the Committee will consider and, if necessary, quiz us on further.

As the hon. Member for Sheffield South East said, it is important that we acknowledge, as the hon. Member for Birmingham, Erdington did, that the Government have done a number of things that are supported in all parts of the House. Reference was made, for example, to the reform of the housing revenue account and to the greater flexibility given to the many excellent arm’s length management organisations. The Chairman of the Select Committee even praised the Planning Minister for his willingness to accept the need for an agreed methodology for determining housing need. The hon. Gentleman will be aware that this is being addressed by Lord Taylor in his report, which we hope will be available in the summer.

The Chairman of the Select Committee pointed out that the Montague report said that guarantees distort the market. May I tactfully suggest that the Montague report was referring in that instance to rent guarantees? If he reads the report thoroughly, as I am sure he has, he will know that it strongly supports the guarantees to reduce the cost of borrowing, which is part of the Government’s package.

On that point, the right hon. Member for Greenwich and Woolwich asked what has happened to the £10 billion loan guarantee and where it is. He will be well aware that it takes time to work through the details and to put an offer to the market. We have done all that and I am delighted to tell him that we will make a detailed announcement next month about the appointment of people to run it, so progress is being made. He also challenges us about shovel-ready projects, which he is clearly concerned about. As he knows, because he looks at these matters in great detail, the Get Britain Building fund of £570 million has already signed contracts with 120 projects that will provide us with no fewer than 8,600 homes, and more are on the way. Under this coalition Government, shovels are in the ground. We are delighted that more is still to come.

Like all Members who spoke in the debate, we believe strongly in the importance of building more houses, both to meet the housing need and because of the real economic benefit that that can bring. We agree with so many speakers on all sides who said that there is no single silver bullet to tackle the long-standing under-supply of housing. The Government cannot do it alone and we need to work with others.

The report recognised that a basket of measures is needed, covering all tenures of housing, and we are taking action to deliver that basket of measures: the spending review, the Localism Act 2011, the 2011 housing strategy, the housing and growth package and the autumn statement. But as so many hon. Members have said, a new Budget and a new spending round is due shortly, when I have no doubt that further announcements on housing will be made. I was not meant to say more than that, but my hon. Friend the Member for Meon Valley helped to further the leaks that have appeared in newspapers today on what might be covered. We will just have to wait and see what is around the corner. As the Chair of the Select Committee, the hon. Member for Birmingham, Erdington and others on both sides of the House have said, it is important to recognise that more still needs to be done to take a comprehensive approach, making best use of existing stock, unlocking stalled sites and stimulating new housing supply across all tenures.

I remind my hon. Friends the Members for Meon Valley and for Peterborough (Mr Jackson), who raised the issue of ensuring that within all forms of tenure we take account of older people, that we now have the care and support specialist housing fund of £300 million specifically to develop specialised housing for older and disabled adults.

All Members who have spoken agree that we need more housing, but agree that the politics at the local level can often be difficult. That is why I said that the first thing that we have to do is ensure that we make the best use of the built environment that we already have. That means, for example, tackling empty homes, providing for the change of use from commercial to residential referred to by a number of my hon. Friends, and, as has been debated a number of times in the Chamber, tackling under-occupancy and affordable housing. The new homes bonus gives local authorities not only reward for new homes, but also for bringing empty properties back into use. It is a powerful incentive that is really working. From next month, local authorities will have further flexibility to remove or reduce council tax discounts on empty homes, and in some cases where they have been empty for more than two years, to charge even higher rates.

We have £235 million of direct funding to help local groups to tackle some of the most problematic empty homes that would not otherwise come back into use. I was grateful to my hon. Friend the Member for Folkestone and Hythe (Damian Collins), who spoke about the need specifically to address properties above shops in our high streets, and he will be aware that we are seeking to do that. There will always be a number of homes that are unoccupied for a short period, and we obviously need that for the market to operate, but the House will be pleased to know that the latest data show that only 260,000 have been empty for longer than six months. That is still far too many, but the figure is now 20,000 fewer than last year, so we are making progress.

We are also taking action to free up land. It was rightly said that Governments of all shapes and sizes have long argued for the need to free public sector land. We are determined to take action on that. We hope to release sufficient land for 100,000 homes, and wherever possible we will use the bill now, pay later deferred payment scheme to help get that under way, but a further announcement may or may not be made in a few weeks’ time. I was grateful to the Chair of the Select Committee who said, in relation to those issues, that local authorities do in some cases need to be quicker with their planning applications, and he will be aware that we are dealing with that in the Growth and Infrastructure Bill. We are also consulting on a package of measures that I think will be welcomed on both sides of the House to make the planning appeals process swifter and more transparent to reduce wasted time and expense and, I hope, lead to quicker development.

The Growth and Infrastructure Bill, which was referred to only briefly in the debate, is very important because it will allow developers to review with their local authorities the viability of the affordable housing contribution on proposed sites. As the House will know, we are committed to a further £225 million, and to the loan guarantee scheme, to ensure that we can meet any reduction in the number of affordable houses that might result from those renegotiations. In addition, we have the £475 million local infrastructure fund—we published its prospectus only a few days ago—which will help local areas to deliver much larger-scale developments to meet need. We want to go still further. The House will be aware that there has not been a single new development of more than 13,500 homes in this country since the 1970s, so we intend to promote and support larger scale garden cities where there is clear local support and private sector appetite. We are currently working through the details on that.

As my hon. Friend the Member for Rugby (Mark Pawsey) rightly said, we must support home ownership, and we are doing that with a number of measures. Reference has been made to the Firstbuy scheme. Over 10,000 reservations have now been made towards our target of helping 27,000 first-time buyers into shared equity. Reference has also been made to the NewBuy scheme, which gives prospective buyers the chance to buy a home with a fraction of the deposit normally required. As we have heard, there are already 3,000 reservations and the figure is rising rapidly. As he also said, the Bank of England is crediting our £50 billion funding for lending scheme for increasing mortgage availability and driving down the cost of loans for home owners.

However, I accept the point made by the right hon. Member for Greenwich and Woolwich about the need to look at additions to the offers that are made, either developments of existing ones or additions to the products available, and that is what we are doing. We are also looking at the issues that many Members have raised in relation to the right to buy, but it is pleasing to note that sales between October and December topped 2,000, helping to fund the one-for-one replacement of the homes that have been sold.

[Mr Betts]

Will the Minister give way?

[Mr Foster]

I will, but very briefly.

[Mr Betts]

I will be brief, because the Minister need give only a one-word answer. Is he prepared to look again at the cap on borrowing to fund housing at local authority level? Why is housing the only form of borrowing that local authorities cannot enter into simply because of the prudential rules?

[Mr Foster]

The hon. Gentleman knows part of the answer, because that is the same problem his Government faced, and it is to do with difficulties with the Treasury. Having said that, we are looking at the issues and are willing to look at the possibility of having flexibility in the cap and other ways of moving forward. As he rightly said, the consultation we are conducting on the potential use of local authority pension funds to help with investment is also part of the package we are considering. We are looking at all those measures.

We are doing a number of things to help make land available, to provide the resources for houses to be built, to bring empty properties back into use, to ensure that we can move forward and to develop the economic benefits to this country that new housing will bring, but also to ensure that we can provide the much-needed houses for people in this country, not least more affordable housing, because all Members are aware that under the previous Labour Government the number of affordable homes fell by a staggering 420,000. We must do something to make more affordable homes available. That is why we are committed to having 170,000 new affordable homes by 2015. It is why we have put in additional funds and loan guarantees to help secure that.

We want a housing programme that works for the people of this country and for its economy. We have made real progress. Further progress is still to come and further announcements will be made later this month. I am sure that the House will look forward to what those announcements contain.

Question deferred until tomorrow at Seven o’clock (Standing Order No. 54).

Business without Debate

Tuesday 5th March 2013 Commons Chamber

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

Business Failure and Insolvency

That this House takes note of European Union Document No. 17883/12 and Addenda 1 and 2, a Draft Regulation amending Council Regulation (EC) No. 1346/2000 on insolvency proceedings; and welcomes the opportunity to consider whether the UK should opt in to the draft Regulation.—(Mr Swayne.)

Question agreed to.

Delegated Legislation

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Criminal Law

That the draft Criminal Justice Act 2003 (Conditional Cautions: Code of Practice) Order 2013, which was laid before this House on 9 January, be approved.—(Mr Swayne.)

Question agreed to.

JG Pears Ltd

Tuesday 5th March 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Swayne.)

19:00

[Sir Edward Garnier (Harborough) (Con)]

I begin by thanking Mr Speaker for the opportunity to raise in this Adjournment debate an issue of acute local concern in Market Harborough, namely the operations of JG Pears Ltd’s animal rendering plant just outside that town. I also thank not only all the many constituents whom I have met or who have contacted me in order to provide me with evidence and information about what is happening to the local environment and how it affects their enjoyment of their properties and their own daily lives, but the environmental health officials at Harborough district council who agreed to meet me, along with my constituent Mary Morgan, at the end of last year. Regrettably, the upshot of that meeting was that there appeared to be little or nothing the district council could do, or was prepared to do, to ameliorate the problem.

I am grateful to be joined by the Minister, who is here to respond for the Government but, in reality, has very little power to influence the issues I am here to raise. It is not for the Minister to tell JG Pears Ltd how to run its business, nor is it for the Government to serve an abatement notice, to prosecute the company for offences under the Environmental Protection Act 1990, or to bring proceedings in the courts for statutory nuisance. I do not think that the Minister can even tell the local authority what to do, and I doubt he has the power to tell the Environment Agency what to do. However, he can tell us what the Government’s attitude is towards companies such as JG Pears that are not good neighbours and appear on the evidence that I have considered to be careless of the rights and interests of the people who live and farm, or work in other ways, close to their premises.

Let me deal with the suggestion, lest it be made outside this House, that my constituents and I are anti-business or think that JG Pears’ plant in Market Harborough should be shut down. We are not anti-business and we do not want the business closed, although I dare say that from time to time some of my constituents must have thought that that would make their lives more tolerable. Perhaps constituents of my hon. Friend the Member for Newark (Patrick Mercer) will occasionally have thought the same, because there is another JG Pears operation in Normanton, Nottinghamshire, whose neighbours appear to be suffering in a similar way to my constituents. My hon. Friend is in his place, and I trust he will be able to catch your eye, Mr Deputy Speaker, before the Minister replies.

In the opinion of my affected constituents, their complaints to the district council have been met, to use their words,

“with a stone wall of complacency”.

The council simply does not seem to think there is a problem. It has provided my constituents with so-called alleged nuisance record sheets. These are essentially diary sheets to record the smells that they experience. They are fascinating documents. At the top, they read as follows:

“In order to assist officers of this department with the investigation of your complaint, you are asked to keep a record of the alleged nuisance that is troubling you. Please keep a note below and, on a separate sheet if necessary, of the dates when the alleged nuisance occurs, the time it starts and finishes and the way in which it affects you. Remember that any action subsequently taken by the Council could end in Court and it is therefore important that accurate records of the specific times when the alleged nuisance affects you are kept.”

There are columns on the sheets to record the date, the weather conditions, the start and end times of the observations, the odour intensity and extent, the type of odour nuisance and its effects, and whether contact was made with the company.

There are five levels of odour intensity, level 1 being “no detectable odour” and level 5 being

“very strong odour (this is when you really wish you were somewhere else)”.

There are also five levels of odour extent, ranging from level 1,

“very impersistent (only detected during brief periods when wind drops or blows)”,

to level 5,

“persistent odour detectable at monitoring location and beyond”.

My constituents have been carefully completing these record sheets since February 2011 and providing the council with them. It has made no difference. They have set up a campaign group and circulated leaflets locally, which read:

“Please help to stop the environmental pollution and nuisance caused by JG Pears factory…this includes foul odour, noise (eg droning, crashing/beeping), black smoke and pollution of adjoining land and watercourses. You may not have realised where the foul odours in your area are coming from. If it smelled like rotting cabbage, dirty bone meal or a nauseating meat broth odour…it is probably JG Pears. These nasty odours are carried on the wind to Great Bowden, Foxton and the Langtons.”

The Langtons are the five separate villages or hamlets of Tur Langton, Church Langton, Thorpe Langton and East and West Langton. The leaflet goes on to say:

“Try driving up Gallow Hill with your car window open and you will probably recognise JG Pears’s foul odour. After years of individual complaints from residents to Harborough District Council…JG Pears’s foul odour and noise continues to torment local residents, day & night, on an almost daily basis.”

The problems continue. On the evening of 2 March, there was a pervasive, nasty stench of meat broth. Shortly before that, on the morning of 15 February, there was a nasty rotting smell. This morning a local councillor, a farmer and his partner, and a reporter from the BBC inspected the watercourses on the farmer’s land adjacent to the site. They found slurry in the ditch which looked like chicken fat. The councillor collected some of this slurry in her gloved hands. It is known in the business as mixed liquor bacterial slurry and is used by JG Pears in the process carried out in the main aeration tank and then sluiced out on to its land, whence it leeches into the nearby watercourses. There is no reference to the proper disposal of this slurry in the company’s licence. Why not?

This site was designed to deal with 1,400 tonnes of material each week. Judging from the huge number of 25-tonne articulated lorries delivering animal products to the site every day, it is not unreasonable to assume that a good deal more than 1,400 tonnes are being processed every week, which may explain why the disposal systems leave a lot to be desired. There seems to be a somewhat haphazard approach to the site’s design and operating methods. There are also doubts about whether some metal chimneys were put up with the necessary planning permission.

Exasperated at the lack of action by the council, my constituents got in touch with me. I contacted the local authority’s environmental health team last October and persuaded them to see me. I also asked them to meet one of my constituents, Mary Morgan, who is a spokesman for the campaigning group, and they reluctantly agreed. Mary Morgan made a compelling and rational case at that meeting. The more I have learned about this matter, the more convinced I have become that the complainants have a case that needs not just to be taken seriously by the council and the company, but acted on.

I appreciate that my hon. Friend the Minister cannot answer these questions, but why does the council not take seriously the years of evidence presented to it and why does it continue to deny that there is a problem? If, as the council contends, the company is operating within the terms of its licence, why does it not look again at the terms of that licence to measure their effectiveness against the evidence of the public nuisance that clearly exists? Why has the council asked residents to go to the trouble of filling out diary sheets if it then says that it cannot rely on the information contained in them because the company’s licence requires the odours and other problems to be witnessed by an environmental health officer? I understand that when the only officer to have been on the site was asked if he understood the company’s processes, he replied that he did not have to. I disagree. He has a professional obligation to know what he is looking at and for. Why are my constituents’ photographs of the billowing black smoke and the contaminated watercourses—available on Facebook, but sadly not reproducible in Hansard—rejected as evidence?

An Environment Agency inspector has identified unacceptably high levels of effluent from the site in watercourses on neighbouring farmland. The company’s licence permits it to spray its effluent fluids on to a small piece of land it owns, but it does not require much imagination to see the consequences of that. The effluent drains from that land straight into the ditches on the next-door farm, as confirmed this morning, and ultimately into the River Welland, which the agency is trying to restore. My constituents have had to suffer smoke, stench and noise—an appalling combination of disturbances that has been allowed to continue for some time. Now, through me, my constituents say they have had enough—enough nuisance and enough inactivity.

I wrote to the company and the district council to let them know that I intended to apply for this debate. The council denies that the complaints I have referred to are made out. It goes as far as to say that there is no evidence to support the claims of odour, noise and water pollution; that the odour problem has been experienced by only a small group of residents; and that only one person has complained. It says that there is no basis for it to take action. I appreciate that the council’s revenue budget is very small and getting smaller, so it is perhaps understandable that it will take no action. However, it should deal with the issue and not try to brush it under the carpet or minimise the problem. The evidence is there and it needs to be acted on.

The company’s operating director was less defensive in his reply, explaining that it strives not to cause problems for its neighbours. It spends considerable sums on its plant and equipment, and does what it can to control odorous emissions. This week, I received a letter from a Manchester firm of planning consultants employed by JG Pears, telling me of its proposal to carry out

“a significant programme of developments”

at the site. I gather that the firm did the same thing in Nottinghamshire and the problems have got worse, not better.

Tomorrow, JG Pears is holding an exhibition to explain its proposed development, which will include

“a new material reception building, a workshop, a replacement water treatment plant, additional parking facilities and a new, safer access off Harborough Road. The proposed works also include a thermal oxidiser. This piece of equipment”,

it explains,

“is the best available means of destroying odorous emissions but at the same time will provide energy to operate the plant. Consequently the proposals include a new chimney.”

If the company needs to do all those things now, it is a pity it did not think about doing them before.

Good businesses should be good neighbours. Good councils are not defensive, but are vigilant to ensure that their residents’ lives are not disturbed improperly. I hope that the Minister, if he can do nothing else, will insert some steel into one or two backbones. My constituents would be pleased if he were to do that.

19:12

[Patrick Mercer (Newark) (Con)]

I thank my hon. and learned Friend the Member for Harborough (Sir Edward Garnier) for the opportunity to speak and for securing the debate.

I must declare an interest because I live just outside the area of contamination, if I may refer to it in that way, from JG Pears, near the village of Normanton on Trent in Newark. I have written to the council a couple of times as a private citizen to express my doubts and concerns about the matter.

I must thank two councillors principally, Councillor Christine Rose and Councillor Bruce Laughton, for their unfailing efforts on this issue. I also thank Judge John Machin, Dr Charlie Clayton and Mrs Sheila Hamilton for leading a very effective campaign in and around the village of Normanton on Trent, which lies directly below JG Pears’ plant, about 10 miles north of Newark.

I will make no further points, because they have all been made splendidly and eloquently by my hon. and learned Friend, other than to say that as well as all the nuisances that blight the lives of his constituents, such as the smell and the flies, we also get a heavy volume of disgustingly smelly traffic moving through the small lanes of Nottinghamshire and, from time to time, some deeply grizzly spillage. That is not only unpleasant but very dangerous.

The very first case that I dealt with when I was elected in 2001 related to JG Pears in Normanton on Trent. For most of the time since then, it has been a very good neighbour. However, its performance varies hugely. Most of the time it adds wealth, most of the time it adds work and most of the time it is a good neighbour, but not all of the time.

It is important to raise this matter because there is planning permission for a further extension of the plant and because it lies on the boundary between Bassetlaw district council and Newark and Sherwood district council. I would not begin to point a finger at either authority, but operations that occur on the boundary between two authorities tend to fall between two stools.

Let me underline the points already made and suggest that the lives of people in Normanton on Trent—a village of more than 1,000 souls—are affected deeply by this nuisance. I appeal to the firm to moderate its operations, bearing in mind that it can live with us in harmony. I fully understand the restrictions on the Minister, but will he do his best to help not just the constituents of my hon. and learned Friend, but my constituents in Nottinghamshire?

19:15

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (Richard Benyon)]

I am grateful to my hon. and learned Friend the Member for Harborough (Sir Edward Garnier) for the eloquent way in which he raised this case, and to my hon. Friend the Member for Newark (Patrick Mercer) for underlining the concerns felt by his constituents. This debate demonstrates in a particular setting—two settings, in fact—the way in which my Department’s priorities interact. First, however, I first want to say on a purely human level that I have huge sympathy for the constituents of my hon. and learned Friend, and wish to ensure that any business of this kind is a good neighbour.

To set the debate in context, we want the rural economy to grow, and rendering plants provide an important service to the farming and food producing community by taking waste and animal by-products and processing them for further use or disposal. Such plants are strictly regulated by the Animal Health and Veterinary Laboratories Agency to ensure that animal by-products are handled and processed safely and do not present a risk to public or animal health. They contribute importantly to our priority of safeguarding animal health but, like all businesses, they should be good neighbours.

This particular plant takes in low-risk material from abattoirs and cutting plants but does not take in fallen stock. It turns that material into high-quality processed animal protein for the pet food industry. It gets inspected quarterly by the Animal Health and Veterinary Laboratories Agency, and was last inspected on 15 January—I suspect it will be small comfort to the constituents of my hon. and learned Friend, but in that inspection all was found to be satisfactory.

The Department’s priority is clearly to improve the environment, and rendering plants are subject to integrated pollution prevention and control under a European directive of that name. That directive has been recast in a somewhat strengthened form into the industrial emissions directive, which we transposed last month. Under integrated pollution prevention and control, each rendering plant must have a permit from the environmental regulator that contains conditions on any pollutant likely to be emitted in significant quantities. Pollution is defined in the directive to include the emission of anything that may

“result in damage to material property, or impair or interfere with amenities and other legitimate uses of the environment;”.

Odour and noise are plainly covered by that.

In this case the environmental regulator is Harborough district council. In accordance with the secondary legislation that introduced the EU system of integrated pollution prevention and control in England, the council first issued a permit for the rendering plant in May 2003 and updated it in November 2008. That permit is readily available on the web.

The permit requires all emissions to air from the plant to be free from offensive odour as perceived by the local authority inspector outside the plant site boundary. As we have heard, a group of residents consider themselves to be continuously and adversely affected by odour from the plant. Following their complaints, in May 2012 Harborough district council compiled a report to determine the impact of odour from the plant on the local community and whether any breaches of the permit had occurred.

A second report for the same purposes was compiled last month. Between them, the reports show that the council officers undertook a total of 64 visits to the vicinity of the site between January and November 2012, some in the company of the complainants’ representatives. Between January and April 2012, an offensive odour was found on one of the 30 visits. Between September and November, the period covered by the second report, an offensive odour was found on one of the 34 visits. That in no way diminishes the points made by my hon. and learned Friend or my hon. Friend. I entirely take their constituents’ concerns as they stated them.

The council’s reports point out that the Secretary of State’s guidance for the rendering sector, issued in 2008, recognises that occasional escapes of offensive odour may occur from rendering processes. The guidance is that formal enforcement action may not be needed if there are no more than two such instances in a 12-month period, provided remedial action is taken rapidly.

In the first of the two instances of offensive odour found in 2012, further visits were undertaken on the day but no further offensive odours were found. In the second instance, a problem with the abatement technology on site was identified and, I understand, rectified as soon as possible. The council, taking into account that guidance but making its decision in line with its enforcement policy, has therefore determined that no enforcement action is to be taken. That is a matter for the district council as regulator, but I understand that my hon. and learned Friend is concerned about it.

The district council has investigated the residents group’s complaint about noise. The council’s officers deemed noise emissions to be extremely low, of negligible impact and not in breach of the plant’s permit conditions. I can only report that; I am sure that the residents might have a differing view. I understand that the council’s recent offer to the complainant of sound-monitoring equipment to enable further investigation has been declined.

The district council has correctly pointed out to the residents concerned the availability of private action if they remain of the view that odour from the plant is significantly impacting on the use and enjoyment of their premises. The district council has also pointed out to the residents that they can contact the site manager of the plant if they experience odour problems.

The district council has recommended that the company operating the plant explore methods to abate odours likely to be considered offensive. That is where the possibility of progress might be found. I am pleased to note that the company appears to have needed little prompting in that regard. I understand that it is developing proposals for a new raw material reception facility, which my hon. and learned Friend described, a replacement effluent treatment plant and the installation of a thermal oxidiser. I am slightly dismayed to hear my hon. Friend say that such improvements have not addressed the problem, but let us look to the future positively.

According to my Department’s experts, those proposals, if carried through, should lead to an improvement in the environmental performance of the plant, while developing its business. They should deal not only with odour emissions, but with emissions of ammonia to contiguous watercourses. My hon. and learned Friend alluded to an event that the company is holding in Market Harborough between 3 and 7 pm tomorrow, 6 March at which those proposals will be described to local people, enabling them to comment. I hope that the event, which I understand is being publicised in leaflets to local residents, will help to enable the company to move forward in delivering environmental improvements, while not only continuing to make its distinctive contribution to the rural economy and society but, one hopes, being a good or better neighbour to those who live around it. That would be entirely the best solution, and I trust that it will meet the concerns expressed so eloquently by my hon. and learned Friend on behalf of his constituents.

All Members of Parliament have a depressing sense of déjà vu when we come across “neighbours from hell” issues and the path of least resistance is for the agency—whether it is a housing agency, local authority or the police—to require people to keep a log. There is a feeling among too many people that that is a delaying tactic. However, I hope that with the proposed measures we will find a way forward.

[Sir Edward Garnier]

May I say how grateful I am to my hon. Friend for his measured response to me and my hon. Friend the Member for Newark (Patrick Mercer)? I am puzzled by the suggestion he has gathered from the district council that my constituents declined to make use of sound monitoring devices. That is not my information. I am slightly concerned that the information he has received from the district council confirms the air of complacency I discussed at the beginning of my remarks. That is not the fault or problem of my hon. Friend the Minister. I know that he is simply acting as an unwilling mouthpiece for the district council, and that this is the system in which we have to operate in these sorts of Adjournment debates. However, may I, through him, urge the district council to up its game and not brush this matter under the carpet, and to ensure that these genuine concerns, concerns confirmed by the constituents of my hon. Friend the Member for Newark, are properly taken account of?

[Richard Benyon]

I entirely accept my hon. and learned Friend’s point. The information I have shared with the House is only as good as that given to my Department by the council. There is clearly a discrepancy between what my hon. and learned Friend has been told and what I have been told. I hope that this will be clarified in the near future and that the changes the company are making will resolve the issue. I recognise his point that this is a matter over which the local authority has control: it has to address the clearly genuine concerns of local people. These are not the kind of vexatious claims that one might hear from an individual who may object to a particular type of business for the wrong reasons. This is a consistent concern for a large proportion of those who live nearby, and is therefore something that the local authority needs to address. He and I are in a business where perceptions are reality. If that is the perception, then it needs to be addressed as a reality by the local authority.

Question put and agreed to.

19:28

House adjourned.