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Jim McGovern (Dundee West) (Lab)
1. What recent discussions he has had with Ministers in the Scottish Government on blacklisting in Scotland.
The Parliamentary Under-Secretary of State for Scotland (David Mundell)
I regularly meet Scottish Government Ministers to discuss a wide range of issues. I commend the work of the Scottish Affairs Committee on investigating the deplorable activity of blacklisting. The Committee’s final report will be given careful consideration by the Government when it is published.
Jim McGovern
I thank the Minister for his response. Perhaps the most ridiculous case of blacklisting that I am aware of is that of the late great Dundonian, Mr Syd Scroggie. He lost a leg and the sight in both his eyes serving his country during the second world war. He found himself on a blacklist. What was his crime? He had written to The Scotsman newspaper to commend the then Dundee district council for buying a portrait of Nelson Mandela. Will the Minister liaise with the Scottish Government to ensure that the odious practice of blacklisting is wiped out?
David Mundell
When the Scottish Affairs Committee report is published, I will undertake to discuss its recommendations with the appropriate Scottish Government Ministers.
Mr Brian H. Donohoe (Central Ayrshire) (Lab)
As someone who has been blacklisted three times in the past, I can tell the Minister that it is an obnoxious way of going about business. Will he ensure that legislation is put in place to ensure that people like me and many others in Scotland do not have to face such a practice in future?
David Mundell
The Government take this matter very seriously. As the hon. Gentleman will know, legislation is already in place in the form of the Employment Relations Act 1999 (Blacklists) Regulations 2010. We await the Scottish Affairs Committee report to see whether it proposes any further measures.
Katy Clark (North Ayrshire and Arran) (Lab)
The practice has clearly been going on for decades, and the law is not working. Has the Minister looked at the legislation to see whether further action is required to ensure that we bring the practice to an end?
David Mundell
We have looked at the regulations, which were brought in by the previous Government. We very much respect the work of the Scottish Affairs Committee and if it finds that the current legislation is not working, we will of course look at the matter.
Mark Menzies (Fylde) (Con)
2. What steps the Government have taken to fulfil their pledge to campaign to keep Scotland as part of the UK.
The Secretary of State for Scotland (Michael Moore)
The United Kingdom Government are providing evidence and analysis to allow voters to make an informed choice about Scotland within the United Kingdom. We are publishing analysis papers on all the key issues throughout this year and next.
Mark Menzies
Does the Secretary of State agree that the Scotland analysis programme is already highlighting the clear benefits of Scotland being part of the UK, and of the UK having Scotland within it?
Michael Moore
I certainly agree with my hon. Friend on that. It demonstrates that Scotland enjoys the best of both worlds, with a strong Scottish Parliament and a strong voice here in Westminster. Our economy is able to benefit from the scale and support of the whole UK. Our place in the world is all the stronger, and our voice in the world all the louder, for being part of the United Kingdom.
Anas Sarwar (Glasgow Central) (Lab)
Yesterday, the Scottish Chambers of Commerce highlighted what it called information gaps, which are a result of Scotland not yet knowing how it would handle business and income taxes and not yet knowing what its currency, its status in the EU or its relationship with international organisations would be. What will this Government do to ensure that all voters in Scotland have the facts, rather than the assertions being made by the Scottish National party and the Scottish Government?
Michael Moore
I commend the Scottish Chambers of Commerce for the work that it is doing, along with others. This week, the Scotland Institute has also highlighted some important deficiencies in the nationalists’ arguments on defence. Our papers on devolution, on the currency and on financial services are setting out the arguments and analysis so that Scotland can make an informed choice. I remain confident that we will decide to stay part of the United Kingdom.
Sir Menzies Campbell (North East Fife) (LD)
May I commend my right hon. Friend on the positive case that he is making? As he has just been joined on the Treasury Bench by the Secretary of State for Defence, will he ensure that all Government Departments including the Ministry of Defence take every opportunity to examine critically the defence proposals of the Scottish National party and the Scottish Government, which have yet again been the subject of strong criticism in an independent report this week?
Michael Moore
My right hon. and learned Friend makes a very important point. I can assure him that my right hon. Friend the Secretary of State for Defence is very much engaged in this entire debate. Central to that debate will be the SNP’s attempt to have it both ways by reluctantly and belatedly signing up for NATO—three quarters of Scots support it, so that was perhaps inevitable—while not being willing to accept the obligations and rules that go with it, including a nuclear umbrella as part of the strategic concept.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It emerged at the weekend that insiders of the no campaign against Scottish independence secretly call the campaign “project fear”. This is a campaign based on scaremongering and negativity. Is the Secretary of State embarrassed?
Michael Moore
I think people on the pro-UK side of the campaign could show their Twitter feeds to anyone to show what negativity and scaremongering are all about. I think, too, that hon. Gentleman should be a little careful about casting aspersions and should concentrate on getting on with the proper arguments. From his side of the debate, we have so far seen no arguments and no detail.
Bob Stewart (Beckenham) (Con)
Will my right hon. Friend comment on the thought that a possible independent Scotland would have an army? Would that independent Scotland be able to employ the same number of Scottish soldiers as the British Army employs at the moment?
Michael Moore
My hon. Friend, whose distinguished track record in these matters is well known to people across the House, makes a very important point. This week, the report of the Scotland Institute—an independent body—has put real and serious questions to the SNP and the yes campaign that they cannot answer.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
3. Which Department is responsible for promoting in Scotland the UK Government’s policies on supporting home buyers; and if he will make a statement.
The Parliamentary Under-Secretary of State for Scotland (David Mundell)
The Government are providing wide-ranging support to help people buy their homes. That support includes the UK-wide Help to Buy mortgage guarantee scheme, which is led by the Treasury and opens in January 2014. The Treasury has also worked with the Bank of England to implement the funding for lending scheme.
Mark Lazarowicz
Next year, home buyers in Scotland will have the opportunity to access the Scottish Government’s shared equity scheme, the Scottish Government’s mortgage guarantee scheme and the UK Government’s mortgage guarantee scheme. That may sound like a surfeit of riches, but it is leading to confusion, even now, about the best way to access these schemes. Why do the Government not take more action to ensure that there is a close relationship between what the Scottish Government are doing and what the UK Government are doing to make sure that the benefits of these schemes do not go to second home buyers, buying houses of up to £600,000 a year, as the people who need them are first home buyers and people on modest incomes?
David Mundell
The hon. Gentleman will be pleased to know that we are working closely with the Scottish Government in relation to their equity scheme, which is equivalent to, but not the same as, the equity loan scheme available in England. The Home to Buy mortgage guarantee scheme will be available in Scotland, and we are working with the Scottish Government to ensure that there is a communications plan so that potential home buyers in Scotland fully understand how all the schemes work and how they relate to each other.
Ann McKechin (Glasgow North) (Lab)
As my hon. Friend has just pointed out, the capital limit on the mortgage guarantee scheme of the UK Government is £600,000. This is hardly designed for those on low and modest incomes. Would the money not be better spent on providing social housing, which is badly needed across Scotland?
David Mundell
I would have thought that the hon. Lady would welcome the 10% increase in loans to first-time buyers in Scotland in the first quarter of 2012. The limit of the scheme reflects house prices across the United Kingdom, and I believe that it is fair and equitable.
Neil Carmichael (Stroud) (Con)
4. What assessment he has made of the potential effect on Scotland of the outcome of the recent negotiations on reform of the common agricultural policy.
The Secretary of State for Scotland (Michael Moore)
Negotiations have been making real progress in the last few hours. We aim to deliver a strong outcome for farmers in Scotland, securing full regionalisation of the common agricultural policy to take account of the particular circumstances of Scottish producers.
Neil Carmichael
Notwithstanding the proven need for environmental schemes, does the Secretary of State agree that it is important to enable the farmers to make decisions about their own production mechanisms, so that they can improve production and provide more sustainable food for this country’s future?
Michael Moore
I agree with my hon. Friend. I spoke to the Secretary of State for Environment, Food and Rural Affairs in the last couple of hours after his all-night negotiations in Luxembourg. He remains committed to a scheme that will ensure that farmers get as productive as possible. He wants a scheme that is regionalised for Scotland, and he is delivering that. We have an arrangement that, I hope, will be fair to farmers, fair to consumers and fair to taxpayers.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
Obviously the most important issue for my constituents is the future of the shipyards, which are threatened by separation, but they are also concerned about the fact that the common agricultural policy supplies public money to landlords who have surplus acres, while the Government fine tenants who are deemed to have surplus bedrooms. Is that fair?
Michael Moore
Let me first pay tribute to the Chairman of the Select Committee, and welcome his evident return to robust good health. I agree with him about the importance of the shipyards in the context of the debate about independence. As for the agricultural issue, I hope that the hon. Gentleman—who is a long-time campaigner for reform of the CAP—will see an outcome from what is still an ongoing process that is fair to his constituents as well as to farmers.
Miss Anne McIntosh (Thirsk and Malton) (Con)
I know that regionalisation is just as important to the delivery of the common agricultural policy as it is to the delivery of the common fisheries policy, but is my right hon. Friend aware of the possible cross-border impact of the way in which the reforms are implemented in Scotland on constituencies that are very close to Scotland?
Michael Moore
Obviously I defer to the hon. Lady’s expertise in this area, but as one who represents what I believe is the longest section of the land border between Scotland and England, I am well aware of the issues that she has raised. What the Secretary of State has been negotiating in Luxembourg is an arrangement that introduces regionalisation for the whole United Kingdom, and allows us to design a common agricultural policy that is fit for local circumstances and fair to farmers throughout the UK.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I am disappointed that the United Kingdom Government are set to negotiate a CAP deal that will leave Scotland with the lowest rural development budget not just in the UK, but anywhere in Europe. Had Scotland been negotiating on its own behalf, it would have benefited from the rule that no member state should receive less than €196 per hectare by 2020. Does the Secretary of State accept that being tied to the UK in these negotiations will cost Scottish farming £300 million a year for the next seven years?
Michael Moore
I am disappointed by the churlish tone adopted by the hon. Lady. I hoped that she might just have studied the tweets from the Scottish agriculture Minister, which have welcomed the major breakthroughs that we have achieved. We have done that as member of the United Kingdom, sitting at the top table and with the clout to deliver a regionalised CAP. It is now for Richard Lochhead and others to get on with designing a common agricultural policy that suits Scotland’s needs, and Mr Lochhead has the ability to do that.
Graeme Morrice (Livingston) (Lab)
If agreement is reached this week on a common agricultural policy that will benefit farmers throughout Scotland, will it not constitute more evidence that Scotland speaks with a louder voice in EU negotiations as part of the United Kingdom?
Michael Moore
I entirely agree with the hon. Gentleman, and the model of the negotiations reinforces his point. It should be noted that the Scottish farming Minister, Richard Lochhead, who has been involved in discussions with the Secretary of State for Environment, Food and Rural Affairs throughout the process, was in Luxembourg overnight, and has seen the United Kingdom deliver for Scotland.
Alun Cairns (Vale of Glamorgan) (Con)
5. What assessment he has made of the most recent figures on employment in Scotland.
The Secretary of State for Scotland (Michael Moore)
The most recent labour statistics show that between February and April 2013 employment in Scotland has increased by 47,000, while unemployment has fallen by 6,000 and the number of jobseeker’s allowance claimants by 900. The Government will continue to take the necessary steps to build a stronger economy in a fairer society.
Alun Cairns
Unemployment in Scotland has fallen for seven months in a row. Does my right hon. Friend agree that that could be put at risk should Scotland vote to become independent?
Michael Moore
I believe that Scotland as part of the United Kingdom has the most appropriate opportunities, and that not only its businesses but its consumers benefit from the great strength of the UK economy. They have more choice and more security as part of the United Kingdom, and when times get tough—as we saw at the time of the banking crisis—the United Kingdom is there to help out. That is a good deal, and we should stick with it.
John Robertson (Glasgow North West) (Lab)
Like my hon. Friend the Member for Glasgow South West (Mr Davidson), I represent a constituency in which the shipyards are the main employer. Scotstoun shipyard employs 2,000 people. What will happen to them if Scotland votes for independence next year?
Michael Moore
Once again, from the other side of the Clyde, the hon. Gentleman makes a very important point. That question is directed to the SNP routinely and it is one for which it has no answer. The arrangement we have with the shipyards and with construction at Rosyth and elsewhere is very good for Scotland, and we should long continue to be part of the UK.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
Will the Secretary of State confirm that many of the jobs are in the offshore oil and gas industry, and we must not forget that that is a very dangerous environment to operate in, especially as we mark the 25th anniversary of the Piper Alpha disaster, when 167 lives were lost? Will he study the outcome of the conference Piper 25 held last week, to see the redoubled efforts of the industry to make conditions as safe as possible for those who work for us offshore?
Michael Moore
My hon. Friend is right to draw the House’s attention to the tragic events of 25 years ago. The loss of 167 lives is something that the families, communities and area are still dealing with a quarter of a century later. We all remember that tragedy and remain committed to ensuring that we have the highest possible standards of health and safety in the North sea. As a Government, we remain committed to working with the sector, the trade unions and others to ensure that is the case, and of course we will study the recommendations from the conference to which my hon. Friend referred.
Mr Speaker
Order. It has suddenly gone quiet, which is very encouraging, but there was excessive noise in the Chamber. I know, however, that Members will want to be quiet for Margaret Curran.
Margaret Curran (Glasgow East) (Lab)
Thank you very much, Mr Speaker.
For those who are in employment, will the Secretary of State for Scotland tell the House whether average wages have gone up or gone down in Scotland since the last election?
Michael Moore
I would have hoped the hon. Lady would welcome the fact that more people are in employment as a result of the measures we are taking, and that we have created nearly 150,000 private sector jobs in Scotland. Of course there are still challenges facing the economy, but the hon. Lady will remember the legacy she left us, and she can see for herself the crisis in the eurozone. We remain committed to taking the steps that will continue our progress on the road to recovery.
Margaret Curran
Once again the Secretary of State does not let the facts get in the way of the same old answer. Average wages in Scotland have, in fact, gone down by £1,100 since he took office. That is the equivalent of 14 tanks of petrol, 15 weekly shops, or over nine months of gas and electricity bills. The Secretary of State has said in the past
“the horrible truth is…everyone is going to have to make a contribution”.
Is this what he had in mind?
Michael Moore
Despite the changes from the shadow Chancellor in recent days, the hon. Lady does not seem to have caught up with the new script—the recognition that the Labour party left the decks burning when it went out of office three years ago. She is not going to be credible until she faces up to that. What I have said to her is, “Yes, these are tough times, and they continue to be challenging,” but what we are doing, by raising the tax threshold so that 224,000 Scots are out of tax all together and 2 million Scots are enjoying a £600 per annum reduction in their income tax bill, is very important. We continue to work for fairness and for a successful economy.
Pete Wishart (Perth and North Perthshire) (SNP)
6. What discussions he has had with the Secretary of State for Work and Pensions on the allocation of additional funds to local authorities in Scotland for discretionary housing payments.
The Parliamentary Under-Secretary of State for Scotland (David Mundell)
Earlier this month my right hon. Friend the Secretary of State for Scotland and I met the Secretary of State for Work and Pensions and Lord Freud, the Minister for welfare reform, to discuss information received from local authorities in Scotland on this matter.
Pete Wishart
The Minister will of course know that some 80% of affected households in Scotland contain a disabled adult, yet they get only a paltry 6.5% of the total budget. Instead of concentrating on his pathetic scaremongering “project fear”, will he concentrate on the real fears of real Scots under this Tory-led Government?
David Mundell
What I am concentrating on is the real concerns of local authorities in Scotland. That is why the Secretary of State and I have met every single local authority in Scotland to discuss the specific concerns they have in relation to welfare reform, and we will meet the Convention of Scottish Local Authorities at the end of July to discuss the outcome of those discussions.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
7. What recent assessment he has made of the performance of the economy in Scotland.
The Secretary of State for Scotland (Michael Moore)
Against a tough economic backdrop of the deficit we inherited from the previous Government and the crisis in the eurozone, we are taking the measures necessary to create a rebalanced economy with sustainable public finances.
Michael Moore
I recognise the issue the hon. Gentleman raises on his constituents’ behalf, and others have done similar. I am very happy to meet him to discuss it further if he wishes. However, we want to ensure that we have an arrangement that helps those with disabilities, and others, to get into the workplace in a sustainable manner. [Interruption.]
Mr Speaker
Order. There is far too much noise in the Chamber. The House must and will hear Mr Alan Reid.
Mr Alan Reid (Argyll and Bute) (LD)
Superfast broadband is very important for the economy of rural areas. The Government’s target is 90% coverage by 2015, but in the highlands and islands, Highlands and Islands Enterprise’s target is only 75% coverage in each local authority area by December 2016. Will my right hon. Friend meet me to discuss how we can get this target up to something comparable to the rest of the country?
Michael Moore
My hon. Friend is right to champion this cause, and it is very important indeed that we get superfast broadband as far across the UK as possible, and particularly in the highlands and islands. However, he might wish to wait for further announcements from the Government in the next day or so.
Angus Robertson (Moray) (SNP)
As part of the “project fear” tactics, there has been a ridiculous level of scaremongering in relation to inward investment, whereas in fact, Scottish Development International and the Scottish Government have helped to deliver a 15-year high in investment levels. Will the Secretary of State apologise for the scaremongering tactics of “project fear” that he is a part of?
Michael Moore
The hon. Gentleman needs to relax a bit and address this issue sensibly. He surely recognises that that record investment comes on the back of a United Kingdom economic framework that is supportive to businesses wherever they locate in the United Kingdom, and through which businesses can get access to the whole of the United Kingdom economy, without any false barriers created by him and his friends.
Angus Robertson
But the failing austerity policies of the Conservative-Liberal Democrat coalition Government are not delivering the growth we require in Scotland or in the UK. However, will he take the opportunity to welcome the help and support he is getting as part of the “project fear” campaign by those who agree with the austerity course, who will agree with the Conservative spending caps that have been announced, and who now agree with bedroom tax: namely—
Michael Moore
That is another neat diversion by the hon. Gentleman, but he cannot avoid the fact that he and his colleagues have no answers on the central questions of Scotland’s economy: what currency it will have, how the banks and others will be regulated, how trade will work across the United Kingdom. On every single important question, there are no answers from the SNP. It will not be listened to until those answers come.
Iain Stewart (Milton Keynes South) (Con)
Later today, the House will debate the High Speed Rail (Preparation) Bill. Does my right hon. Friend agree that this project will assist Scotland’s long-term economic growth?
Michael Moore
My hon. Friend is right: this is absolutely key to the whole of the UK’s economy, and I look forward to the benefits being enjoyed by all parts of Britain—north and south.
Mr William Bain (Glasgow North East) (Lab)
This Government have delivered just one fifth of the promised growth since 2010. Is the Secretary of State also aware that the working-age employment rate in Scotland has fallen by 2% from five years ago, leaving a jobs gap for Scotland of more than 71,000? Does that not make the case for a jobs guarantee now to get Scotland’s young and long-term jobless people back into work, generate more tax revenues and help cut the deficit, which rose, not fell, last year under this incompetent Government?
Michael Moore
The hon. Gentleman should perhaps practise his questions a little more. Yet again, there is denial from him and his colleagues of the good progress we have been making on unemployment, and I hope he recognises that. It is absolutely essential that we take the measures to support people into work, which we are doing with the Work programme and the Youth Contract, and we will be making work pay with universal credit. He can shake his head, but he needs to get with the reality.
John Thurso (Caithness, Sutherland and Easter Ross) (LD)
Does my right hon. Friend agree that connectivity through regional air hubs to international hubs is vital to the performance of the Scottish economy? What can the Government do to assist in maintaining those links, particularly at Inverness and to the highlands?
Michael Moore
My hon. Friend is a real champion of those vital air links to the north and to the far north, which he represents. I know that he has been making strong representations recently, and we would be happy to have further meetings with him to discuss these issues.
Fiona O'Donnell (East Lothian) (Lab)
The Office for Budget Responsibility states that real wages in Scotland will be lower in 2015 than they were when Labour left office. Why is the Secretary of State not standing up for hard-working Scots and protecting tax credits, and is instead giving a tax break to millionaires?
Michael Moore
There we go again. The hon. Lady, once again, chooses to ignore the absolute crisis that the Labour party left for the incoming Government three years ago. She forgets the measures we have taken to take low-paid Scots—224,000 of them—out of tax altogether. She forgets all those things. Without the firm measures we have taken in the past three years we would not be moving from rescue to recovery, as we are.
Gordon Henderson (Sittingbourne and Sheppey) (Con)
Q1. If he will list his official engagements for Wednesday 26 June.
The Prime Minister (Mr David Cameron)
This morning, I had meetings with ministerial colleagues and others, and, in addition to my duties in this House, I shall have further such meetings later today.
Gordon Henderson
Many people in Sittingbourne and Sheppey who have mortgages are benefiting from historically low interest rates. What reassurance can my right hon. Friend give my constituents that their mortgages will continue to be affordable under his Government?
The Prime Minister
My hon. Friend makes an important point. We do enjoy record low interest rates, and that is good news for home owners. What we need to do is stick to the plans that we have set out and have a sensible fiscal policy, so that the Bank of England can keep interest rates low. Here is one piece of advice I will not be taking: on Saturday the leader of the Labour party said that he wanted to control borrowing but on Sunday the shadow Chancellor said borrowing would go up. Perhaps the leader of the Labour party will admit it when he gets to his feet: Labour would borrow more.
Edward Miliband (Doncaster North) (Lab)
Last May, the Education Secretary said that “work will begin immediately” on 261 projects under the Priority School Building programme. Can the Prime Minister tell the House how many have begun?
The Prime Minister
What I can tell the right hon. Gentleman is that infrastructure spending under this Government has been higher than it was under Labour, and we have about £14 billion reserved for capital spending on our schools. But we have had to clear up the appalling mess left by the Building Schools for the Future programme.
Edward Miliband
I do not think the right hon. Gentleman knows the answer. I will tell him the answer: 261 schools were promised, only one has started. Now perhaps he can explain why.
The Prime Minister
We have had to recover from the appalling mess of the Building Schools for the Future programme. That is the mess that we inherited—as well as a record deficit—but it is this Government, as the Chancellor will announce in a minute, who are providing half a million extra school places.
Edward Miliband
I do not think the right hon. Gentleman knows the answer to that one. Let us try another one. In October 2011, he said he wanted to
“bring forward every single infrastructure project that is in the pipeline”.
So, out of 576 projects set out in that plan, how many have been completed?
The Prime Minister
Let me give the right hon. Gentleman the figures for infrastructure spending. Our annual infrastructure investment is £33 billion, which is £4 billion more every year than was ever achieved under Labour. Now let me give him the figures for road schemes. We are investing more in major road schemes in each of the first—[Interruption.]
Mr Speaker
Order. The answer from the Prime Minister must be heard and questions to him, from whichever side of the House, must be heard. It is very clear, very simple—it is called democracy.
The Prime Minister
Thank you, Mr Speaker. The right hon. Gentleman asked the question: how many of the schemes have been completed? You cannot build a nuclear power station overnight. By the way, the Labour Government had 13 years and they did not build a single one. Let me give him the figures on rail. This Government are electrifying more than 300 miles of railway routes. Perhaps he can tell us how many were electrified under Labour? How many? Nine miles—that is the Labour record that this Government are recovering from.
Edward Miliband
I will tell the Prime Minister about our record in infrastructure: 100 new hospitals under a Labour Government, 3,700 schools rebuilt under a Labour Government, and 3,500 new children’s centres—all under a Labour Government. He has no answer, so let me tell him it again: seven out of 576 projects, five of which were started under the previous Labour Government. He said that it takes a long time to complete these projects—I thought he might say that—but 80% have not even been started, despite the promises of three years ago. More promises, no delivery.
Let us see whether the Prime Minister can answer another one. Last year, the Government said that their NewBuy guarantee scheme would help 100,000 people buy a new home. How many people has it helped so far?
The Prime Minister
It has helped thousands of people and has been welcomed by the entire industry. The right hon. Gentleman talks about what was built under a Labour Government and we saw the results—a private finance initiative scheme on which we are still paying the debt and an 11% of GDP budget deficit that this Government will cut in half. That is the proof of what we are doing and we all know that the one question he has to answer is whether he will now admit that he wants to put borrowing up. Will he admit it?
Edward Miliband
Every time I come to Prime Minister’s questions, I ask the Prime Minister a question and he does not answer it—he just asks me one. The only fact that this House needs to know about borrowing is that contrary to the promise the Chancellor made in his autumn statement, it went up last year. That is the truth we find. Let me answer the question the Prime Minister did not know the answer to. He promised 100,000 new homes under NewBuy, but there have been just 2,000. At that rate, it will take until 2058 to meet the target he set.
The British Chambers of Commerce says that the Government’s plan for infrastructure is
“hot air, a complete fiction.”
Even the Deputy Prime Minister has woken up to the problem. He said yesterday
“the gap between…announcement and delivery is quite significant.”
No kidding, Mr Speaker. Why should we believe the promises the Chancellor makes on infrastructure today when the Prime Minister’s own deputy says that they are failing to deliver?
The Prime Minister
The right hon. Gentleman asks for the figures on housing, so let me give him those figures. We have delivered 84,000 new affordable homes. Housing supply is at the highest level since 2008, house building is increasing at a faster rate than for more than two years and we have put in place £11 billion for housing investment. Let me ask him again the question he will not answer—[Interruption.] I know that he does not want to answer the question, but that is why half the country think he is Bert from “The Muppets”, as they think he belongs in “Sesame Street”, not Downing street. Let me give him another go: will he admit that borrowing would go up under Labour?
Edward Miliband
Let me say to the Prime Minister that we will swap places any time. Here is the reality: the Prime Minister promised to balance the books, but borrowing was up last year; he said that we are all in it together, but living standards are falling; he promised to get Britain building, but the Government have not. All we need to know about this Chancellor’s spending review is that the British people are paying the price for their failure.
The Prime Minister
Let us remember what the Leader of the Opposition said at the time of the last spending review. He said unemployment would go up; it has gone down. He told us crime would go up; it has gone down. He told us volunteering would go down; it has gone up. He told us that poorer students would not go to university; the percentage has gone up. He told us that our immigration policy would not work; we have cut immigration by a third. That is what we have done—as ever, he is wrong about the economy, wrong about everything and never trusted by the British people.
Rehman Chishti (Gillingham and Rainham) (Con)
Q2. Today, the Government publish the spending round for 2015-16. Will the Prime Minister confirm that it rejects the representations to borrow less by borrowing more, as proposed by the Opposition?
The Prime Minister
My hon. Friend makes a very good point. On Saturday, the leader of the Labour party told us there would be iron discipline on spending, but on Sunday, the shadow Chancellor, on the television, having been asked five times, admitted that yes, borrowing would go up. So there we have it: they want to borrow less by borrowing more; they want to spend less by spending more; they want to cap welfare by spending more on welfare. No wonder it is not just people at Wimbledon saying, “New balls, please.” [Interruption.]
Mr Speaker
Order. In congratulating the hon. Gentleman on his birthday, I call Mr David Winnick.
Hon. Members
Twenty-one today, twenty-one today, he’s got the key of the door, never been twenty-one before—
Mr David Winnick (Walsall North) (Lab)
I certainly would not suggest a vote on it, Mr Speaker.
Is the Prime Minister aware how shocking it is that the police apparently spent more time investigating the parents and friends of Stephen Lawrence than the racist murder itself, which took place in 1993? When the Home Secretary meets Mrs Lawrence, will she apologise for what occurred? Is it really right for the police to investigate themselves?
The Prime Minister
The hon. Gentleman makes an extremely serious point about a very serious situation. The Lawrence family have suffered appallingly: they lost their son; there was the failure to investigate properly, year after year; and now they hear these allegations that the police were trying to undermine them, rather than help them. My right hon. Friend the Home Secretary set out in the House on Monday the two inquiries—independent inquiries, already under way—and she met Mark Ellison QC again this morning to make sure that his inquiry will cover the allegations made overnight about the bugging by the police of a friend of Stephen Lawrence, but nothing is off the table. If more needs to be done and if further investigations or inquiries need to be held, they will be held. This is not an acceptable situation, and we must get to the bottom of it.
Jane Ellison (Battersea) (Con)
Q3. My Battersea constituency is attracting a large amount of inward investment from around the world for major infrastructure projects. Does the Prime Minister agree with me that one of the ways in which we are restoring the UK’s credibility overseas is by dealing with our debts and showing how we fund public spending properly?
The Prime Minister
My hon. Friend makes an excellent point. The redevelopment of Battersea power station, which for all those years under Labour stood there completely empty and unused, is to start this year, because under this Government we take infrastructure seriously, we get investors to come into our country, and we get projects started—unlike the wasted years under Labour.
John Mann (Bassetlaw) (Lab)
Q4. Never mind Battersea, what about Bassetlaw? In its last six years, the Labour Government delivered £225 million-worth of major infrastructure projects. Can the Prime Minister confirm that in his three years there has been zero delivery of such projects and zero starts of such projects? When will he stop faffing around and get the new Elkesley flyover and the new Serlby Park school, which were guaranteed by the last Government, started in my constituency?
The Prime Minister
The last Government made a lot of guarantees and wrote a lot of cheques, but they could not deliver and they left us with an enormous budget deficit. Let me give the hon. Gentleman the figures: our spending on capital spending is higher than what Labour planned, and annual infrastructure investment is £33 billion, which is £4 billion more than Labour achieved, even in the boom years. That is what happened: they had an unaffordable boom and a painful bust, and it is this Government who are delivering the recovery.
Ben Gummer (Ipswich) (Con)
The Prime Minister knows Ipswich well and he knows that it has some of the poorest wards in the country. He will know that two of those wards were promised schools by the previous Government. They did not deliver them in 13 years. I have just been to the topping out ceremony of one of them, delivered by this Government, and next year we will break ground on the other. When it comes to promises to the least advantaged people in our community, Labour are very good at promising. We deliver.
The Prime Minister
My hon. Friend is absolutely right. The Opposition do not like hearing the evidence of the new schools being built by the Government in difficult times. Also, when we talked about the east of England, year after year, there were calls for improvements to the A11—never delivered, but delivered by this Government.
Mr Gregory Campbell (East Londonderry) (DUP)
Q5. The staging of the G8 proved that Northern Ireland is open to the world for business. Now we need the business of the world to come to Northern Ireland. Will the Prime Minister give us an outline of what he will do in conjunction with the American Administration and the Northern Ireland Executive to deliver a successful inward investment conference in October to deliver thousands of much-needed private sector jobs?
The Prime Minister
I am grateful to the hon. Gentleman, and I look forward to coming to Northern Ireland for that vital investment conference. I think that what we will be able to demonstrate is not only the success of the G8 and the great advertisement that that was for Northern Ireland but the coming together of the UK Government and the Northern Irish Assembly with plans both for economic development and for breaking down the barriers in Northern Ireland between different communities. That shared future agenda is important not just for the future of society in Northern Ireland but for the future of our economy too.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
I recently met Banchory Academy’s Amnesty International group, which has highlighted concerns about the risks to women in Afghanistan. What reassurance can the Prime Minister provide that the Government will continue their efforts to make sure that there is no return to the threats to women that we have seen in Afghanistan in the past?
The Prime Minister
My hon. Friend makes an important point and we should continue to support the Afghan constitution, which gives important guarantees in that regard. I spoke yesterday to President Karzai, including on the issue of the Afghan constitution and how important it is. We are making a major investment by supporting the Afghan national security forces, and through our aid programme—over $100 million a year—we can help to secure the sort of advances in Afghanistan that we all want to see.
John Cryer (Leyton and Wanstead) (Lab)
Q6. Further to the question that the Prime Minister failed to answer last week, can he confirm that he has never had a conversation with Lynton Crosby about alcohol pricing or cigarettes? The question is not “Has he been lobbied?”, but “Has he had that conversation?”
The Prime Minister
As I said last week, I have never been lobbied by Lynton Crosby about anything. The difference between me and, frankly, every Opposition Member is that I can put my hand on my heart and say that I have never been lobbied by trade union after trade union making donation after donation, fixing parliamentary selection after parliamentary selection. That is the real problem in British politics, and it is time that we cleaned it up.
Jake Berry (Rossendale and Darwen) (Con)
With Armed Forces day— [Interruption.]
Jake Berry
Thank you, Mr Speaker. With Armed Forces day in mind this weekend, will my right hon. Friend join me in supporting a campaign in Rossendale and Darwen, supported by Support Our Soldiers, the Rossendale Free Press and the Lancashire Telegraph, encouraging local residents to come and pack boxes to be sent to our troops serving in Afghanistan? We hope that by the end of this weekend we will have packed 500 to be sent to our troops.
The Prime Minister
I congratulate my hon. Friend, and everyone in Rossendale and Darwen who is taking part in this excellent initiative. I have seen these boxes not only being packed in Britain but unloaded in Afghanistan, and I can see the huge pleasure and support that they give our troops in Afghanistan. We should continue to use the money that has been raised in fines from irresponsible bankers following the LIBOR inquiry to invest in the armed forces covenant. Under this Government, we have made real progress in delivering that sort of help and support to armed forces, their families and their communities.
Mr William Bain (Glasgow North East) (Lab)
Q7. In October 2010, the Prime Minister told the Conservative party conference:“In five years’ time, we will have balanced the books.”That promise is going to be broken, is it not, Prime Minister?
The Prime Minister
We have cut the deficit by a third, and we will cut it further by the next election. Frankly, coming to the House complaining about borrowing when you plan to put it up is a pretty odd political strategy. That is the question that the hon. Gentleman has to put to his Front Bench. Why, if borrowing is a problem, is it Labour policy to put it up?
Charlotte Leslie (Bristol North West) (Con)
In 2008 Labour buried three reports warning of a culture of fear in the NHS and warning about inspections. Now we find that its Care Quality Commission has buried concerns over baby deaths. Will the Prime Minister support a root-and-branch review of the sinister culture of cover-up in our NHS over the past decade?
The Prime Minister
First, I commend my hon. Friend for this campaign that she is fighting for openness, transparency and clarity in our NHS. She makes an important point, which is that there was a culture under the previous Government of not revealing problems in the NHS. The former Health Secretary is shaking his head, but this is what the former head of the CQC, Baroness Young, appointed by the previous Government, said—[Interruption.] I know the Opposition do not want to hear it, but they are going to have to hear it, because it is important that we understand the culture that went wrong under Labour. She said this:
“There was huge government pressure, because the government hated the idea that—that a regulator would criticise it by dint of criticising one of the hospitals or one of the services that it was responsible for.”
That is what Barbara Young said. And she said:
“We were under more pressure. . . when”—
the right hon. Member for Leigh (Andy Burnham)—
“became minister, from the politics.”
There was a culture problem under Labour, and the sooner the Opposition admit it, the better.
Barry Gardiner (Brent North) (Lab)
Q8. We now know from the latest Office for National Statistics figures that borrowing did rise last year, and the Prime Minister will recall that the Chancellor of the Exchequer two years ago said, “We have asked the British people for all that is needed, there is no need to ask for more.” Today, why is he asking for more?
The Prime Minister
We have to have a spending review to cover the year 2015-16, which was not covered by previous spending reviews. We have got the deficit down by a third. It is hard, painful and difficult work but we are clearing up the mess left when the hon. Gentleman was a Minister in the previous Government.
Ian Swales (Redcar) (LD)
Sixteen to 18-year-olds can receive free school meals in schools, academies, free schools and university technical colleges, but not in sixth-form colleges and further education colleges, such as those in my constituency. Will the Prime Minister act now to end this clear injustice left by Labour?
The Prime Minister
I am very happy to look at this issue. I know that school meals are very much in the news this week because it is a week when we should be promoting healthy eating in our schools. I am happy to look at the issue, but we have to think very carefully about how best to use the education budget to get money directed to schools for all our children.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Q9. I think the Prime Minister will agree that both his generation and mine were lucky enough to come on to the labour market at a time of full employment and great opportunity. Has he seen the OECD figures this morning in a report that shows the gravity of youth unemployment in our country? May we please, at this late stage in this Government, have a determination to stop unemployment up to the age of 25, as is the case in the Netherlands? Why cannot we deliver that for young people in our country?
The Prime Minister
I absolutely agree with the hon. Gentleman that youth unemployment is a scourge. There is good news in the fact that unemployment has been coming down and youth unemployment has been coming down, but he is absolutely right that it should not be the case that we have youth unemployment of 55% in Spain, yet it is under 8% in Holland. We need to make sure here in the UK that we are performing alongside Holland, Germany and the countries with the lowest rates of youth unemployment. We do that by having a flexible labour market and by helping businesses to invest and locate here. As we stand today, employment is growing faster here than it is in any other G7 country, including Germany, so we are doing the right thing, but we need to focus more on young people.
Mr Crispin Blunt (Reigate) (Con)
I have the Prime Minister’s helpful recent letter to me, underlining in his own hand that housing development does not trump the green belt. I gave his letter to Martin Pike, the planning inspector reviewing Reigate and Banstead’s core strategy, and I regret to report that he upheld the principle that green fields in the green belt could be identified for development against the wishes of local people. Will my right hon. Friend now direct the amendment of the national planning policy framework to better protect green fields in the green belt from unwanted development?
The Prime Minister
I remember underlining that part of the letter. The rules about the green belt have not changed. A local authority can change the green belt only by taking something out of the green belt and putting something back in, in consultation with local people. I know my hon. Friend is having that discussion with his local authority and I am quite convinced that, with the NPPF that we have in place, we can get the balance right between environmental protection on the one hand and the need for more housing on the other.
Graham Stringer (Blackley and Broughton) (Lab)
Q10. This afternoon I shall vote enthusiastically for the High Speed Rail (Preparation) Bill, but can the Prime Minister explain why he has instructed his officials and Ministers to oppose the extension of the trans-European network north of London, which will mean that if we stay in the European Union, High Speed 2 and other transport links to the north of England will not be eligible for funding?
The Prime Minister
Obviously we will be looking at all the ways we can increase the funding available for high-speed rail because, as the hon. Gentleman says, it is very important not only that we achieve high-speed rail between London and Birmingham, but that we build the next stages as well.
Daniel Kawczynski (Shrewsbury and Atcham) (Con)
The Prime Minister knows how hard the Shropshire MPs have worked to get a direct train service from London to Shrewsbury. Virgin wants to implement that direct service in December, but unfortunately Network Rail is trying to prevent that from happening. We are the only county town in England without a direct rail service to London. Will he use his good offices to ensure that that blockage is resolved?
The Prime Minister
I am happy to tell my hon. Friend that the Transport Secretary will be meeting him next week to discuss the issue. In terms of the answer I just gave on high-speed rail, I think that we have to recognise that there is a lot of congestion on our existing main lines and that high-speed rail will help free up services so that we can have more direct connections, particularly to important towns such as Shrewsbury.
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
Q11. The Department for Business, Innovation and Skills proposes to abolish the protection for the name “Sheffield” that guarantees the quality of our manufactured goods. The Ministry of Defence proposes to move the headquarters of our Territorial Army regiment out of the city. What have this Government got against the businesses and people of Sheffield?
The Prime Minister
Sheffield is a fantastic city and a very important part of Britain’s industrial base, and I am proud of the fact that, through the regional growth fund and other schemes, we are investing in its future. We are actually putting more money into the reserves—an extra £1.5 billion—to ensure that we get them up to the level of strength needed for Future Force 2020. On the other issue, I am reliably informed that the hon. Lady should have some confidence.
Sir Bob Russell (Colchester) (LD)
Military bands are important not only to Her Majesty’s armed forces, but to the civilian population. The previous Labour Government cut the number of Army bands by a quarter. In this Armed Forces week, will the Prime Minister give an assurance that there will be no further cuts to Army bands?
The Prime Minister
The assurance I can give my hon. Friend, as the Chancellor will say in a few minutes, is this: yes, of course we have had to make difficult efficiencies in the Ministry of Defence, but there will be no further reductions in the size of our Army, Navy or Air Force, and we will continue with an equipment programme that I think is second to none in terms of the capabilities we will be giving our brave armed service personnel.
Stephen Pound (Ealing North) (Lab)
Q12. Mr Speaker, you will recall that over a year ago—you probably know the exact date—the Prime Minister announced an internal inquiry, to be led by the lustrously named Lord Gold, into the cash-for-access scandal, in which major Conservative party donors were richly, if not royally, entertained at Downing street and Chequers. When does the Prime Minister plan to produce and publish the results of that inquiry?
The Prime Minister
I am very happy to set out for the hon. Gentleman all the things Lord Gold recommended and all the steps that we will be taking, but as we do so perhaps he could impose the issue of donations on his Front Benchers and ask them when they will pay back the taxes they managed to dodge from their donor?
Stephen Mosley (City of Chester) (Con)
Q13. School dinners are vital to ensuring that children eat healthily and in helping to tackle childhood obesity. Will my right hon. Friend join me in welcoming the parliamentary launch of national school meals week, which will take place in the Jubilee Room this afternoon?
The Prime Minister
I certainly join my hon. Friend in that. I think it is a very important cause, because we have had several problems with school meals over the years. They are not attractive enough for young people who want to take them, and there are also problems with obesity, so getting this right, which has been happening over recent years, is extremely important. I speak as someone with two children who enjoy their school meals, and I want the school to go on winning the battle for school meals, rather than parents having to make the packed lunches.
Clive Efford (Eltham) (Lab)
The revelation that the Metropolitan police may have withheld evidence from the Macpherson inquiry has rightly been met with public derision, but the Prime Minister’s answer earlier on really did not go far enough. The public are not satisfied by the police investigating the police, nor will an inquiry held in secret, no matter how eminent the QC, satisfy public opinion. Will the Prime Minister now give an undertaking to hold a public inquiry with the power to summon people and hear evidence under oath?
The Prime Minister
As I said earlier, I rule absolutely nothing out. We have got to get to the bottom of this. But to be fair, this is not the Metropolitan police investigating the Metropolitan police. Two inquiries are under way. One is led by Mark Ellison QC, who played a very major role in prosecuting some of those responsible and who met the Home Secretary today, and the second is led by the chief constable of Derbyshire police force. We need to make sure that they have all the powers and everything that they need. But as I said very clearly, if we need to go further to get to the truth, we will.
Mr Mark Spencer (Sherwood) (Con)
Q14. As the spending round is published, will the Prime Minister assure the House that Her Majesty’s Revenue and Customs will be given the resources to clamp down on tax avoidance, such as the £700,000 avoided by the Labour party?
The Prime Minister
My hon. Friend makes a very good point. I said that I would mention this at every Prime Minister’s questions; I have already managed to get it in once and it is a great pleasure to get it in again. They owe £700,000 of tax that could be going into schools or hospitals. It is about time they realised what hypocrites they are and paid up the money.
Ann McKechin (Glasgow North) (Lab)
Q15. With more than 400,000 house building plots with planning permission remaining unbuilt on in this country, does the Prime Minister agree with me that we should now put pressure on companies to start building and creating jobs rather than simply waiting for their profits to increase?
The Prime Minister
I agree with the hon. Lady that we need to do more to encourage businesses to build on the plots they already have. That is why we have taken unprecedented steps, with schemes such as Help to Buy that are making mortgages available to young people. All those initiatives are actually making a difference, and housing starts are radically up compared with two years ago. But I do not rule out taking further steps as well.
Mr John Baron (Basildon and Billericay) (Con)
The Government deserve credit for having introduced the cancer drugs fund, which has helped more than 30,000 cancer patients since 2010, but can I share with the Prime Minister the fact that there is growing concern about the lack of clarity regarding its replacement at the beginning of the year? Will he look at this as a matter of urgency?
The Prime Minister
I am looking at it as a matter of urgency. I am very proud of the cancer drugs fund; as my hon. Friend says, it has saved many lives and made drugs available to more than 30,000 people. It has been expanded to include some treatments as well as drugs. I certainly want to see this a record that we build on and in no way put at risk.
Sheila Gilmore (Edinburgh East) (Lab)
Last week, the Prime Minister said that people on the Labour Benches had forgotten about the bedroom tax. I can assure him that my constituents certainly have not. In my city last week, only 23 one-bedroom homes were available for let. Of those, four had more than 200 applicants. When is the Prime Minister going to admit that this is not the best way of reducing the housing benefit bill?
The Prime Minister
The point I make to the hon. Lady is that we are removing the spare room subsidy because it is right for there to be fairness as between people in privately rented accommodation and people in socially rented accommodation. But this, in a way, is the perfect prelude to the spending review that we are about to hear. Labour has told us that it is now going to be responsible about spending and that it is going to accept the cuts that have been made, yet we hear, week after week, Back Bencher after Back Bencher, Front Bencher after Front Bencher complaining about the difficult decisions that we have had to take and promising to reverse them. That is why Labour has absolutely no credibility whatever.
Petition
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Kate Hoey (Vauxhall) (Lab)
I have great pleasure in delivering to Parliament and presenting a petition of 40,000 signatures in support of retaining the skateboarding area in the Southbank Centre in my constituency, just across the river. A number of groups have been collecting signatures, and the Save Southbank Skate Park group presented this petition to me and the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) last week. Since then, there has been another petition of 20,000 signatures, which I have not yet been able to get together to present.
This is a culturally and historically important area of the south bank. The Southbank Centre has some very new plans, which everybody wants to see happening, except that it has not engaged with and involved the skateboarders, and it wants them to move to an area which would not be one that they had built up themselves. The centre wants to have its restaurants where the skateboarders are, but many people feel that the restaurants could be where it wants to take the skateboarders. Whatever the situation is, my petition is very clear: some 40,000 people, and many more, want to retain skateboarding in the south bank. May I also say that it is good to see the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Wantage (Mr Vaizey), who has responsibility for the arts, in his place.
The petition states:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The Humble Petition of users and fans of the Undercroft skateboard area,
Sheweth,
That it has been the home to British skaters and riders for over 40 years but is threatened by development.
Wherefore your Petitioners pray that your Honourable House take all steps to urge the Department for Culture, Media and Sport to ensure that the Southbank Centre preserves this facility in its development plans.
And your Petitioners, as in duty bound, will ever pray.
[P001189]
Spending Review
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chancellor of the Exchequer (Mr George Osborne)
This coalition came into office with a commitment to address with firmness and resolve one of the biggest economic crises of the post-war era. The action we have taken, together with the British people, has brought the deficit down by a third, helped a record number of people into work, and taken our economy back from the brink of bankruptcy; and it allows us to say that while recovery from such a deep recession can never be straightforward, Britain is moving out of intensive care, and from rescue to recovery.
Today we announce the latest action to secure the recovery. We act on behalf of every taxpayer and every future taxpayer who wants high-quality public services at a price our country can afford. We act on behalf of everyone who knows that Britain has got to live within its means. We have applied three principles to the spending round I will set out today: reform, to get more from every pound we spend; growth, to give Britain the education, enterprise and economic infrastructure it needs to win the global race; and fairness, making sure we are all in it together by ensuring those with the broadest shoulders bear the largest burden and making sure the unfairness of the something-for-nothing culture in our welfare system is changed.
We have always understood that the greatest unfairness was loading debts on to our children that our generation did not have the courage to tackle ourselves. We have always believed, against much opposition, that it is possible to get better public services at lower cost—that you can cut bureaucracy and boost enterprise by taking burdens off the back of business. In the face of all the evidence, the opposition to these ideas has collapsed into incoherence. We have always believed that the deficit mattered—that we needed to take tough decisions to deal with our debts—and the opposition to that has collapsed into incoherence too. Today I announce the next stage of our economic plan to turn Britain around.
Let me start with the overall picture on spending. In their last year in office, the previous Government were borrowing £1 in every £4 that they spent. It was a record for a British Government in peacetime and a calamitous risk with our economic stability. As the note we saw again this week from their outgoing Chief Secretary put it,
“I’m afraid there is no money.”
So we acted immediately. Three years ago, we set out plans to make savings and to reduce our borrowing. Instead of the £157 billion the last Government were borrowing, this year we are set to borrow £108 billion pounds: that is £49 billion less in borrowing. That is virtually the entire education budget.
So we have made real progress, putting right what went so badly wrong. But while we have been acting, the challenges from abroad have grown: a eurozone in crisis, rising oil prices, and the damage from our own banking crisis worse than anyone feared. The truth is that we have to deal with the world as it is, not as we would wish it to be, so this country has to continue to make savings. I can report to the House that the biggest single saving we have made in government is the £6 billion a year less we are paying to service our debts than the previous Government budgeted for. Bear that number in mind when you hear the Opposition complaining about cuts.
The deficit has come down by a third, yet at over 7% it remains far too high, so we must continue to take action—not just because it is wrong to go on adding debts to our children’s shoulders, but because we know from the global turbulence of the last few years that the economic risks are real and the recovery has to be sustained. If we abandoned our deficit plan, Britain would be back in intensive care. So the figures today show that until 2017-18, total managed expenditure—in other words, the total amount of Government spending—will continue to fall in real terms at the same average rate as it is falling today.
The task before us today is to spell out what that means for 2015-16. Total managed expenditure will be £745 billion. To put that huge sum into context, consider this: if Government spending had been allowed to rise through this Parliament at the average rate of the last three decades, that total would have been £120 billion higher. This Government have taken—[Interruption.]
Mr Speaker
Order. The Chancellor must not have to shout to be heard. Members know that I will always accommodate the interests of Back Benchers on both sides in scrutinising these matters intensively, but the Chancellor and, in due course, the shadow Chancellor must be properly and fairly heard.
Mr Osborne
This Government have taken unprecedented steps to achieve that expenditure control. Now we need to find £11.5 billion of further savings. I want to pay a personal tribute to my right hon. Friend the Chief Secretary for the huge effort that he has put into delivering them. Finding savings on that scale has not been easy. These are difficult decisions that will affect people in our country, but there never was an easy way to bring spending under control. Reform, growth and fairness are the principles. Let me take each in turn.
I will start with reform and the obligation that we all have in this House to ensure that we get more for every pound of taxpayers’ money that we spend. With the help of my right hon. Friend the Minister for the Cabinet Office, we have been combing through Whitehall, driving out costs, renegotiating contracts and reducing the size of government. Cutting money that the previous Government were spending on marketing and consultants, reforming Government IT and negotiating harder on behalf of the taxpayer have already saved almost £5 billion. In this spending round, we will find a further £5 billion of efficiency savings. That is nearly half of the total savings we need to achieve.
We are reforming pay in the public sector. We are holding down pay awards, and public sector pay rises will be limited to an average of up to 1% for 2015-16. However, the biggest reform that we will make on pay is to automatic progression pay. That is the practice whereby many employees not only get a pay rise every year, but automatically move up a pay grade every single year, regardless of performance. Some public sector employees see annual pay rises of 7%. Progression pay can at best be described as antiquated; at worst, it is deeply unfair to other parts of the public sector that do not get it and to the private sector that has to pay for it. So we will end automatic progression pay in the civil service by 2015-16, and we are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police. The armed forces will be excluded from those reforms.
Keeping pay awards down and ending automatic progression pay means that, for every pound we have to save in central administration, we can better limit job losses. I do not want to disguise from the House the fact that there will be further reductions in the number of people working in the public sector. The Office for Budget Responsibility has forecast that the total number of people working for the Government will fall by a further 144,000 by 2015-16. I know that for those who are affected that is difficult. That is the consequence of the country spending far beyond its means.
When I presented the spending round three years ago, I said that about half a million posts in the public sector were forecast to have to go. That is indeed what has happened, and we are saving £2 billion a year, with a civil service now smaller than at any time since the war. I also said three years ago that I was confident that job creation in the private sector would more than make up for the losses. That prediction created more controversy than almost anything else at the time, including with the Opposition. The shadow Chancellor called it “a complete fantasy”. Instead, every job lost in the public sector has been offset by three new jobs in the private sector. In the last year, five new jobs have been created for every job cut in the public sector. The central argument of those who fought against our plan is completely demolished by the ingenuity, enterprise and ambition of Britain’s businesses. I pay tribute to the hard-working people of this country who proved their pessimism wrong.
In this spending round, the Treasury will, as one would expect, lead by example. In 2015-16, our resource budget will be reduced by 10%. The Cabinet Office will also see its resource budget reduced by 10%. However, within that we will continue to fund support for social action, including the National Citizen Service. Ninety thousand places will be available for young adults in the citizen service next year, rising to 150,000 by 2016. It is a fantastic programme that teaches young people about their responsibilities as well as their rights, and we are expanding it.
Local government will have to make further savings too. My right hon. Friend the Communities and Local Government Secretary has set an example to all his colleagues by reducing the size of his Department by 60% and abolishing 12 quangos. He is a model of lean government, and has agreed to a further 10% saving in his resource budget. But we are committing to more than £3 billion capital investment in affordable housing and we will extend the troubled families programme to reach 400,000 more vulnerable families who need extra support. We are proving that it is possible to save money and create more progressive government. That is the right priority.
Here is another of the Government’s priorities: helping families with the cost of living. Because we know that times are tough, we have helped to keep mortgage rates low, increased the personal allowance, cut fuel duty and frozen council tax. That council tax freeze is due to come to an end next April. I do not want that to happen, so I can tell the House today that because of the savings we have made we can help families with their bills. We will fund councils to freeze council tax for the next two years. That is nearly £100 off the average council tax bill for families, and brings savings on these bills for families to £600 over this Parliament. That demonstrates our commitment to all those who want to work hard and get on.
There is one more thing that we can do to help with the cost of living in one part of the country. For years, Members from the south-west of England have fought on behalf of their constituents who face exceptionally high water bills. Nothing was done until we came to office. Now we have cut those water bills by £50 per household every year until 2015. My hon. Friend the Member for Camborne and Redruth (George Eustice) and many others have campaigned to extend that rebate beyond 2015. I am happy to confirm today that we will do that. Taking money out of the cost of government and putting it in the pockets of families—that is what we mean by reform.
Local government has already taken difficult decisions to reduce staff numbers, share services and make savings. I pay tribute to Sir Merrick Cockell for all he has done in showing how this can be achieved. We were told by the scaremongers that savings in local government would decimate local services. Instead, public satisfaction with local council services has gone up under this Government. That is because, with our reforms, communities have more control over their own destiny. That is because we have devolved power and responsibility to manage budgets locally. That is because we have let councils benefit from the tax receipts that come when the local economy grows. Today, we give more freedom, including greater flexibility over assets, and we will drive greater integration of local emergency services. I thank my hon. Friend the Member for Bournemouth East (Mr Ellwood) for his fresh thinking in this area, which has helped to inform us.
We are also embarking on major reforms to the way we spend money locally through the creation of the single local growth fund that Lord Heseltine proposed. This will be £2 billion per year, which is at least £10 billion over the next Parliament. Local enterprise partnerships can bid for that sum, and the details will be set out tomorrow. Our philosophy is simple: trust people to make their own decisions and they will usually make better decisions. But in return for those freedoms, we have to ask local government for the kind of sacrifices central Government are making. The local government resource budget will be reduced by 10% in 2015-16, but when all the changes affecting local government that I will set out are taken into account, including local income and other central Government funding, local government spending reduces by approximately 2%.
I set out today the block grants to the devolved Administrations. Because we have prioritised health and schools in England, this feeds through the Barnett formula to require resource savings of about 2% in Scotland, Wales and Northern Ireland. The Scottish resource budget will be set at £25.7 billion, and Scotland will benefit from new capital borrowing powers of almost £300 million. Being part of the UK means that Scotland will see its capital spending power increase by almost 13% in real terms in 2015-16. It is rightly for the Scottish Parliament to decide how best to use it. That is devolution within a United Kingdom delivering for Scotland.
The Welsh resource budget will be £13.6 billion, and we will shortly publish our response to the Silk commission on further devolution of taxation and borrowing. When we do so, we will be able to say more about the impressive plans to improve the M4 in south Wales that my hon. Friend the Member for Vale of Glamorgan (Alun Cairns) and others have been campaigning for. The Northern Ireland resource budget will be £9.6 billion. We have agreed to provide an additional £31 million in 2015 to help the Police Service of Northern Ireland tackle the threat posed by terrorism. Those police officers do an incredibly brave job on our behalf, and we salute them. Separately, we will make 10% savings to the Scotland, Wales and Northern Ireland Offices.
We believe that the cultural heritage of our nations is not just an economic asset, but has intrinsic value. When times are tough, they too must make a contribution to the savings this country requires. The Department for Culture Media and Sport will make savings of 7% in its resource budget. Elite sports will be protected and the funding of community sports, arts and museums will be reduced by just 5%, but because we recognise the value of our greatest museums, galleries and English Heritage, we are giving them much greater freedom from state control, which they have long called for, applying our reforming principles across the board and empowering those on the front line who know best—what the director of the British Museum called:
“good news in a tough economic climate”.
And while we are at it, we will make sure that the site of the battle of Waterloo is restored in time for the 200th anniversary to commemorate those who died there and to celebrate a great victory of coalition forces over a discredited former regime that impoverished millions.
We still have the finest armed forces in the world, and we intend to keep it that way. The first line of national defence is sound public finances and a balanced defence budget, and my right hon. Friend the Defence Secretary is helping to deliver both. He and his predecessor, my right hon. Friend the Member for North Somerset (Dr Fox), have filled the £38 billion black hole they inherited in the finances of the Ministry of Defence. We will continue to ensure we get maximum value for money from what will remain, which, at over 2% of our GDP, is one of the largest defence budgets in the world. The defence resource budget will be maintained in cash terms at £24 billion, while the equipment budget will be £14 billion and will grow by 1% in real terms thereafter. We will further reduce the civilian work force and their allowances; renegotiate more of the hopeless private finance initiative contracts signed in the last decade; and overhaul the way we buy equipment.
My right hon. Friend the Prime Minister has rightly been clear throughout, however, that he is not prepared to see a reduction in Britain’s military capabilities. This spending round not only protects those capabilities, but enhances them with the latest technologies. We will not cut the number of soldiers, sailors or airmen—we need them to defend our country—and we will give them the best kit to do that job: new aircraft carriers, submarines, stealth fighters, destroyers and state-of-the art armoured vehicles. We also make a major commitment to invest in cyber. It is the new frontier of defence and a priority for the Government.
We will look after families who have lost their loved ones and those injured protecting us long after the wars they fought in are over. We previously committed to fund the military covenant for five years, and today I commit to funding the armed forces covenant permanently. We will do that with the money we have collected from the LIBOR fines, so those who represented the very worst values will support those who represent the very best of British values. Our veterans will not be forgotten.
The intelligence services are on the front line too. Silently, and often heroically, these fellow citizens protect us and our way of life, and so we will protect them in return, with a 3.4% increase in their combined resource budget. The Foreign Office is the public face of our diplomacy, and my right hon. Friend the Member for Richmond (Yorks) (Mr Hague) is quite simply the best Foreign Secretary we have had in a generation. He, too, has demonstrated how we can make our taxpayer pound go further. While making savings in his budget, he has managed to expand our network of embassies in the emerging world and focus his diplomats on British commercial interests. There will be further savings in that budget of 8% in 2015, but he is still committing to strengthen our embassy network in high-growth markets, from Shanghai to Abuja.
The Foreign Office projects our values abroad, and the Home Office protects our values here in Britain.
Chris Ruane (Vale of Clwyd) (Lab)
Is she the best Home Secretary for a generation?
Mr Osborne
Police reform is a model of what we can achieve across Government. Police forces are more accountable to the public, with modern working practices, the latest equipment and democratic oversight, and all that on a smaller—
Mr Osborne
Yes, she is the best Home Secretary for a generation—and a hell of a lot better than the ones who went before.
What was the Opposition’s prediction? They said that crime would rise, and what has happened instead? Crime has fallen by more than 10%. Thanks to the hard work of police officers up and down this country, crime is at its lowest level for 30 years. What was their prediction about our borders? They said that because of cuts we would not be able to control immigration, and what has happened instead? Net immigration is down by more than one third.
This Home Secretary is demonstrating that responsible budgets and reform can deliver better services for the public. In 2015, she will work with a resource budget of £9.9 billion, which is a saving of 6%, but the police budget will be cut by less than that. There will be further savings in the central Department, police forces will be encouraged to share services and some visa fees will go up, but protecting Britain from the terrorist threat remains a top priority, so I can confirm that the police counter-terrorism budget will not be cut at all.
For the police to do their job, they need a criminal justice system that works a lot better. A case of common assault can take 240 days to pass through the courts and involves five separate sets of case papers generated on three different computer systems. In some prisons, the cost of keeping a prisoner is £40,000 a year, but in others, it is one third of that, while the cost of legal aid per head is double the European average. My right hon. Friend the Lord Chancellor is reforming all these things, and by doing so will make savings of 10% in his departmental budget—and he will do that while for the first time offering probation services for those who have served short sentences to help to end the revolving door of crime and reoffending.
That is an example of the reform we are bringing in across Government, and every step of the way, every penny saved, every programme reformed, every entitlement reduced, every difficult choice taken, has been opposed by vested interests and those who got Britain into this mess in the first place. We will not let up. I will not let that happen. The reform will continue.
Government spending does not alone create sustainable growth; enterprise does, and the job of the state is to provide the schools, science, transport links and reliable energy that enable business to grow. Britain was once the place where the future was invented, from the railway to the jet engine to the world wide web. We can be that country again, and today we set out how to get there. A huge amount of innovation and discovery still goes on, but successive Governments, of all colours, have put short-term pressures over long-term needs and refused to commit to capital spending plans that match the horizons of a modern economy. Today we change that. We commit now to £50 billion of capital investment in 2015. From roads to railways, bridges to broadband, science to schools, it will amount to more than £300 billion of capital spending guaranteed to the end of this decade.
Today, we raise our national game. That means that Britain will spend on average more as a percentage of its national income on capital investment in this decade, despite the fact that money is tight, than in the previous decade, when Government spending was being wasted in industrial quantities.
My right hon. Friend the Chief Secretary to the Treasury will tomorrow set out the next stage of our economic infrastructure plan, with specific plans for more than £100 billion of infrastructure projects. Here is what that will mean for the Departments. The Department for Transport will make a 9% saving in its day-to-day resource spending, bearing down on the running costs of Transport for London and on rail administration, but its capital budget will rise to £9.5 billion—the largest rise of any part of Government—and we will repeat that commitment for every year to 2020.
We are already massively expanding investment on major road schemes, but we will do more. We are announcing the largest programme of investment in our roads for half a century. We have already expanded our investment in the railways, but we will do more. We are committing to the largest investment in our railways since the Victorian age, and with the legislation before this House today, we should give the green light to HS2, which will provide a huge boost to the north of England and a transformation of the economic geography of this country.
Here in London, we are digging Crossrail, the largest urban infrastructure project in Europe, but we will do more. We are looking now at the case for Crossrail 2, linking London from north to south. We are going to give the Mayor almost £9 billion pounds of capital spending and additional financing power to the end of this decade.
Ms Rosie Winterton (Doncaster Central) (Lab)
Is he the best ever? Better than the Prime Minister?
Mr Osborne
Well, he’s a lot better than Ken Livingstone, that’s for sure.
Investing in our economic infrastructure also means investing in energy, so we will provide the certainty that investors are crying out for in western countries. This country is already spending more on renewables than ever before. Now we will provide future strike prices for low carbon. We are restarting our civil nuclear programme when other countries are unable to continue theirs, and now we are providing guarantees for new nuclear. Our exploitation of gas in the North sea is already second to none. Now we are making the tax and planning changes that will put Britain at the forefront of exploiting shale gas. We will provide our country with the energy of the future at a price that we can afford. Taken together, this should support over £100 billion of private sector investment in energy.
The Department of Energy and Climate Change will do this while reducing its resource budget by 8%. The Department for Environment, Food and Rural Affairs will see a 10% reduction, but we will set out plans for a major commitment to new flood defences for the rest of this decade. Again, we are prioritising long-term capital through day-to-day cost savings, which is exactly the tough choice that Britain should be making.
It is not enough to have roads, power stations and flood defences. That is just the physical infrastructure we need to compete in the 21st century. We need the intellectual capital, too. This country needs to invent, pioneer and export around the world. That means backing the Department for Business, Innovation and Skills, which helps us to do that. And it means taking tough decisions about what we should support. My right hon. Friend the Secretary of State for Business, Innovation and Skills has agreed to a reduction of 6% in the cost of the Department. That means that we are making savings to student maintenance, keeping grants but not increasing them, and the cost of the central Department will also be cut further. That means that, within the reduced budget, we can put more money into apprenticeships and continue with the dramatic increase in support that we have provided to exporters through UK Trade & Investment.
We are not going to shift medical training and research out of that Department, because they are working well where they are. And in that Department too, we can shift from day-to-day spending to a huge 9% increase in capital investment. That includes a huge investment in science. Scientific discovery is first and foremost an expression of the relentless human search to know more about our world, but it is also an enormous strength for a modern economy. From synthetic biology to graphene, Britain is very good at it and we are going to keep it that way. Today, I am committing to maintaining the resource budget for science at £4.6 billion, to increasing the capital budget for science in real terms to £1.1 billion, and to maintaining that real increase to the end of this decade. Investment in science is an investment in our future. So yes, from the next generation of jet engines to cutting-edge supercomputers, we say: keep inventing, keep delivering; this country will back you all the way.
We have infrastructure and we have science, but we still need an educated work force to make it happen. Because of our ongoing reforms to our universities, they are now better funded than before—[Hon. Members: “What?”] Well, Mr Speaker, people will remember that the reforms to higher education were bitterly contested in the House. We remember the scaremongering about fees, and the claims that they would destroy social mobility and put off students from poorer communities applying. And what has happened since? We now have the highest ever proportion of students from the most deprived neighbourhoods applying to universities. We should all welcome that.
There is no greater long-term investment a country can make than in the education and skills of its children. Because of the tough decisions that we have taken elsewhere, we have been able to invest in education and accelerate school reform. When we took office, our country’s education system was falling behind other parts of the world. Now, thanks to the brilliant programme of reform by my right hon. Friend the Secretary of State for Education and the Minister for Schools, my right hon. Friend the Member for Yeovil (Mr Laws), we are once again leading the way.
We have applied our reform principles in education too, freeing schools and teachers to concentrate on teaching and turning the majority of secondary schools into academies. In this spending round, that momentum of reform will grow. The Department for Education’s overall budget will increase to £53 billion and schools spending will be protected in real terms, fulfilling the pledge we made at the beginning of this Parliament, for all of this Parliament. We will transfer power and money from town halls and central bureaucracy to schools, so that more of the money for education is spent on education. So, while grants to councils and spending on central agencies are reduced, the cash going to schools will go up.
I can announce today that schools spending will be allocated in a fairer way than ever before. School funding across the country is not equally distributed; it is distributed on a historical basis with no logical reason. The result is that some schools get much more than others in the same circumstances. That is unfair and we are going to put it right. Many MPs on both sides of the House have campaigned for that. My hon. Friend the Member for Worcester (Mr Walker) has been a particular champion in this Parliament. Now, the lowest-funded local authorities in this country will at last receive an increase in their per-pupil funding as we introduce a national funding formula to ensure that no child in any part of our country is discriminated against. We will consult on all the details so that we get this historic reform right. The pupil premium that we have introduced also ensures that we are fair to children from low income backgrounds. It will be protected in real terms, so that every poor child will have more cash spent on their future than ever before. The capital budget will be set at £4.6 billion in 2015-16, with over £21 billion of investment over the next Parliament.
We will also tackle the backlog of maintenance in existing schools and we will invest in new school places. We will fund 20 new studio schools as well as 20 new university technical colleges, as they are outstanding new vocational institutions. Free schools are giving parents the opportunity to aspire to a better education for their children. The Opposition have said that they want no more of them, but we will not allow such an attack on aspiration to happen. Instead, we must accelerate the programme and bring more hope to more children. That is why I can announce that we will fund an unprecedented increase in the number of free schools. We will provide for 180 great new free schools in 2015-16.
The schools budget will be protected, there will be fairer funding across the nation, the pupil premium will be extended to more students than ever before and there will be a transformation in the free school programme. We will not make our children pay for the mistakes of the past. We will give them every chance for the future, because that is the single best investment we can make.
Our education settlement is also consistent with the third and final principle of this spending round—fairness. It is not possible to reduce a deficit of this size without asking all sections of the population to play their part, but those with the broadest shoulders should bear the greatest burden. The Treasury’s distributional analysis shows that the top fifth of the population lose the most after this spending round, and the independent Institute for Fiscal Studies is unequivocal that the richest 10% have paid the most. In every year of this Parliament, the rich will pay a greater proportion of income tax revenues than they did in any one of 13 years under the last Labour Government.
When it comes to Her Majesty’s Revenue and Customs, despite the fact that this Department will see a 5% reduction in its resource budget, we are committed to extra resources to tackle tax evasion. The result is that we expect to raise over £1 billion more in tax revenues from those who try and avoid paying their fair share.
Fairness also means refusing to balance the budget on the backs of the world’s poorest. I know that not everyone believes we should fulfil our commitment to spend 0.7% of our national income on development—but I do. I am proud to support a Government who are the first in our history to meet our pledge and meet it not only this year, but next year and the year after that. Of course, overseas development is about more than just the Department for International Development budget, and we comply with internationally policed rules. The DFID budget is, however, the lion’s share, and it will be set at £11.1 billion in 2015-16. Even in these tough times, the decisions we make mean we keep to our commitments.
That includes our commitment to the national health service—an institution that is the very embodiment of fairness in our society. The NHS is much more than the Government’s priority; it is the people’s priority. When we came to office, the health budget was £96 billion; in 2015-16, it will be £110 billion—and capital spending will rise to £4.7 billion. New medical treatments and an ageing population mean that the demand for NHS services is rising, so we have not spared in also demanding reform and value for money in this service. This will not insulate the health service from tough choices; there are already 7,000 fewer managers, and the NHS will continue to make efficiency savings. Those savings will, however, enable new investment in mental health and funding for new treatments for cancers such as prostate and breast cancer. Let me respond directly to the breast cancer research campaign in which so many have taken part. We will continue to back the charity research support fund and look into making it easier for these organisations to benefit from gift aid.
Many older people do not just use the NHS; they also use the social care system. If we are honest, they often fall between the cracks of the two systems, being pushed from pillar to post, not getting the care they should. None of us here would want that for our parents or grandparents, and in a compassionate society, no one should endure it. It is a failure that also costs us billions of pounds: Britain can do better.
We said in the 2010 spending review that the NHS would make available around £1 billion a year to support the health needs of people in social care. It worked, and saved hundreds of millions in the process. Last year, these improvements meant almost 50,000 fewer bed days were lost to the NHS. So today, I can announce that I will bring together a significant chunk of the health and social care budgets. I want to make sure that everyone gets a properly joined-up service where they will not have to worry about whether a service is coming from the NHS or the local council.
Let us stop the tragedy of people being dropped in A and E on a Friday night to spend the weekend in hospital because we cannot look after them properly in social care. By 2015-16, over £3 billion will be spent on services that are commissioned jointly and seamlessly by the local NHS and local councils working together. It is a huge and historic commitment of resources to social care, tied to real reform on the ground, to help end the scandal of older people trapped in hospitals because they cannot get a social care bed. This will help relieve pressures on A and E, help local government to deliver on its obligations and will save the NHS at least £1 billion. This is integrated health and social care—no longer a vague aspiration, but a concrete reality transforming the way we look after people who need our care most.
So these are the three principles that guide the spending round: reform, growth and fairness. Nowhere could these principles be more clearly applied than in our approach to welfare. Two groups of people need to be satisfied with our welfare system: those who need it who are old, vulnerable, disabled or have lost their job, whom we as a compassionate society want to support. Then there is a second group: the people who pay for this welfare system who go out to work, pay their taxes and expect it to be fair on them, too.
So we have taken huge steps to reform welfare: changing working age benefits with universal credit so that work always pays; removing child benefit from the better off; capping benefits so that no family out of work gets more than the average family gets in work. And we have been making sure that benefit payments do not rise faster than wages. The steps we have taken will save £18 billion a year—and every single one of them was opposed by the welfare party on the Opposition Benches.
Now we propose to do three further welfare reforms. First, as I said in the Budget, we are going to introduce a new welfare cap to control the overall costs of the benefits bill. We have already capped the benefits of individuals, and now we cap the system as a whole. Under the system we inherited, welfare spending was put into a category called annually managed expenditure, but the problem was that it was not managed at all. The cost of welfare went up by a staggering 50%—even before the crash. Our welfare cap will stop that happening again. The cap will be set each year at the Budget for four years. It will apply from April 2015 and will reflect forecast inflation, but it will be set in cash terms. In future, when a Government look to breach the cap because they are failing to control welfare, the Office for Budget Responsibility will issue a public warning. The Government will then be forced to take action to cut welfare costs or publicly to breach the cap and explain it to Parliament.
We will exclude a small number of the most cyclical benefits that directly rise and fall with the unemployment rate to preserve the automatic stabilisers: housing benefit, tax credits, disability benefits and pensioner benefits will all be included—but the state pension will not. I have had representations that we should include the basic state pension in the welfare cap. That would mean that a future Government could offset a rise in working age benefits by cutting the pensions of older people. That penalises those who have worked hard all their lives. Cutting pensions to pay for working age benefits is a choice this Government are certainly not prepared to make. It is unfair; we will not do it and we reject those representations completely.
The new welfare cap is proof that Britain is serious about living within its means: controlling spending, protecting the taxpayer and being fundamentally fair. Today we are introducing a limit on the nation’s credit card. The principles enshrined in the cap apply to our second reform today. We will act to ensure that we stop the cost of paying the winter fuel payments made to those who live abroad rising in a way that no one ever intended. EU law now says that people living in the European economic area can claim winter fuel payments from us, even if they did not get them before they left the UK. Paying out even more money to people from all nationalities who might have worked in this country years ago, but no longer live here is not a fair use of the nation’s cash. So from the autumn of 2015, we will link the winter fuel payment to a temperature test; people in hot countries will no longer get it. It is, after all, a payment for winter fuel.
The third welfare reform I announce today is about making sure we do everything to help people get into work. My right hon. Friend the Secretary of State for Work and Pensions has changed the national debate about welfare, and has comprehensively won the argument. He has committed himself to finding a further 9.5% of savings in his Department’s running costs. That will require a difficult drive for efficiency, and a hard-headed assessment of underperforming programmes.
However, welfare reform is about much more than saving money, vital though that is. It is about reducing dependency and changing people’s lives for the better. I am determined to go further to reduce worklessness with all its social consequences. Where is the fairness in condemning people to a life on benefits because the system will not help them to get back into work?
Today we are introducing Upfront Work Search. We are going to make sure that people turn up with a CV, register for online job search, and start looking for work. Only then will they receive their benefits. Thanks to this Government, lone parents who are out of work can now receive free child care for all their three and four-year-olds, so it is reasonable to ask that they start regularly attending jobcentres and preparing to return to work.
We are announcing further changes today. Half all jobseekers need more help with looking for work, so we will require them to go to the jobcentre every week rather than once a fortnight. We will give people more time with jobcentre advisers, and proper progress reviews every three months. We will also introduce a new seven-day wait before people can claim their benefits. Those first few days should be spent looking for work, not looking to sign on. We are doing those things because we know that they help people to stay off benefits, and help those who are on benefits to get back into work faster.
Here is a further change. From now on, if claimants do not speak English, they will have to attend language courses until they do. That is a reasonable requirement in this country. It will help people to find work, but if they are not prepared to learn English, their benefits will be cut.
As a whole, this new contract with people on benefits will save more than £350 million a year, and all that money will enable us to afford extra support to help people to get into work. Help to work, incentives to work, and an expectation that people should do everything that they can to find work: that is fair to people who are out of work, and it is fair to those in work who pay for them. Together, these reforms bring the total additional welfare savings in 2015 up to £4 billion.
Step by step, this reforming Government are making sure that Britain lives within its means. The decisions that we make today are not easy, and these are difficult times; but with this statement, we make more progress towards an economy that prospers, a state that we can afford, a deficit coming down, and a Britain on the rise. I commend our economic plan to the country.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The Chancellor spoke for more than 50 minutes, but not once did he mention the real reason for today’s spending review: his comprehensive failure on living standards, growth and the deficit. We have seen prices rising faster than wages, families worse off, long-term unemployment up, welfare spending soaring, a flatlining economy, and the slowest recovery for more than 100 years. As a result of that failure, for all the Budget boasts, borrowing last year was not down but up. The Chancellor has not balanced the books, as he promised to do, and in 2015 we will see a deficit of £96 billion. There has been more borrowing to pay for the Chancellor’s economic failure, which is why he has been forced to come to the House today to make more cuts in our public services.
Does the Chancellor recall what he said to the House two years ago? He said:
“we have already asked the British people for what is needed, and…we do not need to ask for more.”—[Official Report, 23 March 2011; Vol. 525, c. 951.]
We do not need to ask for more! Is not the Chancellor’s economic failure the reason why he is back here today asking for more? More cuts in the police, more cuts in our defence budgets, more cuts in our local services: this out-of-touch Chancellor has failed on living standards, growth and the deficit, and families and businesses are paying the price for his failure.
Of course, it was not supposed to turn out like this. Does the Chancellor remember what he told the House three years ago, in his first Budget and spending review? He said that the economy would grow by 6%, but it has grown by just 1%. He pledged to get the banks lending, but bank lending is down month on month on month. He made the number one test of his economic credibility keeping the triple A credit rating, but on his watch we have been downgraded not once but twice. He promised that living standards would rise, but they are falling year on year on year. He said “We’re all in this together”, but then he gave a huge tax cut to millionaires. He promised to balance the books, and that promise is in tatters.
We see failed tests and broken promises. The Chancellor’s friends call him George, the US President calls him Jeffrey, but to everyone else he is just Bungle—and I see that even Zippy on the Front Bench cannot stop smiling. Calm down, Zippy, calm down.
Did we get an admission from the Chancellor that his plan has not worked, and that Britain needs to change course? Did we get the plan B for growth and jobs that we and the International Monetary Fund have called for? It does not have to be this way. Surely, rather than planning for cuts in 2015, two years ahead, the Chancellor should be taking bold action now to boost growth this year and next. Investment would get our economy growing and bring in the additional tax revenues that would mean that our police, armed forces and public services would not face such deep cuts in 2015. Why did the Chancellor not listen to the IMF, and provide £10 billion in infrastructure investment this year? Given that house building is at its lowest level since the 1920s, why is he not building 400,000 more affordable homes this year and next? If the Chancellor continues with his failing economic plan, it will be for the next Labour Government to turn the economy around and make the tough decisions that will get the deficit down in a fair way.
I have to say to the Chancellor that there is no point in boasting about infrastructure investment in five or seven years’ time; we need action now. I must also say to him that he ought to brief the Prime Minister better for Prime Minister’s questions, because three years after the infrastructure plan was launched, just seven of the 576 projects that were announced have been completed. More than 80% have not even been started, just one school has been provided, and in the first three months of this year, infrastructure investment fell by 50%. On infrastructure, we need bold action now, not just more empty promises for the future.
As for the idea that this spending review will strengthen our economy for the long term, let me ask the Chancellor some questions. Where is the proper British investment bank that business wants? Where is the 2030 decarbonisation target that the energy companies say that they need if they are to be able to invest for the future? Where is the backstop power to break up the banks if there is no reform, which the Parliamentary Commission on Banking Standards called for? And whatever happened to the Heseltine plan’s much-heralded £49 billion single pot growth fund for the regions? A mere £2 billion is pathetic.
Is this not the truth? Instead of action to boost growth and long-term investment, all we got today was more of the same from a failing Chancellor, and we got more of the same on social security and welfare spending too.
We have had plenty of tough talk and divisive rhetoric from the Chancellor and the Prime Minister, but on their watch the benefits bill is soaring. Social security spending is up £21 billion compared with their plans. We have called for a cap on social security, and we fully support the triple lock on the pension—something not even mentioned in the Chancellor’s statement—but the fact is that in 2010 the Chancellor tried to set a cap on social security spending and he has overspent his cap by £21 billion.
If the Chancellor really wants to get social security bills down, why not get young people and the unemployed back to work with a compulsory jobs guarantee paid for by a tax on bank bonuses? Why not get our housing benefit bill down by tackling high rents and the shortage of affordable homes? Why not stop paying the winter fuel allowance to the richest 5% of pensioners? And why not make work pay with a 10p tax band paid for by a mansion tax, instead of huge tax cuts for millionaires?
The Chancellor is making the wrong choices on growth and social security spending, and he is making the wrong choices on departmental spending as well. Let me ask him: when thousands of front-line police officers are being cut, why is he spending more on police commissioners than the old police authorities? Why is he wasting £3 billion on a reckless reorganisation of the NHS that the public do not support? Why is he funding new free schools in areas with enough school places, while parents in other areas cannot get their children into a local school?
We will study the Chancellor’s departmental spending plans for 2015-16. There is a lot of detail that he did not provide for the House. We look forward to seeing whether he will confirm the continuation of free national museum entry—maybe he can tell us in his response—but I have to say to the Chancellor that the country needs to know the detail, so let me ask him: will this spending review mean fewer police officers in 2015-16, on top of the 15,000 we will lose in this Parliament? Will it mean fewer nurses in 2015, on top of the 4,000 we have lost so far? Will it mean fewer Sure Start children’s centres, on top of the 500 that have already closed? And will he continue to impose deeper cuts on local authorities in areas with the greatest need, when already in this Parliament the 10 most deprived local authorities are losing six times the spending per head of the 10 least deprived areas? People up and down the country want to know the answers to these questions, and they should be in no doubt that the scale of the extra cuts the Chancellor has announced today to our police, defence and local services are the direct result of his abject failure to get the economy to grow.
The Chancellor is failing on living standards; they are falling. He is failing on growth; it is flatlining. He is failing on the deficit, and all we got was more of the same: no plan to turn our economy around, no hope for the future, and Britain’s families and our public services are paying the price for this Chancellor’s failure.
Mr Osborne
One thing is for certain after that performance: the right hon. Gentleman is the worst shadow Chancellor for a generation, and we want to keep him right where he is. What is amazing is that he spoke for 11 minutes and never said Labour wants to borrow more. Did anyone hear that in his comments? That is his argument: he wants to borrow more. Why does he not have the courage to get up and make his economic argument at the Dispatch Box? He finds himself in a situation where the entire argument he has been advancing for the last three years has completely collapsed. Where was the reference to the temporary VAT cut? Abandoned. Where was the reference to the five-point plan? Abandoned. He complains about all the cuts; here is a very simple question. We shall spend £745 billion in 2015; what will he spend? Does he match those plans or not? Hands up on the Labour Benches from those who want to match our spending plans. On Saturday, the Labour leader—
Mr Speaker
Order. May I just say—[Interruption.] No help from the hon. Member for Colne Valley (Jason McCartney) is required; he would not have the foggiest idea where to start. Let me just say to the Chancellor of the Exchequer that there is a way in which these matters are handled, and it is not by the Minister responding to questions posing a series of questions. That is in breach of parliamentary protocol, it is not proper, and it must stop right away—and others, including at the very highest level, ought to take note of that for future weeks. Let’s be clear about it.
Mr Osborne
I will leave it to the country to ask these questions. I make this point. In this spending plan I have set out total managed expenditure of £745 billion, and it is up to all Members of this House to decide whether they support that. We do not know the position of the Opposition, because on Saturday the Labour leader said there would be no more borrowing, but on Sunday the shadow Chancellor said “yes, of course” there would be, so we will see what the position of the Opposition is on this.
The shadow Chancellor mentions what has been said in this House before. Well, let us be clear about what he said in this House before, and how we have responded to it in this spending plan. On 6 June 2011 he said there would be a return to mass unemployment. We have set out welfare plans that help people get back into work. Does he support those or not? That is the question the public will ask of him. He said in October 2010 that we were taking a huge risk with crime. Crime is down 10% or more. He said in July that year that the university reforms would shut out those from disadvantaged backgrounds from university, but actually a record proportion of pupils from disadvantaged backgrounds applied to go to university. He said, in his own words, that the cuts to the border agency would mean we would be unable to enforce our immigration policy. That was wrong, too. Every prediction he has made, including the prediction that there would be no more boom and bust, has proved to be completely wrong, so why would anyone believe a word he has got to say about this?
The simple point is this: we have set out our plans—we have set out our economic strategy, we have set out our spending plans—and those who disagree with them should advance an alternative or retreat from the battlefield, because the shadow Chancellor finds himself in no man’s land. He has abandoned his economic argument but stuck with a disastrous economic policy of borrowing more, and in the end, if we want to know why, we only need to hear what he said this month:
“Do I think the last Labour government was profligate, spent too much, had too much national debt? No, I don’t think there’s any evidence for that.”
All people want Labour to say is, “We’re sorry, we got it wrong, we borrowed too much and we spent too much, and we won’t do it again.”
To answer the specific question that the shadow Chancellor asked me, yes we will have free museum charges—so that people can go to our museums and see the antiquated economic policy advanced by the Opposition, which brought this country to its knees and gave us the worst economic crisis for a generation, and they can learn how this Government cleared up that mess.
These reductions and the control of public expenditure are absolutely essential. That will bolster the credibility of fiscal policy in the markets and it creates room for the private sector to lead the recovery and create the jobs we need, particularly in small businesses in our constituencies, which are desperately trying to find the funding to expand.
Mr Andrew Tyrie (Chichester) (Con)
Behind all the noise, most Members actually do agree that both the deficit and public spending are much too high and have to come down, and we should be under no illusions among ourselves just how tough and remorseless a task that is. Those reductions and that control of public expenditure are absolutely essential. They will bolster the credibility of fiscal policy in the markets and create room for the private sector to lead the recovery and create the jobs we need, particularly in small businesses in our constituencies, some of which are desperately trying to find the funding to expand. Sustaining public expenditure control over this period, and now being able to set out plans for the years ahead, is a great achievement by the Chancellor, the Chief Secretary to the Treasury and the coalition.
I want to draw attention to and ask a question about a particular proposal. The cap on nominal welfare spending will need careful scrutiny; it may well be an essential measure to give teeth to controlling annually managed expenditure, which frankly has not been well managed and is threatening to get out of control. Will the Chancellor publish today all the necessary detail to enable Parliament and the Treasury Committee to examine this extremely important proposal?
Mr Osborne
I thank my hon. Friend for his support for the difficult steps we needed to take. Our trying to set out these spending plans further in advance, so that Departments have time to make the necessary adjustments, is a good innovation in fiscal policy. The certainty we now have for 2015 will, I think, mean better public policy.
We have set out some of the details of the welfare cap in my speech today, but in the document we publish, we have set its parameters, how it will be set in cash terms, the period over which it will be set and when it will be set—at the Budget. However, it is absolutely my intention to listen to the Treasury Committee, which I hope will take an interest in this issue, and to examine best practice and make sure we get the final details absolutely right. If we want to change the Office for Budget Responsibility charter, we will have to legislate, but that is something we need to examine. We absolutely should work on the details, but the principles and the principal components of the cap have been established.
Mr Alistair Darling (Edinburgh South West) (Lab)
I was interested in the Chancellor’s claim to have rescued the economy. I think I am right in saying that in 2010, the economy was actually growing, whereas unfortunately, in 2011 it stopped growing. That is why he is borrowing more than he intended and why his target to reduce national debt has been moved well into the next Parliament.
On the new growth items the Chancellor announced today, particularly those relating to transport, how much of that is public money and how much is expected to be raised from the private sector? Can he also give us some idea of how much additional growth he expects to see in the economy as a result of the measures he has announced, most of which, I think I am right in saying, will not take effect until the next Parliament? Given the delay in delivery of these projects—a problem that has dogged successive Governments—it may be some considerable time before we actually see their economic benefit.
Mr Osborne
The right hon. Gentleman and I have, I hope, a cordial relationship, but I will just disagree on one point. The idea that he handed me a golden economic legacy and an easy set of books, and that somehow it was all fantastically booming after a 6% contraction in the economy, is something that will turn out, if I check his memoirs, not to have been the case.
To answer the right hon. Gentleman’s specific points, the transport money we set out is public investment; of course, there are opportunities to lever in additional private investment. He was gracious enough to acknowledge that all Governments have had the challenge of how to deliver infrastructure projects, given the planning system we have and so forth. We are reforming planning and will set out this week changes to infrastructure delivery in Whitehall to try to accelerate the delivery of projects—something that has bedevilled the British Government for decades, and we shall do our best to put it right.
Mr John Redwood (Wokingham) (Con)
I fully support the Chancellor’s wish to reduce the growth rate of public spending in cash terms; it is a very necessary thing to do to get the deficit under control as economic growth picks up, as I think it is now doing. On the welfare reforms, will he look at the idea that any non-British citizen coming to our country should have to work for a period and pay taxes before being eligible for any welfare benefits?
Mr Osborne
I am certainly prepared to look at any ideas that my right hon. Friend puts forward on welfare. Of course, one of our challenges—one of the debates in this country and in other European countries—concerns the eligibility for benefits of people who move here. In that regard, we are hemmed in by European law, but there may be opportunities within it to make some adjustments, and we are looking closely at those.
Margaret Hodge (Barking) (Lab)
The Chancellor said that one of the objectives of his statement today was to stimulate growth, and he announced £50 billion of investment in 2015-16. In 2009-10, this country spent £48.4 billion in cash terms. Will he now accept that that 2015-16 figure represents a real-terms cut in investment?
Mr Osborne
I inherited from the last Chancellor a plan greatly to reduce capital spending—to cut it by 50%. In the 2010 review, we increased it from the plans we inherited. We increased it in the years since, and now we are maintaining it in the years going forward and setting it out for the rest of the decade. So the big reduction in capital spending that the right hon. Lady refers to is one I guess she must have supported, because she was a Minister of that Government.
Stephen Williams (Bristol West) (LD)
We all know that if we try to live a £40,000 lifestyle on a £30,000 salary, it soon leads to misery unless corrective action is taken. That was the legacy, at a national level, that we were left by the last Government. Despite that tough backdrop, have not this coalition Government secured funding for the national health service and for schools, including more money for children on free school meals, and today announced a massive boost to infrastructure spending and scientific research in order to smooth the way to sustainable economic growth?
Mr Osborne
My hon. Friend is right, and in the end this is about choices. I say to all the Labour Members getting ready to ask questions that, given that the Labour leader says that he will take these resource plans as a starting point, if they complain about any cut, they have to suggest what else they would cut. We have made choices as a Government. We have committed to protecting the NHS, committed to schools, committed to the pupil premium—we have done these things because we want a fairer society, and we also believe that investing in infrastructure and growth enhances our country’s economic performance. Those are our choices: if people have an alternative plan, we have not heard of it.
Mr Peter Hain (Neath) (Lab)
Why does the Chancellor think he is so right, and Keynes wrong?
Mr Osborne
We have drawn on the best economic evidence that the recovery from a banking crisis of the severity that we went through is long and protracted, but we have to de-lever as an economy and try to fix our banking system. That is what I set out at the Mansion House. We also have to have a credible fiscal policy in order to allow monetary policy to be loose. I think that is the best economic approach.
Mr Brian Binley (Northampton South) (Con)
My grandmother taught me that there are only two things people can do when they are in serious financial difficulty: cut spending, and earn more. The Chancellor’s record on cutting spending has been commendable, but more needs to be done on earning more. What will he do to enhance productivity to help this country earn more?
Mr Osborne
My hon. Friend is absolutely right that Britain has got to earn its way in the world, and that is about increasing our earnings as well as dealing with our expenditure. In the Budget, we set out a number of tax changes, such as the new employment allowance, which I know he strongly supports and which will help small firms by wiping out the first £2,000 of national insurance, taking a third of those firms out of national insurance. We have made a series of other tax changes to promote investment, and where we had to make tough spending choices, I have chosen in this spending round to prioritise things that will help businesses to create jobs.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Is the Chancellor not aware that he has been in post for three years now, that he owns these policies and that their failure is his responsibility? All the empty rhetorical questions directed at the Opposition and the shadow Chancellor will not airbrush away the failings on growth, living standards and borrowings. Is it not time he faced up to that and changed the policies that have failed so far?
Mr Osborne
I tell you what has happened while this Government have been in office. First, borrowing has come down—[Interruption.] The shadow Chancellor says it has gone up, but the problem is that if this really is his maths, the country would be in very serious trouble if he ever got himself back into Downing street. We were borrowing £157 billion a year under Labour and now we are set to borrow £108 billion in the coming year—£118 billion if we remove the asset purchase facility transfer. So borrowing has come down.
Secondly, more than 1 million jobs have been created. Thirdly, we can look around the world and see that this country is seen to have got its act together and is making the big reforms we need to education, welfare and the like. That is why we are absolutely determined to win the global race and people see us as a country capable of winning that race.
Andrea Leadsom (South Northamptonshire) (Con)
I sincerely congratulate my right hon. Friend on his statement. Not that he needs any advice from me, but he should stick to his guns because he is on the right track. I find myself agreeing violently with my neighbour, my hon. Friend the Member for Northampton South (Mr Binley), that this is about earning. In particular, I congratulate the Chancellor on his policies on education and apprenticeships to get young people better educated and in work. May I bring to his attention the fact that I have just recruited a new apprentice for my parliamentary office from Magdalen college school in Brackley? Will he join me in urging all colleagues to look into the apprenticeship scheme and how it might help them in their work?
Mr Osborne
I thank my hon. Friend for her support and kind words. We are absolutely going to stick to this economic plan—that is what is taking Britain out of rescue into recovery. If we abandon that plan and if we listen to the advice of the Labour party—although the shadow Chancellor did not mention it in his statement, Labour’s plan is to borrow more—we would be back in intensive care. She is right also to highlight the success of apprenticeships, as there are over 1 million more of them. We are committing to the funding of apprenticeships in this programme. A significant part of my statement was also about school reform, and when people look at it they will see that it is one of the most important parts of the statement.
Mr Michael Meacher (Oldham West and Royton) (Lab)
As the Chancellor’s private sector infrastructure proposals will take years to gain traction, if they ever do, why does he not use public investment to kick-start the economy now, as the only effective means to do so quickly, without any increase in public borrowing? He could do that through a further tranche of quantitative easing, specifically targeted on industrial investment; by instructing the state-owned banks to lend to industry at the scale required; or, most obviously, given that he talks about fairness, by taxing the super-rich, who have made massive gains since the crash, in the last five years.
Mr Osborne
First, we are committing to public investment as well as seeking to secure private investment. The first of the right hon. Gentleman’s ideas is about printing money to spend it on things. That has been tried by a number of countries but it does not always have a happy ending. Secondly, he has this plan to take over full control of the banks and run the banking system as a nationalised banking system. I do not think that would be a sensible approach; it would make the problems in our banking system worse rather than better.
Thirdly, the right hon. Gentleman talks about taxes. I recall, as I was an MP on the Opposition Benches at the time, that he was a Minister when his Government had a 40% tax rate, whereas we have a 45% rate. I do not remember him getting up at this Dispatch Box and complaining all the time that his Government were not increasing taxes on the rich. I seem to remember his good friend Peter Mandelson saying that they were all
“intensely relaxed about people getting filthy rich”.
Under this Government—I hope the right hon. Gentleman would support this—the richest are paying a greater percentage of our tax than under his Government.
Mr David Burrowes (Enfield, Southgate) (Con)
My constituents will welcome a fair review of welfare, schools and health. Will the Chancellor take the opportunity to renew his and our party’s vow to recognise marriage in the tax system and ensure that it is implemented as soon as possible within this Parliament?
Mr Osborne
I can give my hon. Friend the absolutely clear commitment that we will bring forward the proposals to recognise marriage in the tax system—the proposals we set out in our manifesto that are provided for in the coalition agreement—in due course.
Toby Perkins (Chesterfield) (Lab)
The Chancellor has told us today that he is going to bring forward infrastructure spending, but of course we have heard it all before. We reflect on a record of complete failure on infrastructure spending, whereby the money he announces does not actually get delivered. Why should we have any more confidence that what we have heard today will be any more successful than what he has brought to us previously from that Dispatch Box?
Mr Osborne
Because the road schemes that we committed to at this Dispatch Box got their planning permission, or are getting it, and the construction is starting. Some of those road schemes have been completed. The same is true with the schools and all the other pieces of infrastructure. One of our big problems was the complete absence when we came into office of a bunch of plans that were ready to go and had planning permission. We have had to do all that. I am all for speeding up Whitehall and the planning process, but I seem to remember that the Labour party voted against the planning reforms. So when we try to make those changes, which the former Chancellor was good enough to acknowledge are needed because of all the problems that previous Governments have had, actually he has opposed them.
Dr Julian Huppert (Cambridge) (LD)
I was delighted to hear confirmation that the unfair schools funding formula will finally change. Schools in Cambridgeshire have been underfunded for decades and pupils there now get the least of pupils anywhere in the country—they get £600 less than the average. I am very grateful for this money, as all the pupils in Cambridgeshire and other counties will be. When will that extra money start to arrive in our schools, which so desperately need it?
Mr Osborne
The Education Secretary and the Minister for Schools, the right hon. Member for Yeovil (Mr Laws), will set out details of how the formula will work. It is certainly our intention to introduce it in this Parliament, but we shall consult on it. Obviously it is a complex reform, but we have set out the ambition and the principles today, and the Department for Education will now take it forward.
Stewart Hosie (Dundee East) (SNP)
The Budget previously told us that discretionary consolidation for 2015-16 would be £130 billion rising to £155 billion. The Chancellor announced another £11.5 billion today and the pace of the cuts will go on until 2018. That still represents stripping consumption out of the economy equivalent to 8% of GDP, so why does he think that will deliver growth? He has told us previously that the ratio of cuts to tax rises would be 4:1, and nothing today changes that. He is still planning to balance the books on the back of the poor.
On the funding for Departments and, in this case, for Scotland, we face another £40 million revenue cut, on top of the £103 million revenue cut announced in the Budget and the 6.5% cut in the last comprehensive spending review, combined with a 25% cut to capital in the last CSR. This plan A has failed. What makes the Chancellor think that making the same mistakes all over again will deliver a different result this time around?
Mr Osborne
First, all parts of the United Kingdom have to make savings, but because of the application of the Barnett formula the savings in Scotland are 2%. I am not saying that will be easy, but it is not as difficult as the tasks that some English Departments face. We are also providing more borrowing powers for the Scottish Parliament to make its own decisions. We believe that is the right approach—devolution, with Scotland not only having the benefit of being in the United Kingdom and able to make its own decisions about the investments it makes, but benefiting from the very low interest rates that our credible fiscal policy delivers for all parts of the Union. It is pretty clear that if Scotland were independent, borrowing would be more expensive for the Scottish people.
Mr Brooks Newmark (Braintree) (Con)
Most of my constituents care about two things: whether they have a job, and what level of interest they pay on the mortgage or their business. More than 1.3 million new jobs have been created in the private sector, over a quarter of a million new businesses have been created and we have record low interest on mortgages and on businesses. Does my right hon. Friend feel, like me, that that would be jeopardised if we followed the shadow Chancellor’s borrowing plans?
Mr Osborne
I fear that it would be jeopardised and this country would be back in intensive care. It is remarkable that the shadow Chancellor did not have the courage at that Dispatch Box to say that Labour would borrow more. Labour did say that for three years and now it has completely gone silent.
Mr Osborne
What I am talking about is that the Labour leader said on Saturday that Labour would not borrow more and the shadow Chancellor said on Sunday that it would. Because there are two alternative Labour economic policies out there, I would quite like to know which one is which.
Geraint Davies (Swansea West) (Lab/Co-op)
Bankers’ bonuses are going up 64% this year because bankers have moved their income from a 50p tax year to a 45p tax year. Will the Chancellor act to reverse that tax evasion, which he caused?
Mr Osborne
Bank bonuses are down 85% since the previous Government left office. We have curbed irresponsibility in our City, which was rife when the shadow Chancellor was City Minister. In all the years for which the hon. Gentleman was a Member of Parliament for Croydon and sat on the Government Benches, I do not remember him getting up and saying, “I want a higher top rate of tax, Gordon Brown”—sorry, I mean the right hon. Member for Fife. We did not hear that. The truth is that the tax rate for rich people is higher under this Government than it was when the hon. Gentleman represented the good people of Croydon.
Mr Speaker
It is good of the Chancellor to refer to the former Prime Minister by the title of his constituency, but it is an even better idea to get it right as Kirkcaldy and Cowdenbeath.
Steve Baker (Wycombe) (Con)
The Bank of England’s Andy Haldane recently told the Treasury Committee:
“Let’s be clear, we have intentionally blown the biggest government bond bubble in history.”
What contingency plans have the Government made to cope with that bond market bubble bursting?
Mr Osborne
First, let me say that I stand corrected, Mr Speaker, although I think that Kirkcaldy and Cowdenbeath is in the Kingdom of Fife. Yesterday we issued a 55-year bond so we are clearly able to borrow money for the long term. Our economic policy, the further stage of which we set out today, commands the confidence of the world.
Helen Goodman (Bishop Auckland) (Lab)
The Chancellor is presiding over a situation in which an extra 200,000 children will be living in poverty while at the same time cutting taxes for millionaires. Does he think the parents of those children will think that is fair?
Mr Osborne
Child poverty went up by 300,000 during the recession of the previous Government, and the hon. Lady was a Government MP at the time. We have taken a number of actions today, such as that on the pupil premium, to help the poorest kids, and there is also the troubled families initiative. That means 400 families helped by our plans. The distributional analysis, as I showed, shows that the richest quintile in our society are paying the most as a result of the collection of these measures. We are demonstrating that it is possible to have progressive policies while living with sane public finances.
James Morris (Halesowen and Rowley Regis) (Con)
In my constituency, 2,500 more people are in work than at the time of the general election. That employment growth is largely a result of Government investment in apprenticeships and skills. Does the Chancellor agree that we need to invest more in apprenticeships and skills and to give local areas more control over how they invest in skills?
Mr Osborne
I absolutely agree with my hon. Friend. It is good to hear that the businesses of the west midlands and Halesowen and Rowley Regis are taking the opportunity to grow, expand and take people on. We are committed to the apprenticeship programme and are also committing to more local involvement in how money is spent through the Heseltine local growth pot, which will be £10 billion over the rest of the decade. Through some of our apprenticeship reforms set out in the Richard review, we will give the businesses my hon. Friend represents much greater influence over the kinds of skills that are taught locally.
Keith Vaz (Leicester East) (Lab)
I welcome the protection of the counter-terrorism budget, although I do not think the Chancellor’s claim that the Home Secretary is the best in a generation would necessarily win the vote among the police service. The Home Office budget as a whole will be cut by 7% and earlier this year the UK Border Agency was abolished by the Prime Minister. How will we get the backlog of more than 250,000 cases down if the budget is to be cut and mandarins at the Home Office still receive bonuses of several millions of pounds?
Mr Osborne
The Home Office saving is 6.1%, but my right hon. Friend the Home Secretary has demonstrated that she can live with a tough budget—which is true of all Government Departments at the moment—while delivering real reforms and improving the service we get at the end of it. Crime has come down to a 30-year low and immigration has already come down by a third. If the House has to choose between public services that are completely unaffordable and bust the country and public services that do not deliver a good service, that is no choice at all. We are delivering good public services that the country can afford.
Mr Speaker
Order. I am keen if at all possible to accommodate all remaining colleagues, but also to start the next business, the Second Reading of the Bill, by 2.30 pm. There is therefore a premium on brevity.
Sir Bob Russell (Colchester) (LD)
Previous defence cuts mean that our Army is heading towards being smaller than it was at the battle of Waterloo, so that is hardly a triumph. Will the Chancellor confirm that there is now no need, based on his statement, for any cuts to any Army bands and will he also make a statement on why the family housing lived in by our brave soldiers is not being modernised?
Mr Osborne
We did win the battle of Waterloo with that Army, so we were not doing that badly. We are trying to make the choice to have a modern, deployable Army, fully equipped with the latest technology. To address the hon. Gentleman’s specific points, no reduction is required to the uniformed services. I would assume that that would include military bands, but that is for the Defence Secretary to set out. On housing, the Defence Secretary has set out a multi-billion pound plan to improve the housing stock for our brave soldiers and their families.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Half a million people in our country accessed emergency food aid in the past year. The main reason people give for having to go to a food bank is delays in receiving the support to which they are entitled, whether they are in or out of work. How does the Chancellor believe that that situation will improve as a result of the announcements he has made today?
Mr Osborne
Food bank use went up tenfold under the previous Labour Government. We have advertised the services of food banks, which are great local community projects, through the jobcentres. I know that I am not allowed to ask questions, so let me pose a rhetorical question. Labour Members complain about the use of food banks, but can they explain why their use went up tenfold under the previous Government?
Sarah Newton (Truro and Falmouth) (Con)
I greatly welcome the step change in joining health and care services around people who need care. That is most welcome, as is the extra £3 billion spending to allow that vital integration. Will my right hon. Friend let the House know when the details of this vital reform will be published, so that we can all plan ahead?
Mr Osborne
I know that my hon. Friend has been a campaigner on social care issues. This is probably one of the most transformative announcements in the statement. The Health Secretary and the Local Government Secretary will set out shortly how it will work, but it will involve the local commissioning of social care services jointly by the NHS and local government to try to end the divide between the two services that people fall into. I am sure that my hon. Friend’s expertise will be drawn on, because she knows a lot about the subject.
Mark Durkan (Foyle) (SDLP)
The Chancellor outlined a new annually managed expenditure regime. Will he colour that in a little, particularly as regards Northern Ireland? Does he intend Northern Ireland to have its own separate welfare cap? How is it to be fixed? Will it take account of the higher rates of disability and long-term conditions in Northern Ireland or will the cap be used to try to taper Northern Ireland’s higher spending on those benefits?
Mr Osborne
The welfare cap will be for the United Kingdom, as we have a UK welfare system. It certainly will not be used to target Northern Ireland in particular. We want to ensure that more people in Northern Ireland have the opportunity to work and to get off benefits and although the subject has not featured in these questions, some of the changes we have announced to the jobcentre regime will help in this regard. We will ensure that they are suitably applied in Northern Ireland.
Robert Halfon (Harlow) (Con)
With the increased investment in nursery education, the pupil premium, apprenticeships, NHS social care and pensions, is this not a Government who help people from cradle to grave rather than saddling future generations with debt?
Mr Osborne
My hon. Friend makes an excellent point. We are doing everything we can to help people get a job, get on in life and aspire to better things, whether that means helping the poorest pupils in schools through the pupil premium, helping troubled families rather than abandoning them, or ensuring that our elderly get help from our social care system. Across someone’s life, we are stepping in to help rather than, as my hon. Friend points out, burdening the next generation with debt that this generation does not have the courage to tackle.
Mr Speaker
Order. There are still a lot of colleagues standing. May I please ask colleagues now to put a single-sentence question, without preamble—in other words, a genuine short question, which I know will be accommodated by the Chancellor with a short reply?
Julie Hilling (Bolton West) (Lab)
With 300,000 more children in absolute poverty, how many more will be in poverty by 2015?
Mr Osborne
Child poverty projections are made independently, but I say to the hon. Lady that we are doing everything we can to give children from poorer backgrounds the very best start in life, with measures such as the pupil premium.
Mr Speaker
Following the example of the Hilling handbook, I call Mr Andrew Selous.
Andrew Selous (South West Bedfordshire) (Con)
Will the Chancellor confirm that there will be a cap on benefits and not on the state pension in future?
Mr Osborne
Yes, absolutely. We received representations to include the state pension. We are not going to do so, but of course that will ultimately be decided at a general election.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Given the 5% cut in the grant to museums and the increase in operational freedoms the Chancellor has announced, when does he expect charges to be introduced and how much does he think the average cost will be?
Mr Osborne
There will be no museum charges; free entry will remain. What we are doing in the museums sector is introducing radical new freedoms, which have been welcomed across the sector. I think that is the right reform, which is to give more freedom to the front line.
Charlie Elphicke (Dover) (Con)
As so little has been done about problems of tax avoidance over the past decade, can the Chancellor confirm that HMRC will have the resources and the cultural enthusiasm it needs to tackle tax avoidance? Does he agree—
Mr Osborne
The short answer is yes, and the Exchequer Secretary is doing an excellent job in changing that culture, with the Department.
Chris Williamson (Derby North) (Lab)
The Chancellor talked about rail investment in his statement. How many jobs is he creating in Dusseldorf, now that his Government have finalised their plans to spend £1.6 billion building the Thameslink trains in Germany, rather than in Derby? Is that a sensible use of taxpayers’ money?
Mr Osborne
Well, we were operating under the procurement rules of the previous Government.
Andrew Jones (Harrogate and Knaresborough) (Con)
May I welcome my right hon. Friend’s announcement of an increase in transport capital and his indication that it will be invested in our rail network? The boost in capacity and services will be welcomed by rail travellers.
Roberta Blackman-Woods (City of Durham) (Lab)
The Chancellor knows that the north-east is already suffering disproportionately from his Government’s cuts, so can he tell the House what percentage of infrastructure spending will come to the north-east, and by when?
Mr Osborne
My right hon. Friend the Chief Secretary will set out the regional breakdown tomorrow.
Dan Rogerson (North Cornwall) (LD)
In his continuing discussions with the Department for Communities and Local Government, the Department of Health and the Home Office, will the Chancellor urge them to follow the example of my right hon. Friend the Minister for Schools in ensuring that money is spent fairly across the whole country?
Barry Gardiner (Brent North) (Lab)
Because 67% of the Department of Energy and Climate Change’s budget is ring-fenced for the Nuclear Decommissioning Authority, the Chancellor’s 8% cut actually equates to a 35% cut when the Department has to deliver an infrastructure plan which, at £200 billion, is the largest this country has ever seen. How is it going to be able to do that?
Mr Osborne
The hon. Gentleman makes a good point about infrastructure capacity in Whitehall, and we will set out changes to infrastructure delivery tomorrow. The Department of Energy and Climate Change is part of that. Not only is the Energy Secretary on the case, but the new permanent secretary, Stephen Lovegrove, is too, and they are confident that they can deliver this within the budget.
Mary Macleod (Brentford and Isleworth) (Con)
There is a record number of apprenticeships in my constituency. Will my right hon. Friend confirm that the new announcement on apprenticeships means cross-sector and cross-industry support, as well as an increase in the number of girls going into science and engineering?
Mr Osborne
It is certainly our intention to increase the number of girls going into science and engineering and, indeed, to increase the number of people doing science and engineering subjects, both as schoolchildren and young adults. Our support for skills will help to deliver that.
Sammy Wilson (East Antrim) (DUP)
Some 10% of the capital funding for Northern Ireland will be in the form of financial transactions money, which requires the identification of private sector loan or equity investment-type arrangements. Can the Chancellor assure us that, with local Administrations, he will look for the greatest possible flexibility in the choice of those and in the timing of that spend?
Mr Osborne
I am happy to look at both the flexibility and the timing, and to make sure that my Department works closely with the devolved Administration in Belfast.
Stephen Mosley (City of Chester) (Con)
Will the Chancellor do his utmost to ensure that all local authorities take advantage of the council tax freeze, which he has generously extended today?
Mr Osborne
I hope that all local authorities take it up, but ultimately that is a matter for them—that is local democracy.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
From 2006, the Conservative and Liberal Democrats who used to run Newcastle borough council spent all of our £50 million reserves. In dictating a further indiscriminate 10% cut across the board to local government, how carefully has the Chancellor considered its impact, council by council, on their ability to provide decent basic public services and to give discretionary support to valued community groups and organisations?
Mr Osborne
We are giving local councils more freedom, including some more flexibility in the use of assets, particularly where they want to spend to save. The broader point is that if all the changes in local government and social care I announced are taken into account, the change for local government is more like minus 2%—still difficult, but I think that good local councils can continue to deliver excellent local services.
George Eustice (Camborne and Redruth) (Con)
I welcome the commitment the Chancellor made today to renew the water bill rebate for South West Water customers, which has been a vital respite for some 700,000 households in the west country. Does he agree with me that it would be wrong of any future Government to reverse that commitment for this spending review period?
Mr Osborne
I commend my hon. Friend for the campaign he has run. He has represented not only the people of his constituency but people across the south-west of England. Water bills are abnormally high because of the money that needs to be spent on cleaning up beaches and the like, and we have stepped in to help. It is this Government who have done that, after years of campaigns, and we have made the commitment to extend it. As for whether a Labour Government would remove it—well, they never introduced it when they were in office, so I suspect they would.
Mr Clive Betts (Sheffield South East) (Lab)
Does the Chancellor accept that, since the beginning of this Parliament, the cut in central Government grant to local authorities has been twice as great as the cut in funding for central Government Departments? With that in mind, will he take seriously the comments of the chair of the Conservative party that local councils can manage the cuts announced today without any reduction in front-line services?
Mr Osborne
I think good local councils can manage the ask we are making of them. Is the hon. Gentleman complaining? The Labour party has not made it clear whether or not it supports this total mandatory expenditure, so the Opposition cannot really complain about individual cuts unless they tell us whether they would make other cuts, and so far I have not heard of any.
David Rutley (Macclesfield) (Con)
Is not the main message from today’s statement that more can be done for less? Do we not need to move forward on that because of the mess left by Labour?
Mr Osborne
My hon. Friend is right: one of the central principles is that we can deliver more for less. Ultimately, we should not have to choose between public services we can afford and public services that deliver for people. We need both.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
Is it true that, according to figures on page 11 of the spending review document, the Chancellor is cutting capital infrastructure spending by 1.7% in 2015-16 compared with 2014-15?
Justin Tomlinson (North Swindon) (Con)
The decision to introduce a fairer national education funding formula is vital for my local schools. How much did Labour’s formula short-change schools in Swindon?
Mr Osborne
The people of Swindon were short-changed in many ways by the Labour Government. Under the excellent leadership provided by my hon. Friend and his colleague, our hon. Friend the Member for South Swindon (Mr Buckland), not only is Swindon’s voice heard in Parliament, but the changes this Government are making will help families in Swindon, including those with children at school.
Caroline Lucas (Brighton, Pavilion) (Green)
Given the news this week that the Government’s flagship green deal is failing in terms of both the planned jobs and its environmental targets, why will the Chancellor not introduce a big, bold investment in green infrastructure and home insulation in particular, to get people into jobs, get tax revenues up, reduce benefits and give hope to the millions of young people around the country today?
Mr Osborne
We have introduced investment. We have increased investment in renewable energy, so that a record amount is now going in. My right hon. Friend the Chief Secretary to the Treasury will set out the strike prices this week, which will give long-term investors the certainty needed to increase renewable energy investment.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Why is the Chancellor not big enough to admit that he was wrong to claim that borrowing fell last year?
Mr Osborne
When I became Chancellor we were borrowing £157 billion a year. We are forecast to borrow £108 billion a year, which is a reduction in borrowing.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
Why is the Chancellor going to decide what capital investment projects should be delivered in Wales if the Silk commission is implemented, considering that transport is devolved?
Mr Osborne
There is a specific issue around borrowing powers and the M4 corridor through Newport. That has to be done in partnership with the Government in London, but we are very aware of the benefits of that scheme. The Welsh Assembly and the people of Wales will welcome what we are proposing to do on the devolution of further tax and borrowing powers. We will set that out shortly.
Jack Dromey (Birmingham, Erdington) (Lab)
With the Government’s own figures showing that, despite all the promises, house building is down, construction is down, homelessness is up, rents are up, and housing waiting lists are at a record level, does the Chancellor accept that it is the legacy of his actions, including the catastrophic decision to cut £4 billion in affordable housing investment in 2010, that brings him to the Chamber today, and that he is responsible for three wasted years?
Mr Osborne
No, I do not accept that at all. The last Labour Government had a shocking record on house building, especially affordable house building. If the hon. Gentleman turns up in the Chamber tomorrow, he will hear some positive announcements about affordable house building.
Diana Johnson (Kingston upon Hull North) (Lab)
Lord Heseltine’s plan for localising regeneration funding in a single pot would have cost £49 billion. The announcement today is for just £2 billion. Lord Heseltine said that such a figure would be a slap in the face for local areas. Does the Chancellor agree, and why did he not stand up to the Lib Dem Business Secretary, who opposed that idea?
Mr Osborne
It is £2 billion a year, making £10 billion. For the first time, local enterprise partnerships will be able to put in multi-year bids on the basis of a competitive tender that will enable investment in skills, transport and housing locally. It is a revolution in how the money is spent, rather than the situation that we inherited, in which all the spending decisions were made by the people doing my kind of job.
Jim Shannon (Strangford) (DUP)
I thank the Chancellor for his commitment and his comments. He referred to extra money for the police in Northern Ireland to combat dissident republicans. Will he confirm that within that money sufficient funding will be available for the recruitment and training of new officers to combat the dissident republican threat?
Mr Osborne
We have provided just over £30 million to the Police Service of Northern Ireland. I am confident that within that resource the PSNI can undertake the recruitment and training that it requires to police Northern Ireland effectively for all communities.
Nic Dakin (Scunthorpe) (Lab)
Given that 16 to 18-year-olds attend schools as well as colleges, does the Chancellor’s unequivocal commitment to protect school funding in real terms extend to the funding of 16 to 18-year-olds?
Mr Osborne
We set out the school commitment in the direct school grant and the pupil premium. We have invested in the education of young people as well as the education of young adults.
Alison McGovern (Wirral South) (Lab)
Does the Chancellor believe that since he came to office the average British family is better off after inflation—yes or no?
Mr Osborne
I think that they have better economic prospects than they did under the previous Government.
Sheila Gilmore (Edinburgh East) (Lab)
The best way to reduce the housing benefit bill is to tackle the structural reasons for the rise in spending. What steps has the Chancellor taken in the statement to ensure that that happens? Not by building houses at 80% of market rent, I suggest.
Mr Osborne
I agree with the hon. Lady, as one of the things that we need to do is build more homes, and that is what we have set out to do. The housing benefit budget ballooned under the Labour Government, and we have taken action to curb it. If she is against any of our housing benefit reforms she can always let us know. As far as I can see, the Labour party has not made a commitment to reverse any of them at the moment, but who knows, that might change.
Nia Griffith (Llanelli) (Lab)
Confidence to invest long term in industry has been severely damaged by the Government’s creation of uncertainty over the EU, their failure to set 2030 decarbonisation targets, and their failure to control excessively high energy prices. The steel industry faces a crisis in demand. How many of the Chancellor’s mythical lists of infrastructure projects will actually begin this year?
Mr Osborne
As I said, we are spending more as a percentage of national income on infrastructure in this decade than in the previous decade. What I would say to the hon. Lady about energy-intensive industries such as steel is that there is support, which the Department for Business, Innovation and Skills is going to extend as a result of the statement to help them to cope with their high energy costs.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
Living standards have fallen in every year of the Chancellor’s Government. When is he going to get the message that his strategy is not working?
Mr Osborne
As I said, the economic plan is taking Britain from rescue to recovery. I do not know if the hon. Lady knows any more about what the Labour party’s economic policy is. We did not hear from the shadow Chancellor the simple fact that he wants to borrow more. He has abandoned his argument but tragically he has stuck with the policy.
Mr William Bain (Glasgow North East) (Lab)
The £50 billion figure cited by the Chancellor for capital investment for 2015-16 is gross. Will he say whether net capital investment in 2015-16 will be higher or lower than the year before?
Mr Osborne
As I said, we are maintaining capital investment in the way that I set out in the statement.
Mr Speaker
Fifty-five Back Benchers contributed in 47 minutes of exclusively Back-Bench time, so I am grateful to colleagues, including, of course, the Chancellor.
Bill Presented
Railways Bill
Presentation and First Reading (Standing Order No. 57)
Caroline Lucas, supported by John McDonnell, Ian Lavery, Katy Clark, Jeremy Corbyn, Mr Elfyn Llwyd, Jonathan Edwards, Hywel Williams, Kelvin Hopkins, John Cryer, Grahame M. Morris and Martin Caton, presented a Bill to require the Secretary of State to assume control of passenger rail franchises when they come up for renewal; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 18 October, and to be printed (Bill 81).
High Speed Rail (Preparation) Bill
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:59 - The House divided: - Ayes: 37 / Noes: 325 - Question accordingly negatived.
19:12 - The House divided: - Ayes: 330 / Noes: 27 - Question accordingly agreed to.
Mr Speaker
Before I call the Minister to move the motion on Second Reading, I have a brief announcement to make. This Bill relates to a proposal which would affect my own constituency, as is well known. I have taken the view that it would best protect and demonstrate the impartiality of the Chair if I did not take the decision on whether the reasoned amendment should be selected. I therefore referred the matter to the Chairman of Ways and Means. His decision is that the amendment should be selected, and I have accepted that.
The Secretary of State for Transport (Mr Patrick McLoughlin)
I beg to move, That the Bill be now read a Second time.
Today, my right hon. Friend the Chancellor of the Exchequer has set out far-reaching plans to provide the infrastructure that we need to compete in the global race. We need better roads, better airports, better ports, and better rail links too—an ambitious programme for all parts of our country, with HS2 an important part of that. A growing economy, a growing population and growing demand for transport, which have seen rail travel double in a decade, mean that we must act. HS2 will be the first new main rail line north of London for 120 years, linking at least eight of our 10 largest cities, and improving services for Scotland too. I am pleased that HS2 enjoys the broad backing of all the main parties in the House. I want to make three points.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
The Secretary of State has just said that the proposed High Speed Rail (Preparation) Bill paves the way for links to Scotland, so will he explain why clause 1(2)(a) does not make any mention of Scotland or proposals to connect HS2 to Scotland?
Mr McLoughlin
I shall come on to explain, if I may make a bit of progress, the way in which we shall link up to Scotland, and why the Bill covers the area. The Bill provides that important opportunity, and I shall come to that in a short while.
As I was saying, I want to make three points: first, the reason why a new high-speed line is right; secondly, the purpose of the Bill; and thirdly, the work that we are doing to manage the costs of the scheme. Why is HS2 necessary? The answer is not only speed, although HS2 will take an hour off journeys between London and Manchester, and between Birmingham and Leeds, and it will bring two thirds of people in the north of England within two hours of London.
Fiona Bruce (Congleton) (Con)
Is the Secretary of State aware that if there is to be a tangible economic benefit to my constituency and the wider Cheshire region, there must be a hub station stop at Crewe, otherwise it will take longer to travel by High Speed 2 up to Manchester and then travel down on a local line to that area?
Mr McLoughlin
I know that my hon. Friend is concerned, as I am, to make sure that there are sufficient connections right across the country. We have not yet reached the consultation stage on phase 2. Part of the reason why we published phase 2, although it would have been easier not to do that, was to show our commitment to serving the north, right up to Manchester, Leeds and the east midlands. So I am pretty sure that I will be hearing a lot more from my hon. Friend and others on the question of where the station should be located—Crewe or Staffordshire.
Mr McLoughlin
I met a group of Members from—well, I was going to say Staffordshire—I met two Members from Stoke-on-Trent and one from Staffordshire, and I give way to him.
Paul Farrelly
I thank the Secretary of State for giving way and for his generous offer of coming to visit and see the lie of the land in north Staffordshire and east Cheshire. He will appreciate after our meeting that it is difficult for Members from north Staffordshire to support HS2 as it stands because it may very well, on the current modelling, reduce the number of direct trains from Stoke-on-Trent from 31 a day to just three a day. This knock-on issue is relevant to people from Stockport all the way down to Coventry, as he will see from the amendment. What assurances can he give that the west coast main line in the future, after HS2, will not become the ghost train line running a skeleton service, as the projections currently suggest?
Mr McLoughlin
I met the hon. Gentleman yesterday along with two of his colleagues, and I can assure him that this is about providing extra capacity, not reducing services. I want to consider the points that he and two of his hon. Friends made to me yesterday along the same lines. I do not recognise where he gets his figure of three services per day compared to the present level of service. Of course, that will be part of the consultation and one of the aspects that we will examine fully as we move forward.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
The last time I looked, York, Manchester, Birmingham and London were in England. HS2 was clearly an England-only project, yet there will be Barnett consequentials. Unless the Secretary of State can state that there will be equivalent consequentials for Wales amounting to about £2 billion, we will vote against the Bill at every stage.
Mr McLoughlin
I am sorry the hon. Gentleman feels that way, because I believe there will be advantages to Wales as well. As HS2 serves an area up to the north Wales coast, there will be ways in which that can be an advantage. I think he is saying that he will vote against because he is not getting the opportunity to get high-speed services. If we do not get the route as currently proposed, he has no chance of getting any high-speed opportunity whatsoever. He will see, if he looks at the way the plans are laid out, that this can be developed further—even further up to Scotland, as the Bill makes clear.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The Minister talks of expansion further up to Scotland. When? Given the remarks about no Barnett consequentials, the “when” is not in a decade, but should be here and now.
Mr McLoughlin
I announced last October the work that was already being commissioned by HS2 to take the link up to Scotland, and I am more than happy to have discussions with Scottish Ministers and the Scottish Government about that.
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
I suspect that even the Scottish National party does not expect the line to reach the constituency of the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) any time soon, but I hope it will reach my constituency.
Mark Lazarowicz
I would like to believe that it will not be next century and that my constituents will be able to benefit from the line as well. Clearly, they will benefit from faster services in so far as they can use the line further south, but we need to see work being done now and commitments made now to ensure that the further additions from HS2 do not start happening only in 2033.
Mr McLoughlin
The hon. Gentleman makes a fair point. As I announced last October, I have asked HS2 to start doing the work on that, and I hope to be in a position to say more about it in due course. I cannot give him a specific date at this stage because there are some very big issues to address.
I was saying that HS2 will bring about two thirds of the people in the north of England within two hours of London. Its purpose is not merely to keep pace with our competitors, although it is worth pointing out that Italy will soon have 926 miles of high-speed rail, whereas we have just 67 miles.
Julian Smith (Skipton and Ripon) (Con)
Is not Lille in the north of France an excellent example of the benefits that high speed can bring to a city?
Mr McLoughlin
Indeed, and I will say a little more about Lille shortly. I think my hon. Friend may have a copy of my speech, although as I was working on it until not long ago, I would be surprised if he had.
Mr McLoughlin
Mr Speaker, I know that a great number of Members want to speak in the debate and I will give way a number of times, but I am mindful of the fact that you asked me to allow plenty of time for others to take part.
Mr Jim Cunningham (Coventry South) (Lab)
I apologise to the Secretary of State for coming in late and I appreciate the fact that he has given way to me. Can he tell me what Coventry will get out of high-speed rail and, more importantly, what about a decent compensation package?
Mr McLoughlin
I will come on to say something about compensation later in my speech. I think Coventry will get many benefits. The whole west midlands area will get a huge number of benefits from HS2. I want to see councils such as Coventry start working to make sure that they can get the best out of High Speed 2, both from the connections and the way we serve those areas. I know the hon. Gentleman is incredibly concerned about the way we serve Coventry. As somebody who knows Coventry relatively well, I am also concerned to see that take place.
Caroline Lucas (Brighton, Pavilion) (Green)
The Secretary of State is very kind to give way. My point is that not only is the route of HS2 environmentally damaging, but the whole scheme is socially regressive. It is unaffordable to the bottom 50% of income bands and, in effect, it redirects money from the poorest to the richest. How can he justify this reverse Robin Hood strategy when that £33 billion could be better invested in giving us a better rail system for everybody, not just for the privileged few?
Mr McLoughlin
I find the hon. Lady’s position on the issue strange. I should have thought that the Green party would welcome such investment in public railway systems. [Interruption.] I think I had better answer the hon. Lady. HS2 brings a great increase in capacity and I want to say more about that a little later. That is one of the important issues that lies behind the need for HS2. Also, as I point out to colleagues, going from St Pancras station to Canterbury, the first part of the route from St Pancras to Ashford on a high-speed train is a fantastic fast journey, then one hits the Victorian railway network to Canterbury and the journey slows down completely. I want the rest of the country to get the benefit of high-speed rail, not just the area in the south which already has a high-speed service.
Sammy Wilson
And I have no idea how the Minister would extend it to Northern Ireland, but Northern Ireland does not benefit from the Barnett consequentials of this spend, either. Because there is a construction interest, can he give an assurance that when it comes to procurement, there will be no repetition of the mistakes that were made in the past whereby UK-based companies did not benefit from some of the high-spend capital projects, and there will be opportunities for construction firms from Northern Ireland?
Mr McLoughlin
I am more than happy to do that and I shall say more about that later. Crossrail has set a good example. About 97% of Crossrail goods are serviced by British companies, and the Mayor of London is in the process of purchasing a huge infrastructure project, the new London buses, from Northern Ireland. That is very much in my mind with regard to the way I will be dealing with HS2 and talking to the management of HS2.
Damian Collins (Folkestone and Hythe) (Con)
My right hon. Friend mentioned his rail journey to Canterbury. I encourage him to take a different branch on High Speed 1 and travel to Folkestone, as he will see that the investment in High Speed 1 is the biggest single advantage we have in promoting the east Kent regional growth area.
Mr McLoughlin
I am grateful to my hon. Friend, who makes that point from vast experience. It is worth remembering how controversial High Speed 1 was when it was built. I will talk about that a little later. The simple fact is that every infrastructure project—not nearly every project, but every project—is very controversial when it first starts, and in that regard High Speed 2 is no different.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Will the Secretary of State give way?
Mr McLoughlin
I will not be in the position that you are in, Mr Speaker, of having actually counted the number of interventions I have taken, but I will give way to my hon. Friend.
Alec Shelbrooke
My right hon. Friend is absolutely right that all major infrastructure projects are controversial. Would he like to reflect on where he thinks the great city of Leeds would be today had we not built the M1?
Andrew Bridgen (North West Leicestershire) (Con)
Probably in the same place. [Laughter.]
Mr McLoughlin
Indeed, but it would be very difficult to get to, and it would not have benefited from the improvements we have seen there.
I think that the answer starts with a simple point: without HS2, the key rail and road routes connecting London to the midlands and the north will soon be overwhelmed. Even on moderate forecasts, the west coast main line, the nation’s key rail corridor, will be full by the mid-2020s, a point made earlier by my hon. Friend the Member for Shrewsbury and Atcham (Daniel Kawczynski), who wants more services from Shrewsbury to Blackpool. Having served as a Transport Minister in 1989, I know that the fundamental change that has taken place since then is that the pressure on a Transport Secretary now is often to find more services for the rail industry and more rail connections across the country—I was just talking about the west coast main line—and that is despite £9 billion of improvements north of Rugby in recent years. That means investing in the current infrastructure and trying to improve it. There are still problems south of Rugby, which is why Virgin has suffered problems in meeting some of the criteria it regards as important in providing the right kind of service.
Mrs Gillan
Has the Secretary of State had an opportunity to look at the financial results released by Virgin Trains this morning? They indicate that profits are down by 40.5% but revenue is up by 2.8%, which is roughly the same rate as the fare increases, so the passenger increase must be very small. It says that it has now increased capacity by 40%, and this month it started a major advertising campaign to attract passengers. Does that sound like a railway line that is full to capacity?
Mr McLoughlin
No, it sounds like a railway that is providing the services that all colleagues want to see. As I pointed out a few moments ago, in certain areas hon. Friends are pressing for further services that cannot be provided because Network Rail says there is no availability on the existing highways.
Mr Marcus Jones (Nuneaton) (Con)
My right hon. Friend can rest assured that, for a change, I will not be using this opportunity as a pitch to get more fast services to Nuneaton on the west coast main line. Can he assure me that, despite the investment being made in HS2, investment will still be made to continue to improve the services and capacity on the west coast main line?
Mr McLoughlin
Yes, indeed. That is one of the points that will become very apparent with the investment programmes we have over the coming years and that Network Rail will be carrying out. I can assure my hon. Friend that it is not a case of either/or; it is essential to invest in both areas.
David Mowat (Warrington South) (Con)
I would like to add a thought on the capacity question. Will the Secretary of State confirm that over the past 15 years passenger numbers have increased by an average of 5% a year and that the business case for HS2 assumes an increase of 1.6% a year, which is quite a conservative estimate?
Mr McLoughlin
Indeed, and I am grateful to my hon. Friend. Basically, 15 years ago there were about 750 million passenger journeys, and the latest estimate is for 1.5 billion passenger journeys, which is a massive shift that I would have thought my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) would welcome.
Mr McLoughlin
Now, there is a choice. As a bit of a conservative, I will go with seniority, if my hon. Friend the Member for Wycombe (Steve Baker) will forgive me.
Mr Cash
Will my right hon. Friend accept that, in relation to my constituency, this project goes from top to bottom and is deeply opposed by all and sundry? I have had meetings with thousands of constituents already. Will he accept that, according to the Public Accounts Committee, the pricing is unrealistic, the values for journey time savings are untenable and there has been insufficient analysis of non-rail alternatives? What answer does he give to the Public Accounts Committee and my constituents, who are deeply angered by this?
Mr McLoughlin
To my hon. Friend’s constituents I say this: I understand that a big piece of infrastructure of the size of HS2 will obviously have an impact. I respect and understand that and do not criticise those people who raise objections. I will move on to talk about compensation later. He talks about an area where we are yet to confirm the route. We will be having a full and proper consultation later this year, when he and his constituents will be able to make those points. I will want to see what can be done to help with some of the environmental points. I also point out that part of the west coast main line runs through his constituency, and it, too, was very unpopular when it was built, but it is very beneficial to the area, because I know that he often takes the train from Stafford to get to London. I will give way once more, to my hon. Friend the Member for Wycombe, but then I will have to make some progress.
Steve Baker
In relation to passenger numbers, my right hon. Friend will know the old aphorism that if one subsidises anything, one gets more of it. Will he remind us how much subsidy the rail industry has received over the past few years?
Mr McLoughlin
One of the things we are trying to do is drive out some of the subsidy in the railways to make it cheaper and more affordable for companies, but it is certainly true that there is subsidy in the rail industry. However, we have to think about people being able to get to work and what that subsidy supports. Sometimes the commuter in London, and the commuter in my hon. Friend’s constituency, deserves that support to enable him to get to the jobs that are available elsewhere. One has to be realistic and understanding about that.
I will now try to make some progress, because I have been speaking for longer than I had intended to take for my whole speech. This is not about a choice between upgrading the existing railway and building a new one. Upgrades will not provide the extra capacity we need. The choice is between a new high-speed line and a new conventional railway. The significant additional benefits make high-speed rail the right answer. Of course, big infrastructure projects are always controversial. As I often say, the easiest thing in the world for the Government to do would be not to build HS2 or to commit to it, but the costs of that would be huge.
It would be a cost in jobs. Our modest estimates indicate that HS2 will create and support 100,000 jobs, while the group of core cities predict that it will underpin 400,000 jobs, 70% of them outside London. It would be a cost in prosperity. Some estimates suggest that HS2 will add over £4 billion to the economy even before it is open. The line is estimated to provide around £50 billion in economic benefits once it is up and running. If we do not go ahead with HS2, there will also be a cost in lost opportunities for the towns and cities in the midlands and the north. I am not prepared to put up with a situation in which someone can get to Brussels on a high-speed train line, but not to Birmingham; to Strasbourg, but not to Sheffield; or to Lille, but not to Leeds. We cannot afford to leave the economic future of our great cities such as Manchester, Birmingham, Leeds, Sheffield, Nottingham and Derby to an overcrowded 200-year-old railway.
Mr McLoughlin
I did say that I would not give way any more, but I shall give way to my hon. Friend.
Geoffrey Clifton-Brown
My right hon. Friend knows, as does the rest of the House, that much of that high-speed European railway was built with European money. How much investigation has he done with the European authorities into how much he might be able to reduce the enormous £32 billion cost of the railway?
Mr McLoughlin
We will be looking at that. I will say a bit more about costs a little later, if my hon. Friend will wait. As always, we will look at how we finance, and not necessarily just in respect of the area to which he has referred. We could see private sector investment in some of the stations that we are going to develop. I will say something more about the stations in a few moments.
We will deliver the investment to develop new stations and growth at places such as Old Oak Common in west London, where we will invest more than £920 million in a new hub linking the west country, Crossrail and HS2. At Curzon Street in Birmingham, we will invest £335 million on station developments. Similar investments are due in Manchester, Leeds and other great railway centres such as Sheffield and the east midlands.
HS2 will also allow for significant improvements to the rail service on the existing main north-south lines, providing benefits for towns such as Milton Keynes, Tamworth and Lichfield. It will provide real scope to get more freight on to the railways, which I would have thought the hon. Member for Brighton, Pavilion (Caroline Lucas) would welcome. It will also free up capacity on the M1, the M6 and the M40.
My second point this afternoon is about the Bill before the House. It will authorise essential expenditure on the preparation work for high-speed rail. Planning and building the line will take time.
Natascha Engel (North East Derbyshire) (Lab)
On the point about this legislation being the paving Bill and agreeing the expenditure before the line gets built, will the right hon. Gentleman assure the House that he will publish the receipts relating to everything spent as we advance to building the line, so that we can assure ourselves annually that the money spent represents value for money to the taxpayer?
Mr McLoughlin
I am about to make exactly that point; obviously, somebody else has an advance copy of my speech.
The line will be overseen and delivered by successive Parliaments, which is why it is right to provide Parliament with the opportunity to debate the project. The hybrid Bill will provide additional opportunities for closer scrutiny of HS2. This is the moment for Parliament to demonstrate that it is backing British business, jobs and growth by backing HS2.
Let me say how the Bill will help achieve those aims. Without this legislation, Treasury rules would limit the amount of work that could be done or undertaken until after Royal Assent on the hybrid Bill. That includes design work on the construction of the line, planning the movement of utilities and carrying out ecological surveys. The legislation will also ensure that future spending on the discretionary property compensation is compliant with the PAC requirements.
Dan Byles (North Warwickshire) (Con)
My right hon. Friend is being generous with his time. From the moment the train line was announced, the property market up and down the route has frozen solid. Unless my constituents can demonstrate an exceptional hardship, they cannot sell their homes and move. I implore the Secretary of State once again to reconsider a property bond as the single most helpful move he could make to help alleviate a lot of the suffering being caused right now, today, by the project.
Mr McLoughlin
I assure my hon. Friend that, if he has a little patience, I will say something about that exact point a little later.
The PAC requirement states that when there is significant new expenditure that is likely to persist, authority should normally be sought from Parliament. I appreciate that many hon. Members have concerns about the authorisation of expenditure on early works in advance of the subsequent hybrid Bill. That is why this Bill ensures complete transparency in what we are doing, when we are doing it and—crucially—how much we are spending.
The Bill creates a duty on the Secretary of State to produce an annual financial report on the amount of expenditure incurred, allowing Parliament to keep a check on the costs and progress. I hope that that answers the point made by the hon. Member for North East Derbyshire (Natascha Engel).
Mr McLoughlin
I will look at the detail of that. I am certainly determined that Parliament should be kept well informed and, of course, the company will be open to the scrutiny of the Public Accounts Committee and the National Audit Office reporting to the PAC. There is a way in which the House can keep an eye on the matter.
My third point is about funding. We can today welcome the allocation made by the Chancellor in infrastructure investment. Tomorrow, the Chief Secretary to the Treasury will say more about our plans. I know that in the context of the Bill, the House will want to be updated on the cost of HS2. I can therefore tell the House that tomorrow I will be writing to the chairman of HS2 Ltd to set a target price for delivering phase 1 of the project. That amount is £17 billion at 2011 prices. That takes account of the design and environmental changes to improve the scheme. Those changes include a tunnel from Old Oak Common to Northolt, design changes at Euston station, and a tunnel under the M6 near Birmingham.
As a responsible Government, we must be prudent, which means allowing the right level of contingency. In addition, therefore, we have set an overall indicative amount for the budget for phase 1 of £21.4 billion. For phase 2, it is £21.2 billion, so the total is £42.6 billion at 2011 prices. That includes £12.7 billion of contingency.
Graham Stringer (Blackley and Broughton) (Lab)
At Prime Minister’s questions this afternoon, I asked the Prime Minister why the Government were opposing the continuation of the trans-European network north of London. The Prime Minister clearly did not have an answer, and I will understand if the Secretary of State does not. However, will the Secretary of State find out why we are opposing the extension of that network? While we are in the European Union, that could be cutting off a source of funding.
Mr McLoughlin
I heard the hon. Gentleman’s question to the Prime Minister. Those debates on that whole process are ongoing and still at an early stage. I have some worries and I would want to get clarification before we changed the Government’s position.
Andrea Leadsom
Will my right hon. Friend explain what the £12.7 billion of contingency will do to the benefit-cost ratio? During the consultation period, it was always made clear that the £32 billion was the absolute maximum and contained a vast sum for contingency.
Mr McLoughlin
At the moment, the value-cost ratio is reckoned to be 2.5. I also point out that the BCR tells us some things, but not everything. For instance, the BCR on the Jubilee line was a lot lower than that for High Speed 2. If the Jubilee line had not been developed, a lot of the development in Canary Wharf would never have taken place. The line brought a huge amount of investment into the area and the country. It is important that we are seen to be able to compete with other countries in the global race to attract businesses to this country. The point also relates to the Olympic games, where a contingency was allowed and in fact the price of the games came in below the budget that had been set by the Government. I expect the final costs to be lower than those I have outlined. However, I take on board my hon. Friend’s point about BCR.
Andrew Bridgen
My right hon. Friend has announced that the total budget for the infrastructure plan will be about £43 billion. Does that include the £8 billion for the rolling stock?
Mr McLoughlin
If my hon. Friend will allow me to make a bit more progress, he will find that I am going to be very open with the House and put all this out into the public domain. I want to be as open as I possibly can.
Mr McLoughlin
I give way to my hon. Friend, who I met yesterday—I think, but the days are getting a bit blurred at the moment.
Christopher Pincher
They are getting blurred for us all. I am grateful to my right hon. Friend for giving way and for yesterday meeting my constituents from Hints, Weeford and Drayton Bassett to discuss their concerns about compensation and mitigation. He has rightly referred to the great concern that people have about the compensation and mitigation that is available. In setting a budget for phase 1, will he prevail on HS2 to be as efficient as possible so that money can be saved and spent on mitigations in Staffordshire?
Mr McLoughlin
The meeting that I had yesterday with my hon. Friend and his constituents was very useful, and I gave them an undertaking to look at some of the points they made. I have had varying reports on how some of the public consultations have gone. I am determined that we improve the way in which they are conducted so that people get more reliable answers on the points they are making, and as quickly as possible, although sometimes these things take a lot of time if particular requests are made as to routes and the like. I thank my hon. Friend for behaving very constructively in the points that he is making.
Michael Fabricant (Lichfield) (Con)
I am grateful to my right hon. Friend for giving way, and pleased to be able to follow the intervention by my hon. Friend the Member for Tamworth (Christopher Pincher). Next week I will be bringing people from Lichfield, Whittington and Armitage to see him to discuss, primarily, mitigation. May I ask him about compensation? He will know that with the current route I will have real difficulties with the hybrid Bill; in fact, I will not be able to support it. The Country Land and Business Association says that this stage of the game is the only opportunity to get compensation into legislation so that we can give it to people in my constituency, and indeed in Tamworth, who have been blighted for the past three years.
Mr McLoughlin
As someone who was born and brought up in Staffordshire, I know the area that my hon. Friends are talking about incredibly well. Without the authority of this Bill, we would be in a very difficult position as regards exceptional hardship. I mentioned earlier some of the requirements of the PAC in relation to accountability in spending money on a project without the approval of Parliament, and that also relates to compensation.
Mr Skinner
The Secretary of State has been dealing with blight, and he mentions Staffordshire, but he also knows Derbyshire well, and he knows a village called Pinxton. I spoke about blight when he made his original statement, and I was staggered to be told within hours by a farmer in Pinxton who was selling his farm that as soon as the statement had been made he was told that he would never sell his farm. How is that farmer going to be compensated?
Mr McLoughlin
I will say a little more about compensation in a moment. I accept and appreciate the hon. Gentleman’s point about the impact of naming the route. At the time of HS1 several routes were announced and there was potentially more widespread blight. In HS2 we have tried to be more specific about the routes so that we avoid widespread blight. However, I also say to the hon. Gentleman, who is well versed in how these things work, that we will be going out to consultation on phase 2—I will be announcing that in the very near future—and that will enable his constituents and those of the hon. Member for North East Derbyshire to make their points, find out more information, and possibly propose alternative suggestions and ideas.
Sammy Wilson (East Antrim) (DUP)
The Secretary of State said that there is a contingency provision of nearly 40% in this project. Is that typical of a project of this size, or does it indicate a higher degree of risk than would usually be associated with such a project?
Mr McLoughlin
It is a normal level of contingency that would be put into a scheme of this sort, and it is built in on an internationally based calculation.
This is the right way to plan for the project. In addition, with or without HS2, new rolling stock will be needed on the key inter-city routes linking London and the north over the next 20 years. I hope that deals with the point raised by my hon. Friend the Member for North West Leicestershire (Andrew Bridgen). We are therefore budgeting £7.5 billion for HS2 rolling stock. To put that in perspective, the current inter-city express programme to replace trains on the east coast and Great Western lines, which is creating jobs in the north east, will cost £4.9 billion. The money that I have just announced for the rolling stock for HS2 also includes a contingency of some £1.5 billion.
Good infrastructure is an investment in economic growth. We are investing £14.5 billion to build Crossrail, while £11 billion has been invested in new infrastructure at Heathrow since 2003. Over the period of construction, the cost of HS2 will be less than 0.15% of GDP—I repeat, less than 0.15% of GDP. This is an investment that the country can sustain and needs. That is why tomorrow the Chief Secretary will set out the detailed HS2 funding allocations for the six-year period until 2020-21.
Before I finish, I want to explain what we are doing for those affected by the line. As I said earlier and have tried to make clear throughout this Second Reading speech, I do not dismiss those with objections as irrelevant. We do indeed need to design HS2 carefully, consult properly and compensate fairly. I hope that I can reassure people about why it is right to go ahead. Some have concerns about the impact of HS2 on the landscape. While I cannot deny that a project of this scale will have an effect, I believe that the positive experience of our first high-speed line in Kent shows that the consequences can be managed without wrecking the countryside. For instance, while not a single mile of the M1 is in-tunnel, about 40 miles of HS2 will be in-tunnel. Of the 12.4 miles that crosses the Chilterns area of outstanding natural beauty, 5.8 miles will be in-tunnel and 3.5 miles will be in deep cuttings. No part of phase 2 of the route crosses any national parks or areas of outstanding natural beauty.
It is also important to ensure that proper compensation is made to those affected by HS2. That is why we have introduced the exceptional hardship scheme although there was no statutory requirement to do so. We believe that home owners already affected with a pressing need to move should have recourse to compensation, but without the authority of Parliament to incur expenditure to continue with this compensation, I would need to consider carefully what other mechanisms, if any, we could use. Very soon, we will start a new consultation on compensation.
Mr Clive Betts (Sheffield South East) (Lab)
I have met some of my constituents in Greasbro road in Tinsley in Sheffield, whose homes will be demolished by the scheme. They accept that to a degree, but they ask me whether it is reasonable that people who, for the greater good of the country, are moving out of a home that they do not want to leave will simply get 100% of the market value, plus home loss. Is there no room for the Secretary of State to be more generous and say to people, “You are doing something for the good of the country. Therefore, you should receive more than 100% of the market value”?
Mr McLoughlin
The hon. Gentleman makes a very good point. We have said that we will go out to consultation. I fully accept that the position of his constituents is slightly different because the consultation, in the first instance, will relate to phase 1. It is not possible to consult on phase 2 until we have confirmed the route, but there will have to be a consultation on that. Given that he is the Chairman of the Communities and Local Government Committee, which has an important role in this area, no doubt his Committee will want to consider the matter.
We will consider a range of compensation options, including a property bond, about which a number of Members have made representations.
In building HS2, we need to ensure that we make the best use of British skills and workers. For Crossrail, 97% of the contracts have been won by British-based companies. From 2017, HS2 will create 19,000 engineering and construction jobs.
Andrew Percy (Brigg and Goole) (Con)
Supporting British jobs is essential. The Secretary of State will know that the finest rail in the world is produced in my constituency at the Scunthorpe steelworks. Will he assure me that he and his Department will do everything they can to ensure that Scunthorpe gets a cut of HS2 and that we see those benefits and jobs in our region?
Mr McLoughlin
I can assure my hon. Friend that I want HS2 to be not dissimilar in this respect to Crossrail, which saw 97% of the business going to British companies. However, I am cautious about awarding contracts and making promises from the Dispatch Box. I am certainly a little more cautious than my hon. Friend was in asking me to do so.
Mr Jim Cunningham
Will the Secretary of State meet a delegation from Coventry, as he suggested he would just before Christmas when we met him to discuss this issue?
Mr McLoughlin
I hope the hon. Gentleman does not mind my pointing out that I met a delegation before Christmas. I have met one delegation and I am happy to have another meeting with the hon. Gentleman on the same issue. I recognise that the council has changed its position and I look forward to his changing his position as well.
Today marks an important milestone in the progress of HS2. We must keep it to time and budget, and minimise the impact on residents, the environment and the landscape. We can do that and we need to do that because HS2 is an engine for growth: growth in jobs, growth in opportunities for business and growth in the global race. HS2 is a project for our generation. Now is the time to make it happen. I commend the Bill to the House.
Maria Eagle (Garston and Halewood) (Lab)
Britain’s railways face a major capacity challenge in the years to come. That was why, when we were in government, Labour proposed Britain’s first new north-south rail line for more than 100 years. We remain convinced that the project is essential, as is completing the wider rebuilding of our rail network that began under the last Government to reverse the damage caused by decades of under-investment before 1997. Doing nothing is not an option because the existing network is fast reaching the limits of its capacity.
Attempting to upgrade the existing main lines could deliver some, but nowhere near all, of the additional capacity that will be needed in the decades to come, and yet the cost would still be great, as would the disruption to passengers and freight. It would mean that we had learned nothing from the experience of carrying out a major upgrade of the west coast main line while attempting to keep it in use. After a decade of inconvenience and disruption, and almost £10 billion spent, the job was finally completed, but it delivered nowhere near the benefits that will come from a new north-south rail line. By building a new line that extends from London to Manchester, Sheffield and Leeds, we can relieve the pressure not just on the west coast, but on all three existing north-south main lines.
It is vital that we are clear about why the scheme is necessary. Those of us from all parts of the House who support the new line need to be better at communicating why the investment is essential. The new north-south rail line is necessary to deliver a major increase in capacity on our rail network. That is why we cannot afford to delay the delivery of this project any longer.
Dan Byles
The hon. Lady has just said that the project is supported by Members from all parts of the House. She knows that I do not support it. What would she say to Labour councillors in my constituency who consistently call this a Conservative project and imply that it is not a Labour one?
Maria Eagle
I would not agree with that, except in the narrow sense that the project is being taken forward by a Conservative-led Government at present. The Secretary of State and I understand that, on both sides of the House, not everybody is in favour of the project. The genuine concerns that people have need to be heard and we will listen to them in detail.
There will be significant benefits in addition to the new capacity that the line will offer. It will enable the introduction of much faster high-speed trains than can be deployed on the existing network. Journey times between our towns and cities will be cut, significantly in many cases. By building the line, we can help to rebalance the economy between London and the south-east and the rest of the country.
It is worth understanding the extent of the reduction in journey times that will be achieved. The journey from London to Manchester that currently takes two hours and eight minutes will be cut by an hour to just one hour and eight minutes. Sheffield will be just one hour and nine minutes from London, compared with the current two hours and five minutes. Leeds to London will take just one hour and 22 minutes, which is a reduction from the current journey time of two hours and 12 minutes.
Crucially, the journey times to destinations beyond the new line will be reduced. I am not sure that that is always understood. It will take just three hours and 38 minutes to get from London to Edinburgh, instead of the current four hours and 23 minutes. I look forward to being able to get home to Liverpool in a little over an hour and a half. It is not yet widely understood that high-speed trains will run off the new line on to existing track, serving communities across the country. It will be possible to get on a train in at least 28 of our towns and cities, including nine of the UK’s 10 biggest conurbations, and begin a journey that will use the new line. We need to communicate better the extent to which the whole country will benefit from this investment.
The development of stations along the new line will provide major opportunities for regeneration and jobs, in addition to those created through the construction of the line itself. With fast inter-city services moved to the new rail line, capacity will be freed up on the existing main lines for new commuter services, further improving connectivity between our towns and cities further north, and generating opportunities to shift freight from road to rail. The line will deliver a credible alternative to short-haul flights and, therefore, the opportunity to reduce the emissions that contribute to climate change and free up capacity at airports in the south-east that could better be used to open new routes to emerging markets.
We remain convinced that a new north-south rail line is needed. It is the right priority for investment and it is right that we make the decision to proceed.
Chris Kelly (Dudley South) (Con)
The hon. Lady talks about the communities that will be served by the proposed high-speed rail line, but what about ticket prices? Will it not just serve the type of people who work in professional services, such as lawyers and accountants, who will be able to travel at high speed on company expenses rather than out of their own pockets?
Maria Eagle
The hon. Gentleman raises a legitimate concern, which was probably not helped by the Secretary of State’s predecessor, the right hon. Member for Runnymede and Weybridge (Mr Hammond), referring to HS2 as “a rich man’s toy”. Consideration of pricing arrangements will help to alleviate some of those concerns.
Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)
Will my hon. Friend give way?
Maria Eagle
I will give way once I have answered the hon. Member for Dudley South (Chris Kelly).
The Opposition believe strongly that the north-south rail line will be a properly integrated part of our entire rail network. It should not be seen as separate from it. That also goes for pricing and ensuring that people can afford to use it.
Mr Mahmood
Does my hon. Friend agree that this project will have a huge economic benefit to places such as Birmingham and the west midlands? In my constituency, we have a company from the United Arab Emirates that was originally going to settle in London. It provides 20 jobs in Birmingham, a figure that will go up to 80 by the end of the year. The company is asking for better transport links, so that employees can commute as fast as possible. That will provide better jobs and training for our people in the midlands.
Mr Brian Binley (Northampton South) (Con)
Is not the truth of the matter that High Speed 2 will release capacity on the west coast main line? Has the debate not recognised the importance of freight, which is growing at more than 10% per year on rail? Does that not come into the discussions we are having today?
Maria Eagle
My goodness, I find myself in total agreement with the hon. Gentleman.
Despite the importance of this project, there has been a real lack of drive from Ministers—I am not necessarily talking about the Secretary of State—in taking the decisions and delivering the action needed to make it a reality. The former Labour Transport Secretary Lord Adonis set up HS2 Ltd as long ago as 2009. By August of the same year, he had already confirmed plans for a new north-south rail line because he was a high-speed Secretary of State. Nothing has moved anywhere near as fast at the Department for Transport since he left, except the revolving door that has meant I am facing my third Transport Secretary since the election. I hope very much that the Government reshuffle that is rumoured to be on the cards does not deliver yet another change. I am sure that the right hon. Gentleman will agree with me on that.
Mr McLoughlin
I hear what the hon. Lady says, but she should look at the average length of service of Labour Secretaries of State for Transport—they were also fairly rapid through those doors.
Maria Eagle
It is starting to worry me, when I contemplate my political future, that the average length across the parties of Secretaries of State for Transport appears to be somewhat on the short side. I hope that the right hon. Gentleman, while his Government are still in office, and I can increase the average length of time served.
Maria Eagle
I will make a little progress and then give way to the hon. Gentleman.
The fact is that it is only now, four years on from Lord Adonis’s initial action, that the Government are introducing the legislation required to enable money to be spent in advance of construction. The legislation needed to actually begin construction is still nowhere in sight. The Secretary of State’s own departmental plan continues optimistically to claim that Royal Assent on the hybrid Bill will be secured in May 2015, yet in The Times at the weekend he could not be any more confident than to say, “I hope it will.” I know he does not want to admit it, but is it not the truth that there is absolutely no prospect of securing Parliament’s approval for phase 1 before the next election?
Despite its inclusion in the Queen’s Speech, Ministers cannot even guarantee a Second Reading for the hybrid Bill in this Session, leaving just one year to secure its passage through both Houses. It took two years and one month to take the hybrid Bill for High Speed 1 through Parliament, and Crossrail took three years and five months. Neither of those schemes was on the scale, or came with as much controversy, as this new rail line. The Government’s inaction in the past three years requires them to rush the Bill at the end of this Parliament. The National Audit Office has warned that this compressed time scale poses even greater risks to the project:
“Faster preparation for the bill may increase the extent of petitions to Parliament which may make it less likely that royal assent is granted by the planned date of May 2015. It may also divert the Department and HS2 Limited from focusing on the deliverability of the design.”
With construction due to begin in January 2017, less than two years into the next Parliament, Ministers know full well that they are now cutting it very fine indeed.
The fact that Royal Assent will no longer be achieved for phase 1 in this Parliament raises the question of why the new line was split into two Bills in the first place. We all know that that decision was taken to ensure that at all costs Conservative MPs did not have to go into the next election with pressure from their constituents to vote against it. The Government have failed to achieve that goal, and have completely unnecessarily opted for two hybrid Bills, when taking the proposals forward as one scheme would have provided greater certainty and ensured that there was no doubt about the Government’s commitment to the whole north-south line, as Ministers claim.
Mr MacNeil
Harvard Business Review says that there are about 40 mega-regions in the world that straddle national borders. They contain about 18% of the world’s population, 66% of its economic activity and 86% of the world’s patents. In these islands, we have two such mega-regions: south central England and the central belt of Scotland. Professor Richard Florida of the university of Toronto says that linking these regions helps global aggregate prosperity. When would the hon. Lady like to see high-speed links between these two UK mega-regions?
Maria Eagle
We cannot get any further north than Leeds and Manchester until we have got to Leeds and Manchester. That is a constraint, but I hear what the hon. Gentleman says.
Andrew Bridgen
The hon. Lady talks with great enthusiasm about HS2. Will she reassure the House that Her Majesty’s Opposition’s support for HS2 will continue up to and beyond the next general election? The support of the Government in this case is, I believe, rather like the support given by the rope to the hanged man.
Maria Eagle
The hon. Gentleman is speaking in hope rather than expectation. I know his own personal concern about the scheme and I understand his point, but I can be clear with the House that Labour supports getting on with building this north-south line.
Mrs Gillan
I am grateful to the hon. Lady for giving way. I am also grateful to her and the Secretary of State for being so understanding about the problems the scheme will cause to my constituents and my constituency. Does she agree that, in spending in excess of £50 billion minimum on such a scheme, one would expect it to connect effectively to HS1 and Heathrow? Is it not right to say that going ahead with this project and looking at the phase 1 route at this stage before Sir Howard Davies’s review into airport capacity is putting the cart before the horse?
Maria Eagle
It is fair to say that there are concerns about connectivity and what is happening at the southern end, but it is also fair to say that the Government of the day must decide. It is reasonable for the Opposition to raise issues, but, with projects over multiple Parliaments, we must accept, as an Opposition, that we are not quite as well resourced as the Government of the day to come up with well-thought-through alternatives. The Government of the day have to make the decisions, but it is fair enough for opponents and supporters of the scheme to raise issues, recognising that, if the project is ever to be delivered, the Government of the day must decide on the way forward.
Mark Lazarowicz
I did not quite catch my hon. Friend’s answer to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil), who asked about taking the line north of Leeds and Manchester. Will she confirm that we would wish to see the high-speed services and line taken north of Leeds and Manchester in due course? It is not just a question of speed, however; it is also a question of capacity, because, as she pointed out, the construction of high-speed lines further south will free up capacity on existing lines, but that will lead to capacity problems if all the high-speed trains end up going on the existing lines further north.
Maria Eagle
I understand my hon. Friend’s point, and the one I made in response to the earlier intervention was simply that we had to get to Leeds and Manchester before we could go further. Work is going on—led by the Department, I think—looking at the prospects for further phases, if one wishes to put it that way, after we have got to Leeds and Manchester.
The delays over the past three years are no surprise, given that the Department has been promising to publish a transport strategy ever since the election, but has yet again delayed it until later this year. The failure to deliver progress on this new railway line could not be a better example of what happens when one decides on a transport strategy towards the end of a Parliament, rather than at the beginning. It means major transport decisions—for example, how we connect the new rail line into Britain’s hub airport at Heathrow—are not being taken forward in an integrated way. That is entirely a consequence of ducking the big questions on aviation for the whole Parliament and of the Government’s decision, which we believe to be wrong, to tell the Airports Commission not to report until after the next election.
It is not just the rapidly slipping timetable that raises alarm bells and worries those of us who support this project. The National Audit Office wrote:
“We identified three areas of risk to the Department’s effective governance of the High Speed 2 programme:… Underdeveloped governance and programme management… Insufficient resources in the Department’s High Speed 2 team”
and
“Inadequate stakeholder management”.
The criticism that Ministers failed sufficiently to resource the team in the Department will be familiar to anyone who has followed the fiasco over the collapse of the Government’s rail franchising programme. The NAO has warned that there is
“a high risk that it may have insufficient skilled staff in the areas of procurement, corporate finance, rail technical and programme management.”
Yet again, the reckless way in which the Department was reorganised after the election and the scale of cuts to key staff have put a major project at risk.
The Government have finally, belatedly, appointed a new director general for HS2 as well as a new senior management team, which is welcome news, but is it not extraordinary that, just as with the west coast main line fiasco, it took so long for a senior responsible owner to be identified for the project? No wonder the Major Projects Authority has rated the delivery of the new rail line as amber/red. That should have been a clear warning to Ministers to take its concerns seriously, not simply dismiss them as irrelevant.
To be fair to the Secretary of State, there was one bit of good news in the otherwise highly critical report from the MPA. It found that
“the Department has strengthened its working relationship with HM Treasury.”
That is very sensible indeed, particularly in the light of the NAO’s concerns about the budget for the project. It has called the Department’s use of a precise estimate of £16.3 billion for the cost of phase 1 of the scheme as “unwise”, as I think we have discovered today. It said that an honest figure would be between £15.4 billion and £17.3 billion, so I welcome the fact that the Secretary of State has today given updated figures. I am sure that he will continue to do so, as he has undertaken to do.
The NAO was also unable to verify the Department’s claim that the £1.5 billion savings recommended by Infrastructure UK could be delivered. Work apparently only began on identifying those savings in September. The House needs to be told whether the savings have now been locked in. The NAO also raises doubts about the Department’s claim that phase 1 will result in reduced operating costs on the existing network of £3 billion over 60 years. This is on the assumption that fewer long-distance services are likely to run on the west coast main line, but because the Department has not set out any revised service patterns it is difficult to see how such a precise and neat rounded figure has been generated.
The Government should also be clear that the £42.6 billion cost of completing the north-south line as far as Leeds and Manchester does not include the £7.5 billion cost of the trains to run on the line. The Secretary of State has made that clear today. These factors are an essential part of the project, and they ought to be included in the estimates in future.
Worryingly, the National Audit Office also claims:
“The Department has not included VAT in its cost estimates or affordability assessments”,
and warns that
“HS2 Limited will be liable for VAT at 20 per cent on almost all of its spending.”
Ministers need to confirm that the Chancellor and Her Majesty’s Revenue and Customs have agreed that the VAT will be reclaimable. If that will not be the case, that should also be accurately reflected in the budget.
The NAO also warns that, even with the additional £3 billion capital spending from 2015-16 that has been confirmed today, there is a risk that the project
“may restrict the ability to fund other capital projects across government”.
It goes on to warn:
“We estimate that there could be a gap in affordability of £3.3 billion spread over the four years from 2017-18 to 2020-21, which are the peak spending years for phase one.”
The Secretary of State will, I think, have negotiated something in that respect, but he must make it clear, when he can, that the settlement he has reached with the Chancellor—the details of which we might get tomorrow—has closed that funding gap in full. It would be unacceptable if the Department’s failure to plan the spending needed for this scheme were to result in any cuts or delays to the vital upgrading on the rest of the network. That includes the rolling programme of electrification and new inter-city trains, both of which have already been delayed or scaled back under this Government.
Finally, on the budget for the scheme, there is already a creeping increase in spending from the allocation set for this Parliament in the 2010 spending review. The Minister of State, Department for Transport has admitted to me in a parliamentary answer that the budget for the current spending period has been revised upwards from £773 million to around £900 million. That is worrying in the context of the legislation we are debating today, which will effectively give Ministers a blank cheque from Parliament to spend on the scheme. I am sure that the Secretary of State will keep Parliament fully apprised of where the money is going.
In addition to the delays and the criticisms of the budget, serious concerns have also been expressed about HS2 Ltd. It was initially set up to advise Ministers on the route for the new north-south line, but the Government have expanded its role to include building support for the scheme and then delivering it, despite the fact that HS2 Ltd has faced criticism for the way in which it has engaged with communities along the route, with local authorities and with MPs. The fact is that it has not proved to be an effective advocate for the scheme.
The NAO has issued a warning on this, too, saying:
“The programme has a complicated governance structure. This is because the Department aims to preserve some independence for its development body, HS2 Limited, while also maintaining effective governance.”
By divorcing the scheme from delivery of the investment in the existing rail network, there is a risk that we will not focus on the need to create a fully integrated single rail network. It makes no sense that Network Rail is, in effect, having to mirror some of the work of HS2 Ltd, including appointing staff of its own to work on the scheme and having to lobby HS2 Ltd to ensure that decisions are taken in a way that does not have a negative impact on the wider network.
It is increasingly clear that a better option would be to transfer responsibility for the planning and delivery of the new north-south rail line to Network Rail. That would reduce duplication and cost while better enabling the integration of investment in the existing network and the new line. The hopelessly inadequate plans for connecting the new north-south line with HS1 are a good example. The focus of the debate on this issue has been on whether there would be any demand for services from the continent to go further north than London. We should surely not turn our backs on the opportunity to end unnecessary and environmentally damaging short-haul flights, but the real case for getting the connection right involves the opportunity to run the excellent Javelin trains that served us so well during the Olympics further up the country, instead of simply between the coast and the capital.
Mr MacNeil
According to the latest Government figures, Scotland has 8.4% of the UK population but provides 9.9% of the taxes. In effect, Scots will be paying for 9.9% of the new high-speed rail development, so it is disappointing that neither the Secretary of State nor the hon. Lady can give the House a date, an ambition, a target or a hope of when it might reach Scotland.
Maria Eagle
I do not accept the hon. Gentleman’s premise that there will be no benefit to Scotland before the high-speed rail line gets there at some time in the future. It is clear that it will benefit from the project.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Does the hon. Lady agree that, if we are going to spend this large amount of money on HS2, we should get the maximum benefit from it? At the moment, it is planned to connect HS2 with HS1 only by a rather tortuous single-rail route, but there is a better, double-rail solution available. Would it not make more sense to fully integrate HS1 with HS2?
Maria Eagle
I have a great deal of sympathy for the hon. Gentleman’s point. It makes no sense to me at all that passengers from the south-east should have to change trains in north London to reach towns and cities in the midlands, the north and up to Scotland. We do not see this connection as an optional extra that can be delivered in a patch-and-mend way; it needs to be re-thought.
Frank Dobson
Is my hon. Friend aware that HS2 is saying that it wants to use the north London line for the link because
“it is assessed to have less construction risk than a tunnel”?
Is she aware that the man from Bechtel who masterminded the successful channel tunnel link and the refurbishment of St Pancras decided to do a double-bore tunnel from Barking to St Pancras because is was “less risky” to have such a tunnel than to use the north London line. Who would my hon. Friend trust on that?
Maria Eagle
I would undoubtedly trust my right hon. Friend—there is absolutely no doubt about that. The points made by both the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) and my right hon. Friend illustrate the concern and controversy that remain about this issue. I believe that a solution should be devised that can minimise the impact on communities in Camden while ensuring that we do not miss a perfect opportunity to redevelop Euston in the right way for the long term. I believe that the Government should keep looking at that.
Mrs Gillan
I am really grateful to the hon. Lady for giving way, because our speeches are being restricted to only six minutes in the main debate, so it will be hard to say everything that has built up over four years in those six minutes. From what she is saying, am I right to understand that her party might look at a different route for HS2, as the very point she is making about connectivity to HS1 and to Heathrow leans towards another route that was originally in the set of proposals—one that was not chosen by this Government?
Maria Eagle
I do not think it fair to assume that if I had the Secretary of State’s role after the next general election, I would tear everything up. I have made it clear that when there are projects that run across Parliaments, it is important to co-operate and to understand that decisions have to be made. We will, however, have to see where we are by the time we get to the next election. I would certainly want to take every opportunity to make sure that the nation gets the best possible outcome from the money spent. As I say, we shall have to see where we are at that time. I am not interested in delaying going forward with what I believe to be a tremendously important scheme.
The Government must also be clear, following the successful judicial review, about how they intend to change the compensation scheme for households affected by the building of the line. The judge found that the consultation process was unfair, that not enough information had been provided and that the criteria for compensation options were not adequately explained. This failure has caused unnecessary added stress to those affected by the scheme, during what is obviously a very difficult time for them and their families.
It is simply not possible to take forward a project of national importance on this scale without causing a significant impact on some communities and on some people’s lives, but the obligation on all of us is to do what we can to mitigate that impact and to act fairly in terms of compensating people for the loss of property and value that they suffer. Ministers must now act quickly to bring forward a new, fair scheme and ensure that it is communicated clearly and transparently.
Andrea Leadsom
Do the Opposition therefore support the concept of a property bond that would try to improve on the blight that is experienced by so many people?
Maria Eagle
I am willing to support anything that can properly, fairly and reasonably compensate people in a way that still meets the obligation to be reasonable with taxpayers’ money. I would thus be happy to look at the details of the scheme, as I think the Secretary of State has said he is, too. I think we have a particular obligation to treat those affected as fairly as we possibly can and within as speedy a time scale as possible.
Mr Betts
I would like to mention a point raised with the Secretary of State a while ago. Asking people to make a sacrifice for the good of the country—that is effectively what we are asking the people whose homes are to be demolished to do— and saying to them, “This is the value of your property now and you can have 10% extra for the loss of your home” is really not adequate compensation. We should be able to do a bit better than that for people who are being forced to move home through no fault of their own and no choice of their own.
Maria Eagle
That is an important point. Such action could, indeed, lead to other benefits, if it meant that matters were settled earlier than they would otherwise have been. I believe that some European countries do as my hon. Friend suggests, and end up building their lines rather more quickly than we seem to manage to.
Ministers must now engage in a debate about the eventual cost of using the new north-south line, because that goes to the heart of the question of what kind of railway we believe in. There have been fears about the issue ever since the former Transport Secretary, the right hon. Member for Runnymede and Weybridge (Mr Hammond), started talking about rich men’s toys.
Kwasi Kwarteng (Spelthorne) (Con)
I think it important to put on record the fact that the phrase “a rich man’s toy” was presented to my right hon. Friend the Member for Runnymede and Weybridge (Mr Hammond), who is now Secretary of State for Defence. He did not demur, but it is not a phrase that he generated. I happen to have been a member of the Transport Committee at the time. I think it important for us to clear this matter up before the hon. Lady starts accusing my right hon. Friend of making that comment.
Maria Eagle
I think every Member of Parliament realises, given the present state of journalism in this country, that if a phrase is presented to one and one does not demur, it is quite legitimate to say that that is what one agrees with. I understand the hon. Gentleman’s point.
I hope that Ministers will agree with Labour’s vision of a new railway line that is fully integrated with the existing network, and whose fares are fully regulated. That is the line for which we will all be paying, and its use must therefore be affordable for many people, not just for a few at the richer end of society.
It is disappointing that Ministers have so far shown little interest in ensuring that this significant investment delivers real opportunities, especially for our young people. Labour has made it clear that every £1 billion of investment in the scheme should deliver 1,000 apprenticeships, and I hope that the Government will make the same commitment to apprenticeships and to our young people. Ministers must learn the lessons of the Thameslink procurement. Those trains are now to be built in Germany. It is perfectly possible, within EU rules, to ensure that public investment delivers jobs and apprenticeships where they are desperately needed, here in Britain. Every other EU country manages to do the equivalent through its own train procurement. The new line must deliver British jobs and growth, not only after its completion but during its construction, and that must include the manufacturing of the trains.
It was a Labour Government who first set out the ambition for a new high-speed north-south railway line to address the capacity issue on our rail network while also cutting journey times between our towns and cities, and the case for making this scheme a reality remains strong. Indeed, it is all the more necessary at a time when the Government’s economic failure has meant a failure to deliver the growth that the country so desperately needs. The progress made over the last three years, since Ministers inherited the project, has been disappointing, but it retains cross-party support. We will support the Bill today, but we urge the Government to get on with the hybrid Bill as soon as possible. We want to see the enthusiasm and commitment from Ministers that are necessary to make a major project on this scale become a reality.
Mr Speaker
I must now announce the result of a Division deferred from a previous day. On the motion relating to the town and country planning regulations, the Ayes were 281 and the Noes were 185, so the Question was agreed to.
[The Division list is published at the end of today’s debates.]
Mr Speaker
Order. In view of the fact that more than 30 Back Benchers wish to speak in the debate, I have imposed a six-minute limit on Back-Bench speeches, with immediate effect.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I beg to move an amendment:
That this House declines to give a second reading to a Bill which authorises preparatory expenditure on a railway without specifying further detail of the route and a limit on expenditure.
Let me begin by paying tribute to all the constituents and volunteers who have worked tirelessly to protect our interests in the Chilterns. HS2 Action Alliance, 51m, Stop HS2, our Conservative councillors and all the conservation groups have worked very hard and deserve all our thanks and congratulations.
There is no doubt that if HS2 goes ahead, Chesham and Amersham and the Chilterns will be badly affected. Indeed, I think that my constituents will be paying twice: once through their taxes, and once through the disruption and blight that they are suffering.
We have heard that this project was dreamt up under the last Labour Government, and I am glad that the shadow Secretary of State took responsibility for it. The mistake we made was adopting it without asking the proper questions, and now, after three Secretaries of State in as many years, we have a £50 billion project—so we heard today—not connected to any airport or other transport system such as HS1, and divided into two phases with no guarantee that the northern route will be built even in my lifetime.
Graham Stringer
The right hon. Lady is an excellent constituency MP and the route north of Birmingham includes Manchester airport, so, as she was once a candidate who aspired to represent Manchester, does she think she would have a different position on this matter now if she had won that election?
Mrs Gillan
Ah, but fortunately I was elected to represent Chesham and Amersham, so I do not have to answer that hypothetical question.
This project is also almost 30 years out of date. Thirty years ago I might have been supporting it, but people are now looking to save costs in business by using teleconferencing and superfast broadband, and they are trying to reduce the amount of travelling their employees do. If we are in a global race, I would be much happier if we were in fact connecting effectively to Heathrow and HS1, because at the moment we do not even seem to be able to repair our existing roads and railways, and we cannot use the M25 without being stuck in a traffic jam. Surely we should be looking at our infrastructure and maximising its potential before building a bright, new, shiny railway?
Last week the New Economics Foundation did an excellent piece of work: it published a report examining a variety of projects across the country that could be procured for the same sum of £33 billion. They included some very valuable improvements for northern cities, active transport systems and much more superfast fibre-optic broadband, which we need to deliver competitiveness for this country.
I may have been a nimby—when I started off, I was a nimby—but I have studied this project and I am convinced that it is the wrong project. I am not alone in questioning HS2. We have heard what the National Audit Office has said. Its report was damning. It highlighted that the Department had failed to outline clear strategic objectives, had made errors in calculating the cost-benefit ratio and is not sufficiently engaged with stakeholders, and it casts serious doubt over the capability of HS2 Ltd even to deliver this programme alongside the other demands on the Department.
The judicial review has resulted in a judgment that was shaming for the Department, finding that its consultation on compensation was so unfair as to be unlawful. The Major Projects Authority’s report—which the Government continue to refuse to publish in detail, even though the Information Commissioner says it is in the public interest for them to do so—indicates that this project is in the red/amber category, denoting a very high risk of its failing to be delivered on time or on budget.
Mr Binley
Does my right hon. Friend acknowledge that while the NAO report did, indeed, make those criticisms, it also said that at the end of the day there would be a return of 2.5:1 on this project, and does she not recognise the importance of that to the well-being of future generations?
Mrs Gillan
That is a nice try, but the cost of this project is going up minute-by-minute, so I doubt that that ratio is accurate even as I stand here today.
I also have to say that the Department and HS2 Ltd have already failed on other bases: engineering calculations have been wrong, and the costs of alterations to Euston were inaccurate. That, along with public failures such as the west coast main line franchise debacle, must prompt this question: do the Department or HS2 have the leadership capability or competence to deliver the largest infrastructure project in the UK in living memory?
If the project gets the green light, however—as I fear it will, judging by the number of Members present—I want to make two particular points to my right hon. Friend the Secretary of State. On the current consultation—I use that term loosely—by HS2 Ltd on the draft environmental statement, whatever the failings of the process, at the moment one thing is clear: the area of outstanding natural beauty, which belongs to everybody in this country, is going to be irreversibly damaged. My first request to the Secretary of State is that if this project does go ahead, can we have the best possible mitigation in the Chilterns in order to protect our precious, and highly endangered, environment to the utmost level? A fully bored tunnel under the whole of the AONB would offer that protection, and I urge the Secretary of State to adopt that option.
My second request has I think been answered partly, because my right hon. Friend the Secretary of State accepted in his opening speech that he will look more seriously at, and perhaps even deliver, the property bond. The compensation scheme has been totally inadequate to date, and the engagement of officials and Ministers often the dialogue of the deaf, frankly. The Bill does not include specific undertakings on compensation that would fulfil the Prime Minister’s assurance to me that it would be timely and generous to those people adversely affected. So I hope that my right hon. Friend the Secretary of State will look at the property bond put forward by my constituent Hilary Wharf who is to be commended for her work in this area, and that the compensation system introduced is rapid, fair and does not make my constituents feel that the Government are wriggling to avoid paying them a proper price for their properties.
As you know, Mr Speaker, there are several Members of Parliament whose constituencies are affected by HS2 who are unable to speak today, so I want to say a few words on behalf of my right hon. Friend the Member for Aylesbury (Mr Lidington), who has worked tirelessly to put forward the interests of his constituents. He asked me to point out today that places such as Wendover Dean and the Hawkslade and Walton Court areas of Aylesbury are among the worst affected of any along the phase 1 route. He also asked me to highlight the need for better mitigation—a request that fits in with my own request for a fully bored tunnel. I know that you, Mr Speaker, have regularly communicated your constituents’ overwhelming opposition to this project and, like me, have received thousands of letters and have similar experiences of the failure of the exceptional hardship fund to offer adequate compensation to constituents. Likewise, my right hon. and learned Friend the Member for Beaconsfield (Mr Grieve) is very worried about the Denham viaduct and the Colne Valley site of special scientific interest.
Why do we need a paving Bill? There was no paving Bill for the channel tunnel rail link, Crossrail or the Olympics. We could continue to spend money as we have already, without this Bill. Once it is passed, as it undoubtedly will be, the Government can claim that HS2 is backed by the will of Parliament. Frankly, all colleagues should be concerned about proceeding with this project. The Bill is a blank cheque, handed over before Parliament is in full possession of the facts, and to a Department that is having a hard job convincing people that the project is fit for purpose. On that basis, and because this is the first time we have even had a vote on HS2, it is with a very heavy heart that I say I cannot support the Government. I hope that colleagues in the House today will support my reasoned amendment and vote against the Bill. At this stage, I have no intention of calling votes on any other part of the proceedings, but I will on the amendment and on Second Reading.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
I am pleased to support this legislation today, which is a significant step in securing High Speed 2. It is important to recognise that HS2 is about having a vision for the future. It is about making a much-needed step change in capacity on our railways. It is about meeting growing demand for rail, addressing congestion on our roads and motorways, and connecting major cities not just across this country and the UK, but potentially across Europe as well. It has the potential to rebalance our economy.
However, it is very important that progress on High Speed 2 does not go ahead in isolation from considering the importance of continuing to invest in the existing classic line. Existing improvements such as the northern hub and the electrification programmes must continue and be stepped up. Assurance must be given that there will be proper access to high-speed rail, and that means that more attention needs to be given to the siting of the stations and connections to them. It is important that no local services be reduced as a consequence of building the high-speed rail line, and it is extremely important that the potential of developing the freed existing lines for both freight and passengers be addressed. That means that more work needs to take place, perhaps through local authorities and local enterprise partnerships working together, to make sure that proper plans are worked out so that the existing lines freed when high-speed rail comes to fruition will be able to be used to the maximum for freight and for passengers.
It is also crucial that the potential for economic development and rebalancing the economy is achieved. That means that we must not make any assumptions that simply building a high-speed line will automatically bring those economic benefits. Work has to be done, again by the LEPs, with the local authorities and with Government support, to develop economic strategies, regionally as well as nationally, to support business in taking advantage of those opportunities. I was very interested to read the results of studies instigated by local authorities. The Core Cities study put forward by major cities in our country identified about 400,000 new jobs that would come as a result of high-speed rail, and Centro’s report, looking specifically at the west midlands area, identified about 22,000 jobs that would come. I emphasise that none of those jobs will come automatically; we need to give attention to economic strategies and support for business to make sure that those opportunities come to fruition.
A number of important issues must be addressed. Concern remains that under the Bill as proposed, high-speed rail may not go beyond Birmingham. We have heard assurances from Ministers but we need rather more than that; we need a commitment in the Bill to make sure that HS2 is not simply between London and Birmingham, and that the rail scheme progresses to Leeds, Manchester and beyond. The time scale is a very long one, even on the current proposals of 2026 to Birmingham and 2033 to Leeds, to Manchester and to other areas.
Mr McLoughlin
I completely agree with the hon. Lady’s point. I wonder, Mr Speaker whether I might use this intervention to clarify something I said earlier, as I am afraid I gave the wrong figure. I said that the contingency was £12.7 billion but it is actually £14.4 billion, so it is larger than I said. I just wanted to take this opportunity, with your permission and that of the hon. Lady, to put the figure right.
Mrs Ellman
I thank the Secretary of State for clarifying that situation.
The consultation, which has not yet taken place across the whole of the proposed line, must be a very real one. A number of hon. Members have already told us of their local concerns. There are problems in relation to London and, in particular, the development around Euston station, which is an important and difficult issue. Hon. Members have also raised issues in the House relating to access to Stoke-on-Trent. The proposals for Liverpool are not good enough and need improvement. Important environmental issues need addressing, and the question of compensation has been raised in the House this afternoon. All those issues are vital and must be addressed in a reasonable way. It is important for them to be resolved successfully because that will help to deliver a successful HS2—high-speed rail that is about much needed capacity, connectivity and economic progress for the future, throughout this country and beyond.
Iain Stewart (Milton Keynes South) (Con)
It is always a great pleasure to follow the hon. Member for Liverpool, Riverside (Mrs Ellman), the Chairman of the Transport Committee. I have had the privilege of serving on the Committee for more than three years now. I have studied this subject not only through my Committee work, but through other personal research and I do not think I have studied any subject in more depth. I will try to put concisely my observations on the project in the next few minutes.
I support the principle of high-speed rail. I confess that I do not believe this route is the optimal one, and I have specific concerns and suggestions to make about it, but I support the Bill. I fear the opportunity cost of not proceeding with this project far outweighs the risk and costs of going ahead. I shall say a little about why I have reached that conclusion.
The point has been well made that many parts of our rail network are close to capacity. Rail passenger use and rail freight use have increased sharply in recent years and any reasonable projection shows that they will continue to rise in future decades. Simply taking into account the increased population of the country, particularly in areas such as mine, it is clear that there will be continued increased demand on transport services and rail in particular. Rail usage increased even in the recession from 2008 onwards.
It is often said that we should invest in the classic network rather than HS2. I would not support HS2 if it was at the expense of investment in the classic network, but there is substantial investment in that network. There is the electrification of the Great Western and midland main lines, as well as new rolling stock and junction improvements on the west coast main line. The Government have sensibly committed to reopening the east-west rail line from Milton Keynes to Oxford and Aylesbury. Those are just a few of the projects.
Essential and welcome as the upgrades are, they will not be enough for the long term. I have come to the conclusion from all my research, and from looking at all the projects and models that have been proposed, that we need to build a new north-south strategic rail line.
Andrea Leadsom
Does my hon. Friend think, like my hon. Friend the Member for Northampton South (Mr Binley), that this is a matter of needing more capacity? If so, why are we going for a very expensive system like high-speed rail, with its exponentially enormous engineering costs?
Iain Stewart
My research has shown that if we are committing to build a new railway line, the cost of building a fast one is not significantly more than building a conventional one. The majority of the costs come in building the cuttings, the bridges and all the other necessary infrastructure. Making a faster one costs a little more, but not a huge amount more.
If we merely expanded capacity on the west coast or east coast lines, we would have to do that at the same time as running existing services. Anyone who used the west coast main line during the previous upgrade will say what an absolute nightmare that is. Such an approach would not solve the problem of competing demands for use on the existing line between commuter services, freight services, non-stop inter-city services and stopping services. We cannot continually squeeze more and more capacity out of one line, as we will reach capacity and will be overly reliant on that line. That is why I accept the case for a new high-speed line.
I accept that the project is controversial and completely understand the fears of residents along the proposed line of route. There are justifiable concerns about disturbing the peace and quiet of the countryside, but I urge right hon. and hon. Members to look at what happened during the construction and planning of High Speed 1. The same concerns were raised, but since the line has opened there have been very few, if any, complaints.
Sir Paul Beresford (Mole Valley) (Con)
I can certainly back up my hon. Friend’s point. I was on the Committee that considered the Bill and the line was going through the garden of England, and there was talk of devastation and horrendous things. Some of the complaints were justified, but many proved to be empty. It has worked.
Iain Stewart
I am grateful to my hon. Friend for that intervention. I took the opportunity to visit the route of High Speed 1 and saw the noise mitigation measures that had been put in place. The noise of the trains is not much more audible than that of an A road or other minor piece of infrastructure.
Alec Shelbrooke
I was on that trip with my hon. Friend and a notable fact given to us by Kent county council was that Maidstone is now lobbying to have the line go through the station, whereas it was vehemently opposed to that originally.
Iain Stewart
My hon. Friend is absolutely right.
To those who voice concern about visual intrusion on areas of outstanding natural beauty, I simply make the point that railway infrastructure need not be ugly—it need not be concrete blocks. Look at some of the fantastic pieces of railway engineering and architecture we have: the Forth bridge, the Glenfinnan viaduct, Brunel’s bridges and tunnels—they have enhanced the landscape. I urge my right hon. Friend the Minister of State to make HS2 into an opportunity to showcase the best of British design and engineering, with bridges, viaducts and other infrastructure that show off and augment our landscape.
In the couple of minutes remaining, I will highlight five specific concerns and make some suggestions. The first is about the rolling stock for the line and making sure it is compatible with the classic network, particularly on the Anglo-Scottish services. At present, we have tilting trains that allow conventional lines to be used at high speed, but if high-speed trains cannot tilt, journey times on the classic network will be lengthened to an extent that might offset the time gains on the high-speed line. I urge the Minister to consider that.
The second concern, justifiably felt by people in Buckinghamshire, is that the line goes straight through the county with no stop. The high-speed line will intersect with the new east-west line in Buckinghamshire. I ask that, when the scheme is considered in full—the Y-network and connection to the channel tunnel—the case will be reassessed for an intermediate stop at Claydon junction. I would suggest calling it “Milton Keynes Parkway”, but others may have different ideas. That would enable people in the area to access the lines, which I believe would augment the business case.
Only seconds remain, so I will very quickly highlight the point, which has already been well made, about properly connecting airports, High Speed 1 and the channel tunnel. I do not think the plans are optimal. Finally, I urge my right hon. Friend to look at capacity at Euston, where the tube network is already pretty crowded. I believe we need to consider Crossrail 2, so I was delighted when the Chancellor floated that possibility in his statement earlier today. Notwithstanding those concerns, I support the Bill.
Frank Dobson (Holborn and St Pancras) (Lab)
HS2 will unleash havoc on Euston, Primrose Hill and Camden Town in my constituency. It will demolish the homes of about 500 people and blight the homes of at least another 1,000. One local park will disappear for ever; another will be a building site for 10 years or more. The project will prevent the much-needed reconstruction of Euston station, which was intended to provide around 1,000 new flats for local people. It has already delayed plans to rebuild a local convent school. The link to HS1 will subject Primrose Hill and Camden Town to large-scale engineering works, mainly above ground level. Local shops and restaurants will be put out of business; quiet back streets are to become official routes for construction traffic. Yet the compensation and mitigation regime intended for our area is inferior to what has been promised outside London. That cannot be right.
When HS2 was given the go-ahead, we were told, first, that phase 1 would cost £17 billion; secondly, that it would be completed by 2026; and thirdly, that no one would suffer a significant loss. HS2 is backtracking on all three. For a start, as has been pointed out, £17 billion will not provide a working railway, because it does not include the cost of the trains, estimated to be £2 billion—it will be a train-free zone. Nor does it include the cost of the works at Euston needed to allow the already overcrowded tube and local roads to cope with additional passengers and traffic—that is probably another £2 billion. VAT at 20% will come to about £3 billion. The original estimate for HS2 also included £1.4 billion for a spur to Heathrow. The spur has been dropped, but it is not at all clear where the £1.4 billion has gone.
Mrs Gillan
Does the right hon. Gentleman agree that because we do not have the full environmental statement—we have only a draft—we do not know the full cost of any environmental mitigation that may be needed along the route?
Frank Dobson
The right hon. Lady is absolutely right. Recently, HS2 Ltd has been forced to confess that it underestimated the cost of the works at Euston by no less than 40%. We have been asked to write a blank cheque for people who underestimate costs by 40%. On top of that, HS2 Ltd admits that it has to rebuild or strengthen cuttings, embankments and bridges on the north London line and the main line. Originally, it denied that that would be necessary, so it did not provide for it in the initial costings. I remind Members that those costs have soared while HS2 is still at a desk-study stage. God knows what will happen when people get round to practical work on the site.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Is my right hon. Friend aware that last week, the New Economics Foundation produced the third independent evaluation of the project, saying that there was real doubt about its viability and what it would do for northern cities?
Frank Dobson
I cannot possibly disagree with my hon. Friend. In theory, a million years ago, I got a degree in economics, and I have reached the stage where I can usually work out when someone is talking drivel. When I heard the Government’s cost estimates, I think I understood they were talking drivel.
Does anyone in the House really believe that the line will be completed by 2026? I was going to offer a bet against completion by then, but I suspect that the final completion date is so far in the future that I am unlikely to be around to collect my winnings, which brings me to compensation and mitigation.
At present, HS2 Ltd intends that people and businesses in our area should receive lower compensation, lower standards of protection and inferior mitigation measures. There is no excuse for that treatment of a settled residential and business community. Local council tenants, right-to-buy leaseholders, private tenants, leaseholders and owner-occupiers should be no worse off as a result of the project, which is being carried out, apparently, in the national interest. They must be found new homes that meet their needs, and without any detriment to the terms and conditions of their tenure.
The same approach should apply to businesses. Restaurants and small shops in Drummond street depend on passing trade to Euston station for up to 70% of their business, but HS2 Ltd proposes that for 10 years, they should be cut off from the station by a barrier that will be higher than the Berlin wall. What is worse, it is proposed that they would not receive any compensation at all. May I tell Government Members, who always say that they are speaking up on behalf of small businesses, that if they do not do something to prevent that wickedness, they will let down some small businesses? The same non-compensation rules will apply in Camden Town.
The Government must reconsider the project. Is it really the best use of a scarce £17 billion if we want to improve our creaking transport system? Even if it is, would not the London terminus be better sited at Old Oak Common which, unlike Euston, is on the Heathrow Express route and will be on Crossrail? It would be welcome there, and studies show that if people got off Crossrail at Old Oak Common, only 4% of London underground stations would take longer to reach than if they went to Euston. The stations that would take longer to reach are Euston Square, Regent’s Park, Mornington Crescent and King’s Cross St Pancras, so there is no disadvantage. If this goes ahead, most sensible travellers will get off at Old Oak Common anyway, whatever anybody says.
Finally, if it is decided to go ahead, I hope there will be agreement across the Chamber that there should be a special made-to-measure compensation and mitigation scheme for the whole length of HS2 and all the residents and businesses affected by it. It should be as generous as the Secretary of State promised, and I do not doubt the integrity of the Secretary of State.
I also have to say this: in all the years that I have dealt with public and private bodies, I have never come across an outfit as stupid, incompetent and incapable of even delivering letters as the people at present running HS2, and if I were in favour of the project, I would get someone else to do it.
Mr Alan Reid (Argyll and Bute) (LD)
I very much welcome the Bill. It is an important stage in implementing a promise from the Liberal Democrat manifesto. The Bill gives the Secretary of State the power, subject to the approval of the Treasury, to incur expenditure in preparation for the high-speed rail network. The language used in the Bill is open-ended because it states that this expenditure must include at least rail lines connecting London, Birmingham, the east midlands, Sheffield, Leeds and Manchester, and which connect with the existing rail network. The “at least” phrase means that the HS2 expenditure being approved under the Bill is not limited to the cities and regions mentioned, but prepares the way for further extension of HS2 in the future.
This is in line with the Government’s wish to work with the Scottish Government on this issue, with the aim of having a third phase to connect the high-speed link on from Manchester to Glasgow and Edinburgh. By enhancing connectivity between Britain’s large cities, HS2 will make investment in the regions outside London and the south-east far more attractive. This is vital if we are to help rebalance the UK economy and increase jobs and growth. HS2 will underpin the delivery of at least 100,000 jobs, and hopefully far more.
It is estimated that HS2 will transfer approximately 9 million journeys from road to rail and 4.5 million from air to rail. This will ease road congestion and reduce some of the pressure on our airports, allowing our economy to grow in an environmentally friendly manner. Passenger demand is expected to grow and if we do nothing, it is anticipated that the west coast main line will reach full capacity during the next 15 years. High-speed rail provides the best possible option to cope with ever-rising passenger demand and to ensure that we have sufficient future capacity to satisfy the needs of the UK economy.
HS2 will also help to free up capacity on the existing rail network, in particular the west coast main line. As well as improving services for passengers, it will free up capacity for more freight on the railways. HS2 will radically shorten journey times between London, the midlands and the north of England and Scotland. For example, it will shorten the journey time between London and Edinburgh by 45 minutes. That is after phase 2 is completed and without waiting for phase 3.
Mr Sheerman
Has the hon. Gentleman seen some of the research that shows that rather than strengthening the provincial cities, HS2 will reinforce the power and influence of London and do the absolute opposite of what most people thought it would do?
Mr Reid
I have seen some of that analysis, but I disagree with it. All the past experience is that by connecting cities, we bring jobs and growth to both ends of the network. Our Victorian predecessors had great vision. No doubt there were people in those days who said, “This will all be a waste of money. Rail will never take off”, but experience shows that when we connect up people and cities, we create more jobs at both ends of the network.
It is important to point out to the Scottish National party, whose Members have departed and have not bothered to stay for the full debate, that it does not matter where the railway line starts—whether at the London end or the Scotland end. The journey time cut by each mile of track is the same, no matter which end one starts from. Were the SNP’s plans for the referendum to come to fruition and Scotland and England became separate countries, I cannot see a UK Government building the line any further than Manchester, whereas if Scotland remains part of the United Kingdom, I am confident that we will, in time, see high-speed rail all the way from London to Glasgow and Edinburgh.
It is important to point out that other countries, such as Germany, Japan and China, have already invested heavily in high-speed rail and have several rail connections that are much faster than ours. The United States also has plans to develop a high-speed rail network. If we do not go ahead with HS2, there is a great danger that the UK will fall behind our international competitors. We must make plans to meet future passenger demand, provide more capacity and cut train journey times for millions of passengers. The railway lines between our major cities are overcrowded and far slower than they should be.
I believe that the case for HS2 is clear and overwhelming. It will bring much economic development, delivered in an environmentally sustainable manner. The Bill is an important step towards delivering a vital high-speed rail network and I urge the House to support it tonight.
Mr Roger Godsiff (Birmingham, Hall Green) (Lab)
Two acts of monumental folly have been imposed on the railway industry over the past 50 years. The first, back in 1963, was the Beeching report, which led to the butchering of lines linking communities across the UK. Indeed, one consequence of Beeching is highly relevant to today’s debate, because one of the lines he closed was the Great Central line, which ran from London to Sheffield and Manchester. Were it still in operation, I suggest that we would be debating whether to spend money upgrading it, rather than committing £17 billion, rising to £32 billion, on High Speed 2, for which the infrastructure work will not even begin until 2017.
The second act of monumental folly, of course, was the decision in the 1990s to privatise the railways, something that even Mrs Thatcher steered clear of. She had the good sense to realise that it is not possible to privatise a railway system and divorce the operating companies from the infrastructure. As we all know, privatisation has brought no benefit whatsoever for the consumer. The subsidies now paid to train operating companies are double what they were pro rata when British Rail ceased to exist. The Secretary of State was a little reluctant to answer when asked what the subsidy is. Well, I will help him out: £2.6 billion a year is spent subsidising a railway system that is not fit for purpose.
I would have hoped that the Secretary of State and his colleagues would not bring to the Chamber today something that I believe will be yet another act of folly imposed on the railway industry, particularly in view of all the information that has come out over the past two years as the economic case for HS2 has unravelled. Regrettably, that appears not to be the case.
Reference has already been made to the National Audit Office report, but the comments made in it should be repeated again and again, not least the fact that it estimates that there is already a £3.3 billion funding shortfall, a figure that has just been glossed over as far as London is concerned, as my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) said. Indeed, the Chair of the Public Accounts Committee has said that the Government’s business case is “farcical” and
“clearly not up to scratch”.
Furthermore, she said that some of the Department’s assumptions were “ludicrous”. I am talking about the National Audit Office and the Chair of the Public Accounts Committee, yet we have been told again and again today that the figures do stack up.
Mr Sheerman
Has my hon. Friend looked at the really interesting French research showing the deleterious effects on the provincial cities of France as the French rapid trains were introduced? It drove those cities into penury.
Mr Godsiff
I have. As my hon. Friend said earlier, there is a report that makes just that point—that such projects do not spread wealth, but quite the contrary.
David Mowat
The hon. Gentleman makes the point, as I understand it, that infrastructure spending does not spread wealth out. In that case, would he like to make the north really prosperous by closing the M1 and the M6?
Mr Godsiff
We are where we are. I do not wish to have an argument about whether the building of the M1 and M6 was folly. What is folly is the privatised section of the M6, which is uneconomic and will soon go bust. It was supported by the Conservatives—“Let’s bring private capital into our motorways”. It is part of the motorway that is never used and will soon either go bust or have to come to the Secretary of State and ask for a handout.
David Mowat
The hon. Gentleman is generous in giving way a third time. I make the point again: the logic of his argument is that the north would be richer if the M1, the M6 and perhaps the existing west coast main line were all closed. That is ridiculous.
Mr Godsiff
I hear what the hon. Gentleman says, but I do not understand the point that he is trying to make.
As I said, we need to look at the economic case. The National Audit Office report and other reports have said that the project is already spiralling out of control. Already, figures that we were told about a year or so ago just do not stack up and people who have a vested interest in pushing the project ahead seem to be plucking figures out of the sky to suit whatever argument they are making. At the end of the day, the British taxpayer will have to pick up the tab if it goes wrong.
At this time of austerity and cutbacks across a range of services, the idea of reducing the time that business men take to travel from Birmingham or Manchester to London by 30 minutes and one hour respectively is absolutely farcical. It seems completely to disregard the fact that business men tend to work on trains nowadays. They use computers and mobile phones. Not one single, solitary business man in Birmingham has said to me, “Unless the project goes ahead and I can travel from Birmingham to London 30 minutes quicker, my business is going to suffer and be in danger.”
Mark Garnier (Wyre Forest) (Con)
I will come straight back to the hon. Gentleman on that point. I have met a lot of business people in Birmingham who are arguing strongly for HS2. A lot of the hon. Gentleman’s constituents are definitely asking for it.
Mr Godsiff
I say again that not one business man has come to me to make the argument.
The project is absolutely desperate. Secretaries of State always like to leave a legacy, and I understand that. However, I believe that High Speed 2 will not be a legacy. It is a vanity project, and if it goes ahead it could turn into a white elephant.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Interventions have taken up a lot of time, so I am having to reduce the time limit to five minutes, and might have to reduce it again to get everyone in—[Interruption.] If you want to moan, please do so, Mr Gummer. The point is that everyone wants to speak. If you are suggesting that I knock somebody off the list, please tell me.
Jessica Lee (Erewash) (Con)
The eastern side of my constituency, in the heart of the east midlands, borders the proposed site for the east midlands hub. I share that border with my hon. Friend the Member for Broxtowe (Anna Soubry), and I assure the House that as time goes on we will be working together on issues arising from the proposed site.
At this preliminary stage in the proposals for HS2, I speak in support of the project. That broadly reflects the representations made to me by businesses and constituents, although, it has to be said, not universally. On the current plans, the route clips the eastern edge of Long Eaton, and a few roads in the town will not survive. I will deal with the concerns of its residents later. I also have very many constituents who welcome and support these plans. They are right to do so. Put simply, the proposals offer a chance for investment and regeneration on a vast scale in our midlands and northern towns and cities. In Erewash we have a proud history of jobs, businesses and apprenticeships in the railways sector. My late maternal grandfather worked his entire life on the railways. This project brings new opportunities to continue that historical link. The possibility of being a neighbouring town to the east midlands hub has to bring much more with it.
I was recently privileged to bring the Minister of State on a visit to Long Eaton to show him the proposed route. I was very grateful for his generous use of his time to visit Erewash. I am sure he agrees that the opportunities for my constituency in terms of jobs and investment would be second to none. In addition, my right hon. Friend will have noted the road infrastructure in Long Eaton. I hope he agrees that this scheme could bring with it an opportunity to improve the road infrastructure for the town, because as it stands the roads would struggle to manage the new traffic levels.
As I said, some businesses and homes in Erewash would be affected by the proposed route. Of course, it is impossible for any of us to imagine someone’s shock and worry on hearing the news that their home may not survive the construction of the project. However, like many other constituency MPs, I take my responsibilities to assist such residents extremely seriously. I have called a meeting and have been helping on a personal, individual basis every constituent affected by dealing with their correspondence and any application they wish to make under the hardship fund.
I bring to my right hon. Friend’s attention the historical Trent cottages that I was able to show him, which are located on the route. The cottages were built in the early 1860s to serve the railwaymen working close to Trent railway station, which was built at a similar time. They are a historical record of Long Eaton’s railway past, and I ask him to have due consideration of this when reviewing the route.
I return to my starting point in welcoming the possibilities of this project. I take into account the proposed costs of the scheme and the environmental impact, based on the information that we have so far, but I also note the simple fact that we need to address capacity on our railway network. This project, with broad cross-party support, will be the biggest investment on our railways since the Victorian era. In the past 15 years demand for long-distance rail travel has doubled to 125 million journeys a year.
Mr Andrew Turner (Isle of Wight) (Con)
Is my hon. Friend aware that 1.5 million train journeys are carried out each day and that 56 million people never, or very seldom, travel on trains?
Jessica Lee
I thank my hon. Friend for his intervention. I hear his statistics, but I also look to the future. The broad fact is that we are reaching full capacity on our railway network. We can either ignore that or address it; I think we need to address it.
We also need to compete on a global basis. I will give just one example.
Richard Harrington (Watford) (Con)
If my hon. Friend would like to see, as I have seen, the benefits of such a scheme, she should go to China and have a look at the effects of the high-speed network there, because those are the people we are competing with. I hope that she will do that before very long.
Jessica Lee
I am grateful for my hon. Friend’s imaginative ideas. If an opportunity arises to visit China and observe its high-speed rail, I will be delighted to take it.
Finally, I will always support projects that put Erewash on the map. The location of the east midlands hub will do that and more. Although my constituents can travel by train from Long Eaton to London in one and a half hours, there is a strong case for improving the travel times and infrastructure for the towns and cities of the midlands and further north. I will certainly advocate that case in Erewash.
The Minister knows of my obsession with supporting local rail services. Time and again in Parliament, I have raised the campaign to fund the reopening of the train station at Ilkeston. I am delighted to say that that has been successful. I thank him for his support on that project.
I represent a constituency at the heart of the east midlands, which has a strong and proud history of employment on the railways. If this project goes ahead, I have no doubt that that proud historical link will continue well into the future.
Graham Stringer (Blackley and Broughton) (Lab)
I will not detain the House long. I speak as the joint chair of the all-party parliamentary group for high-speed rail. I am therefore highly supportive of High Speed 2. I will make four simple points.
First, this country has a shocking and disgraceful record on infrastructure, under Governments of all political persuasions. The costs of not keeping our infrastructure up to date are much greater than the costs of High Speed 2. We have built one new runway since the second world war, we have the lowest motorway density in what used to be called western Europe, the Dibden port proposal was turned down, we have only a few kilometres of high-speed rail between the south coast and London, and we have a much smaller rail system than we had 40 or 50 years ago. Our competitors are investing in all those areas of infrastructure, to our economic disbenefit.
Secondly, the justification for High Speed 2 is not the speed, as has been said, but the capacity. Having high-speed rail will cost only 10% more than the alternative of building a brand new route and will bring the speed benefits as well as the extra capacity. The alternatives that are put forward by the opponents of High Speed 2 would provide only half the benefit, while costing a great amount of time, money and disruption, as we learned from the west coast main line build. If people are worried about the projections that are used to justify the investment in High Speed 2, they should consider the fact that train passenger numbers are already at the level projected for 2021.
On the economic benefits, I am enormously sceptical of almost all economic models. There may be disbenefit to some towns and cities. The Transport Committee found that some towns in Europe that were joined to the TGV or other high-speed routes had benefited enormously, whereas others had disbenefited.
Mark Garnier
The hon. Gentleman is making a convincing argument in favour of HS2. He raises the important point that one of the perceived benefits is that economic activity will be drawn up the track. However, there is a risk that economic activity will actually be drawn down the track, away from the regions to London. Does he agree that, to mitigate that risk, it is important that we look to build a hub airport up the track as part of the infrastructure development of this country? A hub airport in Birmingham would be a good alternative to what is being suggested at the moment.
Graham Stringer
I will not be drawn into a discussion about hub airports.
On the benefits and disbenefits, it is up to the people who run our towns and cities to ensure that people go in their direction and invest in their area. There is no doubt that such people want the high-speed line. My hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) said earlier that she wants the high-speed route to go to Liverpool. I do not blame her, given the potential benefit.
I am sure that some of the arguments made against HS2 were made when railways began. The vested interests of stagecoach owners and bargees almost certainly led to their using similar arguments about how railways would not catch on. I know of no economic analysis that captures the likely benefits, but what we do know, from looking around the world, is that countries that invest in their transport infrastructure almost always do better economically. We should therefore invest.
Frank Dobson
As the proud MP who has King’s Cross, St Pancras and Euston stations in his constituency, I am rather in favour of the railways. For that matter, I am a member of the National Union of Rail, Maritime and Transport Workers. However, I think my hon. Friend is falling into the sort of syllogism that something must be done, this is something, and therefore this must be done. There are better ways of spending this money on improving the railway system.
Graham Stringer
I hope I am not falling into that trap. I think that a high-speed system that will eventually join Edinburgh and Glasgow, through Manchester and Leeds, to Birmingham and London will be of enormous benefit to the country. I do not believe it is a perfect system and I do not believe it is being constructed in the best way, but it has all-party support and it can be improved. I personally believe that we should be building north to south, as well as south to north. I believe, as my right hon. Friend the shadow Secretary of State said, that we should be building a link directly through to High Speed 1. However, I do not believe that any of those problems are sufficient to stop us investing in infrastructure that will help the whole of the country.
Graham Stringer
I will not, if the hon. Gentleman will forgive me. I have already given way twice.
My last point comes from the experience of being responsible for building the second runway at Manchester airport. Paying compensation on the basis of free market value at the time is an extremely costly way of building infrastructure. Giving free market value plus 10%, 20% or 30%—whatever is appropriate—will speed up the process and save money. I hope the Government will give consideration to that, and to serious mitigation. If people take legal action because they think they are being treated unfairly, and if there is blight for a long time, that will hinder the project. It is estimated that delays in tunnelling on some high-speed routes have cost as much as the actual tunnelling. I therefore hope that on compensation the Government will not be short-sighted. I hope they will deal with the problems outlined by my hon. Friend the Member for Sheffield South East (Mr Betts) and my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), and be generous in looking at the problems and pain caused. That will benefit the high-speed system in the end.
Martin Vickers (Cleethorpes) (Con)
I rise to support the Bill. I am in favour of expanding our high-speed rail network. I respect hon. Members who represent constituencies that will be directly affected, and it is right that they fight for the best interests of their constituents. I have the advantage of representing a constituency that is in no way affected. Even the increased capacity, which is the prime motive for the development of a new network, will be of minimal benefit.
Andrew Bridgen
My hon. Friend says that his constituency will be in no way affected. Unfortunately, it will be, because his constituents—this is true of every constituency—will initially receive a bill for £75 million, rising to a possible £100 million.
Martin Vickers
My hon. Friend makes a fair point, but similar points could be made about every item of Government expenditure. Ultimately, the increased capacity will benefit the more provincial towns and peripheral areas of our country. The network is operating to capacity. We heard from the Secretary of State that the west coast main line would be at capacity in the early 2020s, and similarly the east coast main line, which has an impact on my constituency, will soon be full.
People have talked about blight, but speed is essential. Yes, there can be blight on individual properties and so on, but if that is to be the case, the sooner we get a decision on routes, compensation and so on, the better. Speed is also essential for the economy. We have heard, quite understandably, that connectivity is important to the development of our towns and cities, and that has been proved by countless reports over time. If Hudson and the other Victorian rail moguls had had to operate to timetables as stretched as that for HS2, I doubt whether the network would have developed to anything like the extent it did and from which this country benefited in the late-19th and 20th centuries.
The Minister has just scuttled out of the Chamber. Perhaps he suspected that I was about to mention that increased capacity would allow additional services to Cleethorpes and elsewhere—but that is for the future. If we are to rebalance the economy to the benefit of the north of England, it is important that we have this increased capacity and connectivity. I can understand the arguments against it. The cost is phenomenal, and, as my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) pointed out, my constituents will have to bear some of that cost. [Interruption.] Does my hon. Friend the Member for Northampton South (Mr Binley) wish to intervene?
Martin Vickers
No. Sorry, he looked, er—[Hon. Members: “Keep going!”] I’ll keep going, right. I think what he, er—I’ve lost my track now, I should say.
Martin Vickers
Thank you, Mr Deputy Speaker. I will try to get back on line.
I am very supportive of where the Government are going with this. I was talking about rebalancing the economy. The economy of my own area in northern Lincolnshire is highly dependent on rail. We talked about the importance of freight earlier. Some 25% of freight tonnage moved throughout the country starts or ends in my constituency at Immingham, so I hope that the increased capacity will provide greater opportunities not only for passengers, but for freight. I therefore support the Government and, sadly, will oppose the amendment.
Mr Clive Betts (Sheffield South East) (Lab)
I, too, will support the Bill. I supported the Y route before it was the policy of the last Government, let alone of the parties in this Government, and argued strongly for it. I also agree with the comments made in the excellent speech of my hon. Friend the Member for Blackley and Broughton (Graham Stringer), in which he recognised the importance of this scheme for our economy and the fact that over the years we have fallen behind our competitors in our investment in infrastructure.
This is an important long-term investment for the country. Of course, different cost-benefit analyses will say different things. The problem is that the scheme will take 20 years to build and then will—we hope—deliver benefits for the country for many years after that, and if we put minor changes of assumptions into any cost-benefit analysis we will come up with very different results. To some extent, this is an act of faith. Do we believe that investment in the infrastructure of this country over the long term is likely to be good for the economy? I do, and I believe that high-speed rail is part of that long-term investment.
For the same reasons, it will be important to the rebalancing of our economy by concentrating on the major growth points, which will be our city regions in the midlands and the north. As my hon. Friend the Member for Blackley and Broughton said, the impacts will be different in different parts of the country, but the greatest benefits will tend to be in the city regions. We need to ensure that we get those benefits.
I am therefore very pleased that Sheffield is on the route, and that there will be a station there. That has been welcomed by all parties in the city and by the public and private sectors. There is a difference of opinion on where the Sheffield station should be located. I understand the argument for having a loop into the city centre, but I equally accept that a station at Meadowhall in my constituency could have incredible benefits for the wider city region, provided the need for connectivity to the region is properly recognised. We do not want to hear the argument in the future that, because we have high-speed rail, we will get no further investment in our transport infrastructure, and that everything will be for local councils to decide.
Looking ahead to the tram-train project, we need to determine how to develop that means of transport. I am sure it will be a success, even though it has taken nearly 10 years to get this far. When it has been proved to be a success, we must immediately start planning how to use it as a way of linking the Sheffield city region into the station hub at Meadowhall. That would benefit the whole city region.
I also want to mention compensation. There are industries in my constituency that will be affected by the project, including Outokumpu, a major steel works. It is important, when we compensate such industries, that we recognise the time that they will need to prepare for the changes that high-speed rail will force them to make. It is also important to ensure that we give the compensation in a way that does not allow a firm to take the money and run, taking the jobs elsewhere.
The Government’s exceptional hardship scheme is a welcome step forward, in regard to compensating people for their homes. We need to recognise that there might be people who have to move house, for whatever reason, before the full compensation scheme comes into effect, as well as those who might want to move for family or other reasons.
Mrs Gillan
Does the hon. Gentleman appreciate that compensation has already been paid to some people, and that it can continue to be paid without this Bill? The problem is that the exceptional hardship scheme is proving difficult for people who meet the criteria but find that the compensation does not meet their circumstances because the value of their house has gone down so dramatically.
Mr Betts
I can understand that. I think that the right hon. Lady is making a wider point about the need to look at the whole compensation scheme, and I shall come to that in a second.
Property owners in my constituency have not yet had any experience of the exceptional hardship scheme, but I wonder whether it could be widened to include those who want to move and make the same choices for their families as anyone else could make, but who are unable to do so while the potential blight from the high-speed line is hanging over them.
Frank Dobson
In my constituency, someone who used to be an owner-occupier got a job elsewhere and let their place. They have been told that they do not qualify for compensation because it is intended only for owner-occupiers.
Mr Betts
I understand that point. I have a constituent who bought a small property as an investment with a view to putting down a deposit on another family home into which they were planning to move in a year’s time. They, too, have been caught by that provision.
I made the point earlier to the Secretary of State and to my hon. Friend the Member for Garston and Halewood (Maria Eagle) that if we are asking people to make sacrifices for the benefit of the country, they deserve compensation of more than 100% of the value of their homes. They would get 100% if they chose to sell, but they are not choosing to sell; they are having to move, and we need to be more generous. My hon. Friend the Member for Garston and Halewood made the very reasonable point that if we were more generous, it would almost certainly speed up the process, so let us have a look at that.
In particular, let us have a look at the circumstances of my constituents who live on Greasbro road, which is a very low-value area. It is next to an ex-steelworks and to the motorway, and many people would not choose to live there, but it is a friendly road where people know their neighbours and family members who live nearby. They are worried about moving, and they know that they will probably not be able to buy another house in the local area with the compensation they will get. They ask why they should be penalised and forced to move away from the community that they know. Something more than the market value of their homes would help those people. It would not have to be a percentage increase on the market value; a lump sum in excess of the market value would particularly help people in low-value properties who do not want to reach retirement age in 10 years’ time and find that they have to take out an extra mortgage that they cannot afford.
I support the high-speed rail scheme wholeheartedly, and I support it coming to Sheffield, but let us see whether we can help those people who will be affected and make the benefits to the community more generally accessible.
Andrew Bridgen (North West Leicestershire) (Con)
I draw the House’s attention to my previous declaration—that the proposed route of HS2 not only bisects my beautiful constituency, but runs within 100 yards of my home.
I came to this place to try to do the right things for my constituents and, indeed, my country. I seem to find that a large amount of my time and effort is spent trying to stop bad things happening, which my constituents often reassure me amounts to much the same end, but I can assure you, Madam Deputy Speaker, that it is nowhere near as satisfying. There are few projects that I have ever believed are such a bad thing not only for my constituents, but for the whole country, as HS2. If this goes ahead, my constituency will take all the pain for none of the gain.
What we are being asked to vote for today is the signing of a blank cheque for HS2 Ltd for a railway that is, in my opinion, a solution looking for a problem. This is a scheme with vast financial costs for the taxpayer and a high human cost for those unfortunate enough to live or to have their business on or near the proposed route. The financial costs were initially estimated by the Government this morning as £33 billion, but stand at over £42 billion this afternoon, with a further £7.5 billion for rolling stock. That is an enormous commitment at a time of austerity for a project that will not be ready until 2033 and is of questionable economic benefit.
How can we be certain that today’s £10 billion of additional budget will prove to be the last? When it comes to keeping to budget, Government rail projects certainly have a terrible record. The west coast main line upgrade, which was initially estimated to cost £1.5 billion, ended up costing £9.9 billion. The Thameslink upgrade was estimated to cost £650 million in 1996, but the end costs will be nearer £6 billion on completion. We could be looking at a project with a final bill of many tens of billions more than the Government’s initial estimate or even today’s estimate. All that for a railway where the cost-benefit ratio analysis, even before today’s £10 billion, did not stack up. For phase 1, the Department for Transport claims that HS2 will produce £1.40 of benefit for every £1 spent. The Government categorise schemes below £1.50 as being low value for money—and that is before today’s extra £10 billion.
Mrs Gillan
Does my hon. Friend agree that the cost benefit has been pushed to one side by Ministers today? Now claims are being made about extra capacity, but has it not been true of this project that one moment it is about capacity, the next moment it is about speed and the next it is about restoring a better north-south balance? The objectives are always used to fit whatever the argument demands, and they seem to move around.
Andrew Bridgen
I thank my right hon. Friend for that intervention. She is absolutely right, and I shall deal with the issue of capacity later in my speech.
The cost-benefit ratios are questionable. As has already been pointed out, the assumption is that all time spent on trains is wasted time, so the figures are based on the extraordinary idea that when someone goes on a train they do not do any work. Anyone who travels on our railways will know that that is certainly not the case. It should also be noted that, compared to our European neighbours, journey times between first and second cities are considerably shorter in the UK. The journey time between Birmingham and London is already half that of high-speed rail travel in France and Spain.
David Mowat
My hon. Friend makes the point that others have made—that the business case does not properly reflect productive time, iPads and all the rest of it. Page 51 of the business case addresses that point explicitly, stating that if trains are overcrowded, people who are standing will not be able to work on PCs. The business case would be better if it took that into account.
Andrew Bridgen
My hon. Friend makes a valid point, and I shall deal with the issue of capacity later in my speech and hope to address it then.
When it comes to saving time—this point has been made several times today—I have never met a business person in my career who has said that the reason why their business is not thriving is that they cannot get to London quickly enough.
Another argument cited is that HS2 will rebalance our economy. I agree with that argument, as I believe that it will rebalance our economy, but further in favour of the London and south-east. Indeed, no serious academics support the view that HS2 will reduce the north-south divide. For weekend and leisure travel, for instance, which is the more likely scenario—that more families will travel from London to spend an evening in Birmingham or Manchester, or that families from Birmingham and Manchester will use the route to spend time and money in London? I suggest to hon. and right hon. Members that the latter is the more likely scenario, and that HS2 will simply suck more money from the regions into London and the south-east.
I therefore appeal to all Members to think very carefully about whether they are acting in the best interests of their constituents in supporting the signing of a blank cheque for this white elephant of a project, which is already forecast to cost every constituency in the country £75 million, and which, given the expected further overruns, could easily end up costing each constituency more than £100 million. Are Members prepared to support a scheme that will inevitably suck money away from transport schemes that could benefit their own constituencies? As for the issue of capacity, figures show that the west coast main line has the capacity for the 100% increase in passenger numbers that was proposed by FirstGroup when it submitted its franchise bid.
Mr Binley
Does my hon. Friend not recognise that it has been stated categorically that capacity will be reached by 2026, although other people think that it will be reached earlier? Has he travelled on a London Midland train to London on which he could not get a seat and could hardly get through the door?
Andrew Bridgen
I put it to my hon. Friend that anyone predicting what capacity, or the demand for any commodity or product, will be in 20 years is living in dreamland. The capacity on the railway was driven by punitive taxes on company cars in the 1990s, and that will level out.
HS2 is a huge project that will take a lot of stopping, but I suggest to Members that they would not eat an elephant in one sitting, even if it were a white one, and that today’s debate is merely the first serving of many. I do not believe that this project represents the best use of taxpayers’ money, and I therefore urge Members to support the amendment and vote against the Bill.
Natascha Engel (North East Derbyshire) (Lab)
I shall vote for the amendment and against the Bill’s Second Reading, because I believe that this is the wrong scheme at the wrong time.
In the few minutes available to me, I want to present a passionate defence of nimbyism. I think that this is a case less of “not in my back yard” than of “not through my front door and the rest of my house”. When we consider the people whose lives this project is affecting, we realise that the position is far too serious for them merely to be asked “How much compensation do you want?” People living in the villages and towns that the trains will pass through if the scheme goes ahead are being expected to wait for 20 years with it hanging over their heads, seeing no shovel in the ground anywhere in North East Derbyshire, unable to sell their homes, and money is being lost hand over fist in very small rural businesses.
Andrea Leadsom
I pay tribute to the hon. Lady. There is rarely an occasion on which I do not agree with her. Constituents of mine have been literally suicidal because of the complete lack of sympathy for them, and because they are unable to obtain compensation although their businesses are failing. Does she agree with me that we must get the compensation right?
Natascha Engel
Absolutely. It has already been suggested that the compensation schemes should mirror those in other countries such as France, where big infrastructure projects go ahead with no problems because the schemes are so generous. However, it is not compensation that people are after. They are saying “I have lived in this town, or this village, for four or five generations and I do not want to move. I am being asked to accept all the disbenefits of HS2 without gaining any of the benefits.” If I represented a major town, I might be able to see the benefits of this project, but it does not bring us in North East Derbyshire any economic benefits. In fact, it does exactly the reverse. I cannot see the sense of what is happening, and I shall explain why. I would welcome the Minister’s response to this.
Derbyshire county council has spent many years cleaning up, developing and redeveloping sites that were ruined by the results of the end of the mining industry and the steel industry in Sheffield. For decades those places have slowly been brought back into the economy. Up to £77 million has already been spent in Markham Vale, an area that I share with my hon. Friend the Member for Bolsover (Mr Skinner). That £77 million will, in effect, be wiped out because HS2 will be going straight through it. Chesterfield canal is one of the best and biggest pieces of redevelopment and regeneration in North East Derbyshire, bringing investment to the Chesterfield waterside project. It will now not have a waterside project, and will now not get the £310 million of investment in the local economy.
What about the small businesses in towns and villages such as Renishaw, too? Such businesses become the focal points of villages. Already, only months after the route has been published, a local wedding business has lost £70,000, some 20 years before anything is due to happen.
Andrew Bridgen
Does the hon. Lady share my concern that about 30% of the businesses on the route that could be affected have suggested they would close down, rather than relocate, so all those jobs would be lost all the way along the route?
Natascha Engel
That is absolutely right. This affects rural areas differently from how it affects cities. We are talking here about HS2 and a national economic policy, but we are not distinguishing between the cities and the rural areas.
I was going to go into the detail of the issue of connecting cities. This absolutely will connect cities, but that is not the issue for people who live in North East Derbyshire. In Apperknowle, what people want is to get a bus to the hospital, not to go to London. In each of the recent public meetings I have held, attended by hundreds of people, we asked when was the last time anybody had been to London. In one group of 300 people, five people had been to London in the past five years. This is not being done for the benefit of the people of North East Derbyshire.
I have serious doubts about the business and economic case, too, but those concerns have been raised by other Members, so I will not rehearse them. I do want to say, however, that I have found the consultation to be the most disappointing part of this whole project. HS2 Ltd has been very good at consulting stakeholders, but the stakeholders do not include those people whose houses and businesses the route is going through. The project has failed at the level of going and talking to people—not just persuading them of why the train has to come through their front room, but explaining why a high-speed rail link is needed. People are just not convinced.
At the same time as there is the hardship scheme, we are being told the route has not yet been fixed and the consultation has not even been opened, and therefore no decisions can be made on where the route is going to go. At the same time, however, not very far from my constituency, a kink has been put in to get the train to go around Firth Rixson steelworks in Sheffield. Why are we allowing and announcing changes to the route when the consultation has not even been opened? If the Department for Transport and HS2 Ltd are open to persuasion, will they please put in a kink and go all the way around North East Derbyshire?
Andrea Leadsom (South Northamptonshire) (Con)
My views on HS2 since being elected to Parliament in 2010 are well known. I started by supporting the principle of high-speed rail but opposing the route, but the more I have found out about the project, the more I have become convinced it will not be to the benefit of British taxpayers.
We have rightly heard a lot of talk about the value to the economy as a whole of any new railway line, and that is, of course, true: any new railway line will generate jobs and growth. There is no doubt about that, but the essential point that differentiates one project from another is value for money, and that is what we are not hearing about with the necessary level of clarity. What it costs to generate the growth is what matters. Today, we have heard that there is now a £14.4 billion contingency plan, which potentially makes this project 25% more expensive than before.
We have also heard comparisons with the motorway network, the Jubilee line and HS1. They were all very much resisted at the time, but every single one of them was unique in its own way. For motorways, there is a junction every few miles, so everybody benefits from them; they undoubtedly promote growth in our economy. Likewise, the Jubilee line has many stops, and therefore benefits a huge swathe of the population. HS1 is unique in the sense that it was the link to mainland Europe. HS2 is none of those things; it is a decision that we have taken in isolation.
Stuart Andrew (Pudsey) (Con)
HS1 has brought some multinational companies to the end of the route at King’s Cross. Surely that is a benefit that HS2 can bring to other cities, such as mine, Leeds.
Andrea Leadsom
I absolutely agree with my hon. Friend, and I am not denying that any railway line or other infrastructure will bring growth. I am saying that the critical differentiator is whether the line brings more growth and jobs than something else, and that is where the case for HS2 is not proven.
Andrea Leadsom
I am delighted that my hon. Friend intervened, and that would be a possibility. The bottom line is that we are all here to represent our constituents. There is a case for making that argument, and if I made it, it would undermine the view of many of my constituents that this project is just wrong. Winning that argument would almost certainly cast the line in stone. My hon. Friend will understand that I could not do that, against the very clear wishes of my constituents.
If this is about the value for money of this project versus that of any other project—not the absolute but the relative level of growth and jobs generated by this project, compared with a different one—we need to ask ourselves, first, is this the best value for money for taxpayers? HS2 does mean little curvature of the line. My hon. Friend the Member for Milton Keynes South (Iain Stewart) said that a high-speed track is not much more expensive than a regular train track. That is not what HS2 engineers have told me. They said that it is very engineering-intensive. Because it has to go in a straight line, because there are lots of flood plains, hills and other inconveniences, and because of the speed of the trains, the line has to go through, under and over those obstacles. Therefore, it is much more expensive.
Secondly, high-speed rail has an exponentially higher carbon footprint, so in that sense it is not environmentally friendly compared with a classic line. HS2 has a massive impact on valuable open countryside and sites of special scientific interest, battlefield sites, grade I listed homes and so on.
Thirdly, if, as my hon. Friend the Member for Northampton South (Mr Binley) said, this is about capacity, why not go slightly slower but along an existing travel corridor, so that costs and the impact can be reduced? Fourthly, is the project going to deliver soon enough? We will have no use of it until 2026, yet people say all the time that rail capacity is needed now. Fifthly, does it create the maximum number of jobs? Would another, less engineering-intensive project along an easier route, which we could easily find if speed were not the only goal, generate more jobs? Finally, what about both ends? Does it really make sense to decide where the traveller ends up before we have decided on our strategy for airports?
Having said all that, I note the commitment of the Government and the Opposition, who are determined to see this project built. Although I remain optimistic that during the Bill’s progress substantial changes may be achieved, it is important for me to be realistic. If HS2 is to go ahead, I want to achieve fair compensation and mitigation for the hundreds of my constituents who will be so devastatingly affected.
On mitigation, I urge the Government to ensure that HS2 is much more transparent and that they engage with communities much better than they currently are. Communities’ ideas on mitigation must be given full and proper consideration. The Department for Transport must prioritise the consultation on a full compensation scheme as a matter of urgency. It is shocking that a judicial review had to determine that the original consultation was unfair and in fact unlawful. The exceptional hardship scheme, to my constituents’ bitter experience, has been nothing short of a disaster. Residents up and down the proposed line of route and in the surrounding communities find themselves trapped in their own homes, unable to move either home or business. I strongly urge the Minister urgently to help with this situation.
I hope that, as well as a full compensation scheme that is more generous than the statutory requirement, the Government will agree to a property bond, and that the Secretary of State will meet with the Council of Mortgage Lenders and the National Association of Estate Agents, among others, in order properly to explore the options for a property bond. If banks will not give mortgages on properties because they are blighted by HS2, people cannot get on with their lives, at least until 2026. That is absolutely unacceptable.
Finally, I really regret the position that many Members have been placed in by the Bill. We have been told that this is a vote on the principle of HS2, yet we are also told it is an opportunity for a meaningful compensation scheme to be put in place for those affected. That makes me very schizophrenic, and it places all Members who have strong feelings about this project in a difficult position. I do not want to vote in favour of HS2 but I also do not want to do anything that delays my constituents’ receiving the compensation they deserve. As this is the first opportunity in the Chamber to vote on the principle of HS2, I shall, with a heavy heart, have to vote for the reasoned amendment and against the Second Reading of the Bill, and I urge colleagues to do likewise.
Lyn Brown (West Ham) (Lab)
I am delighted to be at this debate and supporting this Bill, providing, as it will, the ability for the Government to spend money preparing the way for a second high-speed rail service serving London and the regions. My constituency has running through it the route of High Speed 1 and, in talking about spending and finance, I would like to draw the House’s attention to the need to ensure that spending on the new route is planned in a way that capitalises on investment already made, so that we get more bang for the taxpayers’ bucks.
How we will do that is by providing for a substantial link between HS1 and HS2. This new spending should provide this link, with the most obvious and effective way being to utilise the connection to Stratford in my constituency of West Ham. I am arguing that the link between HS1 and HS2 should be substantial and robust enough to enable Stratford to play a major role in the wider high-speed network. That would include it being the London stop for those international services that originate in the regions, thus adding to the viability and the financial business case of those services and, indeed, of HS2 itself. I am not aware of any costings yet undertaken on the funding needed for a robust link, so I ask the Minister to enlighten me in his summing up as to whether any are so far available.
If Stratford becomes a major support station in east London catering for HS2, inter-city and inter-regional services, that would significantly reduce the numbers needing to use the Euston terminus, and Euston could be smaller as a result. The planned Old Oak interchange on its own will not enable enough HS2 travellers to avoid the Euston terminus; we need an enhanced role for Stratford in the east to cater for a similar proportion and then we can have a much slimmed-down Euston terminus.
Mr Andy Slaughter (Hammersmith) (Lab)
I hate to disagree with my hon. Friend, particularly as she is my Whip, but I think she will see that the overwhelming consensus of opinion is in favour of the Old Oak interchange. Although I understand that she is standing up for her constituents, I think she is whistling in the wind rather here.
Lyn Brown
Old Oak—where? All I would say to my hon. Friend is that Stratford has an international station, called the Stratford International station—the message is in the title. I suggest that he needs to look further and wider than his local concerns in order to understand the case. And if he ever wants to be slipped again, I suggest he stays seated.
As I was saying, we need an enhanced role for Stratford in the east to cater for a similar proportion and then we can have a much more slimmed-down Euston terminus. With a twin-track link to Stratford from Camden town, and with the proposals for Old Oak, the number of platforms at Euston would reduce from 12 to six or fewer. Recent research shows that there would be almost as much demand for trips to east London, docklands, Essex, East Anglia and Kent from HS2 travellers as for trips to central London. Using Stratford helps to cater for those needs. Perhaps the Minister would like to talk to the leader of his local county council, who, along with others, funded this research. His constituents will also, I am sure, be interested in the better travel options that will be available to them if this money is spent wisely. The interconnectivity of Stratford is already good, unlike—where was it? The two stations at Stratford serve 100 million passengers a year and it is the UK’s rail hub with the sixth highest use. It has two tube lines, regional rail services to Kent, Essex and East Anglia, and the docklands light railway, and it is strategically positioned for Canary Wharf, London City airport, and the Excel exhibition centre. Of course, it will have Crossrail.
The expenditure we are talking about today must include a robust and substantial link to Stratford between HS1 and HS2. About £1 billion of taxpayers’ money has already been invested in Newham’s international station, so it should get the international services for which it was built. To do otherwise would be crazy.
The business case for spend on HS2 will be greatly strengthened by a link that enables Stratford International to play a full role in the new network and the spending we are talking about today will be more effective as a result. I urge the Minister to try to ensure that that link is delivered.
Kwasi Kwarteng (Spelthorne) (Con)
I am pleased to speak in favour of Second Reading and against the amendment. I have been struck today by the large degree of cross-party support that High Speed 2 commands. Obviously, we have heard objections from Members on both sides of the House, largely from people representing constituencies that will be affected by the route. That is perfectly understandable; that is what happens in the House of Commons. Different interests come together—often there is conflict, and often there is compromise. It is perfectly legitimate for people whose constituents, and their livelihoods, are affected by the direct building of the route to state their objections, but it is also perfectly reasonable for people to speak in this House on behalf of the national interest and it is clear to me that High Speed 2 is very much in the national interest.
Frank Dobson
I am reminded that within a week of first becoming a Member of this House, there was a vote on an issue that had those on both Front Benches on the same side. An old Tory knight of the shires said to me, “Whenever the two Front Benches are in agreement, some poor devil is being done down.”
Kwasi Kwarteng
I appreciate the right hon. Gentleman’s witty intervention, but I do not think it has anything to do with the debate. It was an enjoyable interlude.
We have not had any real perception, understanding or analysis in the debate of what high-speed rail has meant for our partner countries in Europe. I am a member of the Select Committee on Transport and we went to France and to Germany. Nobody in those countries is suggesting that they should close down their high-speed routes. Indeed, everyone we met, from local residents to other stakeholders, Government people and business people, was determined to expand the network.
I am not suggesting for a minute that because such things are supported in France and Germany we should follow that path, but I am saying that we should investigate, as we have, the reasons behind their approach. We need some very good reasons why Britain is so peculiar and different that high-speed rail will not benefit us. As my right hon. Friend the Secretary of State observed, Italy has 960 miles of high-speed rail. We have only a small amount—only 60 miles, I believe—
The Minister of State, Department for Transport (Mr Simon Burns)
Sixty-seven.
Kwasi Kwarteng
I am sorry—67. Everyone else—including China and others around the world—is looking to expand their high-speed rail network. It is only in this country where we are looking not to build any further expansion of the network. That should strike right hon. and hon. Members as very bizarre.
Kwasi Kwarteng
I am not sure which citizens of that famous French city my hon. Friend has been speaking to, but the ones we met were very enthusiastic, as were people in other cities. Lille, for example, has been transformed by the high-speed rail—of course it has, and that is a good thing. No one in France is suggesting that the high-speed rail network should be closed down and the country should go back to what it had before.
There are clear economic benefits. My hon. Friend the Member for Northampton South (Mr Binley) suggested that freight transport is growing at 10% a year. How on earth can that growth in freight be accommodated without substantial investment in our railway infrastructure and without building a high-speed rail network? As my hon. Friend the Member for Milton Keynes South (Iain Stewart) said, simply building another line that is not a high-speed line will cost just as much and not give the benefits, and no one is suggesting that as an alternative.
Kelvin Hopkins (Luton North) (Lab)
I am suggesting precisely that alternative. I have a scheme for a dedicated freight route, capable of carrying lorries on trains, that would cost a fraction of HS2 and take all the freight off the north-south lines, freeing them up for more passengers.
Kwasi Kwarteng
I am pleased that we have Members with such fertile imaginations in this House that the hon. Gentleman has his own scheme. I have not looked at it, though, so I could not possibly comment.
What is clear to me, as a Member for a south-east constituency that is very built-up and highly residential, is that disputes about infrastructure spending are inevitable. I suggested that when the Tower of London was built, people objected to it on quite worthy grounds. There have been objections to every piece of infrastructure spending in this country for hundreds of years, but that does not mean that we have not gone ahead and built the railways or the ports. We are a commercial nation with incredible skills in engineering. We have, or we used to have, great architecture and engineering—I am not casting aspersions on current architecture, just suggesting that it was very good in the past—so there is no reason to suggest, as some have, that HS2 will be a blight on the countryside. It will change of course, but as has been pointed out, Isambard Kingdom Brunel and other Victorians completely transformed the landscape of this country, but they did not make it worse in any way.
Mr Andrew Turner
It was the private sector that did it, not the public sector.
Kwasi Kwarteng
I hear my hon. Friend chuntering from a sedentary position. We have an extremely interesting side of the Conservative party that refuses to countenance any Government spending on infrastructure. Happily, I am not of that wing of the party and recommend that both sides of the House come together in support of the Bill.
My final few words will be about the financing. Yes, £50 billion is a lot of money, but it will be spent over 20 years and, if one uses straight line depreciation, it is not much more than the infrastructure spend on Crossrail. I would suggest that HS2’s benefits are much more transformative than the Crossrail project’s, so on that basis alone, I urge colleagues to vote in favour of Second Reading.
Madam Deputy Speaker (Dawn Primarolo)
Order. Sixteen Members still wish to participate in the debate, and I fully appreciate how important this is for their constituencies. I am therefore reducing the time limit to four minutes from now on. May I please ask Members who have already spoken to intervene sparingly, if at all, and those who are still waiting to speak to realise that an intervention will take time from their speaking time later in the debate?
Mr Andy Slaughter (Hammersmith) (Lab)
It is a pleasure to follow, even at two thirds of the rate, the stirring speech made by the hon. Member for Spelthorne (Kwasi Kwarteng). I support the Bill, the principle and, indeed, the route—with the caveat about the London terminus—for many of the reasons given by the Secretary of State and shadow Secretary of State. It seems bizarre that when most of the developed world believes in having a high-speed rail network, we might want to rely on 19th-century railways. That is not to disparage the existing railways, which have stood us and continue to stand us in good stead, but the example of how they were built is one that I think we should follow, rather than shy away from. Having said that, I am concerned about pricing. Completion is a long way off, and there is a danger of this becoming a rich man’s railway. Cost control is an issue, and costs have spiralled before the project has even left the drawing board. There is also the issue of compensation, and whether it will be adequate.
It appears, however that there is consensus—given the time, I shall restrict myself to this—about the proposal that Old Oak, which is in my constituency, should be the major interchange. It would become the fifth busiest station in the country, with a Crossrail station, and links to HS1, tube lines, First Great Western services and Heathrow. A rail interchange in west London would be of massive benefit in an area much of which is categorised as being in the 1% most deprived in the country. Within a mile of the proposed station, 50% of the adult working population is unemployed.
On Friday, the boroughs and the Greater London authority will publish a vision for the future of Old Oak, described in rather hyperbolic terms as the new Canary Wharf. There is talk of 90,000 jobs and 19,000 new homes, and I am pleased that the boroughs have already taken an interest. However, there are local problems. As currently envisaged, there are poor links with HS1, tube lines and the west London line. There is an inadequate road network and poor-quality station design. We should look at the option of making Old Oak the terminus. I have an open mind on that, although I know that my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) would urge me to be stronger in my opinion because he does not want the line to go to Euston, and he is certainly right that the connectivity from Old Oak is better than the connectivity from Euston. It appears that HS2 Ltd wanted to go to Euston simply because it wanted to say that it had a central London terminus, but it should look at that again. With all due respect to my hon. Friend the Member for West Ham (Lyn Brown), who is no longer in the Chamber, Stratford International is an exception to the rule, “If you build it, they will come.” There is consensus about where the interchange should be.
My other caveat is that we have to take care with the construction. Most compulsory purchase schemes are hopelessly inadequate both in the compensation that they offer and the way in which people are dealt with. The effect on small businesses and even large businesses—Cargiant is in my constituency, as well as Wormwood scrubs, which is a large area of important open space—must be considered, and I hope that the project will be undertaken sympathetically, however important it is to the nation. Finally, I back my right hon. Friend the Member for Holborn and St Pancras in saying, “Please take HS2 Ltd off the job”. The company is not making a good job of promoting the scheme, and we should find someone who will take this national project forward in the way that it should be done.
Mr Brian Binley (Northampton South) (Con)
Life can deal some heavy blows, but not usually from so kind a Deputy Speaker. I will discard most of what I was going to say about capacity to meet your requirements, Madam Deputy Speaker. I will simply say that connectivity is vital. Capacity is highly limited, and one need only talk to my constituents in Northampton to know how much capacity impacts on performance. They are pretty sick of it.
I was going to discuss whether it was worth the money or not but, again, that argument goes out the window. I would only say that any business man would willingly accept a benefit ratio of 2.5:1, and would grasp at it. To say that that is not good enough for a national project of this kind is crazy. I was going to discuss the benefits of the project for my good constituents, but that is out of the window too. I shall merely say that we are driving ahead with a project called Northampton Alive. We are expected to build 56,000 houses to help ease the problems of the south-east and London, and we need a better rail link to service those people. The only way we are going to get it is by having additional capacity.
Now let me talk about the one thing that most speakers have not talked about, other than my good friend the hon. Member for Luton North (Kelvin Hopkins)—an honourable friend, too. Freight is a major player in the whole of our rail network. It has grown sizeably, to the point where it is now delivering 90 million tonnes of goods each year. That rate is growing by more than 10% a year. We cannot accommodate that growth on the west coast main line. We need another line to enhance the corridor. That is why high-speed rail is so important, why it impacts upon the national interest, and why it is massively important to Britain’s prosperity and to the future well-being of my children and grandchildren.
Do not forget the freight issue. It is vital to the debate. The second issue that is vital is connectivity, as I indicated earlier. If we do not have a high-speed rail link to Europe and beyond, we will miss out massively. I am sorry if my hon. Friend the Member for Stone (Mr Cash) is thinking, “Rarely do you do this as a little Englander.” In the long-term future we will have high-speed rail links to south-east Asia and to the middle east, provided people there can settle down and settle their differences. That future is what we are thinking about when we talk about High Speed 2.
So what are my conclusions? High Speed 2 is vital to the nation’s future economic well-being. It will improve rail connections between economically important parts of our country and with our markets in Europe and beyond. It will stop heavy lorries from Prague, Warsaw and Bratislava messing up our road network. I want to see a more effective rail network and High Speed 2 is a vital part of that. I pray that this House has the courage to make that decision and make it now.
Kelvin Hopkins (Luton North) (Lab)
It is a pleasure to follow the hon. Member for Northampton South (Mr Binley). His emphasis on freight is absolutely right. I have a scheme which would solve all his problems and, I believe, the country’s problems, but that is another story.
I am a long-term passionate believer in railways as the mode of transport for the future. That was not true 30 years ago. It is gratifying to see Members on both sides of the House supporting the principle of railways, even if we disagree about what particular railways we ought to build. I remain sceptical about HS2. I believe it is unnecessary and extremely expensive, and the opportunity cost of spending elsewhere is very great indeed. But I do not want to be negative; I want to propose sensible, practical alternatives.
The core of all the problems of capacity is London to Birmingham and there is an alternative, which is to upgrade the route between Paddington and Birmingham Snow Hill via Banbury. That could double capacity between London and Birmingham, and also would go to a very sensible terminus at Paddington, which is of course on Crossrail. At the Birmingham end, Snow Hill is in the town centre. The station for HS2 will be away from the town centre, so much of the advantage of speed will be lost in extra transport from that station into the town centre, but Snow Hill is in the centre. That would be a great advantage.
In 1990 British Rail, as it was in those days, freed up the line and ran a train from London to Edinburgh with a two-minute stop at Newcastle. For most of the journey it was a 140 mph operation. The journey took three and a half hours—two and a half hours to Newcastle, three and a half hours to Edinburgh—which was eight minutes faster than the time advertised for HS2 now, so it can be done. We need to upgrade the route on the east coast main line, which means a double viaduct at Welwyn, so that there are four tracks at Welwyn instead of two; an east-west flyover at Peterborough; and a flyover for the Lincoln route at Newark.
All that will free up the line for a very fast, mostly 140 mph operation on the east coast main line, and we can get that journey to Edinburgh eight minutes faster than HS2. It also means that we could get a one and a half hour operation from King’s Cross to Leeds, using the east coast main line. There is even another route to get to Sheffield via Retford from King’s Cross, providing additional fast capacity—not high speed, but fast. Much of that route would be 140 mph.
There are sensible alternatives. They would require a bit of upgrading, such as the redevelopment of some stations, but we would be talking about spending a couple of billion pounds, not £50 billion or more. They would make life much easier for everyone and free up all that extra spending for other routes. The whole railway system, being Victorian, needs an enormous amount of work, including electrification and track renewal, which is needed in many areas.
I also think that we need a dedicated rail freight line, built on old track beds and underused lines, running from the Thames right up to Glasgow, linking all Britain’s main conurbations, and capable of carrying lorries on trains. Some 80% of freight goes by lorry, rather than container. They cannot get through tunnels and bridges, so it would have to be on a new dedicated route capable of taking that kind of traffic. That is what we need to do, and it would cost a fraction of HS2. All those other operations, when added together, would cost much less than HS2 and provide much more benefit. If the cost-benefit analysis was done for that, and for the other routes I have mentioned, I think we would see that it is much more desirable in social, economic and financial terms.
Mr Andrew Turner (Isle of Wight) (Con)
HS2 has been proposed as a solution to the problems we currently face. We are told that it is green, that it will deliver regional growth and that it will resolve slow journey speeds between British cities. However, all those claims are questionable. It is important that we highlight them before UK taxpayers are asked to foot the enormous bill of £32.7 billion.
HS2 will lead to an increase in CO2 emissions. Its supporters insist that the project is carbon-neutral. However, according to HS2 Action Alliance, 250 mph trains use three times as much power as 125 mph trains. HS2 Ltd’s plans rely on transferring passengers from existing classic rail, which uses much less fuel and carbon, to high-speed trains. That means that the new line will have few, if any, environmental benefits.
We have also failed to learn lessons from High Speed 1. In Kent, Thanet remains one of the most deprived areas in England, despite being served by high-speed rail that runs direct to London. Even the experts are questioning the proposals. Professor Mackie of the university of Leeds has said:
“For various reasons HS2 is rather unlikely to make much difference to the north-south divide. A spatial analysis would probably show London to be the main benefiting region”.
It is unlikely that HS2 will deliver the regional benefits that have been promised.
London operates as a brilliant hub, and cities across the country have brilliant connections with the capital, but that should not be the focus of investment. Lines outside London need investment too. People do not travel out of London to work and then back again to sleep; the overwhelming majority come into London for work. Our European neighbours have had a similar experience. I will give just one example. In France, on the line connecting Paris, Rhone and the Alps, passenger growth to Paris was three times greater than that from Paris.
The only people who will benefit from the project will be those living within about a 10-mile radius of the station near Birmingham on the HS2 line. Those who live any further away, such as in the black country or Coventry, will be asked to travel more than 10 miles. Will people really be prepared to pay the cost of travelling to stations more than 10 miles away? Even if subsidised travel is provided, why should 99% of people have to pay for the 1% who use the line?
Mrs Anne Main (St Albans) (Con)
Does it not seem rather perverse that we are reducing the amount of public subsidy for some commuters, such as those who take the line from my constituency to London, while putting massive public subsidy into another line? It is very much like cherry-picking.
Mr Turner
I must agree. Only a very small percentage of people use trains regularly. As the Transport Secretary has said, 10 million people travel annually on HS1, or about 30,000 people a day; another, say, 1.5 million people travel on all the other trains. What is the number of those not travelling? Practically everyone else in the country—59 million, say. That is the difference: 1.5 million on the one hand and 59 million on the other.
Another argument in favour of HS2 is that current trains are too full and the project will provide the opportunity to increase capacity. I disagree. If trains are currently too full, why not put the prices up? The way to make that fair would be to say to current regular commuters, “Yes, you can keep the current rate but a new user of the trains should be required to pay a bit more.” That would encourage further growth and investment in towns and cities outside London and raise more money towards the costs of running trains.
If it is to be delivered, the project must be delivered using private funds. The public sector should not be expected to foot the bill for HS2 while people are having to make their own financial sacrifices, and there will be no need at all to spend public money once we are out of austerity.
Susan Elan Jones (Clwyd South) (Lab)
Like many Members, I was rather saddened when I realised that the time for our speeches would be cut by half, until I realised that that is exactly what will happen to train journeys to my part of north Wales with the advent of high-speed rail.
Many local concerns have been legitimately aired in this debate and it is important that Front Benchers on both sides take those seriously, because they are fair and legitimate in respect of compensation. However, for me the crux of the matter is that I do not believe it can be right that from here it is quicker to get to Paris than to Wrexham, to Brussels than to Liverpool and to Rotterdam than to Glasgow. It is not right that while France, Germany, Italy and Spain all enjoy high-speed rail networks, we in Britain—the country that invented railways—do not have a comparable system.
I lived and worked in Japan for almost three years and saw how that country’s amazing bullet trains, the Shinkansen, can connect a nation and make travel so much faster. The Bill will bring jobs, growth and investment to the UK as a whole and, critically for me, to my home area of north Wales, although it is not directly on the line. I am delighted that such eminent Welsh experts as Professor Stuart Cole of the university of Glamorgan are pointing to the real benefits to Wales in terms of inward investment due to speedier connections and greater capacity.
As I said, the planned route does not go directly into Wales, but it is still hugely important for connectivity and investment. Getting the journey time from London to such key hubs as Manchester or Liverpool down to an hour and 10 minutes—and to Birmingham, I believe, down to 49 minutes—would be a massive improvement. If the proposed Crewe stop in the second phase takes place, as I very much hope it will, that would also improve things immeasurably. The investment would mean that getting business representatives from London to north Wales and back in a day would be easy. That is the sort of investment that we need.
I do not believe that backing HS2 excludes support for other improvements—indeed, both together are complementary. Backing HS2 does not exclude making the case for direct-line trains now from Wrexham, Gobowen and Shrewsbury to London on the west coast main line service. A Conservative Member made that case earlier and colleagues from north Wales and neighbouring Members from Shropshire, across the political divide, will continue to press it. Supporting HS2 certainly does not exclude the importance of electrification for north Wales and improvements to rail services in west Wales. All those programmes are vital.
We must, of course, ensure that there are sensible, proper connections from HS2 stations. Last week, in a debate in this House, we were reminded that it was the anniversary of the battle of Waterloo. I am loth to tread on the subject of European politics in this place, but might I be so bold as to ask why, if the French can manage high-speed trains, we should settle for something slower and second best?
I believe that the programme is needed for jobs, investment and connectivity—I emphasise connectivity, given the nature of my constituency. It is good for Wales, including north Wales, and for Britain. I welcome it and wish it well.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
In the light of your entreaty and decision to cut us down to four minutes, Madam Deputy Speaker, I have binned my speech.
I say to my right hon. Friend the Secretary of State that I am going to support this Bill because I believe strongly in the principle of a superb infrastructure to enable this country to be competitive in the 21st century. I hope, however, that he will regard me as a critical friend, because I think that his proposed route contains two fundamental weaknesses.
Before I talk about that, I would like to concentrate on the costs. In discussing this Bill which we are, I hope, going to pass, we need to know precisely what costs we are dealing with. My right hon. Friend has now given us two lots of costs, and I hope that he or the Minister of State will clarify exactly what those costs are. I believe that we are now talking about £42 billion for phase 1 and phase 2, plus some £9 billion for rolling stock, making a total of about £51 billion. It would be enormously helpful if he could clarify those costs.
It was not an idle intervention that I made on my right hon. Friend earlier. I do think that money should be available from Europe in the transnational networks, and I hope that he and his Department are urgently investigating that. As the hon. Member for Clwyd South (Susan Elan Jones) said, a lot of the superb high-speed rail network was funded by Europe.
In the very short time I have available, let me deal with the two fundamental flaws in the proposed route. First, it is completely wrong to have an holistic transport policy that does not link HS2 with our major hub airport. Sir Howard Davies and his airport commission will not report until after the next election, so how can it make sense to fix a route when we do not know where the hub airport will be? If, for example, he favours—I make no recommendation as to which option he should favour—an estuarial hub airport solution, the current route would be in completely the wrong place.
The other fundamental flaw in the route is that it does not properly link HS2 and HS1. Other Members have talked about this, particularly the hon. Member for West Ham (Lyn Brown). I would say to her, and to my right hon. Friend the Secretary of State, that they should look at the process that was involved with HS1. The then new Secretary of State, my right hon. and learned Friend the Member for Kensington (Sir Malcolm Rifkind), very late in the day, called in all the evidence and changed the route. That route, which had been designed by British Rail, went right through south London and was going to blight large numbers of houses, and he changed it at the very last minute. If he had not done so, Stratford International would never have come into being and the Olympics would never have taken place. I say this to my right hon. Friend: do please look at the route, because if we are spending this vast amount of money, let us, as a nation, get the maximum out of it.
I commend to my right hon. Friend a solution proposed by Ove Arup—the Heathrow hub. A Heathrow hub would produce a truly holistic transport policy integrating road, rail, freight and air. Above all, it would benefit my constituents in the west, because the newly electrified west coast main line would go into the Heathrow hub rather than having to go into Paddington and out again, as is currently the case if people want to get to Heathrow by rail. A Heathrow hub would also benefit my right hon. Friend—my good friend—the Member for Chesham and Amersham (Mrs Gillan), because the route could be altered to be taken along the M40. I ask my right hon. Friend to think about existing transport networks, as with HS1, because if HS2 is run along existing motorway links, each one cancels out the other.
I believe in this new HS2 project, which will put Britain into the forefront of competitiveness in the 21st century, but will my right hon. Friend please have a look at the route?
Graeme Morrice (Livingston) (Lab)
I firmly support the delivery of a new north-south rail line, because faster journeys will bring the constituent parts of our island closer together.
As a Scottish MP, my views on HS2 as it affects and, indeed, benefits Scotland, are coloured by the area I represent. The announcement of plans to extend the high-speed rail network north of Birmingham is welcome news, but it is right that all parts of the country, including of course Scotland, should benefit from such a significant expansion of the country’s transport infrastructure. As it stands, the plan takes high-speed rail only halfway from London to Scotland, so there is a real necessity to extend the network further north to Edinburgh and Glasgow. These better services would provide benefits to the Scottish economy of about £3 billion, as businesses in the cities would be able to operate more efficiently, increasing their productivity while accessing new markets and labour pools. Firms throughout the UK would be able to look to Scotland for business opportunities that distance and congestion had previously made less attractive. Tourism on both sides of the border would be boosted as the UK was opened up to faster, more convenient travel. Scotland’s strong engineering base might also benefit from the employment opportunities that the planning and construction of High Speed 2 will provide.
Importantly for Scotland, bringing Edinburgh and Glasgow closer to London, as well as to the cities of the midlands and the north of England, would undoubtedly boost growth across all of its major conurbations. It would also open up the opportunity for through trains to run from Scotland to Paris and Brussels.
The argument is reinforced by reports that estimate that the regional economic benefits of high-speed rail for central Scotland would be about £20 billion over a 60 year period, which compares with £5.4 billion for the west midlands. Studies reiterate that the most cost-effective option for a rail route between London and Scotland is a new high-speed route that connects London, Birmingham, Manchester, Liverpool, Glasgow and Edinburgh. Such a network would be expected to deliver up to £50 billion of business benefits alone. That would be felt greatly in Scotland and the north of England, as well as in the south.
We need extra capacity on north-south routes sooner rather than later and all northern cities must be able to link into those routes. It is apparent that that might not be fully realised. I understand that the HS2 technical director has described the construction of the UK’s high-speed rail network as the work of generations. It will be many years before England and Scotland are connected in this way. Public opinion demands that the high-speed network be extended north of the border. Concerns have also been expressed about the lack of information about funding, costs, routes and the location of terminal stations.
To sum up, the Scottish end of the UK’s high-speed network should be built as soon as possible so that we can have the immediate benefit of a high-speed line between Edinburgh and Glasgow. I call on the Minister to commit to a concrete timetable for extending high-speed rail to Scotland. Not only would high-speed rail boost the Scottish economy and support thousands of jobs in Scotland and throughout the UK, but it would give us a once-in-a-generation opportunity to reshape the economic geography of the whole country.
Alec Shelbrooke (Elmet and Rothwell) (Con)
I offer a heartfelt thank you to my right hon. Friends the Secretary of State and the Minister of State, who have been exceptionally receptive to me and my constituents and have worked hard to resolve the issues with HS2 in my constituency.
I fully support HS2. It is a vital project for Leeds. Unfortunately, the plan that has been put forward is unacceptable, but my right hon. Friends have worked very closely with me and we have come up with some ideas. The route will still go through my constituency, but hopefully those ideas will form part of the consultation. As has been said, it is important that we utilise, as far as is possible, the high-traffic corridors that already exist, such as the M1, which is 12 lanes wide up to Leeds.
Andrew Bridgen
My hon. Friend says that he overwhelmingly supports HS2. He supported it this morning when it was going to cost £33 billion. He supports it now that it will cost £43 billion. Will he support it when it will cost £50 billion or £60 billion?
Alec Shelbrooke
I am glad for the extra minute, but my hon. Friend knows that he is making those figures up. He is including the contingency, which will not necessarily be spent. The Secretary of State has also made it clear that £5 billion will be spent on rolling stock, which could go on the existing west coast and east coast main lines. My hon. Friend knows that he is being rather naughty with the figures.
Returning to the advantages for Leeds, over the past decade Leeds has been a growth city. A great deal of business has come to Leeds. There are things that we need. I lead on transport issues within the team of Leeds MPs. Leeds is crying out for its transport network to be improved, because it is worse than it was in the 1950s. We want to move forward with the tram-train system.
None of those things will happen unless there is investment in our northern cities. That is one reason why HS2 is so important. There are huge commercial opportunities in Leeds. There is also a willing and able work force in and around Yorkshire that can be drawn to Leeds. We have got to get away from the idea of its being a Leeds to London link. The most important benefit to Leeds—yes, we will be able to get to London within an hour and 20 minutes—will be the Javelin trains, which will service a wide area of the Leeds city region and will link up, if I can get a tram-train system put in, with the Leeds-Bradford International airport, which is vital to the economy of Yorkshire. Thanks to lobbying by the airport and local MPs, there are now three British Airways flights a day to Heathrow, which dock at terminal 5. The Javelin trains will cover the wider area, so that people in south Yorkshire and west Yorkshire will be able to get to Leeds-Bradford airport in minimum time, get airside and get off in New York, San Francisco, Australia or wherever they are going. HS2 will open that up. It is nonsensical to say that we need to discuss where we are going with the airline industry first before we talk about HS2—they complement each other.
In April, we came to the House during the recess to reflect on the death of Margaret Thatcher. Many Members on the Government Benches gave speeches about how she was a visionary, and how she led and did what she thought was right. I ask my hon. Friends to reflect on the great lady’s comments in 1986, on the opening of the M25:
“Now some people are saying that the road is too small, even that it’s a disaster. I must say I can’t stand those who carp and criticise when they ought to be congratulating Britain on a magnificent achievement and beating the drum for Britain all over the world.”
I am sure my right hon. Friend the Minister remembers the quote. She went on to say:
“And to those who say, ‘we always build our roads too small’ we can only point out that at some of the planning enquires those who object to the new road say that our traffic forecasts are excessive, and that improvements to existing roads would be enough. Fortunately the planning inspectors and successive Secretaries of State have not accepted that viewpoint.”
We can see the comparison with the high-speed rail network, which I believe is vital for my home city of Leeds and for the growth of Britain.
Kris Hopkins (Keighley) (Con)
I rise to support the Bill. HS2 will link eight of Britain’s 10 largest cities. As a Yorkshire MP, that is not just good news for Leeds and Sheffield, but for the wider economy. My nearest city, Bradford, is intrinsically linked by its economy to Leeds. The key benefits of jobs, increased capacity and shorter journey times will transform the north of England’s ability to contribute to the economy, which is why I am extremely disappointed that the Labour-led leadership on Bradford council has turned its back on this project. I ask them to reconsider. If the great wealth generators of the industrial revolution who transformed our northern cities had the same limited vision for our communities as the Labour party in Bradford, this country would not have achieved the greatness it attained.
As a direct consequence of this investment, two-thirds of the population of the north of England will be within two hours’ reach of London’s markets. Redrawing the economic geography of the nation will bring our cities closer together and contribute to rebalancing growth and opportunity. The growth in jobs could start earlier by starting the build at both ends of the proposed route, and by ensuring that materials and the work force are sourced as much from the north of England as they are from the south. We need that investment in the north of England. We have a huge contribution to make to Britain’s economy, and that will help us to win the global race that the Chancellor talked about earlier today.
Not since the Victorian era has there been this level of investment in our rail infrastructure. I am sure that the businessmen and women who have to stand on trains on the east coast main line at peak times all the way to Doncaster before they can get a seat will vouch for that lack of investment. The imbalance between the economies of the north and the south cannot carry on. The Bill is a key component in bringing about change and I ask my colleagues to support it.
Jeremy Lefroy (Stafford) (Con)
Earlier this year, hundreds of my constituents awoke to find that the value of their homes had been substantially reduced and those who had plans to move discovered that purchasers could no longer get mortgages. That remains the case. The reason was the announcement of the preferred route for HS2—a route that followed none of the previously published options nor an existing transport corridor. Furthermore, the project will not see a shovel in the ground for 13 years and will only be completed in 20 years, meaning uncertainty and disruption for a generation. It was also a route that, I have been told, can hardly be altered, because it is designed to take ultra-high-speed trains travelling at up to 250 mph and hence must be straight. As a result, it goes through five villages in my constituency and comes very close to others.
I have long advocated sensible investment in rail in the UK. When the previous Government proposed to build new track for the west coast main line across my constituency in order to cut journey times and improve capacity, I supported it, but I believe that HS2 is the wrong solution. The Government have rightly said that a new rail network needs to be designed to increase capacity, rather than speed, so I cannot understand the fixation with speeds of 225 mph to 250 mph, if that means that routes are so inflexible that they cannot follow existing corridors, such as motorways, as many have argued. No railway in Europe travels at that speed. The maximum is 200 mph.
Then there is the question of capacity and demand. I imagined that HS2 had done a lot of detailed work on this point, so I wrote asking for current figures for the utilisation of west coast main line services as well as projected figures to 2035. The answer from HS2 was:
“I am sorry but we do not have information on the current figures of WCML services. The Department of Transport may do.”
Mrs Gillan
Does my hon. Friend agree that the fact that Virgin is starting a major advertising campaign to attract people to travel on the west coast main line means that it can hardly have a capacity problem?
Jeremy Lefroy
I do. The first-class coaches are almost never full. Indeed, I have often seen one person per first-class carriage. It needs to make at least two of them standard class.
I had also imagined that HS2 would be largely used by business travellers, so I was surprised to have the reply from HS2 stating that 70% of journeys on HS2 were expected to be for leisure purposes. I fully recognise the value of leisure travel to the economy, but where is the justification for an ultra-high-speed line, such as that which HS2 seems so determined to build, if 70% of those using it are doing so for leisure?
Andrew Bridgen
Does my hon. Friend recall that the initial estimates of capacity usage for HS1 were overestimated by 30%?
Jeremy Lefroy
Yes, and I fully understand the problems mentioned by some of my hon. Friends. We need to do something about that, but an ultra-high-speed line is not the answer.
I come now to the business case for HS2. There has been a lot of argument about whether it is valid. I am not an expert in these matters, but there are several things that make me sceptical. The first is the apparent lack of knowledge at HS2 about current demand. The second is the surprising fact that HS2 is to be largely a leisure railway rather than a business railway. Since leisure passengers are much more sensitive to price than business passengers, especially premium business, I wonder whether this price sensitivity has been fully incorporated in the business case. The third reason is the large question mark over whether this is the right way to help the midlands and the north to develop. Just this week, plans were unveiled for a vast new commercial development at Old Oak common in London at the proposed junction of Cross Rail and HS2. I welcome that, but it underlines the concerns of those who worry that HS2 will simply bring more development into London, possibly at the expense of the midlands, the north and Scotland.
Then there is the business case for the west coast main line after HS2 comes into service. The line will remain an essential part of our national transport infrastructure, so it is essential that its post-2035 business case be at least as strong as that for HS2, but I have not had that case from HS2, despite my asking for it. Given that HS2 is so dependent on leisure traffic, I am concerned about what will be left for the west coast main line. Clearly, there will be an increase in freight and some leisure, commuter and regional services, but will it be sufficient to maintain the line without very substantial subsidy? And if a subsidy will indeed be required, has that been factored into the business case for HS2?
I fully support the comments made by north Staffordshire MPs about the real concern over the connectivity of Stoke-on-Trent, which is one of the top 10 conurbations in the country. I ask the Secretary of State to take that matter very seriously. On compensation, I entirely agree with those who support the idea of a property bond. That must be done. In France, people receive well over the market rate for their property, and everything goes through much faster. Let us be generous, as many Members have suggested.
I have no pleasure in opposing the proposals before us. If this were a Bill to provide for additional capacity in the network by using existing corridors at a sustainable cost and without a fixation on ultra-high-speed trains, I would support it wholeheartedly, but I am afraid that it will achieve none of those things.
Stuart Andrew (Pudsey) (Con)
I certainly welcome the Bill. For too long, we have been trying to move our 21st century population round the country on a transport system that was built by the Victorians. For too long, we have tinkered with the system—at a very expensive rate—to try to improve it, but that only brought disruption and did not solve the problem. We still have a major and pressing capacity problem that is simply not going to go away. It is going to get worse, and we ignore that fact at our peril.
Routes that are crucial to counties, cities and towns such as Yorkshire, Leeds and Pudsey are going to be overwhelmed. We have already heard about the doubling of train journeys in the past 15 years. In 2011, during the morning peak, an average of 4,000 people had to stand as they travelled on the routes into Euston, and 5,000 had to do so on the routes into Birmingham. There are currently 115 passengers for every 100 seats, and the situation is going to get much worse. We need to act now to increase the capacity on our railways. As a country, we cannot afford to leave the economic future of cities such as Leeds, Manchester and Birmingham to an overcrowded railway that will be almost 200 years old by the time HS2 opens.
If we are going to deal with the problem, why not be ambitious about it? Let us do it properly. Let us not tinker with it; instead, let us get back that Victorian foresight and ambition and make our railways something we can be proud of. The only way we can do that is by building a new line, so let us use the best technology and make it a high-speed line. After all, it is rather embarrassing that Turkey will soon have 1,500 miles of high-speed rail when we have just 67. HS2 will bring us the capacity that we need. It will double the number of seats between Leeds and Birmingham, it will transport the equivalent of the population of Cardiff every day, and it will run up to 18 trains an hour.
Over the years of debate on HS2, those who are against it have said that it will have an impact on the regions that it is trying to serve, and that the money would be better spent on local services. But this is not an either/or; it has to be both and, frankly, it is both. The northern hub is being funded in full, the line between Manchester and Leeds is being electrified, and new stations are opening up all over the place. The core cities are predicting the creation of 400,000 jobs. During the construction phase alone, the project will provide more than 8 million pay packets. HS2 will also link our cities to help them to do business. At the moment, trying to get on a train going from Birmingham to Leeds is a nightmare. Let us see business working together in those two great cities. As we have heard, 70% of the jobs created will be outside London.
We have heard about the costs and the business case, and I shall not repeat those points, but we need to maximise the potential. I welcome the decision to create a taskforce, led by Lord Deighton, to keep this major project on track. He has a great record in this area. We must ensure that British industry and the British work force are ready to deal with these changes. I want the best for my constituents. I want them to benefit from the best opportunities that the country has to offer, just as those in many constituencies in the south have been able to do. We cannot wait; this is urgent. Let’s get ambitious.
James Morris (Halesowen and Rowley Regis) (Con)
If Members can agree on anything, it is surely that there is an urgent need to rebalance Britain’s economy away from over-reliance on London and the south-east, so that we can harness the full potential of the whole country. For too long, the black country and the wider west midland region were allowed to fall behind while other parts of the economy accelerated. Although the financial services bubble gave the illusion of economic growth, the black country saw relatively little of the benefit. Gross value added in Dudley and Sandwell fell from 88% of the national average in 1997 to just 74% in 2008. Now that our local economy seems to be getting back on track, we need to make sure that the recovery is sustainable, and we need to put in place the infrastructure to make sure that the west midlands is not left behind again. This Bill, and the project it allows for, is absolutely vital for the west midlands economy.
Halesowen and Rowley Regis was at the heart of the industrial revolution. Our communities developed around the transport network of the day, and new links were built to transport our goods around the country. The position of the west midlands at the centre of the motorway network is still a huge advantage for transporting freight, but we need much better transport infrastructure to move people between Britain’s great cities. Great cities such as Birmingham and Manchester offer many advantages over the capital, but the reality for many companies is that much of their work will still need to be done in London, and they see the current rail network as an obstacle to effective business rather than as a way of getting from one location to another efficiently.
Most of the focus has been on reducing journey times. Although this will be an important consideration for many businesses, for most of my constituents the key benefit of HS2 will be the increased capacity that the new line will offer. The rail network around the west midlands is quickly approaching bursting point, which would be catastrophic for businesses and for people just needing to travel across the country. The number of people travelling by rail to and from cities in the west midlands is increasing even more quickly than the national trend.
My constituency is served by three mainline railway stations, with regular services to and from Birmingham. Our regional services have to share lines with the inter-city network, severely constraining the ability of either to expand to meet rapidly growing demand. Rail journeys to and from Birmingham have increased by 22% over the past five years, and for Coventry the figure is even higher at 30%.
If there is a clear need for greater capacity across the core of our rail network, surely the only question is what form the extra lines should take—whether we build a new high-speed line across the country or expand the lines we have. Although I can understand why, on a superficial level, it might sound attractive to try to add extra capacity to old lines, this cannot be the best way forward in the long term. We have an ageing rail network, and HS2 would be the first major rail line built outside London for 150 years. During that time, plenty of lines have been taken out of service.
Our economy is relying on a rail network that was largely designed around the needs of the mid-19th century. Given the cost of any expansion in capacity on the scale needed to meet future demand, why on earth would we opt to stick with a technology that would be nearly 200 years old by the time the new service was operational? If we are serious about building an effective rail network, and serious about rebalancing our economy, surely the only way forward is for us to invest in this infrastructure and allow our regional economies to compete and succeed.
Angie Bray (Ealing Central and Acton) (Con)
As is the norm with any major infrastructure project in this country, HS2 has provoked a massive debate and has become something of a national drama. I think it fair to say that Ealing and Acton has not exactly been immune to the debate, and that the project has had a bumpy ride in my patch. With a border to the north more or less marked out by the railway lines pinpointed to be the arteries taking the new trains in and out of London after they have passed through Old Oak Common, it is undeniable that the proposal will have an impact on my constituency.
Residents in north Acton, living right on the boundary between Ealing and Brent where the new Old Oak Common station would be, will be particularly affected by an estimated eight years of construction works. Some will also find themselves potentially living alongside the railway where it comes out from the tunnel. Obviously, it is not easy to allay genuine and legitimate concerns, but, first and foremost, compensation for those whose properties border or lie close to the track must be as generous as it is possible to be.
Secondly, the onus will be on Ealing council and Transport for London to manage the arrangements in a way that keeps disruption to a minimum. I understand that some constituents fear that they will be almost completely trapped, and will be unable even to gain access to local shops or their doctors while the works proceed. That would be simply unacceptable. Alternatives such as extra bus routes around the works will have to be laid on, and effective traffic management will be essential.
Concerns about mayhem around the Hanger Lane gyratory system while the line is being constructed, along with anxieties about the impact of an overground HS2 through parts of north Ealing, prompted a vigorous campaign by local residents who have demanded, at the very least, a tunnel between Old Oak Common and Northolt. Last year I wrote to the Secretary of State supporting their campaign, and I am delighted to say that that option appears to have met with his favour. We look forward to final confirmation.
Nevertheless, as my constituents know—notwithstanding those local impacts and the opposition from campaigners further up the proposed line—I have long been a firm supporter of what I see as an ambitious and timely project. Given that I have campaigned loudly against a third runway at Heathrow and have used the “train not plane” argument, how could I not be? Central to this pledge was the logic that a new high-speed rail link improving north-south connections would dramatically reduce the need for the airlines to lay on so many short-haul domestic flights from some of our northern cities, which take up so much landing space at Heathrow. The HS2 concept, however, has always been more than just a buffer against the immediate third runway threat. It is a project for the future, and a rare example of a Government’s demonstrating genuine long-term vision—something that we should be encouraging.
We know that existing services will be full to bursting point by the mid 2020s. We know that the demand is there and that we need to ease the pressure, so why not plan now? Sooner or later we will need the extra capacity, and if we wait for 10 years we will just be doing what we have to do now in a rush. In any case, I have always believed that a country that can be ambitious should be ambitious, and should seek to update its infrastructure in a timely fashion.
High-speed rail makes sense, it will be needed in this country, and the proposals are achievable. I believe that as long as there is generous compensation—and I do mean generous—for all whose lives would be blighted, we should all get behind this project.
David Mowat (Warrington South) (Con)
I support the Bill, but before I say why I support it let me give a number of reasons for not building this railway. We should not build it just because we have less high-speed track than any other country in the world. We could be right and those countries could be wrong, so that is not a good reason. We should not build it because the business case for HS1 to move to St Pancras was predicated on access to the north. We should not build it on environmental and carbon-related grounds: I think that those are rather difficult to justify, at a time when most electricity continues to be produced from fossil fuels. We should not even build it to try to rebalance infrastructure spending, which over the last decade has been 10 times higher per head in London and the south-east than in the north-west, and more than 10 times higher than in the north-east.
We should proceed with this project if, and only if, three conditions exist: a robust business case, clear transformational benefits, and affordability in cash-flow terms, at about £2 billion a year. That £2 billion a year needs to kick in as Crossrail finishes, and I think that that is quite achievable. I cannot go into the business case in a great deal of detail, other than to say that the benefit-cost ratio remains higher than 2—about 2.5 for the full Y network—and is predicated principally on capacity arguments. The number of passengers on the west coast main line has been increasing at a rate of 5% a year for the last 15 years. This business case assumes an increase of only 1.6%, which is quite conservative.
As for transformational benefits, some Members have said today that the northern cities could do better if they just invested in broadband, while others have said that northern cities do not understand that HS2 will cause all the jobs to be sucked into London. All that I can say to that is that the northern chambers of commerce do not agree. They have estimated that in the north-west it will produce some 40,000 extra jobs and £8 billion of incremental benefits, while KMCG’s Green Gauge report estimates that there will be about 50,000 extra jobs.
I want to make a number of observations about the project. First, on the timing, 2032 is a long time ahead, and I am a little concerned that there is going to be a gap of over a decade before it goes to Birmingham and Manchester. That is a decade in which the northern cities will be put at a disadvantage—although prosperity will not, of course, stop in Manchester and Birmingham. I do not fully understand why we are not able to do more in the north earlier, in terms of the timing of the investment.
It is important that the northern cities are linked not only to London but to Brussels and Paris. I do not fully understand the issues around the linkage and all that goes with that, but to do this project and not allow that to happen would be wrong.
I also want to comment on a number of councils. We heard about Bradford no longer supporting the project, and I have heard Warrington council say it no longer supports it, because there is no station on its patch. Either this project has transformational benefits for the region and all of us in that region benefit, or it does not. My constituents in Warrington work in Liverpool, Manchester, Birmingham and elsewhere. What matters to them is that we go some way towards fixing the north-south divide and getting prosperity much more evenly spread across the entire country.
Finally, let me say that I commend this Bill and that I hope the House supports it tonight.
Mr William Cash (Stone) (Con)
I oppose this Bill on national and local grounds. I pay tribute to the people of Stone, Swynnerton, Whitmore and Madeley for the meetings we have had to discuss these matters, and I also pay tribute to the Country Land and Business Association and Stop HS2 for the back-up they have given at these meetings and in consideration of all these matters.
I oppose the Bill for many reasons. The route will cut a swathe right the way through my constituency from top to bottom. I also agree very much with the comments of my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) and my neighbour and good friend the hon. Member for Stafford (Jeremy Lefroy). I do not need to repeat their points. They have made them forcefully and so have many others, and they are right.
The reality is that my constituents gain no benefit from this whatever. As has rightly been said, it is all pain and no gain. The unfairness of the current arrangements is so gross that it has to be rectified; there is a complete failure to understand that in the 21st century we must have a proper compensation arrangement if this Bill is to go through, as many predict.
I do not believe that the comments of the Public Accounts Committee can be in any way disputed, and as for the question of the amount of money involved, that is the biggest white elephant of all time. As has been noted, the amount has already gone up to £50 billion-plus, and I will not be surprised if it is £75 billion by the time this is finished. The reality is that this is a very expensive operation that is blighting people’s homes already in a way that is completely unfair, and it deserves to be discarded.
On the question of compensation, the arrangements favour the acquirer so much against the claimant, and they do not even say how the compensation is to be calculated. As for the exceptional hardship scheme, three quarters of the applications have been rejected, as the Minister knows, and compensation is available only through a discretionary scheme.
Mrs Gillan
Does my hon. Friend agree that there is nothing in this Bill that either pushes forward any compensation scheme or stops the Government continuing to pay compensation, and what we really want is the new consultation on compensation, which I hope the Department will launch as soon as tomorrow or the next day?
Mr Cash
I could not agree more. The fact is that the current arrangements for compensation are wholly inadequate to deal with this unique—and, I believe, appalling—scheme.
We are also now pressing for a property bond scheme, which would underwrite the property values where this project has an adverse impact. That needs to be set up. Members will know that it is fear of the unknown that has the greatest impact on the property market. A property bond scheme would create stability in the market, and the idea has already been propagated by the BAA and Central Railway. The ideas are out there, and amendments will doubtless be tabled in Committee to show how such a scheme could work in practice; the argument can be made in more detail then.
As far as I am aware, this scheme has no support whatsoever in my constituency. I have held many meetings in packed rooms and overflowing halls. At the end of them, I have asked, “Does anybody agree with the proposed scheme?” Only one person, who I think was from HS2 Ltd himself, said yes. The amount of very sensible opposition to the scheme is amazing.
The west coast main line is a very good service. My hon. Friend the Member for Stafford hit the nail on the head: it is available and can be improved. Extensions can be made to Euston to improve the availability of the service.
The bottom line is that the whole scheme should be rejected. I shall vote against it with absolute determination tonight, and if we lose, we move on to the compensation arrangements. In fairness to the people who have been completely blighted and whose lives have been destroyed, we must have a property bond and proper arrangements. It is disgraceful.
Damian Collins (Folkestone and Hythe) (Con)
I rise to speak in favour of the Bill. This is a massively important piece of national infrastructure that will benefit us not just in the immediate decades after its completion, but for probably more than a century. Connecting the great cities of the north and midlands to London and the south-east, and to the continent through the channel tunnel, is an investment in our future. We should look at the benefit not just in ticket sales, but in the business regeneration that will take place across the network.
The Secretary of State described the business situation in Kent, an issue that, as a Kent MP, I should like to touch on. It is impossible to imagine how east Kent can be regenerated without the benefits that High Speed 1 brings. I sit in meetings with the regeneration group that looks at the east Kent regional growth zone, and selling the benefits of High Speed 1 and the lower journey times into London is the single biggest advantage we have. As the Secretary of State pointed out, the HS1 line runs only as far as Ashford into London; the rolling stock running from Folkestone, Dover and Canterbury into Thanet is also a massive source of regeneration.
None of us can know for certain what the future will bring—no more than when, nearly 30 years ago, this House debated the Channel Tunnel Bill. At that point, many Members spoke against it. Some said that we were living in the age of Concorde, and that international rail travel was not the future. The channel tunnel has outlasted Concorde and will be there for many more years to come. Back then, my predecessor, Michael Howard, championed the property blight issue. A compensation scheme was in place, but in fact people’s property prices actually went up, not down, as a result of the building of the channel tunnel rail link. People said at the time that it would be a drain, diverting business investment from the south-east to France, where it would be encouraged. In fact, that gateway is bringing business investment into the UK from France. People said that it would destroy jobs in Kent; in fact, it is creating jobs. As I said earlier, it would be impossible to imagine a job creation strategy for east Kent without the physical infrastructure of the channel tunnel.
In the 1980s, Members said that they did not think there was a case for city-to-city rail travel, and certainly not through the channel tunnel, which would simply reduce journey times across the channel itself. Of course, there is now an enormous market for city-to-city travel: not just from London to Paris and Brussels, but soon opening up into Holland and Germany and to other locations in Europe. My hon. Friend the Member for Northampton South (Mr Binley) pointed out in his very good speech the enormous benefit that rail freight infrastructure gains from investment in high-speed rail, and from the channel tunnel. The potential is enormous and evolving, and it will be the same with High Speed 2. I commend the Bill to the House.
Lilian Greenwood (Nottingham South) (Lab)
As we have heard today from numerous hon. Members, the railways face an imminent capacity crunch. The lack of capacity is holding back growth and costing the taxpayer, as our existing infrastructure bears an ever heavier burden. Soon, on the west coast main line, the route will effectively be full. For passengers, this means overcrowded peak services, with many commuter trains regularly running at more than 150% capacity. I challenge anyone to use their travel time productively when they do not even have a seat to sit in. We need radical action to break through the logjam and provide additional connections between our major cities. That is why a new line is needed.
HS2 is a project for the country as a whole; it is a new north-south rail line to connect our cities, slash journey times and release additional capacity for freight and passenger services. As a major infrastructure project, it can drive economic growth, attracting additional investment along the route while delivering jobs and skills. We have heard already today about the failure of this Government on infrastructure spending, which was down by nearly 40% in the past year. That makes it even more important that a new line is built, but there must be strong oversight of its delivery.
A number of hon. Members have said that we should improve the infrastructure we already have. Of course, we must continue to invest in our existing network. We have always been clear that projects such as the northern hub must be complementary to a new line, but there are limits to what we can do with our current infrastructure. We have already spent more than £9 billion on the west coast upgrade. Hon. Members representing constituencies along the route will know just how disruptive that process was; indeed, the hon. Member for Milton Keynes South (Iain Stewart) described it as an absolute nightmare. Although that work made essential improvements, it did not provide the additional capacity needed to keep pace with passenger demand. As Network Rail has said:
“The lack of capacity will become even more acute beyond 2024 as demand continues to grow. The most effective and best value for money way to create additional capacity will be through building a new line.”
We must not look at passenger growth in isolation. The freight sector has enjoyed a decade of continual growth, but with limited additional paths available, there is a risk that freight operators will have to be turned away in the future. Any Government serious about climate change will want a growing rail freight sector to help reduce carbon emissions and congestion on our motorways. But the challenges facing freight underline the danger of treading water instead of delivering a new line.
We also have to consider the improvements that can be made to passenger services. As a constituency MP, I know how overcrowded and slow the services between Nottingham and Birmingham can be, holding back a growing commuter route, and inadequate connections between our core cities are stopping commuter routes developing at all. It can take more than two hours to travel from Nottingham to Leeds on existing services, but the new line should cut that journey time by two thirds.
A number of hon. Members, including the hon. Member for North West Leicestershire (Andrew Bridgen) and my hon. Friend the Member for Birmingham, Hall Green (Mr Godsiff), have suggested that high-speed rail will only benefit London, but that underplays the growth we have seen in regional traffic. From 2000 to 2010, passenger growth between Manchester and London was 70%, whereas between Manchester and Birmingham it was 105%. In addition, we must not forget that this project was driven forward, in part, by the regions. For example, Centro, the transport authority covering Birmingham, started to make the case for high-speed rail in 2008, before the last Labour Government became committed to the project.
The Government have announced this week a regional growth commission, chaired by Lord Deighton. Ministers must ensure that local authorities have every opportunity to contribute to that review. As my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman) rightly said, the Government must work with local bodies, including transport authorities and local enterprise partnerships, to maximise economic development and the benefits from released capacity. This is an area where the case has not been made strongly enough. So far, local media coverage has been dominated by HS2 Ltd’s suggestions for reductions to existing mainline services. That is a pity, because the released capacity and rolling stock could help enable more local services and even the reversal of some Beeching-era cuts, but Ministers and HS2 Ltd have not made that case. They must do so if the constituents of Members such as my hon. Friend the Member for North East Derbyshire (Natascha Engel) are to be convinced.
That is part of a wider problem. It sometimes feels like the project is being developed in isolation, with little regard for other transport needs. We know that we will not see a decision on a spur to Heathrow until the Davies commission reports, after the next election. We would have liked that decision to be made sooner.
We are also concerned about the day-to-day running of HS2 Ltd, for which Ministers are ultimately responsible. A station redesign for Euston was announced with no prior warning or consultation. My right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) spoke passionately on behalf of his constituents about that point and many others. New tunnels appeared for west London and the east midlands without clear information about how they would impact on the overall cost of the project.
According to the National Audit Office, the Department for Transport and HS2 Ltd need to do more to make the business case for high-speed rail. There has been no information on the cost of tickets. The new line cannot be a rich man’s toy; all fares must be subject to regulation on the same basis as the rest of the network.
We have also not had the commitments we would like on apprenticeships. We have said that an apprenticeship should be created for every £1 million spent, creating 33,000 apprenticeships over the lifetime of the construction project. A similar approach is training a new generation of skilled workers through Crossrail, and Ministers should build on the experience to ensure that apprenticeships and opportunities for young people are delivered as part of the new rail line.
Many right hon. and hon. Members and their constituents have understandable concerns and questions remaining about compensation and I would be grateful if the Minister could tell us when he expects the new consultation on the subject to be announced. We need to make sure that we are getting value for money, especially as we are debating a spending Bill today for a project that has increased its preparatory budget from £773 million in 2010 to more than £900 million today. We will continue to press the Government on these issues in Committee.
Let me recap. There are real questions that Ministers need to address. However, they are questions about how the project is being introduced, not about the need for it. We can meet our capacity challenges only through serious investment, and treading water is not an option.
For too long we ran a 19th century railway on the 20th century principle of “make do and mend”. In an age of rising passenger demand, that is no longer enough. We are not managing decline; we are investing in the future. The proposed line will cover 330 route miles, directly linking most of our major cities and cutting journey times from others. It will improve transport links between England, Scotland and Wales, as my hon. Friend the Member for Clwyd South (Susan Elan Jones) pointed out. It will meet or even exceed the standards of the rail infrastructure of our continental competitors. It will be a north-south rail line—one might even call it a one nation rail line.
It would have been better to have introduced a hybrid Bill for the whole route, but at least this preparation or paving Bill does cover both phases. We will support the Bill as we want the project to succeed, and we will hold the Government to account as we go into Committee.
The Minister of State, Department for Transport (Mr Simon Burns)
This has been an extremely good and well-informed debate. A significant number of my hon. Friends and other hon. Members have spoken in support of High Speed 2 and this paving Bill, and a number, including a number of my right hon. and hon. Friends, have expressed their concerns and lack of support.
I want to begin in a slightly unusual way by congratulating the shadow Secretary of State, the hon. Member for Garston and Halewood (Maria Eagle), and the shadow Minister, the hon. Member for Nottingham South (Lilian Greenwood), on taking the view in the national interest that they will support the Bill tonight, as they supported it when they were in government. For that consistency, I congratulate and thank them.
We heard a number of excellent speeches. I thought the speech by my hon. Friend the Member for Folkestone and Hythe (Damian Collins) was particularly relevant and interesting, because his constituency has the experience of High Speed 1. I also enjoyed the robust contribution made by my hon. Friend the Member for Northampton South (Mr Binley), who is clearly a keen and enthusiastic supporter of the project.
I say to my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan), my hon. Friend the Member for North West Leicestershire (Andrew Bridgen) and others who oppose the Bill and who have the preferred or proposed route going through their constituency that I understand what they are going through. I have considerable sympathy for them as constituency MPs and I admire they way in which they are rightly fighting for the interests of their constituents, but ultimately I believe that the national interest must come first, although we must do all we can to alleviate any problems that have been highlighted.
Mr Burns
I am sorry, but no. I have very little time and a lot to say to reply to the debate.
In the comments made both by those who support the Bill and by those who oppose it, there was a common theme: we have to sort out the issue of compensation. I agree. We accepted the High Court’s decision in the only one of the 10 judicial reviews that we did not win that we should reconsult. That consultation on a comprehensive compensation scheme will begin shortly, and I can say to my hon. Friend the Member for South Northamptonshire (Andrea Leadsom) and others that the options to be considered will include a property bond.
My hon. Friends the Members for Tewkesbury (Mr Robertson) and for The Cotswolds (Geoffrey Clifton-Brown) asked that we say once again what the costs are. I will give those figures to the House now. For phase 1, it is £21.4 billion in 2011 prices, and for phase 2, it is £21.2 billion, making a total of £42.6 billion, which includes a contingency of £14.4 billion. The cost of rolling stock is £7.5 billion, of which £1.7 billion is the contingency fund.
The debate has laid bare the fact that everybody wants the benefits that high-speed rail is set to deliver—new jobs, growth and prosperity for our country—but there are understandably some questions and concerns about how we realise those benefits. Those concerns are not unlike those that surrounded the construction of many of the now indispensable parts of our nation’s transport infrastructure, such as the M25, the Jubilee line extension to Canary Wharf and High Speed 1 itself. High Speed 2 is not a scheme being built for the future based on the travel behaviours of the past. We stand firm in our belief that High Speed 2 is the right choice for Britain in the 21st century, just as the railways were the right choice for Britain in the 19th century. Amazingly, back then, those opposed to the railway claimed that it would terrify country folk, turn cows’ milk sour, stop hens laying and lead to an invasion of town folk into the country; and that travelling at speeds of more than 25 mph would cause the engines to combust and the passengers to disintegrate.
The doubts of today are the only true hindrance to realising our vision and the benefits it will deliver, and I am sure that future generations will look back at these doubts in the same way as we look at the doubts of those opposed to railways in the 19th century—and, ironically and using a shorter time scale, the doubts that the people of Kent had in the 1980s and ’90s, which they now totally reject. One of my hon. Friends mentioned that Maidstone successfully avoided having a station, which went to Ebbsfleet instead, and Maidstone is now begging to have a station because the town is losing out on the regeneration that a station delivers.
High Speed 2 is a vision that we have to realise. Over the past decade, about half of economic growth has been concentrated in London and the surrounding regions. While High Speed 2 will shrink the distance between our great cities, the vision for High Speed 2 is to extend the benefits that it will deliver far beyond the actual network. We estimate that over 70% of jobs created by High Speed 2 will be outside London. High Speed 2 will redress the imbalance felt acutely by millions of people in different parts of the country. Britain cannot afford to burden the economies of great cities such as Manchester, Leeds and Birmingham with an overcrowded railway that will be almost 200 years old by the time that High Speed 2 opens and which has no spare capacity.
It is time that Britain—the country that invented the railway—raised its aspirations and ambitions by building that world-class, high-speed rail network. I am confident that the House will recognise the core objective of High Speed 2 to create an engine for growth that will unlock massive potential and opportunities for UK cities such as Birmingham, Leeds, Manchester, Sheffield and others along the route. It will link eight of Britain’s 10 largest cities, serving one in five of the UK population. People will be able to travel from Edinburgh to London and back in the time that it takes to drive one way. The network will be fully integrated with the nation’s airports, with stations serving Manchester and Birmingham directly, an option for a spur to Heathrow, and short connections to East Midlands airport from Toton station, which is halfway between Derby and Nottingham. That will radically redraw the economic geography of the nation, bringing our cities closer together and rebalancing growth and opportunities. In doing so, High Speed 2 will rewrite the economic fortunes of this country.
It is imperative that we do not delay the project, and the expenditure powers that we are seeking in the Bill will allow us to move forward with this ambitious investment in infrastructure. I have to say to right hon. and hon. Members that dithering is not an option if we want to maximise the economic potential of the country. By building High Speed 2, we will demonstrate that Britain still has the ambition and vision to build world-class infrastructure to support a world-beating economy. For those who do not believe that there will be acute regeneration around the stations and depots, I suggest that they go to Japan to see what has happened in places such as Tokyo, Osaka and Nagoya, where there has been massive regeneration, with shops, leisure activities, hotels and businesses, not simply in the immediate vicinity of the stations but beyond in the wider community.
We have to move forward to show that we still have ambition. At its heart, that is what HS2 is all about: jobs and growth—jobs and growth for this generation; jobs and growth for future generations. That is the legacy that the House is being asked to support today—a legacy that will support this nation’s zeal for hard work and its determination to succeed. We must have the courage and conviction to make bold decisions. We must be bold now, and it is for that reason that I urge right hon. and hon. Members to support Second Reading and to reject the amendment.
Question put, That the amendment be made.
Andrew Bridgen
On a point of order, Mr Speaker. I seek your advice on where the £10 billion of extra funding, which was announced for HS2, has come from. The House has divided on important matters without being aware of whether the extra £10 billion will come out of existing budgets—meaning the curtailment of existing projects—the deficit or the comprehensive spending review. I was keen to ask the Minister about that while he was at the Dispatch Box, but as you saw, Mr Speaker, he was keen not to answer my question.
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. I will deal with his second point first and his first point second. On his second point, I am sure he will appreciate that this is not a matter for the Chair. Some Ministers, when delivering winding-up speeches, are comfortable with taking interventions, depending on time considerations and other matters. Other Ministers decline to do so and are absolutely within their rights, so this is not a matter for the Chair. He may wish to pursue this matter in conversations with Ministers, and it is proper for him to do so. On the other point, that will come out in the course of debate over a sustained period. The hon. Gentleman will doubtless represent his constituents assiduously on the matter. We will leave it there, and we are grateful to the hon. Gentleman.
high speed rail (preparation) bill (programme)
Motion made, and Question put forthwith (Standing Order No. 83A(7)),
That the following provisions shall apply to the High Speed Rail (Preparation) Bill:
Committal
(1) The Bill shall be committed to a Public Bill Committee.
Proceedings in Public Bill Committee
(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Thursday 18 July 2013.
(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.
Consideration and Third Reading
(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.
(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.
(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.
Other proceedings
(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Mr Syms.)
Question agreed to.
high speed rail (preparation) bill (money)
Queen’s recommendation signified.
Motion made, and Question put forthwith (Standing Order No. 52(1)(a)),
That, for the purposes of any Act resulting from the High Speed Rail (Preparation) Bill, it is expedient to authorise the payment out of money provided by Parliament of expenditure incurred by the Secretary of State under or by virtue of the Act.—(Mr Syms.)
Question agreed to.
Hybrid Bill Procedure
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Leader of the House of Commons (Mr Andrew Lansley)
I beg to move,
That the following Standing Order (Private Business) be made:
224A. “Comments on environmental statement
(1) This order applies to any government bill in relation to which the Examiner decides Standing Orders 4 to 68 are applicable and in relation to which an environmental statement is required to be deposited under Standing Order 27A.
(2) In this order:
(a) “the relevant Minister” means the Minister of the Crown with responsibility for the bill;
(b) “the environmental statement” means the environmental information originally
deposited by the relevant Minister in relation to the bill for the purpose of Standing Order 27A;
(c) “supplementary environmental information” means any additional environmental information deposited by the relevant Minister, after the deposit of the environmental statement, to supplement that statement for the purpose of meeting the requirements of any EU Directive relating to environmental impact assessment.
(3) The notice published under Standing Order 10 in relation to the bill shall state that any person who wishes to make comments on the environmental statement should send them to the relevant Minister in such manner and on or before such date as shall be specified by the relevant Minister in the notice, that date being no earlier than the 56th day after the first publication of the notice.
(4) For the purpose of Standing Order 224 paragraph (3) shall be treated as one of the Standing Orders compliance with which must be examined by the Examiner.
(5) The relevant Minister shall, in such form as may be specified by the Examiner, publish and deposit in the Private Bill Office any comments received by him in accordance with this order and shall also submit those comments to the independent assessor appointed under paragraph (6) below. The relevant Minister shall deposit a certificate in the Private Bill Office setting out the date on which all comments have been received by the independent assessor.
(6) (a) If the bill originated in this House and if comments are received on the
environmental statement in accordance with this order:
i. a report shall be prepared by an independent assessor summarising the issues
raised by those comments;
ii. the Examiner shall appoint the independent assessor within the period for commenting on the environmental statement prescribed by paragraph (3) above;
iii. the assessor shall be instructed to prepare the report within such period as the Examiner shall specify, the end of that period being no earlier than the 28th day after the date certified by the relevant Minister, in accordance with paragraph (5) above, as the date on which the assessor received all of the comments from the relevant Minister;
iv. before specifying a period in accordance with sub-sub-paragraph (iii) above, the Examiner shall consult the relevant Minister on the length of this period;
v. the Examiner shall submit the report of the assessor to the House.
(b) If a report is submitted to the House in accordance with sub-paragraph (a)(v) above, the Examiner has leave to submit the report of the assessor to the House of Lords.
(7) If paragraph (6) above is applied, the bill shall not receive a second reading until at least 14 days after the report of the independent assessor on the comments on the environmental statement has been submitted to the House.
(8) If any supplementary environmental information is deposited in relation to the bill:
(a) it shall be prefaced with a statement that the information is being deposited as supplementary information under this order;
(b) the requirements of Standing Order 27A in relation to the deposit of copies of the environmental statement shall apply to the supplementary environmental information;
(c) copies of the supplementary environmental information shall be made available for inspection and sale at the offices prescribed by Standing Order 27A(6);
(d) notice shall be published in accordance with Standing Order 10 (save in respect of dates) above stating that any person who wishes to make comments on the supplementary environmental information should send them to the relevant Minister in such manner and within such period as may be specified in the notice, the end of that period being no earlier than the 42nd day after the date of the first publication of the notice;
(e) paragraphs (5) and (6) above shall have effect in relation to any comments received on any supplementary environmental information deposited in this House as they apply to comments received on the environmental statement and irrespective of the bill’s House of origin;
(f) the examiner shall examine and report to the House whether or not paragraphs (8)(a) to (d) have been complied with and Standing Order 224 shall apply to that examination.
(g) the bill shall not receive a third reading in this House or, if supplementary environmental information has been submitted before second reading, second reading in this House until at least 14 days after the assessor’s report on the comments on the supplementary environmental information has been submitted to the House.
(9) At third reading of the bill the relevant Minister shall set out:
(a) the main reasons and considerations upon which Parliament is invited to give consent to the project to be authorised by the bill;
(b) the main measures to avoid, reduce and, if possible, offset the major adverse effects of the project.
A written statement setting out this information shall be laid before this House not less than 7 days before third reading.
(10) The costs of the assessor and also the costs of the process of appointing an assessor, incurred by the House by virtue of paragraphs (6) and (8)(e) above, shall be reimbursed by the government.
(11) For the avoidance of doubt, any supplementary environmental information accompanying an amendment to a bill which, if the bill were a private bill, would require a petition for an additional provision shall be subject to paragraph (8) above and not paragraph (3) or (7) above”.
Mr Speaker
With this it will be convenient to discuss the following:
That, in respect of any bill relating to High Speed 2 that is read the first time in Session 2013-14 and to which the standing orders relating to private business are found by the Examiners of Petitions for Private Bills to apply, it shall be sufficient compliance with:
(a) any requirement under those standing orders for a document to be deposited or delivered at, or sent to, an office of a government department, body or person if it is deposited or delivered at, sent to or otherwise made accessible at that office in electronic form;
(b) any requirement under those standing orders for a document to be deposited with an officer if it is deposited with or delivered, sent or otherwise made accessible to that officer in electronic form;
(c) any requirement under those standing orders for a document to be made available for inspection at a prescribed office, or to permit a document to be inspected, if it is made available for inspection at that office, or is permitted to be inspected, in electronic form;
(d) the requirement under Standing Order 27(4) or 36(3) relating to private business to permit a person to make copies of a document or extracts from it, if there is provided to that person, on request and within a reasonable time, copies of so much of it as the person may reasonably require and such copies may, if the person so agrees, be provided in electronic form;
(e) the requirement under Standing Order 27(4) relating to private business for a memorial to be made on every document deposited under that Standing Order, if the memorial is made on a separate document;
(f) any requirement under Standing Order 4A(1), 27A(6) or 224A(8) relating to private business to make a document available for sale at prescribed offices, if it is made available for sale at an office in London.
That this Order shall not affect any requirement under those standing orders to deposit any document at, or deliver any document to, the Private Bill Office or the Vote Office.
That any reference in those standing orders to a document which is deposited, lodged, delivered or sent under those standing orders includes a reference to a document which is so deposited, delivered or sent in electronic form.
That any reference to a document in this order includes a reference to any bill, plan, section, book of reference, ordnance map, environmental or other statement or estimate.
Mr Lansley
As the House heard during the previous debate, the Government are introducing a hybrid Bill to Parliament later this year to allow consideration of whether the powers to construct, operate and maintain the HS2 scheme should be granted. Given the significance of this decision it will be clear to the House that it is essential that Parliament have the means in place to support effective decision making in relation to the Bill. However, it has been a while since the last hybrid Bill and some of the rules governing this process are now out of date. Therefore, the motions I am moving today will update this parliamentary procedure. If I may, I will explain them to the House. I believe that the House will not find them objectionable.
On the motion for electronic deposit, the House may be aware that, along with the HS2 hybrid Bill later this year, we will provide Parliament with the environmental statement. This will set out the likely significant environmental effects of the scheme and put forward proposals for alleviating them. For a project of this magnitude, there is a considerable level of detail involved. We expect the statement to be up to 50,000 pages long. It is of course important that communities can easily find out what the impact will be on their local area. However, current Standing Orders require us to deposit a hard copy of that document to every local authority area along the line of route. It is estimated that each document would weigh up to 1 tonne in that form. In this day and age, that is inconvenient for the communities involved and wasteful of Government resources. That is why our first motion allows for the electronic deposit of bill documentation for the HS2 hybrid Bill. That will make it easier for communities across the line of route to find the information most relevant to their area without having to work through an enormous document. It will also make it easier for local authorities, including parish councils, to meet their obligations to make the information available for public inspection.
It should also be noted that this is a permissive power. It does not require documents to be deposited in electronic format only. HS2 Ltd is clear that if a deposit location wants all the documents in hard copy, they can have them in hard copy. In all cases, HS2 Ltd will make available the key documents in hard copy, such as the Bill and the non-technical summary of the environmental statement.
Frank Dobson (Holborn and St Pancras) (Lab)
I welcome the right hon. Gentleman’s clarification, because several people have raised with me the possible difficulties with the large maps, which, without sophisticated IT gear, can be difficult to reproduce. If HS2 will still be obliged to provide large maps in solid form, I will be pleased with the reassurance he has given.
Mr Lansley
The right hon. Gentleman raises a sensible point. For most people with access to electronic equipment, navigating large documents is perfectly straightforward. In fact, it is probably easier to navigate documents of this length and complexity electronically than in hard copy. Not least, of course, it affords people the opportunity to focus on a local area or to do things such as word searches. I can confirm, however, that reasonable requests for hard copies of maps and section drawings will be met. These could be requested either from local authorities, which will be provided with hard copies for inspection, or directly from HS2 Ltd, which will provide A3 copies. It should further be noted that copies of all maps and sections will be available for inspection in both Houses. I hope that gives the right hon. Gentleman the assurance he was looking for.
If a deposit location would like documents in electronic format, but does not have the equipment to make them available to the community, HS2 Ltd has committed to providing that equipment at its own expense. This is a wholly sensible modernisation of Standing Order requirements, which were originally conceived in the 19th century, and is about making it easier for people to engage with the hybrid Bill process and therefore ensuring the most effective decision making by Parliament.
The second motion also relates to the environmental statement. It is vital that members of the public be made aware of these environmental effects and have an opportunity to comment. It is also important that the public’s views be shared with Parliament before it makes a decision on the principle of the Bill. That is why our proposed changes to Standing Orders will incorporate a formal consultation period for the environmental statement between introduction and Second Reading of the hybrid Bill. Although this follows the precedent of the Crossrail Act 2008, by enshrining this consultation in Standing Orders, we will improve the transparency and certainty of the hybrid Bill procedure.
It should also be noted that the lack of a guaranteed consultation process has been raised in the courts. It is important that we are clear that the proceedings of the House should not be subject, as a consequence of that lack of clarity, to interference from the European Courts.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I certainly approve of the electronic tabling, because it strikes horror into my heart to think that there are at least 50,000 pages to the environmental statement, and we will need some way of navigating it, but what assurances can my right hon. Friend give me that HS2 Ltd will comply exactly with the Standing Orders? Surely, he needs to examine the time scale he has put into these amended Standing Orders, because 56 days is not enough time to examine 50,000 pages, minimum, of an environmental statement. It is only eight weeks.
Mr Lansley
On my right hon. Friend’s first point, these are the requirements of the Standing Orders in relation to hybrid Bills, and the promoters of a hybrid Bill, and participants in that process, will be required to comply with them; otherwise, the quality of consideration will be put at risk. They will have to behave in a way that is consistent with what the House and the examiners of the Bill require.
I will come directly to the second point that my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) made. The new Standing Order requires the appointment of an assessor to prepare a summary of the public’s comments. The independence of the assessor will be assured, because they will be appointed by Parliament and will report directly to it. That summary will make it easier for Members to appreciate and represent the views of the public when debating the principle of the hybrid Bill.
As my right hon. Friend the Member for Chesham and Amersham has just pointed out, the length of the consultation period is set in the Standing Order at 56 days. To give that some context, the equivalent consultation period for projects pursued under the Planning Act 2008 can be as short as 28 days. That legislation covers projects of national significance such as new nuclear power stations, which are not intrinsically unlike HS2, given the level of debate that they can create and the significance of their environmental impact.
Frank Dobson
I recognise that I am getting into obscurantist territory with this point. I understand that the examiner of the hybrid Bill will be an Officer of the House, and that the assessor will be appointed by that Officer of the House and not by the House itself, which has, after all, demonstrated this evening that it is party to this matter.
Mr Lansley
As far as I understand it, that is true. The examiner will appoint the assessor, and the assessor will report directly to Parliament. That appointment is not in the gift of the Government. The independence of the assessor is intrinsic to the process, and the role of the assessor is to summarise the views presented during the consultation. The assessor will use their technical expertise to present the environmental assessment issues in a form that Parliament can readily engage with. This is a parliamentary process; the assessor will be appointed by Parliament, not by the Government.
Mrs Gillan
I am grateful to my right hon. Friend for giving way again. This is an opportunity for us to probe and to find out exactly what this measure means. What remuneration will be paid to the assessor? Will they be remunerated by the House? Will there be any opportunity for Members to query, adjust, amend or request a revision of the report that the assessor puts forward to enable MPs better to understand the complexity of the environmental statement?
Mr Lansley
On my right hon. Friend’s first point, I simply do not know what the remuneration arrangements are, but I will gladly write to her with that information. It is possible that the assessor will be paid by the Government, but as their appointment is not in the gift of the Government, I do not think that will impinge on their independence at all. As far as I am aware—I will certainly correct this if I am wrong—it will not be possible for anyone to have an impact on the assessor’s report. It will be the job of the appointed assessor to use their technical expertise to deliver the best possible representation of the public’s views, as reported to the consultation, in order to enable the House and the hybrid Bill Committee to engage fully with the process. The report will be made available before Second Reading.
I was talking about the length of time being made available for the consultation period. It is worth noting that the consultation to which the new Standing Order relates will follow the consultation on the draft environmental statement that is currently taking place—it is running from 16 May to 11 July. So there will be two opportunities for the public to make their views on the environmental statement known. Taken together, that supports the view that 56 days is an appropriate period of consultation.
Mrs Gillan
I think there is a misunderstanding about the consultation on the draft environmental statement. That consultation did not have to be carried out, but it is being carried out by HS2 Ltd. The consultation on the environmental statement that will appear at the same time as the hybrid Bill has to be carried out by the Government, and not by HS2 Ltd. I do not know what weight will be given to the previous consultation; indeed, it does not actually have to be considered at all.
Mr Lansley
I think it is true to say that the draft consultation taking place now is not part of the formal processes, but that does not mean that the public will not have a significant opportunity to make their views known. Having the draft environmental statement as the subject of consultation now directly relates to my right hon. Friend’s point—that 56 days, the eight-week consultation period, does not come in, as it were, in relation to an environmental statement that has not been prefigured by the consultation on the draft. In any case, if those responding to the draft consultation feel strongly about those issues, they should make their views known in the consultation required under the Standing Order.
For the sake of clarity, I was right that the Government are responsible for the remuneration of the assessor, but the amount of remuneration will be the product of a procurement process for the necessary expertise. I hope that is accurate and completes that thought. I hope that, notwithstanding the relative obscurity of these matters, the House will—[Interruption.] Does the right hon. Member for Holborn and St Pancras (Frank Dobson) want to intervene again?
Frank Dobson
Yes, I do, before the right hon. Gentleman sits down. It is not my intention to ask obscurantist questions, but it is my understanding that in the Appeal Court hearings—the Government won most cases and lost one—an undertaking was given, in the case that was lost, that the environmental assessment would look at all the alternatives to HS2, including different routes and also air, road and other alternatives. Will he confirm that that is the case?
Mr Lansley
I had better enter the same caveat as I have on one or two other occasions: if I find I am in any sense wrong, I will correct what I say. My understanding is that the environmental statement that is the subject of this Standing Order is an environmental statement relating to the route proposed in the hybrid Bill. It is not an environmental statement that relates to a range of other options. But I will take advice, and if I am wrong I will correct that for the right hon. Gentleman.
Geoffrey Clifton-Brown (The Cotswolds) (Con)
Will the Leader of the House confirm that the particular matter with which we are dealing tonight refers only to the environmental statement, and if so, how will other matters be dealt with? Secondly, in view of what he has just said, if we are dealing with environmental matters that relate only to the particular Bill that contains the particular route, how will alternative representations about the route be dealt with?
Mr Lansley
My hon. Friend will have heard me just say that the Standing Order relates to the processes of the consultation on the environmental statement—it does not change the other processes affecting the hybrid Bill—so the rest of the Standing Orders relating to consideration of the hybrid Bill are, to that extent, unchanged. I will double check, but I think it is transparent that the environmental statement must of necessity relate to the hybrid Bill that is the subject of consideration by the hybrid Bill Committee. To what extent it needs, of necessity, to go beyond the precise considerations of the route, I do not know. [Interruption.] I am advised that the environmental statement will include reasonable alternatives considered to HS2, as required by the Standing Orders.
Mr Lansley
The shadow Leader of the House is going to help us in any case, but I gladly give way to her now.
Ms Eagle
I thank the right hon. Gentleman for giving way. A non-technical summary states:
“Strategic alternatives were those that did not involve high speed rail…Route-wide alternatives involved different layouts or operational characteristics for a high speed railway between London and the West Midlands”,
and it states, too, that “local alternatives” also need to be considered.
Mr Lansley
I am grateful to the hon. Lady. In any case, the new Standing Orders do not change the character of the environmental statement that is required. They simply make it plain that we are creating a transparent process whereby consultation must take place between the introduction of the Bill and Second Reading, and everyone must have an opportunity to see the assessment before Second Reading. In that respect, this is a clear improvement on the hybrid Bill process in respect of the prospective HS2 Bill.
I commend both motions to the House.
Ms Angela Eagle (Wallasey) (Lab)
I thank the Leader of the House for his explanation of the changes in the Standing Orders for the purposes of this hybrid Bill. He was right to observe that hybrid Bills are rare. We have not had one since we embarked on the Bill that became the Crossrail Act 2008, eight years ago. He was also right to observe that some of the rules governing this procedure are out of date, and could do with a bit of modernisation. I accept that the motions seek to do just that for the purposes of this particular hybrid Bill and no others.
The changes in the Standing Orders are being made first in respect of the electronic deposit of information, and secondly in respect of the process for consulting on the environmental statement, which will form a vital part of consideration of the Bill when it finally appears. I have no objections in principle to either of the changes that the Leader of the House is suggesting, but I should like to probe him a bit about them.
We are told that, in the coming year, a hybrid Bill will be presented to Parliament which will grant the powers that will allow the HS2 scheme to begin. Will the Leader of the House be a little more forthcoming about when we are likely to see it appear, along with the final environmental statement? Will we see it during the current calendar year, or during the current parliamentary Session? Is the Leader of the House confident that, even if the Government are able to publish the Bill in the next year, it will be completed before the next general election? After all, this is a huge and complex undertaking which has generated a great deal of opposition. If it takes as long to produce this Bill as it took to produce the much smaller and less controversial Crossrail Bill, it would not be completed until December 2016 even if we embarked on it today. Given that the Leader of the House schedules House business, it would be interesting to hear from him when we are likely to see the Bill and the environmental statement.
The publication by the Secretary of State for Transport of a draft environmental statement and a design refinement consultation document in May was a welcome development which will assist the consultation process, and we have just made a decision on the initial stages of the High Speed Rail (Preparation) Bill itself, but we still have a long and complex way to go in the hybrid Bill procedure. It makes no sense to undertake a complex consultation procedure on a complex and controversial project such as HS2, only to discover that there are plenty of opportunities for legal action and for further uncertainty or delay because the consultation mechanisms used did not comply with best practice, or indeed—as the Leader of the House hinted—with the EU directive on environmental impact assessments. If the changes outlined by the Leader of the House mean that that risk has been mitigated, I agree that we should support them. Of course it is desirable in principle for those affected to be made aware of the position in a timely fashion, and to have a chance to comment before Parliament makes a decision.
The Leader of the House explained that the HS2 hybrid Bill would be accompanied by an environmental statement. He also revealed that he expected this to run to 50,000 pages. That is the equivalent of 33 copies of Tolstoy’s “War and Peace” rolled into one, although I am sure that it will be a more interesting read. The environmental statement accompanying the Crossrail Bill was only 2,700 pages long. As the Leader of the House noted, once a copy of the statement has been deposited with each of the authorities along the route, as dictated by the current Standing Order, the weight of the documents will be over a tonne, which is apparently the weight of 17 large trees. Opposition Members agree that it is sensible, in this particular case, to make provision for the electronic deposit of the environmental statement. Reassurances were needed, but the Leader of the House very properly supplied them during his speech. I was grateful to the Leader of the House for making it clear that if a deposit location wishes to have the documents in hard copy, they will be provided by HS2 Ltd, and that the key documents will also be made available in hard copy. I hope that that will provide suitable reassurance that there will be fair access to the documents.
My right hon. Friend the Member for Holborn and St Pancras (Frank Dobson) has rightly highlighted the fact that some key components of the environmental statement are not well-suited purely to online publication. Detailed diagrams and maps are often less accessible in online form, and I appreciate—as I hope my right hon. Friend does—the fact that the Leader of the House has been able to put it on the record that those maps and large documents will be made available in all formats, including in hard copy if that is required. That will ensure that the maps are deposited in libraries and other public buildings along the route and are accessible, so people can check whether they will be affected.
It is also vital that the online publication of the environmental statement be accessible to those who wish to access it. Concerns have been raised in the past about information on both the HS2.org.uk and the data.gov.uk websites being hard to find, and difficult to navigate when located. When the statement is published, it should not be hidden on some obscure corner of the internet. I hope the Leader of the House agrees on that.
We welcome the announcement of a 56-day consultation on the environmental statement—although some speed-reading may be required, as the right hon. Member for Chesham and Amersham (Mrs Gillan) has said. That is, however, a practical and sensible proposal, although I ask the Leader of the House to ensure that this consultation will not mean that the wider consultation on HS2 will be reduced. I would appreciate the Leader of the House’s reassurance on that point.
While we support the proposals in relation to the HS2 hybrid Bill, we need to be cautious about this setting a precedent. While documents should always be published accessibly online, it is crucial that we still aim to publish and deposit hard copies for future, perhaps less complex, Bills.
Mrs Cheryl Gillan (Chesham and Amersham) (Con)
I would like answers to all the questions the shadow Leader of the House has so rightly asked about these standing orders and the alterations. This is a particularly tortuous and complex process, and because it so tortuous and complex, it is neither accessible nor transparent to the stakeholders and the people who are affected by it. They must be able to understand what is required of them. I therefore ask the Leader of the House to consider how he is going to produce explanatory notes on this hybrid Bill process and these changes to standing orders, and make them available, particularly to those people who have been part of the consultations and the community forums up and down the line, but also to the environmental organisations, many of whom contain volunteers and others who are not familiar with our practices and procedures here, and who certainly have no idea of how to navigate their way around the hybrid Bill process.
I would like to know the date when the hybrid Bill and the environmental statement will be deposited, because it now appears that we are going to have 50,000-plus pages in this environmental statement, which amounts not so much to 17 large trees, but more to 17 large white elephants, to refer to the symbol that has been adopted by many of the anti-HS2 groups up and down the line. Making that date known will enable organisations throughout the country—many of which have very scarce resources or rely on voluntary contributions—to plan how to deal with this better. I am worried that moving to electronic tabling for something as large as this may cause technical problems. What checks will be made on the IT systems of local authorities up and down the line where these documents will be deposited, to establish that those systems can take these documents and people can navigate them with ease? It is all very well talking about making documents available electronically; when I was looking at the Department for Transport’s business statement today on the No. 10 website, it was almost impossible to navigate or download it in a timely fashion. That business plan was not very long, but if that is the standard the Government set for the ease of navigating documents, it does not reflect well on their IT systems. We need to know that full checks have been made of those systems, and that they can take the documents in question.
I do not want to prolong the debate and I will not seek to divide the House on this issue—these are Standing Orders—but I would like two reassurances. First, if a significant number of the environmental organisations that will need to engage in this process ask for an extension to the 56-day deadline, I want the Leader of the House to undertake at least to listen to them and to consider an extension.
Geoffrey Clifton-Brown
The shadow Leader of the House told us that the environmental statement for Crossrail extended to some 2,500 pages. This statement will extend to some 50,000 pages. Does my right hon. Friend really think that 56 days is a practical amount of time in which to examine that amount of material?
Mrs Gillan
No, and that is why I am asking the Leader of the House whether, after taking advice from organisations that need to examine the document in detail, he will consider extending the deadline, or whether it would be possible to change the Standing Orders to that end. A standard consultation period, as under the last Government, was deemed to be 12 weeks. The Government have concertina’d it and seem to be adopting an eight-week standard, which is not satisfactory when we are dealing with something as precious as an area of outstanding natural beauty such as the Chiltern hills. Many details will need to be examined once the statement is forthcoming, and I would like to know what the various possibilities are.
At a time when we are cutting budgets and expecting local authorities and other organisations to cut back in the interests of paying down the debt left to us by the last Labour Government, what funds will be available to our local authorities to maintain and make available these documents through electronic means? There may have to be extra IT maintenance and people on duty. I need to be able to reassure my own local authorities that they will not be out of pocket as a result of something imposed on them by central Government.
I shall leave it there and look forward to hearing the Leader of the House’s response.
Mr Lansley
I am grateful to the shadow Leader of the House, the hon. Member for Wallasey (Ms Eagle), and to my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) for their contributions to this short debate.
In answer to the hon. Lady’s question, the Government intend to introduce the Bill by the end of this year. [Interruption.] My apologies—yes, the calendar year. On the question of further consideration and the progress of legislation, particularly where a hybrid Bill is concerned, these are matters for the House, but we intend to secure Royal Assent by the end of this Parliament.
I apologise for not clarifying earlier that the change to Standing Orders applies to all hybrid Bills, so it would apply to any future one in the same way. That is good because, of course, one issue we want to set out is that there is transparent clarity about the process, and we are entirely consistent with any European requirements in relation to consultation on the environmental statement. The motion on electronic deposit relates to this Bill and if such a thing were required in relation to a future Bill, a further motion would be required in order to make that permissive power available.
As for what my right hon. Friend the Member for Chesham and Amersham said, I will not reiterate the points I made about the length of consultation and the fact of the availability of the draft environmental statement for consultation now, in addition to the Standing Order requirements for a consultation later on. Taken together, when we make the comparison with the consultations required for other major projects under planning legislation, we see that this is an entirely appropriate period of consultation. She makes a good point about ensuring that those engaging with this process can do so effectively. As was the case with Crossrail, hybrid Bill information papers will outline the process. I know, as the House authorities will know very well, that the House will provide advice on petitionings.
My right hon. Friend also asked me about the costs for local authorities. We have made it clear that HS2 Ltd will cover IT costs for local authorities. The requirement on public availability is a long-standing one that this amendment does not change. The new Standing Orders before the House do not change that requirement in relation to local authorities, but, as I say, it has been clear throughout that the IT costs for local authorities will be covered by HS2 Ltd. I hope that that helps to clarify a few of the points raised in the debate, and I continue to commend the motions to the House.
Question put and agreed to.
Electronic Deposit Of Documents (High Speed 2)
Motion made and Question put forthwith (Order of 24 June),
That, in respect of any bill relating to High Speed 2 that is read the first time in Session 2013-14 and to which the standing orders relating to private business are found by the Examiners of Petitions for Private Bills to apply, it shall be sufficient compliance with:
(a) any requirement under those standing orders for a document to be deposited or delivered at, or sent to, an office of a government department, body or person if it is deposited or delivered at, sent to or otherwise made accessible at that office in electronic form;
(b) any requirement under those standing orders for a document to be deposited with an officer if it is deposited with or delivered, sent or otherwise made accessible to that officer in electronic form;
(c) any requirement under those standing orders for a document to be made available for inspection at a prescribed office, or to permit a document to be inspected, if it is made available for inspection at that office, or is permitted to be inspected, in electronic form;
(d) the requirement under Standing Order 27(4) or 36(3) relating to private business to permit a person to make copies of a document or extracts from it, if there is provided to that person, on request and within a reasonable time, copies of so much of it as the person may reasonably require and such copies may, if the person so agrees, be provided in electronic form;
(e) the requirement under Standing Order 27(4) relating to private business for a memorial to be made on every document deposited under that Standing Order, if the memorial is made on a separate document;
(f) any requirement under Standing Order 4A(1), 27A(6) or 224A(8) relating to private business to make a document available for sale at prescribed offices, if it is made available for sale at an office in London.
That this Order shall not affect any requirement under those standing orders to deposit any document at, or deliver any document to, the Private Bill Office or the Vote Office.
That any reference in those standing orders to a document which is deposited, lodged, delivered or sent under those standing orders includes a reference to a document which is so deposited, delivered or sent in electronic form.
That any reference to a document in this order includes a reference to any bill, plan, section, book of reference, ordnance map, environmental or other statement or estimate.—(Mr Syms.)
Question agreed to.
Business without Debate
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Skateboarding Southbank
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Kate Hoey (Vauxhall) (Lab)
I have great pleasure in delivering to Parliament and presenting a petition of 40,000 signatures in support of retaining the skateboarding area in the Southbank Centre in my constituency, just across the river. A number of groups have been collecting signatures, and the Save Southbank Skate Park group presented this petition to me and the right hon. Member for Bermondsey and Old Southwark (Simon Hughes) last week. Since then, there has been another petition of 20,000 signatures, which I have not yet been able to get together to present.
This is a culturally and historically important area of the south bank. The Southbank Centre has some very new plans, which everybody wants to see happening, except that it has not engaged with and involved the skateboarders, and it wants them to move to an area which would not be one that they had built up themselves. The centre wants to have its restaurants where the skateboarders are, but many people feel that the restaurants could be where it wants to take the skateboarders. Whatever the situation is, my petition is very clear: some 40,000 people, and many more, want to retain skateboarding in the south bank. May I also say that it is good to see the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Wantage (Mr Vaizey), who has responsibility for the arts, in his place.
The petition states:
To the Honourable the Commons of the United Kingdom of Great Britain and Northern Ireland in Parliament assembled.
The Humble Petition of users and fans of the Undercroft skateboard area,
Sheweth,
That it has been the home to British skaters and riders for over 40 years but is threatened by development.
Wherefore your Petitioners pray that your Honourable House take all steps to urge the Department for Culture, Media and Sport to ensure that the Southbank Centre preserves this facility in its development plans.
And your Petitioners, as in duty bound, will ever pray.
[P001189]
Lindisfarne Gospels
(10 years, 10 months ago)
Commons ChamberRead Full debate Read Hansard Text
Roberta Blackman-Woods (City of Durham) (Lab)
I thank Mr Speaker for granting this debate, which is particularly time-sensitive. It is good to be able to have the debate in advance of the Lindisfarne Gospels’ return to Durham.
Let me start by explaining why there is so much excitement in the north-east and Durham, where the Gospels are to be exhibited, about the temporary return of the Lindisfarne Gospels to our region. The book is simply a stunning masterpiece of early mediaeval European book painting and the beautifully illustrated manuscript represents the pinnacle of achievement of Anglo-Saxon Northumbrian art at the end of the seventh century.
The Gospels book was made on the holy island of Lindisfarne and was probably written between St Cuthbert’s death in 687 AD and the death of Eadfrith, Bishop of Lindisfarne, who was identified as the artist and scribe of the book by Aldred, the provost of the monastic community of St Cuthbert at Chester-le-Street. A recent study suggested a date for the Gospels of between 710 and 720 AD.
The making of the book required time, dedication and the invention of new tools and materials. With no modern technology at his disposal, Eadfrith is credited with inventing some of his own gadgets to help. Professor Michelle Brown, an expert in mediaeval manuscript studies at the University of London’s schools of advanced study, stated that Eadfrith
“was a technical innovator who invented the pencil and the light box in order to achieve his complex artistic and social vision”.
The book is the oldest surviving translation of the gospels into the English language, but it is worth recognising that the Lindisfarne Gospels’ intricate and symbolic artwork helped convey its message to those who could not read. The Gospels were created at a time of great change when Britain was a land of many cultures that were coming together into an emerging national identity. The manuscript is inspired by all the different peoples who lived in these islands at the time: Britons, Picts, Celts and Anglo-Saxons, along with those of Mediterranean and middle-eastern cultures.
Another extraordinary aspect of the Gospels is that unlike most early mediaeval books this one has come to us in almost perfect condition. That is, frankly, remarkable, considering that it was written about 1,300 years ago and the eventful journey it has been on ever since.
The first Viking raid on Britain struck Lindisfarne in 793 AD. After nearly 100 years of continuing raids, the monastic community abandoned Lindisfarne in 875, taking with them the body of St Cuthbert, the Gospels and other important relics. The Lindisfarne community is believed to have travelled around for seven years before eventually settling at the priory at Chester-le-Street, where they stayed until 995. They then moved to Durham priory with the relics of St Cuthbert, after the dead saint revealed to one of the monks where he wanted his new resting place to be.
In 1069, the Lindisfarne Gospels spent a short time back at Lindisfarne to escape the devastating raid on the north by William the Conqueror. The book was then returned to Durham. In 1104, St Cuthbert’s body and other monastic treasures from Lindisfarne were moved to the splendid new cathedral at Durham. However, in 1536 the dissolution of the monasteries was ordered by Henry VIII. The priories of Lindisfarne and Durham were broken up and the Gospels were believed to have been seized by the King’s commissioners.
By the early 17th century, the Lindisfarne Gospels were owned by Sir Robert Cotton. Cotton’s heirs presented the book to the nation and it became part of the founding collections of the British Museum in 1753. In 1973, the Lindisfarne Gospels became part of the British Library, their current permanent resting place.
This is only the fifth time the Gospels have been loaned since coming into the hands of the British Museum and later the British Library. Except for a museum evacuation during world war two, all the loans were for major library and museum tours undertaken within the past 50 years: at the Royal Academy in 1961, in Durham cathedral in 1987, and at the Laing art gallery in Newcastle in 1996 and 2000. It took nearly two years of negotiations, planning, organisation and effort to bring the Gospels to the region on the last two visits. On the first day of the exhibition, almost 3,000 people came along to see the Gospels, which demonstrates huge interest from the region.
What has happened since the last visit? A condition survey by the British Library in 2004 suggested that it might be difficult to move the Gospels again, but the findings of the survey were far from conclusive. There followed a fervent campaign, led first by the Northumbrian Association—I take the opportunity to thank the late John Danby for his work; he is much missed—and by my hon. Friends the former Member for Houghton and Washington East, Fraser Kemp, Baroness Quin, the former Member for Stockton South, Dari Taylor, my hon. Friends the current Members for Washington and Sunderland West (Mrs Hodgson) and for North Durham (Mr Jones), and me.
I first raised the question of what was to happen to the Gospels when I was elected in 2005 and put down an early-day motion on the subject. I then wrote to key agencies, including the British Library, Durham cathedral and museum services. We constantly badgered the British Library to consider a permanent move for the Gospels to the north-east, and if that was not possible we called for a temporary move. We also lobbied our Government on the matter, and the then culture Minister, my right hon. Friend the Member for Tottenham (Mr Lammy), intervened on our behalf. It was difficult, but that lobbying persuaded the British Library to commission an independent expert review into the future of the Gospels in 2006. In 2009, the panel reported back, recommending that, with great care, the books could be loaned for three months every seven years.
Mrs Mary Glindon (North Tyneside) (Lab)
I congratulate my hon. Friend on securing this important debate. She will be aware that the fabulous collection of Roman gold and silver known as the Backworth hoard is in the north-east for the first time in 200 years, on loan from the British Museum. Does she agree that such exhibitions and the fact that the Lindisfarne Gospels will be allowed to come to us every seven years shows that our region has the skills, expertise and knowledge to host our most treasured national items?
Roberta Blackman-Woods
My hon. Friend is absolutely right. I will talk about what skills the region has to support the Gospels.
The review set out the conditions and criteria that would need to be met for the Gospels to be loaned out, to preserve the quality and condition of the book. It was agreed in 2009 by the British Library and the Association of North East Councils that Durham would be the first place the Gospels visited under the new arrangements. It took some time and forbearance, but we are all pleased that all the partners exhibiting the Gospels in the north-east for three months from this weekend, especially Durham university and Durham cathedral, managed to persuade the British Library that suitable conditions in the north-east could be created to house the Gospels adequately.
The exhibition has been made possible by the close partnership working between the British Library, Durham cathedral, Durham county council and Durham university, as well as the long-standing and continued support from parliamentarians. Together with the Lindisfarne Gospels, the British Library is lending five other precious manuscripts for the exhibition, including the 7th century St Cuthbert Gospel. These manuscripts and artefacts have not been seen together since the Reformation, and they will be exhibited in the newly refurbished Wolfson gallery in the Palace Green library of the University of Durham. The university is to be commended for the simply amazing space it has created to show the Gospels.
The British Library has worked closely with the university and the cathedral to ensure that the Palace Green library meets the requirements for lending the Lindisfarne Gospels for exhibition display, and that that complies with the report by the panel of independent experts. The exhibition is the centrepiece of the festival around the Lindisfarne Gospels, and we hope that it will attract many people to the history and heritage of the region, as well as the Gospels themselves. To that end, I am grateful to the Heritage Lottery Fund for providing a grant of £487,000 to Durham university.
Guy Opperman (Hexham) (Con)
I congratulate the hon. Lady on securing the debate, and may I register on behalf of Government Members the total support of the whole House for the campaign that she and many others have conducted for many years? Does she agree that this is a good example of the north-east working together for something that we all treasure, and that there is no finer tourism opportunity this summer?
Roberta Blackman-Woods
I agree entirely, and it is excellent that we have been able to achieve cross-party support to bring the Gospels back to the region on temporary loan. I thank the hon. Gentleman for his intervention.
I thank the Heritage Lottery Fund for its grant, which has helped the university to run an outreach project alongside the exhibition. The manuscript is one of the most important books in the British Library’s collection, but it is also a treasure of world culture, and it is a symbol of our region’s proud past and the cultural legacy that it has created for the nation. That was recognised by the Prime Minister, who when visiting Northern Ireland in 2011 described the Lindisfarne Gospels as “a British national treasure”.
Jim Shannon (Strangford) (DUP)
I thank the hon. Lady for bringing this important matter to the House for consideration. She, the Prime Minister, many others in the House and I have called the Gospels a national treasure because they are one of the most important pieces of informative history in the United Kingdom of Great Britain and Northern Ireland. Does she agree that such is the historical importance of the Lindisfarne Gospels and the interest that they create across the whole of the United Kingdom that opportunities should be given to all regions, including to Northern Ireland, to see them?
Roberta Blackman-Woods
I thank the hon. Gentleman for his intervention. I agree: it would be wonderful for the people of Northern Ireland to have the opportunity to see the Lindisfarne Gospels and other important historical texts in the region too.
Bearing in mind the Prime Minister’s comments, I should be grateful if the Minister said whether his Department will continue to support the loan of the Gospels to the north-east region on a regular basis, and whether the Government will encourage the Heritage Lottery Fund to give access funding to the Gospels exhibition so that not only schools but everyone attending the exhibition can view the Gospels free of charge, just as tourists and others can do in the British Library. I believe that that is particularly important, given that the north-east is the country’s poorest region. Having to pay a charge to see the Gospels does not seem to be entirely fair. It is fantastic, however, that the British Library has agreed to lend the Lindisfarne Gospels to Durham this summer so that they can be displayed in the north-east and many people in the region and elsewhere will have an opportunity to see them.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
I apologise for being late for the debate. As my hon. Friend has no doubt mentioned, the last time that the Gospels came to the north-east they came to the Laing art gallery in Newcastle. Does she agree that enthusiasm for their return and the campaign waged by many Members for that return shows the value that the north-east places not only our cultural heritage but on the arts more broadly?
Ian Lavery (Wansbeck) (Lab)
I congratulate my hon. Friend the Member for City of Durham (Roberta Blackman-Woods) on bringing this important debate to the Floor of the House. Like my hon. Friend, I am delighted to see the return of the Lindisfarne Gospels nearly to their rightful home. I say “nearly” tongue in cheek, because really the Gospels belong to the beautiful island, Holy island, in Northumberland.
The Gospels were made on the holy island of Lindisfarne in Northumbria. The book was probably written at some time between St Cuthbert’s death in 687 and the death in 721 of Eadfrith, bishop of Lindisfarne, who was identified as the artist and the scribe of the book. The Gospels’ last visit, as my hon. Friend the Member for Newcastle upon Tyne Central (Chi Onwurah) correctly pointed out, was a tremendous success. It was in 2000, and on the first day the Gospels attracted almost 3,000 people, which was fantastic. I hope that that will be repeated or even surpassed when the Gospels come to Durham later this year.
I feel the need to raise a couple of points with regard to artefacts including the Gospels, their accessibility to people throughout the country, and fairness. The first point was touched on by my hon. Friend the Member for City of Durham when she said how difficult it was to arrange even a temporary loan of the Gospels. For many years the British Library flatly refused to allow any temporary loan of such a valuable asset to the north-east. That upset many people in our region. The people in the north-east see the Gospels as theirs and were offended by the attitude of the British Library.
Given that these treasures belong to the people of the whole country, there should be a much greater requirement on the national museums to loan artefacts such as the Gospels to regions such as the north-east. Museums do loan some artefacts and materials, but they are generally stuff, as they see it, of lesser importance. They make people jump through hoops and over hurdles in order to secure the loan of artefacts such as the Gospels, even on a temporary basis. The British Library should not expect people to travel from the likes of the north-east to London to see these artefacts. It should bear in mind the distance and the cost, and the priority of people who want to see them. We have world-class museums in the north-east region, and facilities such as Woodhorn museum in my constituency—a first-class museum that is perfectly capable of housing artefacts such as the Gospels.
My second point is a simple one. Why are the national museums in London? There are a few outposts, such as York, but generally the national museums are in London. Again, I emphasise that they are inaccessible to many of the people whom I represent and many in my region. We should be looking at outposts up and down the country. The comprehensive spending review today could spell dangerous times and possibly even the end for many museums throughout the country. Rather than seeking funds to extend or refurbish the London sites, why do the national museums not create new outposts, possibly even within existing museums, to ensure that people across the nation can see the treasures that they want to see, and experience what other people are experiencing? Why cannot the British Library, for example, establish a base in Northumberland or Durham, where items such as the Gospels could be displayed without leaving the Library’s care?
We are delighted to celebrate the Gospels’ return to the north-east and also the exhibition that accompanies them, which has provided inspiration for a number of local groups to engage with their cultural heritage. Without being too negative, I simply say that we should make sure that these cultural artefacts are accessible to people up and down the country, regardless of how much they have in their back pocket.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
It is a pleasure to respond to the debate, which was secured by the hon. Member for City of Durham (Roberta Blackman-Woods) and has been so ably contributed to by the hon. Member for Wansbeck (Ian Lavery) and other Members who intervened. The debate is about the best way to display the Lindisfarne Gospels and the work that has gone into ensuring that they are displayed regularly in the north-east.
Let me begin by taking up the challenge set out by the hon. Member for Wansbeck on the need for our national museums to work more closely with organisations and museums outside London. Having spent this morning debating the future of the Museum of Science and Industry in Manchester, which is part of the Science Museum Group, and having spent most of last week debating the future of the National Media Museum in Bradford, which is also part of the Science Museum Group, I can only say that I wholly concur with the sentiments he expressed. We need to do much more with our national museums to ensure that the regions are not seen as somehow second class, that national museums, wherever they are located, are on an equal footing with those in London, and that the quality and expertise that exist in national museums outside London and our major regional museums are as good as any to be found in London.
I certainly hear the hon. Gentleman’s point about having to jump through hoops and hope that we can continue to encourage and work with our national museums to share much more of the national collections around the country, because they are national collections and deserve to be seen by everyone across the United Kingdom. His point was well made. I think that the north-east—I might be inviting an intervention on this point—is enjoying a bit of a renaissance. For example, I was delighted by the recent decision to save the Zurbarán paintings and by the moves to turn the bishop’s palace in Bishop Auckland into a major cultural destination site.
Roberta Blackman-Woods
In praising the north-east and the wonderful facilities we have for exhibiting and conserving documents such as the Lindisfarne Gospels, it was remiss of me not to invite the Minister to visit Durham and see the exhibition himself.
Mr Vaizey
In preparing for the debate, the thought did occur to me: “How on earth can I resist if an invitation is made?” As someone who occasionally spends his summer holidays in Newcastle, I would be only too happy to visit the Gospels displayed in Durham cathedral and also to go to Lindisfarne, with a suitable escort—the hon. Member for Wansbeck clearly thinks that if he keeps his head down he will not have to come with me.
I pay tribute to the hon. Member for City of Durham for her campaigning. She acknowledged in her remarks the work done by the noble Baroness Quin when she was a Member of this House. I was delighted to hear that she is pleased with the current arrangements, but that does not mean that she will not continue to push for better arrangements from her perspective. It is important to stress that the British Library operates at arm’s length from the Government, but as the hon. Lady indicated, it is not unheard of for Arts Ministers occasionally to engage in what today is known as the nudge agenda in order to encourage our national institutions to do the right thing.
I could wax lyrical in the time remaining about the importance of the Lindisfarne Gospels. They are one of the world’s great treasures. They help us interpret Britain in a time of change. They are known the world over. Indeed, I was speaking only this afternoon with a friend visiting from New Jersey who is a great fan of the Gospels. It is worth remembering that in this age of digital technology, we have the chance to share the beauty of the Lindisfarne Gospels with not just the United Kingdom but the whole world, particularly through the British Library’s “turning pages” technology.
Mrs Glindon
My intervention is about the Minister’s mention of sharing the Lindisfarne Gospels the world over. Given that they have such massive heritage importance to the north-east and the world, is it not a shame that people will be charged to see them when they are on display in the north-east?
Mr Vaizey
I note the hon. Lady’s point, but I am delighted that schoolchildren will get the opportunity to see the Lindisfarne Gospels for free and that the Government have maintained their policy of free access to the national museums. It may be difficult at this stage to allow free access to the Gospels, but given that we are now on a seven-year cycle, perhaps my successor could look at the issue in 2020.
The key point about the seven-year cycle is that the Lindisfarne Gospels are part of the national collection and of international significance. As the hon. Member for Strangford (Jim Shannon) said, many other parts of the United Kingdom would welcome the opportunity to see them. The British Library should maintain ownership and curatorial control of the gospels, so that other parts of the country may see them in future.
As the hon. Member for City of Durham pointed out, we have made great progress. Since the Lindisfarne Gospels came into the national collection in 1753, they have been removed only five times. They were evacuated during world war two and subsequently moved as far as the Royal Academy for display. The three other times since then have also been when they have been displayed—once in Durham and twice in the Laing art gallery in Newcastle. Now, of course, they are going back to Durham.
The page openings that will be on display in Durham are the same that would have been on display had the gospels been exhibited in the British Library in London. Different generations of people from across the north-east region will be able to appreciate the artistry, craftsmanship and beauty of these unique national treasures.
As the hon. Lady pointed out, this is the first time in about 400 years that the key relics from St Cuthbert’s grave, including St Cuthbert’s Gospel, St Cuthbert’s cross, St Cuthbert’s travelling altar and the Durham Gospels, will be displayed together. They will be in place for three months. I am delighted that the Heritage Lottery Fund has found almost half a million pounds to enable the display to take place. I have absolutely no doubt that these extraordinary treasures will attract tens of thousands of people from the north-east and around the world. I look forward to making the trip up to the north-east myself.
The hon. Lady gave a detailed exposition of the journey of the Lindisfarne Gospels. It is worth recording in this Chamber that in the early 17th century they were held in stewardship by a parliamentary Clerk. How things have changed—in the 17th century, a parliamentary Clerk held the beautiful artefacts that are the Lindisfarne Gospels, while tonight the parliamentary Clerk is holding a petition to save the skateboard in the south bank.
Question put and agreed to.
Ministerial Correction
(10 years, 10 months ago)
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Education
(10 years, 10 months ago)
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Andrew Selous
To ask the Secretary of State for Education what steps he is taking to achieve gender balance in teaching in primary and lower schools.
[Official Report, 20 June 2013, Vol. 564, c. 797-98W.]
Letter of correction from David Laws:
An error has been identified in the written answer given to the hon. Member for South West Bedfordshire (Andrew Selous) on 20 June 2013.
The full answer given was as follows:
Mr Laws
The Government has made it clear that it would like to see the proportion of male trainees growing over time. The most recent Initial Teacher training (ITT) census in November 2012 showed a record number and percentage of male graduates entering ITT.
The proportion of qualified male teaching staff in nursery and primary (including lower) education increased from 16% to 19% between 2010 and 2011. Workforce figures for 2012 are not yet available.
In July 2012 the Teaching Agency (TA) launched the Primary Experience Programme, which allowed male graduates interested in primary teacher training to have 10 days’ work experience in a school. 1,000 places have been made available in schools across the country and the programme’s impact is currently being assessed by the National College for Teaching and Leadership.
The TA also regularly puts male graduates in touch with a range of inspirational male primary teachers, to get an insight into teachers' motivations, career choices, challenges and the rewards of day-to-day life in a classroom.
The correct answer should have been:
Mr Laws
The Government has made it clear that it would like to see the proportion of male trainees growing over time. The most recent Initial Teacher training (ITT) census in November 2012 showed a record number and percentage of male graduates entering primary ITT.
The proportion of qualified male teaching staff entering nursery and primary education increased from 16% to 19% between 2010 and 2011. Workforce figures for 2012 are not yet available.
In July 2012 the Teaching Agency (TA) launched the Primary Experience Programme, which allowed male graduates interested in primary teacher training to have 10 days’ work experience in a school. 1,000 places have been made available in schools across the country and the programme’s impact is currently being assessed by the National College for Teaching and Leadership (NCTL).
The TA also regularly put male graduates in touch with a range of inspirational male primary teachers, to get an insight into teachers' motivations, career choices, challenges and the rewards of day-to-day life in a classroom.
Westminster Hall
(10 years, 10 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Museum of Science and Industry
(10 years, 10 months ago)
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Westminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
It is a pleasure to serve under your chairmanship, Mr Brady.
Let me set the context for this morning’s debate. The Museum of Science and Industry in Manchester—MOSI, as it is affectionately known—is part of the Science Museum Group, which consists of five museums: MOSI; the Science Museum in London; the National Media Museum in Bradford; the National Railway Museum in York; and the National Railway Museum in Shildon, County Durham. The SMG has an international reputation. Collectively, its museums attract more than 5 million visitors every year—mainly school groups, but also individuals and families. I certainly remember taking my daughters to MOSI when they were little. I also remember my mum taking me to the Science Museum in London; that really brought science to life for me, and it was one reason why I ended up taking biochemistry and physiology as my first degree.
MOSI became part of the SMG in 2012. It is feared that today’s comprehensive spending review will announce a further 10% funding cut for the group, on top of the 25% real-terms cuts it has suffered over the last spending period. My hon. Friend the Member for Manchester Central (Lucy Powell), who cannot be here today, because she is on maternity leave, has campaigned doggedly on this issue; she even visited MOSI last weekend with her family—they start young in the Powell household. She has determined that, in 2011-12, the Department for Culture, Media and Sport grant to MOSI fell to £3.9 million from £4.88 million the previous year.
The SMG felt that if that was to be the level of the funding cut for 2015-16, the only option would be to close one of its museums outside London and to scale back provision in London. The ratio of taxpayer to commercial funding in the SMG’s existing funding model is approximately 60:40, and reversing—in fact, more than reversing—that relationship in such a relatively short period threatens the SMG’s viability. I appreciate that, in the light of the high-profile campaign to save MOSI, which has support from, among others, fellow Oldhamer Professor Brian Cox, the Minister seemed to have a change of heart last week, and the threat to our regional museums has been lifted, but I would be grateful if he could confirm that in his closing remarks.
As past and current leaders of the museums said in a letter to a national newspaper last week, the SMG museums not only hold collections of international significance, but are vital to their host cities, providing cultural, educational and economic benefits across their regions. The economic importance of Manchester’s science and innovation base cannot be overestimated, and it is confined not just to the city centre. Greater Manchester is one of the fastest growing city regions in Europe, generating £47 billion of gross value added each year, and accounting for 40% of GVA for north-west England.
That recent growth has been driven by knowledge-intensive and high-growth firms. Manchester has been at the forefront of scientific development since the industrial revolution of the 19th century. Inventions such as Samuel Crompton’s spinning wheel, which was exploited by Richard Arkwright, helped to establish Manchester as the centre of the global textile industry. More recently, a small-scale experimental machine—nicknamed “Baby”—created by Alan Turing was the first stored-program computer to run a program, and it was the forerunner of the modern computer.
There are many other famous Manchester scientists I could talk about, but I will mention just a few. They include John Dalton, who did work around atomic theory; Ernest Rutherford, the physicist; and Tom Kilburn and Freddie Williams, who commercialised Alan Turing’s work. Of course, the first commercial railway in the world also ran from Manchester to Liverpool, and MOSI is located on the site of the old Liverpool Road station.
Today is no different. With our excellent universities and the development, for example, of a regional science centre for 16 to 18-year-olds, in my constituency, Manchester is once again being seen as a world-class centre for research—a status reinforced by the Nobel prize-winning discovery of graphene. The translation from research to the commercialisation of such discoveries is aided by Manchester’s science parks. As we have seen with the development of industrial hubs, such as the digital sector in silicon valley, in California, the closer research and development are to industry, and the closer the links between them, the greater the opportunities for the growth of new, innovative knowledge-based industries.
Manchester has a world-class biotech cluster, and the digital, creative and information and communications technology sectors are growing faster than those anywhere else in the UK, outside London. The country’s second-largest media hub is based at MediaCityUK.
Those are our new industries. From those developments, our 21st-century manufacturing base will grow. MOSI is part of that. It showcases the city region’s economic and scientific strengths, as well as their development potential, promoting science, technology, engineering and mathematics and inspiring the next generation of scientists, engineers and mathematicians.
Hugh Bayley (York Central) (Lab)
I strongly support the case my hon. Friend is making. Of course, I have an interest in this issue because the National Railway Museum is based in my constituency. She has, several times, made the important link between the museums and exciting the public—especially young people—about science. She has also mentioned the museums’ contribution to a science-based economy. The National Railway Museum has established a rail academy, which is basically a training school in craft skills for the railways. Will she join me in asking the Department to provide enough money not only to keep the museums’ doors open, but to ensure that the collections are properly conserved, added to and explained to the public?
Debbie Abrahams
I am grateful for that intervention, and I wholeheartedly support what my hon. Friend says. We must see our museums not as archaic, but as part of inspiring the next generation, and we must see the potential that has for our economic growth and the regeneration of our regions.
Kate Green (Stretford and Urmston) (Lab)
I congratulate my hon. Friend on securing the debate, which is important to all of us, including you, Mr Brady. Does she agree that museums also need to be resourced to carry out outreach into communities that might be less willing and able to come through the museums’ doors? We would be very sorry if we lost the good work museums in Greater Manchester have done to reach out to disadvantaged communities.
Mr Graham Brady (in the Chair)
Order. Before the hon. Lady replies, I should clarify one point for the record, since my status as a Greater Manchester Member of Parliament has been mentioned. While I may have my own strong views outside the Chamber, my only view for these 90 minutes is that we should have orderly debate.
Debbie Abrahams
Thank you, Mr Brady. I thank my hon. Friend for her intervention, and I wholeheartedly agree with her. Outreach work is one of the things MOSI is doing. The potential threat to the work done in our schools is a real issue.
The museum hosts a range of high-profile events promoting science and innovation. They include the Manchester science festival, which, in 2012, included MOSI’s first citizen science project—Turing’s Sunflowers. The project drew participants from 13 countries and generated the largest ever data set investigating Alan Turing’s hypothesis about the mathematical patterns in sunflowers—we will all know about that, and we will be discussing it over tea later. There is also the FutureEverything art exhibition and conference—a ground-breaking mix of cutting-edge digital technology, art and music. Those are the types of programmes MOSI puts on, and they are so accessible for such a wide range of groups.
MOSI also runs tailored programmes for schools and colleges, reaching 75,000 young people a year. Through MOSI’s science, technology, engineering and mathematics network contract, high-quality, innovative projects are delivered to volunteers and schools. Over the past year, the STEM ambassador programme has placed ambassadors in 140 schools in Greater Manchester, working with 450 teachers and providing at least 100,000 instances of engagement with pupils in face-to-face activity.
Of course, we must not forget the under-six programme, which allows the children of my hon. Friend the Member for Manchester Central and others to explore and find out first hand about the magic of science.
I am looking forward to visiting the exhibition on the brain that is coming to MOSI next month.
Barbara Keeley (Worsley and Eccles South) (Lab)
My hon. Friend is making excellent points, and I congratulate her on securing the debate. In our debate last week, we focused on the point that the funding threat to a much loved museum is a matter of huge concern to people in the region who work in science and engineering, such as the astrophysicist Tim O’Brien. He has said that he has no doubt that places such as the museum make our future scientists. Does my hon. Friend agree that it is vital to our future productivity, as well as providing excellent learning outside the classroom?
Debbie Abrahams
I totally agree with my hon. Friend. The activities and exhibitions can inspire the next generation of scientists and engineers, as I have mentioned.
We must not forget that MOSI also directly makes a key contribution to the region’s economic prosperity. A recent study of its economic impact shows both direct and indirect impacts. It is one of the top two visitor attractions in Greater Manchester and generates a direct gross value added benefit of more than £7 million as an employer and through procurement, but there is also nearly £28 million in off-site expenditure, generating a GVA of £8 million. MOSI’s development plans have the potential to increase those impacts.
As I have mentioned, after the 25% real funding cut in the last spending round, there is the prospect of a further 10% cut in the comprehensive spending review this afternoon, and the SMG has made it clear that if that happens a tipping point will have been reached and activity will have to be cut dramatically. That will include the closure of one of its regional museums. SMG has proposed a different approach. It has suggested, for example, moving the group from the responsibility of the Department for Culture, Media and Sport to the Department for Business, Innovation and Skills, and protecting the current funding level for both revenue and capital. That would provide a foundation on which the group would seek further major revenue and capital investment from the private sector. I should be grateful if the Minister commented on those proposals, as well as confirming that the CSR does not threaten MOSI or the free access to museums introduced by the Labour Government. To introduce such a threat would, as my hon. Friends have said, be myopic, to say the least, and bring into question the Government’s commitment to fairness, growth and the regions.
I am immensely proud of Manchester’s contribution to the world’s science knowledge base. Through our entrepreneurs and industrialists, the applications of that knowledge have changed how we live. MOSI not only inspires future generations to become the new Geim, Novoselov, Turing or Dalton, but, as curator of those achievements, protects our cultural heritage and contributes to our cultural identity. That is something that we should honour and celebrate, not destroy.
Andrew Gwynne (Denton and Reddish) (Lab)
It is a pleasure to see you in the Chair, Mr Brady. I accept your strictures imposed earlier—you are certainly independent—but you are also a Greater Manchester MP, and it is always pleasing to see one of those reach the heights of chairing Westminster Hall debates.
I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this important debate. I first visited the then Greater Manchester Museum of Science and Industry in 1983, shortly after it moved to the historic Liverpool Road station site, in Castlefield. The museum visit was with 3rd Denton (Wilton street) cubs, and I remember being mesmerised as a 9-year-old boy by the big engines, the turbines, the wheels, the pistons, the smell of the smoke and the steam. It was really alluring and gave me a lasting interest in science, technology and innovation.
Over the years, the museum has grown, first encompassing the neighbouring Manchester Air and Space Museum and then gradually filling the whole of the Liverpool Road station site. For those who do not know, the Liverpool Road station is the terminus of the Liverpool and Manchester railway, which opened in 1830, and the museum buildings are therefore those of the world’s first passenger railway station, here in Manchester—or rather there in Manchester, since we are in London, England’s second city.
Other Manchester firsts housed in the museum include, as my hon. Friend said, Baby, the first programmable computer, which is so large it would probably fill this Chamber, but is about as powerful as a pocket calculator. Nevertheless, it is a Manchester first. There are also Rolls-Royce cars. Of course, it was in Manchester that Mr Rolls met Mr Royce and founded the company that continues to produce those cars. The huge emphasis on science is fitting, in the city where the atom was first split. The museum commemorates king cotton: Manchester is of course Cottonopolis, because cotton was the industry that the city’s wealth was built on. However, it also recognises the downside to rapid, uncontrollable growth—particularly the cholera epidemics of the 19th century, with the campaign for clean water and proper sanitation. There is even an opportunity—I do not know whether you have done this, Mr Brady—to walk through a reconstruction of a Victorian sewer, with the smells included.
The Museum of Science and Industry, better known as MOSI to its regulars over the years, is a much loved local museum, and I have fond childhood memories of it. One of the best Christmas presents that I ever had was when I was 12. My grandad’s friend was a friend of the museum, and he bought me membership, so I, too, became a friend of the museum. Back then, people had to pay to get into museums, but a perk with the friend membership badge was to get in free, so I spent many a good time there. More recently, I have enjoyed taking my children there. I think that such experiences are the reason that Mancunians would consider it a tragedy for the museum to close; that is why we breathed a collective sigh of relief when Ministers assured us, last week, that that would not happen.
Not only is MOSI hugely popular with visitors in the north-west and across the north of England; it is also an iconic national museum. We should not be tempted to call it a regional museum, because it is not. It is a national museum based in the regions, and we should emphasise that. It has uniquely interesting sections about the history of the industrial revolution and has helped to garner the inventiveness of our science base in the north-west. That scientific base is not just a thing of the past. As my hon. Friend mentioned, graphene is a modern Manchester invention and an example of the important role that science has always had, and will continue to have, in the economy of Greater Manchester and the north-west of England.
It is therefore a matter of some concern that in the past few months sources inside the museum’s parent company, the Science Museum Group, have claimed that the future of MOSI is under threat because of funding problems. As a result of the previous Labour Government’s move to give free access to important national collections, visitor numbers at MOSI have shot up. Last year, the museum welcomed more than 800,000 visitors, and it is rightly regarded as a major national centre for industrial heritage and innovation.
It is beyond argument that MOSI is a vital part of Manchester and that it provides cultural, educational and economic benefit throughout the region. It is an invaluable part of the local and regional economy, attracting tourists and prestige, and, as we heard from my hon. Friend, it supports many jobs. Surely, there is a wider principle that the benefits of tax revenue gathered nationally should be spread, so that everyone across the country can benefit from them.
Everyone pays taxes, so surely there is a case for the benefits of tax revenue to be spread as far as possible around the country. That has been demonstrated by the BBC, with the excellent move of a large part of its operation from London to Salford, spreading more of its economic impact outside the M25. Surely, our national museums should operate on the same principle. Everyone should have access to our national collections—a point firmly made by my hon. Friend the Member for York Central (Hugh Bayley).
Kate Green
My apologies, Mr Brady; I would not for one moment impugn your independence, but it is a great pleasure for us all to see you in the Chair this morning.
Will my hon. Friend join me in paying tribute to the Imperial War Museum, which of course has located the Imperial War Museum North in my constituency? It is a national museum in the regions, and it is very well visited and much loved.
Andrew Gwynne
My hon. Friend is absolutely right. The Imperial War Museum North is another national museum based in the regions that is bringing into Trafford wharfside, and into an iconic building at that, visitors who probably would never have seen those collections in the Imperial War Museum in London. We enjoyed a visit a couple of years ago to see the “Horrible Histories” exhibition, which my kids found absolutely fascinating. We should continue to trumpet the benefits of having national museums and collections in the regions, so that we all may benefit from learning from our past and looking towards our future.
The speculation about MOSI’s future was met by uproar from residents across Greater Manchester and the north of England. As we can see from the number of colleagues here today, the speculation has been met by real concern from most Greater Manchester politicians. The suggestion that MOSI would be affected by the Science Museum Group’s problems led me to write to the Secretary of State for Culture, Media and Sport. In my letter, I outlined that the acclaimed opening ceremony of the 2012 Olympics included a stunning segment on Britain’s development into the global industrial power that it is today. Danny Boyle is rightly lauded for portraying the history of Britain not just as a succession of monarchs, but as a land built by proud working men and women.
Life during the industrial revolution may not have been pleasant for some—indeed, it almost certainly was not—but surely it is just plain wrong to allow access to that history to be lost. I pay tribute to all those involved in MOSI’s development from the early days in 1969, when the then North Western Museum of Science and Industry opened in a temporary venue on Grosvenor street. It was later linked to the university of Manchester institute of science and technology, and then through the superb vision and drive of the former Greater Manchester council, which was instrumental in moving the museum and developing it on its current site, the museum turned into what it is today. The museum, along with the transformation of the county’s once polluted river valleys, is probably the former Greater Manchester council’s best lasting legacy. I thank the many volunteers and friends of the museum who have worked hard to keep things ticking over in the good years and the bad.
People in Manchester and across the north-west, and indeed across the country, are incredibly proud of our free museums, so it is of some small comfort to hear the DCMS announcement on the funding settlement for 2015-16, as no museums should close. Clearly, like MOSI, we await confirmation of the actual details of the funding package, and until those details are received, we cannot be certain of the structural deficit that MOSI will face or of which options will have to be considered. Opposition Members certainly hope that the Government’s culture funding cuts will not result in the closure or downgrading of this outstanding Manchester institution or of parts of it.
There are a number of concerns about the Science Museum Group and MOSI that I would like the Minister to address. Whatever financial problems are facing the Science Museum Group, particularly the London Science Museum, most of my colleagues here today would agree that they should not affect MOSI.
Of course there remains the question of what to do with the structural deficit. The Science Museum Group is currently £2 million in the red, which is projected to go up to £4 million, and potentially even to £6 million, depending on the CSR announcement today. Recent figures show that between 2010-11 and 2014-15 Government funding for the Science Museum Group, including MOSI, has been cut by 25% in real terms. So far, the Science Museum Group has undertaken a number of cost-cutting initiatives, including redundancies across the entire organisation, to try to make the necessary savings. Although it now seems that there will be only a 5% cut to the Science Museum Group’s budget, not the 10% cut that was envisaged, it will still have a significant impact on the budgets and savings that will have to be found.
Mr John Leech (Manchester, Withington) (LD)
I thank the hon. Gentleman for giving way, and I congratulate the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this debate.
The Minister’s announcement that the cut will be only 5%, rather than 10%, is very welcome, but it will clearly have an impact on the long-term financing of the Science Museum Group and, in our case, MOSI. Surely, we ought to be considering constructive ways to bridge that gap. Some 5 million people visited the museums last year, and the budget deficit is likely to be in the region of £4 million, which is the equivalent of 80p per visitor over 12 months. I am not suggesting for one second that we ought to be charging entry, but surely we ought to be able to generate more money from those 5 million people who are going through the doors, as well as generating more money, particularly in Manchester, from sponsorship by large businesses such as the airport. From Manchester’s perspective, that would be seen as businesses supporting our local museum.
Andrew Gwynne
I absolutely would not support anything that might lead to the introduction of charges at MOSI, because I think that would be a very retrograde step. Where I agree with the hon. Gentleman is on the need for a longer-term vision for the museum, whether that is through charitable giving or through greater sponsorship. I am cautious about the airport, which is not a cash cow for every funding cut in Greater Manchester. Indeed, the Manchester Airports Group already contributes greatly towards the arts in Greater Manchester, most notably through its sponsorship of the Hallé orchestra. I am not sure that the Manchester Airports Group can for ever write blank cheques to fill every funding cut that comes Manchester’s way.
Barbara Keeley
My hon. Friend is making a great case, and I support what he says about charging. I note that a parent from the constituency of my hon. Friend the Member for Stretford and Urmston (Kate Green) started the Facebook group “Save The Museum of Science And Industry Manchester.” In her appeal, she made this specific point:
“It is one of the few places left…suitable for everyone from babies to older people.”
She makes the important point that, because the museum is free
“this means that it is accessible to everyone, not just those who can afford to go on expensive days out.”
Does my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) agree with her? In these days of cuts and austerity, when families are suffering and wages are going backwards, we must think of having such days out. Young people can learn a lot from a free day out, particularly one with their family.
Andrew Gwynne
My hon. Friend is absolutely right. Not only is the museum free, it is fun. That is why people want to keep going back. MOSI is a hands-on museum. There are not lots of exhibits in glass cases; there are lots of things that people can touch, feel, do and play with, which can spark imagination. MOSI is a great fun day out for children and adults of all ages. We must develop a clear vision of what the museum wants to do in the future.
Hugh Bayley
On charges, the National Railway Museum has been part of the Science Museum Group since its inception and it is instructive to consider what happened there. When charges were introduced, the number of visitors fell to 300,000; when charges were removed in a number of stages by the previous Labour Government, attendances rose again and are now at the 1 million mark. When a museum does not impose entry charges, people pay much more in the cafeteria and the shop. There are marketing opportunities for museums, which are stronger and better if they remain free and open to the public.
Andrew Gwynne
My hon. Friend makes a good point. Total visits to MOSI in 1997 numbered 235,000. In 2011-12, they peaked at 818,000. That shows the benefit of free access to collections at our national museums in the region.
On visitor satisfaction, 99% would recommend MOSI. Not only is it accessible to all, it is obviously enjoyed by all but the miserly 1% who clearly do not think it is a good day out. Who would dream of 99% visitor recommendations? In 2012-13, 63% of visitors to MOSI were families and 10% educational groups. Only 27% were general admissions of independent adults. I am sure that it is exactly the same in York. Our national museums benefit families who are struggling to make ends meet in the cost-of-living squeeze by giving them a free, fun day out on their doorstep in central Manchester, York or Bradford.
I press the Minister to give firmer reassurances about the future of MOSI. Surely, we must make the case for national museums across Britain, not simply focus on the ones based in the capital city. As we have heard, MOSI is a world-class museum. Surely, we should fight to protect a cultural asset not just for the north of England or for Greater Manchester, but for Britain as a whole.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this debate. As ever, she reminds us that all those cold, chilly evenings canvassing in the Saddleworth snow for a by-election were worth every minute, because of the role that she plays in championing our area. It is a pleasure to see you in the Chair, Mr Brady. I must ask your indulgence and that of Front-Bench Members; I may not be able to stay for the whole debate, due to my Wednesday responsibilities for Prime Minister’s questions, to which we are all looking forward today.
Along with many of the Members here today, I spoke about MOSI in last week’s Opposition day debate. The passion in the Chamber that day demonstrated the strength of feeling about the preservation of one of our most treasured cultural institutions. I will not repeat that speech—it is a particularly good one, if anyone has not had the chance to read it—but I will summarise it by saying that for me, MOSI is the soul of our city.
I received a huge response to that speech. Many people e-mailed me to tell me that reading it made them want to go visit MOSI. It made me want to visit MOSI as well, but the duties of a Member of Parliament during summer and spring weekends meant that I could not get there this weekend. However, my wife and daughter visited MOSI this Monday. I rang them on Monday evening and spoke to my two-year-old daughter, who is usually obsessed with iPads and other modern technology. She had been captivated by a typewriter and a rotary-dial telephone.
Kate Green
My hon. Friend highlights how important it is for girls as well as boys to be able to enjoy the experience of visiting MOSI. We have a huge wish for more girls and young women to enter science and technology careers. MOSI can be a good early introduction for them.
Jonathan Reynolds
I absolutely agree. I mentioned in my speech last week that I take Bess to MOSI and tell her about invention and how she can be an engineer because of the opportunities available. One can see a flicker of inspiration in children’s eyes. It is fantastic for boys and girls, and it is a particularly good way to illustrate to people the kinds of career and opportunity that everyone should be able to follow.
MOSI also illustrates how far contemporary technology has come and gives people a sense not only of where we were in the past but of where we are now. I welcome what the Minister said last week to guarantee its survival. To be honest, though, I think that most people are bewildered that there should ever have been any doubt about the future of such an important asset. MOSI is particularly important to my constituents and me, and the questions about its future highlight the struggle for survival and the worry of many museums throughout the country. It is great to see my hon. Friend the Member for York Central (Hugh Bayley) here making those points too.
Government figures released earlier this year show that local authority funding for museums fell by 11% in 2011-12. As local government grants make up half of all public funding to the arts, that is particularly alarming. If the cuts to local government announced today are the 10% reported, given that things are already at breaking point, there must be doubt about the long-term survival of some of our most treasured national museums. It illustrates how big and painful the cost is of this Government’s failure to get the economy going over the past three years.
Barbara Keeley
My hon. Friend is supporting and extending the case that we are making for MOSI. He is right to highlight the role played by local government. I pay tribute to my hon. Friend the Member for Blackley and Broughton (Graham Stringer), who was instrumental in establishing the museum. Manchester city council bought part of the site for £1. When I was a Trafford councillor, Trafford also established the Imperial War Museum. Salford council has taken the risk of buying the docks to establish the Lowry. If not for that, our cultural heritage in Manchester would not exist as it currently does. Does my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) agree about the importance of local government? Those who cut local government are pulling the rug from underneath our city council leaders and other leaders in Greater Manchester, who may not be able to do such things in future.
Jonathan Reynolds
I could not agree more. As an MP and a former councillor, I always say that local government should be just that—not local administration, but local government. The legacy that we can point to in Greater Manchester, and some of the exciting work that we are doing for the future, is a strong sign of that, but I worry that soon councils will be able to do nothing but try to deliver their statutory responsibilities, because there will not be enough funding to go around.
Julie Hilling (Bolton West) (Lab)
To follow on from that point, it is not just about our national museums in the regions. It is also about places such as Bolton Museum and other museums in our various towns that have been supported largely by local authorities over the years. They are crucial to young people’s understanding, and particularly their involvement in science and technology, as well as to expanding their views of the world and their heritage.
Jonathan Reynolds
I agree. They are so important to us that given the financial situation, I think that we will have to consider different ways of funding them in the long term to guarantee their existence. However, I echo the point made by my hon. Friend the Member for Denton and Reddish (Andrew Gwynne): I am completely opposed to bringing back charging to enter museums. Free museum access has been an outstanding success, and there should be consensus that it must always continue.
I have done a little bit of research in advance of this debate. As the Minister knows, the Opposition are always here to help with constructive suggestions about this Government’s problems. It appears to me that increasingly, a lot of institutions are turning to the internet to supplement their funding. A range of organisations from start-up businesses to non-profit organisations, and even councils, are turning to what is known as crowd funding as a cheap, easy and accessible way to raise funds. Clearly, crowd funding is no silver bullet, but I am glad that our shadow Culture, Media and Sport team has said that it will examine what opportunities it might present.
Two of the world’s most famous museums have used crowd funding successfully to raise money to buy specific pieces or fund exhibits. The Smithsonian in Washington, for example, is looking for $125,000 to put on the world’s first exhibition of yogic art. To be honest, I have no idea what that is, but it sounds extremely exciting. Similarly, the Louvre runs an annual crowd-funding campaign known as “Everyone’s a Patron” to ask members of the public to help purchase particular pieces of art. Since the campaign started in 2010, it has funded the purchase of “The Three Graces” and a collection known as “The Treasures of Cairo”, and this year it raised €800,000 to complete a set of 13th-century ivory figures, which now form the only complete set anywhere in the world. Given the huge amount of public support generated by the campaign to save MOSI, maybe we could harness some of it to bring our people even closer and get them more involved in MOSI’s future to secure its long-term success.
Clearly, that funding model would not solve every problem, but I wonder whether there is a role for the Government to support such campaigns. It could be a way for the Government to support not just museums but a whole range of the arts, start-up businesses or practically any other project that we could imagine.
I again thank my hon. Friend the Member for Oldham East and Saddleworth for securing the debate. I also thank my constituents for the way in which they have got behind the campaign, the Manchester Evening News for its leading role in the campaign to save MOSI and the Minister in anticipation of what I am sure will be his reassurance. In my speech last week, I said that it would be unconscionable if we ever lost MOSI, and I stand by that entirely; I am grateful for the platform given to us as Members of Parliament for Greater Manchester to assist in some way in the campaign.
Dan Jarvis (Barnsley Central) (Lab)
It is a pleasure to serve under your chairmanship, Mr Brady.
I congratulate my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) on securing the debate on the future funding of the Museum of Science and Industry in Manchester. She has clearly articulated the relevance and importance of MOSI in Manchester, and I am sure that people throughout the country share her passion for this award-winning museum. It has real historical, scientific and educational value.
We have had a good debate, with several useful contributions. We should mention my hon. Friend the Member for Manchester Central (Lucy Powell), although she is not present today. She has been an articulate and determined campaigner for MOSI, so it is right to place recognition of her work on the record.
My hon. Friend the Member for Denton and Reddish (Andrew Gwynne) mentioned his first visit to the museum while still in the Cub Scouts in 1983. He spoke with passion about the scientific and industrial heritage of Greater Manchester. He rightly pointed out that MOSI is a national museum that is based in the regions.
My hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) again stated his strong support for MOSI. He said that it was part of the soul of Manchester, and he rightly pointed out the important role of local government in supporting our cultural heritage, a theme to which I shall return.
We had some useful interventions from my hon. Friends the Members for York Central (Hugh Bayley), for Worsley and Eccles South (Barbara Keeley), for Stretford and Urmston (Kate Green) and for Bolton West (Julie Hilling), and from the hon. Member for Manchester, Withington (Mr Leech).
Today’s contributions and those made in recent weeks as part of the wider debate are testimony to the importance of culture and heritage throughout the country. Last week’s Opposition debate, with contributions from Members of all parties, illustrated clearly the economic, social and educational worth of culture, in addition to its intrinsic value. Significantly, we received assurances that the Department for Culture, Media and Sport will remain in its existing form, as well as assurances from the Minister, which we accept in good faith, that the Science Museum in London should not have to close, and nor should the National Railway Museums in York and Shildon, the National Media Museum in Bradford or MOSI in Manchester.
Last week, I also asked the Minister to confirm whether the same assurances applied to the National Coal Mining Museum in Wakefield, which is also funded through the Science Museum. I would be grateful if he clarified today whether he is able to extend his recent assurances to include the National Coal Mining Museum. Such assurances would be most welcome and greatly appreciated.
In spite of the Minister’s recent and welcome assurances, I am sure that all Members agree that the devil will be in the detail. As I am sure the Minister acknowledges, our museums face challenging times, which is why we must continue to emphasise just how important culture and heritage are to our society. More needs to be done to secure the long-term financial stability of our museums. If we do not do something, the accumulated loss of income could seriously damage our culture and heritage sector.
My hon. Friend the Member for York Central last week described our museums as
“like fantastic flowers in a garden”—[Official Report, 19 June 2013; Vol. 564, c. 960.]
and said that we must “keep feeding their roots”. I agree with him. Museums inspire and educate while they entertain; beyond that, they are of course of important economic value. More than 4 million people visited one of the Science Museum Group institutions last year, attracting tourists from inside and outside the UK to places that they might not normally visit, and benefiting local economies, even where museum entry is free.
MOSI is a prime example of the importance of universal access to museums, and it is an integral part of Manchester’s cultural offer. During the industrial revolution, Manchester was at the centre of the textile industry in this country, and MOSI celebrates that history and the city’s technological development. MOSI provides an estimated £8 million in gross value added to the local economy and attracts more than 800,000 visitors each year, including more than 100,000 school visitors.
Andrew Gwynne
Is it not important to recognise as well that MOSI is an integral part of the Castlefield urban heritage park in Manchester city centre? The park is also the home of Manchester’s Roman fort, Mamucium, the birthplace of the city, and the site of the Bridgewater and Rochdale canals, which brought coal into the city to fuel the industrial revolution.
Dan Jarvis
My hon. Friend is right to point out that MOSI is part of a wider collection of cultural and heritage offers in Greater Manchester. In the near future, I hope to have the opportunity to go and see some of the incredibly important cultural and heritage institutions in that part of our country.
It is also important to highlight MOSI’s work in education, which is instrumental in inspiring young people to consider careers in science and industry, fields that are crucial to our country’s future scientific innovation. As already mentioned, since 2009, MOSI has hosted science, technology, engineering and mathematics ambassadors in schools. The museum provides valuable scientific inspiration to the young people of Greater Manchester and much further afield.
A great supporter of museums as a platform to motivate and educate, Professor Brian Cox, has stated recently:
“Knowledge and inspiration are classless.”
I agree, and, even more so, that access to the institutions that provide such knowledge and inspiration should be classless, too.
It is right that society should invest in museums. They are of real social benefit, but we must help them to develop practical, dynamic and innovative ways to ensure the future success of such organisations. That must include funding. The hon. Member for Manchester, Withington discussed that in his intervention today and in his speech last week, and my hon. Friend the Member for Stalybridge and Hyde mentioned crowd funding and other potential sources of revenue. Museums and government, national and local, need to look at innovative ways of securing funding for museums such as MOSI.
Private and public funding are not mutually exclusive, and much can be gained from the diversity of multiple funding streams, as our cultural sector already shows. In difficult economic times, however, DCMS, local government, the Arts Council and the museums themselves must focus on creating an innovative offer, one that will sustain our museums not only for now, but for the next generation. Museums have done great work in recent years to reinvent themselves, integrating new technology, new experiences and attracting new audiences.
Andrew Gwynne
My hon. Friend is absolutely right about the need to look for alternative sources of funding, but does he agree that it would be a retrograde step to revert to some form of charging at museums such as MOSI, even at a level of 80p, as suggested by the hon. Member for Manchester, Withington (Mr Leech)?
Dan Jarvis
I assure my hon. Friend that I completely agree that it is not in our interest—the interests of museums and of the people we represent—to go back to what were, frankly, the bad old days, when only those people who could afford it went to our museums. That is why it is vital for us to campaign to safeguard the right of all people, and of young people in particular, to be able to visit those incredibly important cultural and heritage sites. I believe that the Minister agrees, though I would be grateful for his assurances. I completely agree with my hon. Friend that the introduction of free entry to museums was a significant achievement that we should never row back from.
It is important that museums look innovatively at what they can offer the public. They have done great work on that in recent years and have integrated new technology and new experiences to reach out to new audiences. They must work in a wider and stronger network of partnerships with other cultural and educational bodies, such as libraries, schools, colleges, universities, and arts and community centres. They also need to work with the people who visit them and those who do not yet do so—the 50% of the country that did not go to a museum or gallery last year.
Museums help create a sense of history, a sense of community and a sense of place by preserving our culture and as a visible sign of our civic pride and social values. That is why maintaining and developing our regional museums should be a priority for any Government. In that context, I would like to take the opportunity to ask the Minister an important question that I have asked him before, and which I asked the Secretary of State during parliamentary questions last Thursday. In these challenging economic times, what work is the Department for Communities and Local Government doing with the Arts Council and local authorities in the regions to support the arts, culture and heritage? I would be grateful for a response when he winds up the debate.
Artistic and scientific brilliance can flourish anywhere, but talents need to be honed and people need to be inspired. That can happen only if people are given the opportunity to experience and explore their own history and culture. This week, a new Lowry exhibition opens at Tate Britain and displays some of the distinctive northern industrial landscapes that the Stretford-born artist painted over his lifetime.
Jonathan Reynolds
Lowry may have been Stretford born but, as my hon. Friend may know, for a substantial portion of his life, he lived in Mottram in my constituency. We are extremely proud of him.
Dan Jarvis
My hon. Friend is right to be extremely proud and I am grateful for his important clarification. He will agree that we need to ensure that the next generation of children has every opportunity to succeed. It will never be acceptable to tell a child that they were born in the wrong decade, and that is why a new museum will open tomorrow in my constituency. Experience Barnsley will enable visitors to discover the history of our town through local perspectives. Such initiatives can help ensure that each person’s potential is fulfilled, and that no future L.S. Lowry, Barbara Hepworth, Marie Curie or Stephen Hawking is missed because they did not have cultural and educational opportunities near where they grew up.
Protecting free entry to our museums and securing the future of our regional museums should be a priority. Equal access to museums should be a right for all, not a privilege for the few. That is why the Labour Government ensured that entry to museums and galleries would be free for all. In the 10 years following the introduction of that policy, visitor numbers have more than doubled to 18 million a year. We must continue to encourage people to visit these wonderful institutions.
Our museums are essential to people all over the UK—socially, educationally and economically. To continue to thrive, they must continue to reinvent themselves, drawing new crowds through their doors. They must work with national and local government and others to develop innovative methods of funding. Our museums can continue to go from strength to strength and our society with them. We must help make that happen.
The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mr Edward Vaizey)
I am pleased, Mr Brady, to speak under your chairmanship in this important debate. As many hon. Members have said, it is a huge honour to be presided over by a Greater Manchester MP and chairman of the 1922 committee. You are the shop steward of our Back Benchers, which adds to the lustre of your chairmanship this morning.
Many hon. Members have talked about the impact of the Museum of Science and Industry on their lives and those of their constituents. Before I go into the detail of some of the excellent contributions, it may be worth pointing out that my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley), who was here this morning as the Whip, told me before the debate started that there is a photograph of her aunt, Connie Varty in the museum, taken when she was a young woman working as an engineer for Beyer Peacock & Co. Almost everyone has had some impact from the wonderful museum.
I shall begin in the traditional but no less heartfelt way of thanking the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) on securing this debate on the future funding of the Museum of Science and Industry in Manchester. I welcome her contribution and those of the hon. Members for Denton and Reddish (Andrew Gwynne), for Stalybridge and Hyde (Jonathan Reynolds) and for Barnsley Central (Dan Jarvis), all of whom are concerned about the museum’s future.
There has been a strong reaction in the last three weeks to reports that the museum may be in danger, and it is clear how much it is valued. I will use my contribution to scotch the rumours that have swirled around. First, the Museum of Science and Industry is in no danger of closing, nor are the museums in York or Bradford. At lunchtime, I will meet the chairman and directors of the Science Museum Group to discuss the future. I have made the point in many debates that we cannot be complacent. The challenge—I will come to this in a moment—is not simply to keep the museums open but, as was echoed in many of the contributions to the debate, to ensure that they are enhanced and improved to sustain their future for many years to come.
I come to the “scotching the rumour” section of my speech. A few weeks ago, someone—I do not know who—tweeted that the Department for Culture, Media and Sport would be abolished as part of the comprehensive spending review. I want to scotch that rumour. The Department is a metaphor and an adornment to the Government. We have moved to better offices, and they cost £2 million a year less than previously. One gets more for less with DCMS. We are also delivering the main growth programme for the Government by rolling out superfast broadband.
Rumour No. 2 concerns the introduction of charging for our national museums. I was berated in no less an august journal than The Spectator for a mildly flippant remark saying that when tourists visited our museums for free, we would fleece them in the cafes afterwards. The hon. Member for York Central (Hugh Bayley) said that more elegantly, and the point was well made that visitor numbers have doubled at the Museum of Science and Industry, and many visitors who enter free spend money within the museum. The commercial case is that charging would enable museums to raise revenue, but they would lose a significant amount of income from cafes, shops and other areas where visitors spend money. It is not a zero-sum game, and charging would not simply increase revenue by the amount charged. That is the commercial reason for introducing charging, but I accept the moral case that museums are national collections that should be open to the public free for all.
Andrew Gwynne
I am grateful for the Minister’s clarification and greatly reassured. Do I take it that he completely rules out the suggestion of his hon. Friend the Member for Manchester, Withington (Mr Leech) that people should perhaps pay 80p to visit MOSI in future?
Mr Vaizey
I do not want to enter a row between the hon. Member for Denton and Reddish and my hon. Friend the Member for Manchester, Withington (Mr Leech). I have made the Government’s policy as clear as possible.
I turn to rumour No. 3. There is no intention of transferring the Science Museum Group to the Department for Business, Innovation and Skills, but I certainly welcome that Department’s interest and think there is an opportunity for a deeper and more profound partnership between the two Departments in supporting the Science Museum Group. There is no mystery to the fact that the Minister for Universities and Science is a huge admirer of the Science Museum Group, and he recognises that it is without doubt the most formidable attraction for young people in drawing them into the world of science. It is therefore important, for a Government who take science seriously and want to increase the number of young people who choose careers in science, to clearly support the Science Museum Group’s education work. I will be holding discussions with BIS to see what support it wishes to bring to the organisation.
On rumour No. 4, I scotch any suggestion that we would allow the National Coal Mining Museum to close. That is certainly not our position, and it, too, will remain open. The point of bringing the Museum of Science and Industry and the National Coal Mining Museum within the Science Museum Group was to enhance their offer.
An important point of principle to get across—I thought of this when I was hearing the excellent contributions by the hon. Members for Oldham East and Saddleworth, for Denton and Reddish, for Stalybridge and Hyde and for Barnsley Central—is that we have to get out of the mindset that somehow the regional museums are second class, or that the national museums in the regions are somehow second class to the national museums in London. In principle, if a museum had to close, there is no reason why the London branch of the national museum should not be on the same page. It is really important to say that the museums in York, Bradford and Manchester have as much status and right to survive and thrive as the museums in London.
As has been pointed out time and again, the visitor numbers and attractions at MOSI are second to none. The museum is home to many important buildings from our industrial heritage, and it is uniquely placed to explore the meeting of science and industry and the beginnings of the modern world—the industrial revolution, of course, started in Manchester—in a way that has meaning locally, nationally and internationally. It promotes the best of new technology and curates the Manchester science festival and the FutureEverything conference and exhibition, which I visited last year and experienced a groundbreaking mix of cutting-edge digital technology, art and music. MOSI is at the forefront of science education. It delivers innovative projects and a high-quality service for schools and volunteers through the Science, Technology, Engineering and Mathematics Network—STEMNET.
Since MOSI joined the Science Museum Group, investment has been made in the public programme and events, in improving the retail and catering offer and in attracting visitor donations. SMG’s long-standing relationship with the Wellcome Collection has also established a new relationship with MOSI that will culminate in the opening of a special exhibition next month.
I hope that I have left hon. Members in no doubt as to my personal support for the museum in Manchester, but I have to thank the director of the Science Museum Group. Since he made his concerns known on my birthday, on 5 June, I have had a meeting with MPs from Bradford and an Adjournment debate, and many contributions were made during the arts debate in the main Chamber. We now have the Westminster Hall debate, and I am still looking forward to my special appearance in front of the Select Committee on Culture, Media and Sport, so he has certainly helped me fill my time and build up valuable experience in parliamentary debating.
To summarise what has happened, on 17 June, I met the hon. Members representing the Bradford areas, and my hon. Friends the Members for Keighley (Kris Hopkins) and for Shipley (Philip Davies), as well as the director of the Science Museum Group, in advance of the Adjournment debate held by the hon. Member for Bradford West (George Galloway). We had a productive discussion and agreed that a working group representing the Science Museum Group, local MPs and Bradford council should come together to look at securing a sustainable future for the National Media Museum. That has now become known as the five-year plan. During the Opposition day debate on the arts and creative industries on 19 June, the Secretary of State for Culture, Media and Sport also made it clear that the reduction in resource funding for national museums in 2015-16 would be held at 5%.
There is also an important additional development that will affect the Science Museum Group positively. Recognising the unique business model of the national museums and their innovative approach to generating income, the Chancellor of the Exchequer has offered new measures that will make it easier for the museums to manage their budgets independently and reduce administrative burdens. That will include an exceptional power for the sector to borrow up to £40 million a year from the Government; authorisation to invest in non-grant income; access to reserve funds, so that museums have the flexibility to spend donations that they receive; the freedom to set pay, to attract the best expertise; and exemption from Government procurement policy, so that museums can make their own choices about key contracts.
As I think most hon. Members would agree, that is a significant step forward and something that the national museums have long campaigned for. Combined with the favourable funding settlement, it is clear that there is no reason why the Science Museum Group should close any museum based on a lack of funding. The new administrative and financial freedoms will also boost income generation and create a more dynamic operating model.
As hon. Members will appreciate, the outcome of the spending review will shortly determine the Government’s capital support for the national museums, so I cannot speculate on that at this point. However, I can mention the support for capital improvements provided by the Heritage Lottery Fund, the DCMS Wolfson Fund and the Catalyst match-funding schemes, which we have established with the Arts Council England and the Heritage Lottery Fund.
During the Adjournment debate last week, I paid tribute to the constructive way in which hon. Members representing Bradford, Manchester and York have worked with me and the Science Museum Group to forge a sustainable future for the regional museums. I would like to thank them again for their continued commitment to that endeavour. Looking ahead, we will continue to work with the Science Museum Group, as it examines a range of options across its operation to increase the income that it generates from exhibitions, events and corporate sponsorship. We will also look at potential partnerships at regional level, both public and private, working with local government, education and business.
Andrew Gwynne
I do not think the Minister appreciates just how lucky he is. He has visited the Museum of Science and Industry at Liverpool Road station, and he might not be aware that an earlier Member of Parliament was not so fortunate. The Liverpool Member of Parliament, William Huskisson, was killed at the opening of the Liverpool and Manchester railway, when he was run over by Stephenson’s Rocket, which is a fate that, thankfully, the Minister avoided.
Mr Vaizey
I went on a replica of Stephenson’s Rocket when I made the visit. It is well known that the first railway fatality involved a Member of Parliament, which may still resonate through the ages.
I pay tribute to the way in which hon. Members have approached the issue. The hon. Member for Barnsley Central has also contributed significantly to the debate. He and I sparred with each other at last week’s debate, and I probably got slightly carried away—I am not used to debating in a full Chamber, so it was a novel experience for me. It was an interesting debate, and the Labour party is making a powerful case for the importance of supporting arts and culture in the regions.
There was a slight paradox—I felt, obviously, being biased—in that Member after Member got up and talked about how well culture was doing in their constituency, so we are not having an arts emergency, but the issue is worth looking at. That is why I am pleased, for example, that the Arts Council has, under this Government, looked seriously at how it supports arts and culture in the regions using lottery money, which we increased.
As hon. Members know, we significantly raised the proportion of lottery funding going to the arts. An additional £100 million is going to the arts every year under this Government. Some of that money has been used to significantly increase the amount of funding available for touring, so national arts organisations have the opportunity to tour their work around the country. The Arts Council has also set up what it calls the creative people and places fund—off the top of my head, it is worth about £30 million—which is designed to support arts and culture in areas that are, to use the jargon, under-represented in terms of arts and culture, where perhaps the quality of offers that one might find in other parts of the country is not available.
The issue is serious and important, and I pay tribute to the hon. Member for Oldham East and Saddleworth for raising it, but I hope that she will also acknowledge that a lot of work is being done to ensure that all parts of the country benefit from our arts and culture. We will listen to any further suggestions that she or other hon. Members may have.
Non-geographic Telephone Numbers
(10 years, 10 months ago)
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Richard Burden (Birmingham, Northfield) (Lab)
Thank you, Mr Brady. I am pleased to have the opportunity to debate this important issue. The matter is of concern to many people—all our constituents, I think. It is a complex and controversial issue, but the term “non-geographic phone numbers” generally covers numbers that start with 08, 0845, 087, 09 and 118, and which are used for everything from contacting Her Majesty’s Revenue and Customs to voting on TV shows.
All the evidence shows that people find the numbers extremely confusing and expensive. The so-called freephone 0800 numbers are guaranteed to be free only when phoned from a land-line—they are not always free from mobile phones—and it is people on low and fixed incomes who are undoubtedly hardest hit. Poorer people often do not have the security of a land-line, and they are unable to get contracts.
Mr Gregory Campbell (East Londonderry) (DUP)
I congratulate the hon. Gentleman on securing the debate. He rightly says that 0800 numbers are free only from a land-line. Does he agree that the warning signal, or the acknowledgment that it could be very costly to use such numbers from a mobile, is often in such a tiny—almost insignificant—font size, either on the screen or in newspaper print, as to be illegible, particularly for elderly people?
Richard Burden
The hon. Gentleman makes a very good point. It is important that the information is clearer, but perhaps what is more important—and this is the case I will advance today—is ensuring that the calls are free rather than just pretending to be free for certain people.
As I was saying, people on low and fixed incomes do not have access to land-lines, and they probably do not have access to contract mobile phones either or, sometimes, to the internet. They rely, therefore, on prepay mobile phones and phone boxes, and as the former have higher call costs than contract phones poorer people end up paying more to use the telephone than those on higher incomes. A study by Save the Children, in fact, found that they could be paying about 22% more.
What is particularly unfair, and this is one of the major subjects of today’s debate, is that it is not just businesses and game shows that charge people a fortune; the Government’s own use of the numbers is a matter for concern. I have been contacted by constituents who are justifiably irate that ringing essential public services, such as HMRC, results in them having sky-high bills. The answers I have received to parliamentary questions to Departments have revealed not only the shocking scale, but the scope of Government use of high-cost phone numbers. Six out of 10 Government phone lines are high cost. The Home Office, the Department for Business, Innovation and Skills, and the Department for Environment, Food and Rural Affairs all use a high proportion of high-cost phone lines. The Department for Work and Pensions alone has 200-plus 0845 numbers. Vulnerable people are being charged rip-off rates for contacting essential services, including pension, work and welfare services—when talking to Jobcentre Plus, the Pensions Advisory Service, about disability living allowance and attendance allowance, and so on. The waiting times for the services can be long, and that drives up bills even further.
The 0845 and 087 revenue-sharing numbers are the major culprits. Calling the numbers can cost anything up to 41p a minute, and a service charge is included, which is paid to the Government. I am pleased that my right hon. Friend the Member for Wentworth and Dearne (John Healey) is here today because he has done some very important work on what he has rightly termed a telephone tax, and the National Audit Office is also looking into the scandal. It is simply beyond belief that people calling taxpayer-funded phone lines are taxed again. Some Departments have been making money, and phone companies are clearly making a fortune. It is illogical and unfair, and it cannot continue. The use of revenue-sharing numbers by the Government and all associated public agencies must stop, and it must stop now.
John Healey (Wentworth and Dearne) (Lab)
I welcome the success that my hon. Friend has had in securing the debate, and also the fact that he is campaigning hard on the matter, as am I. It is important to expose the rip-off rates that some people have to pay to access essential public services and information.
My hon. Friend mentions the revenue sharing, which is part of the deal for 084 numbers. Both he and I have tabled parliamentary questions, and I have had seven Departments say to me that they do not get any financial or non-financial benefit from the lines. That, however, contradicts what Ofcom believes to be the case, and I have, therefore, had to write to those seven Departments. Does my hon. Friend agree that, as a follow-up to the debate, something the Minister might usefully do is ensure that attention is drawn to other Departments that use the numbers but do not appear to know that they should be gaining a financial benefit—at a cost to many of the poorest, who pay the extra charges?
Richard Burden
My hon. Friend makes a very good point, and it is true that many Departments, or the people who make the decisions, did not know that they were making money out of the numbers. They assumed that something starting with 08 was free, just like the 0800 numbers. It is important that that message gets across. There are one or two Departments that, when they found out, were fairly horrified and said that they would change. The key thing, therefore, is that they make that change quickly.
I suggest that revenue sharing is particularly unfair, but that it is part of a wider picture. Calling any public service on a geographic or a non-geographic number means that people with very little money—those with prepay mobile phones—get bills they simply cannot afford. That covers accessing central Government services and those of other public bodies, agencies and local authorities and, until very recently, even GP surgeries. I was made aware of the case of a homeless family in my constituency who clearly did not have a land-line or a contract phone, and were trying to reach Birmingham city council a couple of years ago. They were kept hanging on for ages, just trying to find out if they had any chance of getting a home. How can we seriously expect people calling a homelessness helpline to maintain regular direct debits or have been able to negotiate cheap phone tariffs? We need clear criteria for all public services—in central and local government—if we are to overcome the problems.
I sought to have this debate because there is a chance for the Government to change, and to initiate change. I understand that, in July, Ofcom will make clear recommendations for simplifying the system. It will make 0800 numbers free for all, including from mobile phones and, going back to the point that the hon. Member for East Londonderry (Mr Campbell) made, it will ensure that the costs of calling 084 and 087 numbers are clear. It will also encourage greater use of 03 numbers, which are priced the same as the traditional 01 and 02 geographic numbers, and they will not have a revenue-sharing element.
Of relevance here is article 21 of the EU consumer rights directive. An amendment to the directive, which could stop businesses using a service charge when consumers call under certain circumstances, is under consideration, and more work needs to be done on that. I therefore ask the Minister: will the Government continue to charge what has been rightly termed a telephone tax when they begin to regulate businesses in that regard?
There is already best practice in some Departments. HMRC has been one of the worst culprits, but it has now rightly responded to the Public Accounts Committee’s recommendations and is switching to 03 numbers, which will save many people a fortune. That must be linked to the more recent PAC recommendation for improving waiting times so that people are not left in a queue for hours.
We need more clarity and co-ordination, as my right hon. Friend the Member for Wentworth and Dearne said. That is not a new idea; it has been on the agenda since 2006, when Sir David Varney called for change in his Cabinet Office report, “Service transformation.” He called for clear public sector telephone number strategies that would end confusion and provide a better service to people, as well as a better deal for the taxpayer. Seven years on, Ofcom is now providing the Government with a framework to achieve that.
I have some questions that I hope the Minister will be able to answer. First, does the Minister agree with me—and, I am sure, countless members of the public, and campaigners, such as the fair telecoms campaign, which has done a great deal of work—that it is fundamentally wrong to place a service charge or, to put it another way, a telephone tax on calls to phone lines that are already funded from taxation? If so, what is the Government’s time scale to end its use across all Departments and agencies?
Secondly, what progress has been made on implementing the recommendations on contact centres in Sir David Varney’s “Service transformation” report, which was taken over by the Cabinet Office’s Contact Council? The report called for an exploration of the scope for single access numbers for all non-emergency public services, which would provide complementary support for the 999 service; more urgently, for the implementation of a clear public sector numbering and tariffing strategy using the 03 number range; and for the establishment of a set of cross-Government benchmarks, such as calls answered per minute, to improve the performance of public sector call centres.
If no progress on implementing those recommendations has been made since the abolition of the Contact Council, will the Government now take the opportunity provided by Ofcom’s consultation and its results to establish a whole of Government solution? Such a solution would need to be clear and comprehensive, and it would need to make access to all public sector services less confusing and more cost-effective for the taxpayer. It would end the use of revenue sharing—the telephone tax—and establish clear numbering criteria for different services, with essential services using freephone for all 0800 numbers and all other services using 03 numbers.
Thirdly, will the Government enforce Ofcom’s recommendations that the costs of revenue-sharing numbers must be declared, which goes back to my right hon. Friend’s point? What is Ministers’ time scale for such an implementation? Ofcom has outlined an implementation period of 18 months from when the recommendations are published, which means organisations would not have to declare their charges until at least 2015. We know the costs, and we know that many people are currently confused about the price of the numbers, so why delay? The Cabinet Office should issue directions to enforce transparency now, and I invite the Minister to agree with me.
The success of the gov.uk website—it provides one point of access for all Departments and public bodies—demonstrates that better Government co-ordination in communications can be done simply and effectively. As face-to-face services are cut back—not all of us think that that is a good thing—and more people are directed online and on to the telephone, it is important that the Government do not ignore those sections of the population that find it difficult to access the internet and do not have access to contract phones or land-lines. We know that they are the people most likely to need the Government’s help and advice.
Finally, we need to ensure that people’s contact with the Government or local government is not just that of being transferred from one Department to another, while watching their phone bills go up and up as they hang on the line. As the Government introduce huge changes to the benefits system, with universal credit and so on, we know that there are likely to be very big increases in the number of inquiries. That underlines the fact that we need an efficient system, which recognises that people calling Government advice lines have complex concerns and problems that need to be dealt with sensitively and effectively.
The idea of today’s debate is to invite the Government to seize this opportunity drastically to improve public services and end the scandal of rip-off rates that hit the most vulnerable in their time of need. I invite the Minister and the Government to take up that opportunity.
The Parliamentary Secretary, Cabinet Office (Mr Nick Hurd)
It is an enormous pleasure to serve under your chairmanship, Mr Brady, for the first time, at least in this Chamber.
I congratulate the hon. Member for Birmingham, Northfield (Richard Burden) not only on securing the debate, but on how he presented his argument. I extend those congratulations to the right hon. Member for Wentworth and Dearne (John Healey), because they have together done an excellent job. They have taken a forensic approach to using the parliamentary question process to expose some, frankly, awkward and inconvenient truths about a system that, as Ofcom has said, clearly does not work for anyone at the moment. It is quite right to raise that substantive issue.
The right hon. Gentleman, who was a distinguished Minister, will recognise that I feel, in coming to this for the first time, that this is one of those situations in which Departments have been allowed to do their own thing, without very much effective co-ordination from the centre, over many years and during different Governments. We have reached the point at which we have to acknowledge that the current system does not work for anyone. Ofcom was quite right to make that point, and it is also right that the National Audit Office should look at the issue. My congratulations are therefore quite genuine.
The hon. Member for Birmingham, Northfield mentioned that the Cabinet Office previously had a role, but it has not been directly involved in recent years. We are now reviewing whether there is a case for central control to play a more proactive role. The reason for that is straightforward: we see ourselves as champions, first, of transparency across Government—there is a failure of transparency here—and secondly, of the taxpayer in ensuring that those who supply services to the Government and the public deliver best value.
Through the Efficiency and Reform Group, we take great pride in ensuring that historical contractual arrangements with large corporates are much less cosy than they were. I refer the right hon. Gentleman and the hon. Gentleman to its recently published report, which demonstrates that, through a much more rigorous and robust process, we saved the taxpayer £10 billion last year—this is serious money—by doing things that we consider to make hard commercial sense but had not been applied. For both those reasons—as champions of transparency and of driving a hard deal with the taxpayer and the public—we are taking an increasing interest in this area.
The timing of the debate is slightly awkward in the sense that we are all waiting for the NAO report. As a former Minister, the right hon. Member for Wentworth and Dearne will know that Ministers sometimes read a brief that is not quite what they want to have to say, and this is one of those moments. Having looked at what is happening, I sense that there is frankly a substantial problem, as I have said. It is not just about the cost, which is real and of course massively relevant at a time when our constituents are very stretched; there are also big issues around complexity and transparency, and the system does not work.
There is clearly a real problem, but I see some encouraging signs of movement and transition. It probably needs to go further and faster, but there is clearly movement in some areas. One area is around transparency, which matters a lot because it is the great disinfectant. The Ofcom policy proposals are all about simplifying the matter and making it less complex and more transparent. Responding to those proposals is now under way.
I also see progress in the action taken by Departments to reduce costs. The hon. Gentleman did not mention this, but we should recognise that HMRC, which is a hugely important Department in the context of this debate, has already moved two of its helplines, the tax credit and Welsh language helplines, from 0845 numbers to 03 prefix numbers to reduce the cost to callers. It is also committed to moving all of its personal tax, expenses and benefits helplines to 03 numbers by the end of the summer, which was welcomed by the Public Accounts Committee and the voluntary sector in particular. Clearly, there has been movement both on transparency and to reduce costs.
Another area, which was mentioned by the hon. Gentleman, is about reducing the need for the public to use the phone in engaging with the Government. He makes a fundamental point that we will always be in a situation in which a proportion of the population will not be online or comfortable with being online and will need what we call in our clunky Government language “assisted digital”. The Government will shortly announce plans to invest taxpayers’ money in a radical, ambitious process to go digital by default, which will ensure that no one is left behind and which should transform the experience of dealing with Government—online as often as possible and practicable. We all know the benefits of online communication, and success on that mission will mean that we reduce the need for people to use the telephone and be exposed to some of the vagaries, complexities and costs that we are debating here now. It is important for that to be registered, because the Government digital strategy, which was published last November, sets out how we intend to redesign digital services to make them straightforward and convenient so that all who can use them will choose to do so while those who cannot are not excluded. That channel shift, as we call it, will result in a reduction in the use of call centres, telephones, post and in-person centres, thereby reducing the problem of higher non-geographic phone charging, which is the subject of this debate.
John Healey
I am grateful to the Minister for the way in which he is responding to this debate. I am intervening before he returns to his brief, because his response so far has been genuine, open and welcome. He recognises that there is a significant problem, which is very welcome. He says that the Government are now reviewing the area, which is also welcome. He talks about a problem of timing. May I perhaps help him with that? The NAO has indeed now agreed to carry out a cross-Government review of the use of non-geographic numbers, some of which have these rip-off rates. The Comptroller and Auditor General tells me that he expects that report to be completed next month, in July, so the Minister may not have to wait long before he considers action. I invite him to tell the Chamber how he intends, from the centre of Government, to respond to that NAO report and the findings that it may have.
Mr Hurd
I am grateful to the Opposition for any offer of help, but I approach such offers with some wariness, and my instinct was right on that one. The right hon. Gentleman is right to say that the NAO report is imminent; I do not have an exact date, but July seems to be the month. My awkwardness comes from trying to give the hon. Gentleman and the right hon. Gentleman as robust a response as they would like. None the less, we must wait for that report and its recommendations to see to what degree they encourage a higher level of central co-ordination and control, which both Members are instinctively calling for.
We will also have to wait to see whether the NAO gives the Cabinet Office some sense of mandate to play a more proactive role in this exercise, which is a move towards not just greater rigour and transparency, but a great deal of commercial awareness when it comes to conversations with the suppliers of services, who, as the hon. Gentleman has said, might have benefited disproportionately in the past with regard to the charges that they have effectively made to the public. The point that I was labouring is that we now have a real body of experience that is saving billions of pounds of taxpayers’ money in negotiating and renegotiating, often in flight, these contracts with suppliers to ensure that the taxpayer gets a better deal.
What I am asking of hon. Members is patience. Let us see the NAO report and what signals it sends in terms of the deficiencies of the current system and the need for a bit more central control, and then the Cabinet Office will respond. We are now a great deal more interested in this subject than in the past because we recognise that the system is not working for anyone. I just hope that I can reassure the hon. Gentleman and the right hon. Gentleman on that.
Richard Burden
Like my right hon. Friend, I am sure that the Minister is being absolutely genuine in what he is saying. We are waiting for the NAO report and the Ofcom recommendations, both of which will be published in July. I completely understand that the Minister needs to wait for them. There will be complex negotiations with suppliers. There is one thing on which I should like to push him a little further. On behalf of the user of services, the public, would it not be reasonable to say that there are certain principles here to which we aspire? The first is that an essential public service should be free to the public. Secondly, phone lines should be as cheap as they can be for other Government services. The obvious way of doing that is using something like the 03 numbers. How we get to those points could be the subject of detailed discussions, but, presumably, we should be able to agree that if the call is essential, it should be free, and if it is non-essential, it should be as cheap as it can be.
Mr Hurd
If we are trying to create a culture of greater simplification, transparency and trust, principles are important in terms of bringing people together, communicating and building that trust. Some Departments need to think through quite carefully the implications of some of the changes that the hon. Gentleman is proposing. For example, if they cannot make a particular charge for a service, they have to consider how they can continue to provide it. It is reasonable to build into the process some time for them to think through that carefully, because, presumably, the services are valued by the people using them. The principles of transparency and of keeping it simple and as cheap as possible are ones that we endorse, along with the commitment to try, as far as we can, to move people to a situation where most of this stuff is done online. We also want to make sure that all the services that we provide to people who are not online and who are not comfortable with that—we hope the number of those will be smaller—are as easy to navigate as possible.
The hon. Gentleman usefully made the point—we know this from our own constituencies—that it drives the public nuts to be transferred around the system, not get answers and be kept waiting. A large part of what we do as MPs is to try to disentangle such things. The onus is on us to try to make that process of engaging with Government as easy as possible, because we know that, on too many occasions, it is far too difficult.
In conclusion, the hon. Gentleman has raised a substantial point. It is something that the Cabinet Office is taking increasingly seriously. We are waiting for the NAO report. We see encouraging signs of transition towards greater transparency, and a desire to reduce costs and the need for telephony services. We also recognise that there is value that we can add in ensuring that the taxpayer is not ripped off.
Beef Cattle and Sheep (Carbon Footprint)
(10 years, 10 months ago)
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Neil Parish (Tiverton and Honiton) (Con)
It is a great pleasure, Mrs Brooke, to serve under your chairmanship this afternoon. I thank Mr Speaker for granting this timely debate on the report on the carbon footprint of the cattle and sheep sector by the all-party parliamentary group on beef and lamb.
I also thank my fellow committee members, especially the hon. Member for Brecon and Radnorshire (Roger Williams), my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice) and my hon. Friend the Member for North Herefordshire (Bill Wiggin) for attending the oral evidence sessions that we held as part of our four-month long inquiry and for their assistance in compiling the report.
The all-party group wanted to examine the methodologies currently used to calculate the carbon footprint of the sector in the UK and globally and how the data are used to inform the measures being taken to reduce emissions.
The report, which we launched in Parliament earlier this month, found that more robust scientific data and a standard model to measure carbon sequestration were needed to help the beef and lamb sector meet the twin challenges of sustainable food production and of reducing the environmental impact. It also found that the positive environmental impact of grazing livestock must be taken into account when trying to mitigate the sector’s carbon footprint.
Our inquiry found that a large number of models are used to assess the carbon footprint. Professor Nigel Scollan of Waitrose told the group at the evidence session that 16 methodologies for measuring the carbon footprint of livestock have been developed since 2007 alone. The PAS 2050 model, which was developed by the Department for Environment, Food and Rural Affairs, the Carbon Trust and the British Standards Institute, is the standard model used by DEFRA. However, in the evidence session, the independent Committee on Climate Change, which acts as an advisory body to the Government, stated that its accepted method for calculating production emissions is set out by an Intergovernmental Panel on Climate Change.
There is a clear lack of consensus or consistency, which raises two crucial points. First, there is a lack of consensus on how to measure livestock emissions. Secondly, any debate going on at an international level is not based on comparable data. For example, in England, the footprint of beef cattle, according to the PAS 2050 used by DEFRA was 12.65 kg carbon dioxide equivalent per kilogramme of live weight and for sheep it was 11.86 kg.
Ms Margaret Ritchie (South Down) (SDLP)
Is the hon. Gentleman aware of the research that has been carried out in Northern Ireland? The greenhouse gas implementation partnership seems to agree with him that there is still a body of research yet to be carried out. The Agri-Food and Biosciences Institute in Belfast, which is working with DEFRA and the department of agriculture and fisheries for Scotland, says as part of that research that the ongoing challenges of the inclement weather present a problem.
Annette Brooke (in the Chair)
Thank you for that. We will keep interventions a little shorter in future.
Neil Parish
The hon. Lady is right, because climatic conditions will make a difference. The amount of time that an animal takes to finish grazing to become fat also makes a difference, as does the time taken to finish an animal for meat production. All such things have to be taken into consideration. Of course there are a number of ways to measure carbon.
Mr Mark Spencer (Sherwood) (Con)
In my hon. Friend’s calculations, will he make reference to the transportation of meat once it has been processed through an abattoir? For example, moving beef from South America to Europe using aviation fuel enormously increases the carbon footprint.
Neil Parish
Indeed. When we import meat from South America, Australia or New Zealand, we should take into account the length of time that it takes to get here, especially if it comes by air. Of course, if it comes by sea, it is argued that the carbon footprint is not as large, but it is there none the less. That is why local home-produced food that travels very little distance to the abattoir and that is grazed nicely on good permanent pasture must be of great benefit to all the United Kingdom.
Guy Opperman (Hexham) (Con)
I applaud both the fact that we are having this debate and the work that my hon. Friend and his committee have done. Does he agree that, while this is a legitimate debate for us to have, our fundamental job in the House is to stand up and support our beef and sheep farmers?
Neil Parish
I could not agree more with my hon. Friend. The purpose of this inquiry and report is to look at the benefits of producing grass-fed beef and lamb, to keep sustainable grass pasture and to produce very good meat. We would not necessarily want or be able to plough such land, and a huge amount of carbon is captured within the soil. We took some evidence that showed that over years of permanent pasture the carbon actually increases, so there are many good reasons for producing this high-quality beef and lamb.
I will, if I may, continue with my contribution. The footprint of sheep, according to the PAS 2050, is 11.86 kg CO2 equivalent per kilogramme of live weight. The comparative figures for Wales were 7.51 kg CO2 equivalent per kilogramme of live weight and 8.6 kg CO2 equivalent per kilogramme of live weight.
As that has demonstrated, even within a country, there is significant variation in the statistics and no way to determine whether they were driven by different efficiencies or by different ways of producing data. That makes any form of comparative assessment of carbon footprint challenging and poses major difficulties for policy formulation. There is no international consensus on sequestration—the process by which carbon dioxide is removed from the atmosphere by pasture land through a process of absorption and deposition in the soil, which acts as a carbon sink. In essence, that is a natural form of carbon capture and storage.
The importance of including carbon sequestration is highlighted by Mr Bill Grayson, a producer who gave evidence to the inquiry. He ran four models on his farm’s emissions. The PAS 2050 model, which does not include sequestration, concluded that his farm was a net emitter. The other three methods, which include sequestration, put his farm as a net absorber of carbon. Evidently such significant differences make sensible policy development almost impossible.
Mr Spencer
My hon. Friend is being very generous with his time. I hope that he recognises that we need to view this matter globally. It makes no sense to allow UK farmers to plant trees and remove land from beef production to then allow South American farmers to tear up rain forests to produce beef and to ship it around the world, so that it sits on supermarket shelves next to UK-produced beef.
Neil Parish
My hon. Friend raises another important issue. I have visited Brazil, where people are ploughing up a lot of the savannah and planting soya bean and sugar beet and driving cattle towards the rain forests and allowing them to partly destroy the rain forests before people cut down the trees. So it is absolutely essential that we produce in this country high-quality beef and lamb, so that we do not need as many imports; that is absolutely clear. I will go on to talk a little more about those examples shortly.
I want to highlight the methodology used to produce the figures. Achieving consistency in the figures used should be viewed as one of the top priorities for the industry and the Government, who should work in partnership. We urge Ministers and officials at DEFRA to accelerate work at both the EU level and with international bodies, such as the Food and Agriculture Organisation, to seek global consensus in an agreed methodology.
For example, if we compare the impact of livestock in the UK and in France using nationally-produced data, our producers will be hugely disadvantaged because French data will include sequestration. It is not very often that I ask a Minister to look at a French system, but on this occasion I will. We urge him to look into this issue as a priority and—if we are to see greater co-operation between nations in our effort to respond to environmental and food challenges—to migrate to the model accepted in France. If the Government do not view this as a viable course of action, they need to make a robust case to say why not. The disparity built into the status quo is no longer acceptable in a global debate, because we debate carbon across the whole world and we need to measure it in a similar way.
The report also highlighted other weaknesses in the current life-cycle analysis in the model that DEFRA uses, in addition to its exclusion of sequestration. It is well documented and understood that grazing livestock plays a major role in the management of our landscape; I think that all hon. Members from all parties in the House would recognise that. That view is supported by the English National Park Authorities Association and Natural England, which rightly point out that the landscape value generated by upland farming has an economic benefit to the area, owing to the tourism and business revenue extracted, and that grassland management is important to maximise upland areas’ efficiency as a carbon sink.
Glyn Davies (Montgomeryshire) (Con)
I thank my hon. Friend for allowing me to intervene, and I do so only to ask him to agree that that issue is particularly relevant to Wales. There is almost no cereal growing in Wales that is worth talking about; in Wales, farming is almost wholly livestock farming. Livestock farming in Wales is so important that it completely dominates the agricultural scene there.
Neil Parish
My hon. Friend refers to the amount of permanent pasture in Wales. Much of the land may well be too steep to be ploughed, and from an environmental point of view, we would not want to plough it. I do not wish to over-labour this point, but if we are not going to graze livestock on that pasture, what are we actually going to do to manage that land successfully? So livestock farming is not only important from an aesthetic point of view; it produces great meat and it does a great service for the landscape. So I very much agree with him. Parts of the west country and the north of England likewise have much permanent pasture.
Huw Irranca-Davies (Ogmore) (Lab)
May I draw the hon. Gentleman’s attention to something that he might find interesting, which is the reintroduction of the little-known Welsh White beef cattle up on the Plynlimon hills with the Wildlife Trusts? The reason that those cattle have been reintroduced in those areas, which are vital for holding carbon emissions in peat bogs, is that they trample the right sort of way—better than sheep—in that environment and they eat the right sort of vegetation to keep the biodiversity right as well. So the Welsh White cattle are doing a good job up there.
Neil Parish
The shadow Minister raises an interesting issue about not only carbon sequestration but the management of grassland, but not only Welsh White cattle are important in that regard; there is an argument that sheep do not do the same job on certain pasture land as suckler cows and beef cattle do. That is perhaps the subject for a debate for another time, but it is relevant to the fact that, if we are to have good-quality grassland, we need the right type of stock to graze it.
The inquiry found that no current methodology exists to include this factor in an assessment of carbon footprint, despite the fact the loss of hedgerows and pasture land, for example, would evidently impact on the amount of carbon removed from the air. Of course, more carbon would also be emitted if that pasture land were to be destroyed.
Grazing livestock, particularly on uplands, makes a valuable contribution to biodiversity and the preservation of ecosystems. For example, hedgerows provide wonderful habitats for many species that are vital for the diversity of fauna and flora. As numerous witnesses pointed out, it is important to bear that in mind when considering the overall environmental impact of agriculture. Quantifying the carbon value of biodiversity is incredibly difficult and is not something that life-cycle analysis takes into account. The evidence suggests that it will be a major challenge to find an agreed way of quantifying this benefit in the short or medium term. This exposes the weaknesses of simply looking at carbon footprint as a measure of environmental impact, and we urge the Minister to consider this point.
George Eustice (Camborne and Redruth) (Con)
I am grateful to my hon. Friend for giving way. Like me, he was a farmer before first entering the House and as farmers we are used to getting the blame for a lot of things. There are certainly environmental consequences to certain farming practices, but does he share my disbelief that farmers are in the dock for—of all things—causing climate change and being responsible for it, given that we all know that the real problems with carbon come from the transport sector, energy generation and general industrialisation rather than from farming?
Neil Parish
My hon. Friend and I should probably both declare an interest; I should certainly do so as I am a farmer, and proud to be so. He is absolutely right, because what we have with methane gas from ruminants in particular is a very natural gas. It may come out perhaps too much for people’s liking, but it is very much there. We are taking lower-quality proteins—I had better be careful what I say—and developing them into high-quality meat. Therefore, the animal is doing a great deal of good, and I want to balance the amount of methane gas that the animals might produce compared with the amount of carbon that is kept in the land. I repeat the fact that if we do not keep that land as permanent pasture and plough it up, we will release an awful lot of carbon.
Farmers feel that the real basis of livestock farming is almost under threat. The whole idea of this report is perhaps to try to flag up in advance where the world might go to in a few years’ time, and that scenario is what I am particularly keen to avoid. People need to know the benefits of livestock farming.
I will move on to the next paragraph of the report. Food security is one of the most pressing issues for Governments across the world. By 2050, the global population is estimated to reach 9 billion, and food production will need to increase to meet growing demand. However, that has to be achieved using the existing agricultural land, while making more efficient use of water and mitigating the existing and future impact of farming on the environment.
The challenge is no less great on the home front, with the UK population set to increase by 10 million in the next quarter of a century alone and after the percentage of agricultural land in the UK fell from 39% in 1989 to some 25% in 2009. This means maximising the value of available land, by getting the best possible outcomes in terms of food production. British agricultural land comprises many different land types, and not all are suitable for the production of arable crops. This point was eloquently made by the food climate research network in its evidence to the all-party group:
“Not all land can support crop production and the question then arises—what should be done with this poorer quality, more marginal land? Traditionally the answer has been to graze ruminants which then provide us with meat, milk and other outputs. This represents a form of resource efficiency—the land is being used to produce food that would otherwise need to be produced elsewhere”
That is particularly important.
Almost 65% of UK farmland is only suitable for growing grass where sheep and cattle are grazed. We should be utilising this marginal land, which cannot be used for arable crops but can grow good grass and provide good biodiversity and environmental benefits. Beef cattle and sheep play a vital role in food production, because of their ability to turn non-human food into edible proteins and nutrients. Limiting the role of British livestock will reduce the efficiency with which we use our land for food production and will therefore reduce our ability to be self-sufficient.
These points are often neglected, or at least not adequately considered, by those who advocate meat-free diets. If, for argument’s sake, we were all to switch to a diet free of meat, much of our agricultural land would be unfarmed and we would see a considerable drop in the efficiency of our land to food conversion, in addition to the negative impacts on biodiversity, as outlined above.
When the developing world is eating more meat, and choosing to do so, there is a greater need to produce meat across the world. Therefore, Britain should do its fair share of meat production, and grazing both sheep and cattle on grassland is essential, in my view. Grazing cattle and sheep are often given disproportionate blame for carbon emissions from agriculture, and there is not enough recognition among some conservation groups of the role that livestock farming, particularly of grass-fed beef and lamb, plays in storing carbon, protecting biodiversity and utilising marginal land that cannot be used for arable crops.
I thank you for listening to this debate, Mrs Brooke, and open it to colleagues to join in.
Jim Shannon (Strangford) (DUP)
I thank the hon. Member for Tiverton and Honiton (Neil Parish) for bringing this matter to the Westminster Hall Chamber. Those hon. Members who represent agricultural areas will be aware of the importance of the carbon footprint in relation to beef cattle and sheep. I declare an interest as a farmer, although not a working farmer, and as someone who has lived in the countryside for some 40 years. The land that we have is rented out by adjacent farmers, who look after it well. I have spoken to the Ulster Farmers Union in Northern Ireland, which has given us a bit of a steer—if I may make a pun—and it has, along with the all-party group’s recommendations, given us some indication of where we want to go.
I am sure that I am not the only person here who watches adverts for cars with a low carbon footprint, who has read reports by environmentalists regarding our footprint as a country and has even been made aware of issues by children and grandchildren, coming home and telling us what they were taught in school. They tell us things we do not know and seem to have great knowledge and expertise.
It is incumbent on us all to be aware of the world that we live in and to do our best to leave a planet behind which our great-grandchildren can enjoy. One aspect of this is being told that we need to cut down our carbon emissions, otherwise global warming will wreak havoc on our country and our world. One of the main greenhouse gases is methane—we are aware of that—which is produced in large quantities by cattle. Agriculture is responsible for 22% of Northern Ireland’s greenhouse gas emissions, but that must be set against the fact that it has moulded landscapes, encourages biodiversity and brings money into the local economy by providing employment. I want to give a farmer’s perspective on the issue, and a Northern Ireland perspective as well.
Northern Ireland’s greenhouse gas emissions are responsible for 3.5% of the total UK greenhouse gas emissions. However, it is responsible for 7% of the UK’s methane and nitrous oxide, because Northern Ireland relies a lot more on agriculture than other parts of the UK. Therefore the carbon footprint is of greater importance for Northern Ireland than for other regions of the UK.
Mr Gregory Campbell (East Londonderry) (DUP)
Regarding the importance for Northern Ireland, does my hon. Friend agree that on this issue, like a number of others, it is important that the Minister, DEFRA and the responsible Departments in Westminster liaise closely with the regions—Scotland, Wales and Northern Ireland —to ensure that best practice is adopted by all those concerned, throughout the UK, in trying to tackle a serious problem?
Jim Shannon
I thank my hon. Friend for a good intervention. I am confident that the Minister will give us some indication of that—I have no doubt that that will happen—but the regions my hon. Friend mentioned must work together with DEFRA.
As I have often said in this Chamber, agriculture in Northern Ireland is under pressure because it is being strangled by EU regulations. Young farmers go to college and learn new ways, then they come home and cannot afford to implement changes that would be beneficial, due to red tape and regulations. However, that is a debate for another day. European legislation dictates carbon emission reductions, but the support offered is sparse. For example, in some countries carbon sequestration is included, but in our current model it is not included, so our farmers would be at a disadvantage in a global market if a tax were to be imposed.
In the grassland used to graze cattle and sheep, carbon is stored in the soil, as the hon. Member for Tiverton and Honiton said, therefore less carbon dioxide is released into the atmosphere if we farm along those lines. That information could have major repercussions and calls into question our understanding of the carbon footprint of livestock. Although that might be a little bit technical and hard to understand, perhaps, for those who do not have knowledge about the land, it is a serious issue.
It is difficult effectively to evaluate the carbon footprint of raising livestock, because many different variables affect the amount of methane produced, such as the feed system it is raised on, pasture type, rearing time and genetic make-up. People may believe that a meat-free diet is the future because crops have a lower carbon footprint, however far from the truth that may be, but some issues are raised by such a way of life. When land is ploughed, carbon is released that would otherwise have stayed trapped in the carbon sink and that in turn makes it difficult to compare the benefits of growing crops. Furthermore, as the hon. Gentleman mentioned, 65% of UK farmland is suitable only for growing grass and would not be a viable option for growing crops. Some land would have to be in pasture all the time, because it cannot be used otherwise.
Ms Ritchie
I thank the hon. Gentleman for giving way and congratulate the hon. Member for Tiverton and Honiton (Neil Parish) on securing this welcome debate. Is the hon. Member for Strangford (Jim Shannon) aware of the impact of the cost of fertiliser on crop production and the impact of that on the debate on greenhouse gases?
Jim Shannon
I thank the hon. Lady for her intervention. I am aware of that. Certainly, the Ulster Farmers Union and the farmers on the land in the Ards peninsula and mid-Down are all aware of the costs of the fertilisers and their impact on the land and the waters round about Strangford lough and the Irish sea.
If we ceased to graze cattle on these pasture lands, they could not be used to produce more food and the productivity of our land to food conversion would stop. Biodiversity would also be negatively affected. Land used for grazing livestock provides habitats for animals, which creates biodiversity. Biodiversity has a positive impact on the environment, but that is another factor that is not included when calculating carbon footprints. Many factors that need to be considered when calculating carbon footprints are not considered, and that could negatively affect our farming industry here in the United Kingdom of Great Britain and Northern Ireland.
Calculating the exact amount by which biodiversity benefits the environment is also difficult. To combat our greenhouse gases, we need more investment in research into farming practices. For example, how big a role does carbon sequestration actually play? We also need to educate our producers to better understand the various issues so that they are able to run their businesses more efficiently.
There is a lot of work to be done. The competitive farming systems team spends a third of its money on sustainable and competitive farming systems, yet most small farmers cannot think of that amount of their income leaving in that way. In Northern Ireland, we have many small farmers. The average size of a farm in Northern Ireland is between 65 and 70 acres, but there are many hobby farmers and part-time farmers. The impact on such farmers is greater, and the impact on us in Northern Ireland is greater still.
Sustainability is crucial. Raising livestock sustainably is not solely the responsibility of producers; retailers also play a pivotal and vital role, which I hope the Minister takes on board. Retailers must enable consumers to make informed decisions about the products they buy so that they can take into account animal welfare, nutritional value and environmental impact before purchasing the product. There has been much talk in the press over the past week or two about the green, amber and red system that tells consumers about a product’s fat content, nutritional value and so on. That, too, will have an impact on farmers, through the retailers.
Retailers can make deals to source meat only from farms with lower emissions, which are better for the environment and are more cost-efficient, but they must stop squeezing the farmer with lower prices while maintaining or increasing prices in their shops, thereby putting pressure on farmers while increasing their own profit margins. Let us be realistic about achievable goals, rather than squeezing the farmer every time we try to achieve specific targets. That is a different story for a different day, but it comes off the back of this debate.
The question that we need to answer is simple: how will we produce enough food to feed a worldwide population of 9 billion by 2050? The answer lies with finding more efficient ways to raise livestock that do not compromise the needs of future generations. Enforcing a vegetarian diet would be unsustainable because the fertilisers used to increase yields, particularly nitrates, pollute water supplies and lead to other consequences. We are endangering the already fragile fishing ecosystems, and the carbon footprint of cattle and sheep is too high. Those issues must be fully considered.
Although I fully understand the need to reduce the carbon footprint, it cannot be done at the expense of farming in the United Kingdom and, more specifically, Northern Ireland. In any consideration of the topic, the farmers’ views and opinions must be paramount. No system will work without their co-operation. Any enforcement of new regulations must be informed and subsidised and cannot be allowed to affect the cattle or the land. The Ulster Farmers Union recently highlighted an interesting figure:
“A recent European Joint Research Centre (JRC) study, highlighted that Brazilian beef has the largest carbon footprint of imported animal products, and with this in mind it is clear that it would be extremely difficult for the EU to achieve its CO2 emission reduction objectives.”
It is all very well to point the finger at our local farmers and to tell them what they should do, but other producers across the world are riding roughshod over the emissions objectives.
Any importation of animals with a high carbon footprint defeats the purpose of any targets set, and the local agriculture industry must be allowed to produce, sell and achieve reasonable aims. I urge great caution when considering the enforcement of a further burden on our agriculture sector. As one farmer said to me, and this is important,
“there are only so many targets we can reach before we realise that we haven’t had time to actually produce anything at all—just time spent filling in forms and working at machinery.”
Let us farm and help those who farm to do their best.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
I congratulate the hon. Member for Tiverton and Honiton (Neil Parish) not only on securing the debate but on all his work to drive forward the all-party group’s report.
The impact of livestock production on greenhouse gas emissions and climate change is complex and highly contested. The report does an admirable job of highlighting some of the difficulties associated with carbon footprint modelling, particularly on measuring the impact of carbon sequestration, but that is only one aspect of a much bigger picture.
We need greater recognition of the urgent need to address climate change, and we cannot escape the reality that cattle and sheep produce a lot of methane, but it has become increasingly evident that that is not a zero-sum game; there is an increasing body of evidence showing the significant environmental benefits associated with livestock farming. When we look at both sides of the carbon balance sheet, we see that, overall, methane emissions from ruminants are only one part of the footprint of agricultural production and that cattle and sheep farming, which have been central to our culture for millennia, play a positive role not only in enabling sustainable land use but in maintaining our carbon sinks, protecting biodiversity and creating livelihoods in rural communities.
Those issues are extremely pressing in Scotland, because livestock farming accounts for a high proportion of land use—significantly higher than in other countries of the UK. More than 82% of our agricultural land is grassland, some 70% of which is rough grazing. Those are huge carbon sinks—the Scottish Agricultural College estimates that they represent 80% of the UK’s carbon stocks—so the extent to which carbon sequestration takes place on grassland is very important. We do not yet have enough consistent evidence to reach definitive conclusions, but we know that changing the use of that land could have very adverse consequences, not just for greenhouse gas emissions but for biodiversity and the livelihoods of our farmers and rural communities.
In the past, I have heard simplistic arguments for switching from livestock to arable production, which is a total non-starter in most of Scotland. Some 85% of Scottish land is less-favoured area, and much of it, especially on higher ground, is not suitable for crops. Our climate, combined with marginal land quality, makes arable farming an unviable proposition in many parts of the country. As much of that land is a carbon sink, bringing grasslands and rough grazing into cultivation would, frankly, be destructive and irresponsible in climate and environmental terms; it would increase, not decrease, greenhouse gas emissions.
By contrast, a great deal can be done to maximise the sustainability of livestock farming without compromising livelihoods. Research by Scotland’s Rural College as part of the “Farming for a Better Climate” initiative shows there are lots of simple, practical steps that farmers can take to minimise and mitigate the impact of livestock-related greenhouse gas emissions, from how they manage grazing land to how they use fertilisers and manage waste and slurry; there is also the kind of energy, bedding materials and feed that they use, and even the breeds of sheep and cattle that they rear. Let us not forget that that account cannot end at the front gate—the hon. Member for Sherwood (Mr Spencer), who is no longer in his place, made a point about transport costs—it is also about other aspects of the supply chain, such as packaging and processing costs, all of which potentially have an environmental impact that can be reduced to bring better produce to consumers.
I represent a constituency famous for producing some of the finest beef anywhere in the world. Indeed, Buchan was known as the stockyard of Britain in the days when we still had trains. We are proud of the beef and lamb that we produce in the north-east, but livestock numbers have fallen across Scotland in recent years. As several colleagues from Northern Ireland have said, this has not been an easy time for livestock farmers, who face a range of challenges that are outwith the scope of today’s debate.
When people stop farming, the land stops being stewarded and communities start to diminish. Before we make rash policy decisions, it is important that we have a much better understanding of the role of carbon sequestration. We do not have enough of an evidence base yet, but policy should be based on knowing what we are dealing with and how we can best use our land sustainably. We should recognise that livestock farming is one of the most sustainable ways to manage, maintain and steward grassland and land that is not suitable for cultivation.
I hope the Minister will take on board the all-party group’s concerns about the methodologies used by DEFRA to measure the climate impact of beef and lamb production. I also hope he will recognise the contribution that cattle and sheep farming make to sustainable land management, food security, biodiversity and the well-being of our rural communities.
Bill Wiggin (North Herefordshire) (Con)
It is a pleasure to follow the hon. Member for Banff and Buchan (Dr Whiteford)—I very much enjoyed her speech. I congratulate my hon. Friend the Member for Tiverton and Honiton (Neil Parish) on calling the debate.
I should mention that I keep Hereford cattle, which are the finest, tastiest, most adaptable and most popular breed in the world—no need for any of these Welsh Whites.
Bill Wiggin
I would be delighted to give way after challenging the hon. Gentleman.
Huw Irranca-Davies
Welsh Whites are a very small breed, with little panda eyes that look up at you. It would be very difficult to eat them, because they are gorgeous little creatures.
Bill Wiggin
It is difficult to justify having these wonderful animals if they have no purpose. One key point is that if we did not have a healthy, nutrient-rich diet, largely from meat, it would be hard to justify having these wonderful breeds, from many different parts of the United Kingdom, which would be a great loss.
There are two primary causes of climate change: one is chopping down trees in our rain forests to plant soya beans, and we are doing what we can to mitigate the impact of that industry; the other is emissions from the front and the back of the cow, which release methane into the atmosphere. While the emissions from our cattle are regrettable, we have taken steps to control the phenomenon, and we are currently taking further action.
A report called “The English Beef and Sheep Production Roadmap—Phase 1”, from 2009, states:
“Steady improvements in beef and sheep production efficiency have taken place over the past decade, with 5% fewer prime animals required to produce each tonne of meat in 2008 than in 1998.”
Emission levels from British cattle have therefore been reduced due to lower cattle numbers.
Regardless of where the emissions come from, however, the inquiry undertaken by the all-party group has clearly highlighted the fact that there are specific issues surrounding the way in which we in England measure carbon emissions from grazing livestock on our farms. In some cases, we go so far as to disadvantage our farmers, our industry and even our country, in terms of its ability to meet the agricultural industry’s global targets. It is outrageous that there is no international consensus on sequestration, and I am sure the Minister will want to see one. Having a consensus is absolutely fundamental; indeed, there is an old saying: “If you can’t measure it, you can’t manage it.” We have to move forward on that.
Britain excludes sequestration from its assessments, whereas France and Wales, which is next to my constituency, include sequestration. That means that when we make comparisons between the three countries and measure how close each is to reaching its targets, we in England find ourselves at a disadvantage. While the inquiry by the all-party group, which is led by my hon. Friend the Member for Tiverton and Honiton, has told us many things we already knew, it has also revealed sequestration to be the primary issue of contention.
England has one of the most efficient livestock production systems in the world, in the form of our rain-fed pastures. Yet, grazing cattle and sheep comes in for undue negative criticism, with the focus fixed firmly on emissions from animals. Those animals actually have a positive part to play in landscape management and the utilisation of land that cannot, as many colleagues have said, be used for arable crops. Many fellow Members would support us in the view that our sheep and cattle contribute meaningfully to our environment, and the all-party group report rightly acknowledges that. One of the contentions revealed by the report is that if we, like France and Wales, took such issues into account, our carbon footprint could be significantly lower, and our farmers would be at less of a disadvantage.
The report suggests we need more robust scientific evidence and data to move the debate forward constructively. National Farmers Union climate change adviser Dr Ceris Jones acknowledged that the report highlights the exclusion of sequestration from the majority of our calculations of greenhouse gases. As the report recalls, “a number of witnesses” supported the idea that pasture land had the ability
“to sequester carbon from the atmosphere”.
It goes on to point to research being done in France by Professor Jean François Soussana on carbon sequestration, which may point to why several countries now include carbon sequestration in their calculations.
In my constituency, farming is a major employer and a huge part of the local economy. I therefore find very troubling anything that hampers my constituents or that might prevent their businesses from growing or from being as successful as they could be.
Carbon sequestration is set to be a significant issue for the industry, particularly because of the different attitudes towards it in different countries. As I explained, those differences could have a significant negative impact on our industry. If we could offset the methane emissions from grazing livestock, as happens in France and Wales, that could have a positive implication for our understanding of our livestock’s carbon footprint. Additionally, as the report explains, that
“would render the current PAS 2050 model incorrect and would mean we should move to a model closer to that used in France.”
Before such a drastic move is contemplated, and with the science unresolved, further investigation should, of course, be our first course of action. Dr Luke Spadavecchia, of DEFRA, has explained to the all-party group the complexity of the sequestration calculation. Even if the science on sequestration was unanimous, however, the inquiry would still have raised several valid and vital points on, for example, sustainability and the role our cattle and sheep play in feeding the world’s growing population.
Ultimately, there is still much debate to have on this matter. I hope the inquiry and our subsequent debate will enable us to find common ground so that we can move forward and give our farmers the best opportunity to succeed.
Kerry McCarthy (Bristol East) (Lab)
It is a pleasure, as ever, to serve under your chairmanship, Mrs Brooke.
It is probably masochism that brings me here to debate with a room full of farmers. People are well aware of where I come from on this issue, but I hope to convince them that I am speaking not from an emotive perspective, but on the basis of a significant number of reports from eminent experts in the field, which have convinced me of the environmental danger posed by the livestock sector.
In 2009, I introduced a debate in Parliament on the environmental impact of the livestock sector—as I recall, it was just me and the then Labour Minister, who was not particularly impressed. [Interruption.] Actually, the hon. Member for Strangford (Jim Shannon) may have been there.
It is a shame that my hon. Friend the Member for Stoke-on-Trent South (Robert Flello) is not here, because he introduced the Sustainable Livestock Bill in Parliament a few years ago as a private Member’s Bill.
Neil Parish
When the hon. Lady refers to the dangers of livestock production, is she differentiating between grass-fed livestock on permanent pasture, which is good for the landscape and biodiversity, and other forms of livestock? It is an interesting point, and I would like her to clarify it.
Kerry McCarthy
I will get on to that in a moment. It was one of the first points I was going to make.
My hon. Friend the Member for Stoke-on-Trent South is by no means a vegetarian—he enjoys eating meat—but he made a persuasive case at that time for looking at the environmental impact of the livestock sector. It is a shame that he could not be here, because he perhaps has more credibility on these matters than I do in the eyes of the farmers present.
However, let me turn to my first point and respond to the intervention from the hon. Member for Tiverton and Honiton (Neil Parish). The problem with today’s debate is that it has, for understandable reasons, focused very much on farming in the UK. I understand that Members are keen to support the industry and the farmers in their constituencies, but that has led to a bit of a distortion, with a focus on grazing and grass-fed livestock, although I entirely agree that their environmental impact is less serious.
I had an interesting meeting with the Campaign to Protect Rural England on Friday and was told how in some areas of Wales the land previously used for sheep grazing was being used to grow blueberries, or given over to forestry, which were both more profitable. I accept that the areas at the top of the hill would not be suitable for that, but the CPRE made the case for alternative uses. Given the price of blueberries in the supermarket, perhaps people would gain from venturing into growing them.
Jim Shannon
The hon. Members who have spoken in the debate have focused on local farming, but I think every one mentioned farming elsewhere in the world, where the impact and the carbon footprint are greater. Does the hon. Lady acknowledge that if livestock farming plays a role—and we believe it may—other countries need to do their part? Does she feel that that is something she should focus on?
Kerry McCarthy
I entirely support the move, if people are going to eat meat, towards locally-sourced, sustainable, grass-fed cattle. That is far more environmentally friendly, in view of issues such as food miles; and, in the case of organic meat, issues of pesticides and fertilisers are also addressed. I support that. It is not the ideal solution, but it is a lot better.
I had a piece published on the topic in the New Statesman last week; 97% of the world’s soya crop goes to farmed animals. As to the question of how to feed the world without a partly meat-based diet, it is estimated that we could eliminate most of the worst of world hunger with about 40 million tonnes of food, but at the moment nearly 20 times that—760 million tonnes—is fed to animals each year. My article was to an extent a criticism of the Enough Food IF campaign, which is about feeding the world and lobbying the G8 to address global hunger. The campaign criticises the fact that 100 million tonnes of crops go towards biofuels, and says that biofuels are a bad thing; but, as I have said, 760 million tonnes go towards feeding animals and it seems completely silent on that point. That needs to be addressed when we consider the devastation of the rain forest and its environmental impact.
Bill Wiggin
The hon. Lady is making an important point about the substitution of animal feed for human food, but she must understand that—even if the crop is wheat or soya beans—not all that food would be suitable for human consumption. Therefore, even in the ideal world that she hopes to live in, what she envisages would not mean we could not have animals.
Kerry McCarthy
I understand the nuanced argument that the hon. Gentleman is trying to make, but I still think that there is a compelling case, and I want to deal now with some reports.
It seemed to me that during the debate there was a herd of elephants in the room, which hon. Members were not mentioning. No reference was made to other very authoritative reports, which have said there is a serious issue to be addressed. In my 2009 debate, I cited the United Nations Food and Agriculture Organisation report of 2006, “Livestock’s Long Shadow”, which makes compelling reading. It concluded:
“The livestock sector emerges as one of the top two or three most significant contributors to the most serious environmental problems, at every scale from local to global.”
I will not cite all the figures that I quoted in my debate, because people will be familiar with the fact that it takes 8 kg of grain to produce 1 kg of beef.
Kerry McCarthy
I do not think I can take any more interventions, because I suspect the winding-up speeches will begin soon, and I have been generous in giving way.
Raj Patel wrote in “Stuffed and Starved”:
“The amount of grains fed to US livestock would be enough to feed 840 million people on a plant-based diet. The number of food-insecure people in the world in 2006 was, incidentally, 854 million”.
I also cited figures about the water footprint. It takes 100 times as much water to produce 1 kg of beef as it does to grow 1 kg of vegetables. It takes 2.2 calories of fossil fuel energy to produce a single calorie of plant protein. It takes almost 21 square metres of land to produce 1 kg of beef, if we factor in animal feed, compared with 0.3 square metres to produce 1 kg of vegetables; I could go on. That was a 2006 report, but more recently Professor Mark Sutton, the lead author of a UN environment programme study published in February, entitled “Our Nutrient World”, called for people to become what he called demitarians, and eat half as much meat as they do now. He said:
“Unless action is taken increases in pollution and the per capita consumption of energy and animal products will exacerbate nutrient losses, pollution levels and land degradation, further threatening the quality of our water, air and soils, affecting climate and biodiversity”.
In 2009, a report was produced called “How Low Can We Go?”. It was co-authored by the World Wide Fund for Nature and the Food Climate Research Network set up by Dr Tara Garnett, who is now at the university of Oxford. It gave scenarios in which cuts in food system emissions would mean we could reduce the total UK carbon footprint by 20%—that is, make a 70% cut in the UK food carbon footprint, which is currently about 30% of the UK total. It concluded:
“A reduction in consumption of livestock products could play a significant role in any deep and long-term abatement strategy”
to cut greenhouse gas emissions
“from the UK’s food chain.”
Another relevant paper was called “Public health benefits of strategies to reduce greenhouse-gas emissions: food and agriculture” and was published in The Lancet in December 2009. It was a collaboration between the National Centre for Epidemiology and Population Health at the Australian National University, Canberra, the London School of Hygiene and Tropical Medicine, the Food Climate Research Network and the London International Development Centre. I am sure that hon. Members do not need me to tell them that work published in The Lancet is peer-reviewed. I would say that that is a considerably more rigorous process than the all-party group inquiry that we have heard about. The paper concluded:
“Agricultural food production and agriculturally-related change in land use substantially contribute to greenhouse-gas emissions worldwide. Four-fifths of agricultural emissions arise from the livestock sector. Although livestock products are a source of some essential nutrients, they provide large amounts of saturated fat, which is a known risk factor for cardiovascular disease. We considered potential strategies for the agricultural sector to meet the target recommended by the UK Committee on Climate Change to reduce UK emissions from the concentrations recorded in 1990 by 80% by 2050, which would require a 50% reduction by 2030. With use of the UK as a case study, we identified that a combination of agricultural technological improvements and a 30% reduction in livestock production would be needed to meet this target”.
The final report I want to mention is “Setting the Table”, commissioned by the Department for Environment, Food and Rural Affairs and published by the Sustainable Development Commission in December 2009. It found that eliminating waste, cutting fatty and sugary foods and reducing meat and dairy consumption would make the biggest contribution towards improving health and reducing the environmental impacts of the food system. The SDC’s research found evidence that consuming only fish from sustainable stocks, eating more seasonal food, cutting out bottled water, shopping on foot, and some other things not directly related to the meat industry would contribute towards a more sustainable diet. However, it concluded that the most significant health and environmental benefits were from reducing meat and dairy, cutting food and drink of low nutritional value and reducing food waste.
I appreciate the intention of hon. Members who are present today to defend the UK beef and sheep industry; but I do not think it is helpful, in doing that, to ignore much of the other evidence. We cannot look at the issues in isolation. We should begin by acknowledging that there is a problem, and address that. I am slightly concerned that EBLEX, the organisation for the British beef and sheep industry, supports the all-party group, and is thanked in the report. I also note that Weber Shandwick provides the secretariat for the group, and has been thanked for its help in compiling the report. I do not know quite what clients it has that have led to its interest in the issue, but I think vested interests are clearly at work. I was going to say they are trying to pull the wool over our eyes—I have managed to make an entire speech without sheep or cow-related puns until now; I am not sure that the Minister or my hon. Friend the Member for Ogmore (Huw Irranca-Davies) will manage that. He already has a twinkle in his eye. I think that there is, to an extent, an attempt to pull the wool over our eyes, and I urge Ministers to consider the issue in the round, rather than looking only at the narrow points made in the report.
Huw Irranca-Davies (Ogmore) (Lab)
It is a delight to serve in a debate under your stewardship, Mrs Brooke, and to respond briefly, before the Minister takes the stage. I thank the hon. Member for Tiverton and Honiton (Neil Parish) and other members of the all-party group on beef and lamb for their work on the report. I note for the record my membership of the group, although I can take no credit or praise for this report. I was absent from the proceedings during witness statements and so on. My absence in no way diminishes the report; in fact, it probably strengthens it.
I will mention the contributions before I make some detailed points. The chair of the all-party group, the hon. Member for Tiverton and Honiton, went in some detail through the report, which I will discuss in a moment. I should make it clear that I used the example of Welsh White cattle for a particular reason. He made the point ably in his contribution that we should consider not only issues such as carbon reduction, emissions and sequestration, but the wider benefits of particular livestock in certain landscapes and environments.
The reason why I gave the curious example of the fairly rare Welsh White—a small beef animal—is that its footprint is slightly lighter than other cattle but slightly heavier than sheep. It does a perfect job of breaking up the upland peat bogs of the Plynlimon hills, but not breaking up the ground too much. Combined with excellent work done by local farmers and the Wildlife Trusts to re-block some of the drains dug during the second world war to dry out the land so crops could be planted, which never quite worked successfully, the breed is now yielding great dividends. The right creature in the right habitat helps biodiversity as well.
The hon. Gentleman made the point well in his contribution that there is a wider range of issues, some of which are interlinked. Often, we talk about carbon on this side and biodiversity on the other side. We need to pull the strands together intelligently.
The hon. Member for Strangford (Jim Shannon) made a varied contribution. He always speaks well, and not only about the interests of Northern Ireland and his constituents. He rightly raised food security and food production, as did other Members. We are focusing increasingly on meeting the need for good nutrition and affordable food on the tables of a growing population both within this country and in terms of exports. Export markets are growing for Northern Ireland, Scottish, Welsh and English produce.
The hon. Member for Banff and Buchan (Dr Whiteford) added an extra dimension to the debate when she said that we need to consider both sides of carbon. Again, that came out in the all-party parliamentary group’s report: this is not simply about carbon emissions, but about sequestration within different types of landscape. The point was well made, and I will return to it.
The hon. Member for North Herefordshire (Bill Wiggin) made a good contribution, although I should pick him up on one point. He referred to Wales, “which is next to my constituency.” It is a little larger than simply being next to his constituency; it is next to a few others as well. I understand that Wales is often used as a unit of international measurement, but I would not want to think that it is only the size of North Herefordshire. It is a little larger.
Huw Irranca-Davies
It is, but it is next door to a lot of others as well. We may be slightly smaller than other countries, but we are a proud nation, as the hon. Gentleman knows.
My hon. Friend the Member for Bristol East (Kerry McCarthy) rightly challenged the farming sector with its responsibilities in terms of climate change and carbon emissions, saying that it could do more. She was eminently reasonable on the contribution that farming could play as part of the wider UK and global drive to tackle global emissions. She also widened the debate to the issue of biofuels versus food, which other hon. Members also raised, and to diet and other reports that challenge or contradict what we are debating. Those reports were useful for this debate and probably deserve separate debates, which I am sure she will seek; it is right to have challenge.
This is more than simply an applied academic argument about how we measure and compare the carbon footprint of livestock. It is about effective measures to improve the performance of different types of farms in different farming sectors, and we can seek that improvement only if we measure the right thing in the right way and make like-for-like comparisons both within the UK and its devolved Administrations and internationally. As hon. Members have said, it is also a matter of food security and providing for the demands of a growing global population, and as I am sure other members of the all-party group are aware, it is a matter of reputational importance to the livestock sector. It recognises the work that the sector can do and its role in reducing carbon emissions, while putting good, wholesome British food on consumers’ plates in all parts of the UK and increasingly in other countries, which demand outstanding produce from England, Northern Ireland, Scotland and Wales.
The all-party group’s report raises questions about the accuracy and appropriateness of measurement, the lack of consensus on standard methodologies of measurement and the lack of comparability between measurement approaches domestically and internationally, as well as about how carbon sequestration can and should be taken into account with a standard approach. The all-party group has done a great service to the House by raising those issues, so that the Minister can respond to them domestically and internationally. I will turn briefly to some of the specific issues.
I am grateful for the information provided to all hon. Members by the National Farmers Union and others. One interesting dilemma within the discussions on carbon emissions and sequestration is illustrated in upland hill farming, which is part of my family background. The NFU makes the good point that such farmers could be particularly disadvantaged by how we currently measure, assess and compare carbon impacts. Some of the hill farms are on poor land without any real alternative uses. Such farming is also extensive in nature; it takes far longer to raise lambs to carcase weight. The finishing period is far longer, and generally, the vegetation and forage are of a much lower standard. That has a significant impact. When we look at the farming sector as a whole and say, “You’re not doing well enough,” the question comes back, “What alternatives do you have for that environment?” It is an interesting question. I am glad that I am speaking up for sheep, rather than cattle, after my earlier intervention. As we mentioned, it is also a question of the benefits for landscape management and biodiversity of having the right livestock in the right place.
On the international comparators raised by the all-party group and others, can the Minister give us an update on what progress has been made towards standardising international measures? What is happening on the common carbon footprinting methodology for the lamb meat sector? What is happening on the slightly earlier-stage beef life-cycle assessment white paper by the Global Roundtable for Sustainable Beef? How are those things progressing? They and similar transnational interventions might provide some solutions to what the all-party group seeks.
Some issues raised by the NFU include the uncertainty still associated with agricultural emissions—it existed while we were in government, and it is still ambiguous now—the need for good data about the wider aspects of on-farm activity, the choice of unit used to assess on-farm activity and carbon emissions, where the boundary lies and whether farm-specific mitigation measures should be part of the overall measure of a farm’s carbon impact. If a farm takes measures, including on renewable energy and so on, should they be included?
Finally, the NFU has broadly welcomed the recent call by the Agricultural and Horticultural Development Board to develop and deliver a computer-based environmental impact calculator for use by UK farms. It sees that as a way to achieve less ambiguity and more confidence. Will the Minister give us an update on that as well?
I thank the all-party group for its report and for securing the debate this afternoon. The right questions are being asked, and I am sure that the Minister will give us some assurance on them. Much more work needs to be done on measurement and comparability, but while recognising the real issues of food security and affordability, there are also things on which the farming sector—if we can get the measurements right—will want to deliver. Such work will show not only what a good job farmers do, but what more they can do to help us in our drive to tackle carbon emissions and climate change.
The Minister of State, Department for Environment, Food and Rural Affairs (Mr David Heath)
It is a pleasure to serve under your chairmanship, Mrs Brooke, and I think that this is the first time I have done so, so it is a particular pleasure. I, too, congratulate the hon. Member for Tiverton and Honiton (Neil Parish), not only on securing the debate and his contribution to it, but on the work of the all-party group for beef and lamb, which he chairs, and its report.
I am going to introduce a few figures, which are important to the debate. It is a fact that man-made greenhouse gas emissions represent a serious threat of climate change. Inescapably, agriculture directly accounts for about 10% to 12% of global greenhouse gas emissions. More widely, including other emissions associated with agricultural production, such as land use change, energy for fertiliser production and fuel for transport and refrigeration of products, emissions from global food production are far more significant, perhaps totalling 25% of global greenhouse gas emissions. In the UK, the figures are rather different. Agriculture accounts for about 9% of UK greenhouse gas emissions, and overall emissions from the agriculture sector have decreased by 20% since 1990, while we expect them to decrease by 12% from 2010 levels by 2025. I hope that that puts the issue into context.
The hon. Member for Tiverton and Honiton, as well as the hon. Members for Strangford (Jim Shannon) and for Banff and Buchan (Dr Whiteford), stressed the importance in discussion of such matters of recognising balance—there are downsides, but also upsides. The hon. Member for Ogmore (Huw Irranca-Davies) mentioned, for example, the value not only of biodiversity but of having a thriving and positive economy in the country. Getting the balance right is important, therefore, and is exemplified in specific cases. The hon. Member for Ogmore told us about his little, sad-looking White cattle in Plynlimon. I seem to remember that Plynlimon is the wettest place in the United Kingdom—it has the highest rainfall—so perhaps that is why the cattle look sad: they are sitting at the source of the great River Severn and feeling sorry for themselves, because it is raining. Nevertheless, he made an important point about needing the right animals in the right places to achieve the right results.
To return to our carbon footprint in this country, UK beef and lamb producers are among the most efficient globally. In 2010, the EU Joint Research Centre published a report showing that British beef is produced with less than half the emissions per kilogram than beef from Brazil. Those results are supported by research undertaken by Ricardo-AEA and Cranfield university, which reported that beef from Brazil is produced with 33% greater emissions than beef from the UK. The point I am making, because many Members have been concerned about what carbon footprinting is all about, is that it can be a useful tool to help businesses identify inefficiencies and emissions hot spots in order to improve not only environmental performance, but business efficiency and competitiveness.
I was slightly concerned by the contributions of some Members, who suggested a serious detriment to agricultural producers in this country, which carbon footprinting is not. Carbon footprints are not used in international policy making; they are tools for the benchmarking and marketing of products. In England and Wales, we do not have Government targets for mitigation in the agricultural sector. International emission comparisons are made using greenhouse gas inventories that are compiled under strict guidance issued by the Inter- governmental Panel on Climate Change. It is important to recognise that carbon footprinting can help the industry to meet not only our societal needs, in dealing with greenhouse gases, but its business needs, in doing the right thing. Carbon footprints are not intended—I can certainly foresee no such intention—to be introduced as targets or as something that individual producers must fulfil.
Nevertheless, the industry wants to do better. The UK beef and sheep industry, therefore, is seeking further emission reductions through the EBLEX product road maps, recognising that measures to reduce agricultural greenhouse gas emissions generally increase business efficiency and competitiveness. My Department welcomes such developments as part of the wider growth strategy for the sector.
The APG made some specific points. Its report draws attention to the problems of standardisation for carbon footprinting of the beef and sheep sector. Under the previous Government, DEFRA worked with the British Standards Institute and the Carbon Trust to develop the PAS 2050 standard for carbon footprinting and to encourage best practice. PAS 2050 aims to simplify carbon footprinting so that it can be carried out by a wider range of practitioners, and provides guidance to ensure greater consistency in approach.
The report is right to point out, however, areas of uncertainty where flexibility is needed, so PAS 2050 is not prescriptive for individual products, although it includes the potential for industry to develop product guidelines known as “supplementary requirements” to ensure that consistent approaches are used and to improve comparability of results. The dairy sector, for example, has produced such guidance via DairyCo, in partnership with the Carbon Trust. DairyCo has also worked with the International Dairy Federation to promote international standardisation. EBLEX is, as mentioned by the hon. Member for Ogmore, discussing international standards for carbon footprinting beef production systems with the Sustainable Agriculture Initiative or SAI Platform, a food-industry initiative supporting the development of sustainable agriculture worldwide. Similarly, EBLEX is exploring options to develop international standards for lamb production.
The APG report also calls for improved accounting of soil carbon sequestration in carbon footprinting. PAS 2050 provides for the optional inclusion of soil carbon sequestration in carbon footprinting, but we might have a misunderstanding about the terminology, which I want to address. There is a distinction between carbon storage and carbon sequestration: carbon storage is carbon that is held by permanent pasture or any other land management system; and carbon sequestration is a process by which carbon is captured in that system.
Scientific understanding indicates that UK pastures represent a significant store of carbon, but do not tend to sequester additional carbon from the atmosphere. That is where the distinction needs to be drawn. If we change land management, of course we have a change—perhaps a positive one, perhaps a negative one, but one that could be either sequestration or release of carbon—but, in a steady state, we do not have a movement of carbon on that basis. Where management practices are employed to increase soil carbon sequestration, the benefits are often small, uncertain and difficult to measure. Nevertheless, DEFRA has invested £390,000 in a project to improve carbon accounting under agricultural land management, including work to assess the extent to which agricultural land management can enhance carbon sequestration in the UK, the findings of which will support carbon footprinting studies. We expect the results to be published in the spring of 2014.
Bill Wiggin
My understanding of what the Minister said is that grassland is better storage than a sequestration process. However, the business of farming for cattle and sheep means that the carbon is captured by the grass and then moved along the food chain as the cattle eat the grass and become food and manure. That is the sequestration process, and that is why it is important to measure it.
Mr Heath
There is a constant store in any land management system. Any landscape feature, if it is not changed, will have a constant store, so there is a zero-sum gain. If the land is ploughed up or a different crop is grown, the equation may change and the position will be different. That is the simple point that I am making.
We want to continue to fund research into improving the sophistication and accuracy of carbon footprinting methods to support the industry and we have engaged actively in the production of internationally agreed standards for carbon footprints. Research under the UK’s agricultural greenhouse gas research and development platform is a £13.5 million initiative which, in response to the hon. Member for East Londonderry (Mr Campbell), who is not in his place at the moment, is shared with the devolved Administrations, so it is also relevant to the hon. Member for Banff and Buchan. Its purpose is to improve the understanding of greenhouse gas emissions from UK agriculture, and it will also provide underpinning evidence to improve the quality of carbon footprints.
Given the wide variety of production systems and processes in beef and sheep farming, carbon footprinting inevitably becomes part of the marketing mix, but as with other product information, the industry has a responsibility to be transparent about what it has and has not included in the analyses.
Kerry McCarthy
Will the Minister address the point that was made by the hon. Member for Tiverton and Honiton (Neil Parish) about methane emissions? I believe that 37% of methane emissions are attributable to the livestock sector, but the hon. Gentleman argued that because they come from a natural source they may not be as environmentally damaging as emissions from other sources. My understanding is that emissions are emissions and cause the same harm regardless of where they originate.
Mr Heath
The hon. Lady is of course right. A greenhouse gas is a greenhouse gas and has an effect on climate change. I do not accept entirely the argument about some being natural and others are not. That is transparently the case, but it is not a distinction that should affect our consideration of emissions. Some processes and activities are more avoidable than others, and some have a societal interest. The hon. Lady’s contention is perfectly respectable and she is entirely consistent in what she says about not using pasture land to produce animals as we do at the moment. However, society generally does not agree with that view. Society in this country generally wants to eat meat and wants the most efficient and effective processes, which is why we provide research support to help the industry to make those processes as beneficial and as least harmful as possible, but that does not mean that people do not want to eat meat. In the same way, people want to move around the country despite the fact that doing so has a demonstrable effect on greenhouse gas emissions.
Kerry McCarthy
I thought I made it clear at the beginning that I was concerned primarily about soya and grain production and its impact, rather than grass-fed animals in this country.
Mr Heath
I understand. I am not trying to misrepresent the hon. Lady’s point of view. She opened her comments by saying that she was somewhat masochistic in expressing her view in a debate populated largely by people with agricultural interests.
If we can do anything to mitigate effects on agriculture and any other sphere, we should do so. If we can provide help with research and help the industry to help itself in reducing those effects, all the better. We want to put all those factors into the equation with the other undoubted benefits of extensive pasture and the societal changes in parts of the country where other forms of agriculture would be exceedingly difficult, or in areas where there is huge expertise, for example, in beef production. My hon. Friend the Member for North Herefordshire (Bill Wiggin) prayed in aid his Hereford cattle, and I thought there might be tension between those with Herefords and those with Aberdeen Angus cattle, but that did not arise. Let us join together in saying that this country is blessed with not only some of the best breeds of livestock, but some of the best livestock husbandry anywhere. I am proud of that, and it makes my job that much easier.
My final point is about industry development and supplementary requirements, and responds in part to the report of my hon. Friend the Member for Tiverton and Honiton’s all-party group. Getting development of supplementary requirements under PAS 2050 and product rules under the greenhouse gas protocol product standard will help to bring consistency to carbon footprinting in the beef and sheep sector. EBLEX has taken the lead, and is a very effective levy-funded organisation. It is working on a UK-wide basis, which is relevant to some of the arguments about levy funding in the red meat sector, to produce the best possible advice and support for all producers throughout the United Kingdom, and I support it in that.
My hon. Friend and his all-party group have made some important points about the lack of consistency and the interpretation of the information we have to date. We accept that there is a lack of consistency. We want to improve that and to make the information as useful as possible because that will help the industry to move in the right direction in reducing as far as possible the emissions from agriculture and ensuring that we contribute as much as we can to our overall reduction in greenhouse gas. I hope we all support that. It is a principal feature of Government policy.
Neil Parish
I thank the Minister for his response. I want to put on the record the benefits of grass-fed beef and sheep production, and the fact that the amount of carbon stored in the soil balances the methane gas that the animals release. That is the particular point that I wanted the report to emphasise.
Legal Aid (Rural Wales)
(10 years, 10 months ago)
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Mr Mark Williams (Ceredigion) (LD)
It is a particular pleasure, Mrs Brooke, to serve under your chairmanship this afternoon. We have an extra minute or so, for which I am very grateful.
I sought this debate to highlight the increasing number of concerns about the proposals to reform legal aid, following publication of the consultation document, “Transforming Legal Aid” by the Ministry of Justice on 9 April. I hope to obtain some reassurance from the Minister that, at the very least, the impact of the reforms on our constituents will be fully considered before changes are made.
The consultation, which closed on 4 June, outlines a number of reforms to the provision of legal aid across the England and Wales that are causing a great deal of concern. I responded to the consultation, as many other colleagues did, and tomorrow’s Back-Bench debate provides another opportunity to speak on the issue—if hon. Members only have a small bite of the cherry today, there is the opportunity for a bigger bite in that debate.
I wanted to focus on the effect of the reforms particularly in rural areas—in constituencies such as mine and in rural Wales generally—because I believe that that has been lamentably overlooked in the consultation. I worry that, if enacted, the proposals will have a devastating impact on access to justice for my constituents and on solicitors’ practices, and we must be aware that the significance of the reforms is such that, if enacted, there will be no going back.
Before addressing the proposals, I want to raise concerns about the consultation itself. First, as mentioned by the Welsh Assembly Government in their submission to the consultation, there was no mention in the consultation document of the Welsh language in accordance with the Welsh Language Act 1993. The Welsh Language Commissioner, Meri Huws, states in her submission letter:
“There are several references in this consultation to assessing the impact of the proposed changes on various groups as well as assessing the impact in accordance with the MOJ’s duties under the 2010 Equality Act. With regard to the Welsh language, there is no mention of it in the consultation’s documentation.”
What discussions have there been so far between the Ministry of Justice, the Welsh Language Commissioner and the Wales Office? I am glad that a colleague from the Wales Office, the Under-Secretary of State for Wales, the hon. Member for Preseli Pembrokeshire (Stephen Crabb), is present today. It strikes many of us that the specific concerns of Wales have been low down the pecking order.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
I congratulate the hon. Gentleman on securing the debate, and I declare an interest, having practised legal aid work as a solicitor and barrister. I support everything that he is saying, but it is worse than he described. As the consultation document was sent out in English only, the Ministry of Justice thereby has broken its Welsh language policy. It is only a mere afterthought, as, I am sure, is getting rid of all these firms. The proposal is for four legal aid firms alone to deal with legal aid in the whole of north Wales, and I am sure that it is just as bad in mid-Wales.
Mr Williams
I am grateful to the right hon. Gentleman for that intervention, which illustrates the huge degree of concern. The Government embark on consultations, and we can have a debate about whether they are genuine; I hope very much that this one is, as much needs to be said and changes need to be made. However, I have to raise the treatment of the Welsh language in this case. I see, as an English speaker representing a majority Welsh-speaking constituency—50% of my constituents do so, and in large parts of my constituency, larger percentages speak Welsh as their first language—that what has happened is an insult to those people. All Departments across Whitehall need to be mindful of that when they produce any documentation.
Glyn Davies (Montgomeryshire) (Con)
The hon. Gentleman is making a hugely important point to many of us who represent rural parts where the Welsh language is strong. Does he agree that the consultation simply has not been acceptable, and the principal reason is the attitude towards the Welsh language, not only in the consultation, but in the fact that there will be four firms, making it impossible for them to deliver the service and pay proper account to the Welsh language?
Mr Williams
I agree with my hon. Friend completely on that point, and I am grateful for both interventions. They illustrate points that I will make a little later in my speech.
Simon Hart (Carmarthen West and South Pembrokeshire) (Con)
I intervene briefly, simply to say that in answer to a question of mine the Under-Secretary of State for Justice, my hon. Friend the Member for Kenilworth and Southam (Jeremy Wright), stated that
“any criminal legal aid contract holder would be required to meet the obligations of the Welsh Language Act.”—[Official Report, 11 June 2013; Vol. 564, c. 280W.]
That sounds all right on paper, but does the hon. Gentleman share my concern that it is something of an afterthought?
Mr Williams
As I shall say later, the delivery in practice will be a different story. There is concern that the consultation period of eight weeks is too short and does not allow people fully to analyse the proposals, particularly when reflecting on the Government’s ambitious timetable not only to get the proposals authorised, but to start tendering the contracts by the autumn. Consultation is particularly critical in this case, given that the proposals can be enacted without further primary legislation, which is why it is opportune that we discuss such matters now.
Jessica Morden (Newport East) (Lab)
I congratulate the hon. Gentleman on securing the debate. In April, the Government cut some civil and family legal aid, the consequences of which I am seeing in my office, with many parents fighting custody battles where one parent can get a solicitor and the other parent cannot. Therefore, justice is denied and courts are getting clogged up. In light of those changes, does it not make sense for the Government to slow down and have a look at what is happening already where they have cut legal aid, before rushing into further changes?
Mr Williams
I concur with much of what the hon. Lady says. This is about process, and what her constituents will find more difficult when they are faced, I think, with nine solicitors’ practices in the whole of Gwent is physically accessing legal aid, if it is available to them.
On the proposals themselves, the model is inappropriate for rural areas. The geography of our country is such that defendants will be allocated a solicitor whom they will find it extremely difficult, physically, to meet sometimes. The proposals do not take into account the vast distances and travel challenges across my area of Ceredigion and the rest of rural Wales. If a defendant from Newtown was allocated a duty solicitor in Llanelli, a meeting would require the defendant or solicitor to make a round trip of more than five hours—not to mention, of course, the challenges with transport links that we face in rural areas.
The reduction in firms that are able to bid for contracts will lead to huge delays in solicitors attending courts, or possibly a police station, and that has serious implications for the defendant. I understand from a local solicitor that, just before Christmas, GEOAmey—one of the private companies—transported a constituent of mine from Manchester to Aberystwyth but was unable to take the constituent off the prison van. It had to take him back, as it had brought only two members of staff, and at least three are needed to escort a prisoner. That vast journey, at huge expense, was a wasted opportunity. A future with a criminal defence system providing that level of service is a worrying one.
Mr Williams
I give way for the last time—[Interruption.] Sorry, nearly the last time.
Nia Griffith
Does the hon. Gentleman agree that affording that transport is virtually impossible for many clients and that, if they were allocated different people on different occasions, which can happen with repeat offences, they could end up with several different firms representing them at one court hearing? Again, that would be massively wasteful.
Mr Williams
The hon. Lady pre-empts another of my later remarks. The relationship between solicitors and those repeat offenders is critical, and we risk losing that.
It is asserted that there would be four providers across the whole of Dyfed Powys. There would be real access issues, and are the proposed consortia feasible? As we have heard from hon. Members, the proposals plan to have four providers across the whole of Dyfed Powys, four across the whole of north Wales—sorry, I correct myself—and four in Gwent and nine across the whole of south Wales. By contrast, 37 contracts are planned for Greater Manchester, which has a similar population to south Wales. Again, will the Ministry of Justice, and the Whip speaking for the Ministry today, outline how that was calculated? How was rurality factored in? Although my hon. Friends from south Wales and the M4 corridor will have strong feelings about the provision of access there, for those of us who work, live and function in mid-Wales and north Wales, the picture is disastrous. We lose out yet again, and we are put at a real disadvantage compared with other people across the country.
My next concern is that competitive tendering at 17.5% less will drive solicitors out of business. The competitive tendering proposed for contracts remains a major cause for concern. It will simply drive solicitors out of business. Those remaining will be firms that are willing to cut costs, possibly to unworkable levels. That would lead to tenders being awarded to less able and potentially less experienced firms, which may find themselves unable to deliver on the prices promised to secure the tender. I am clear in my mind where I would like to go if I needed legal advice. However, there is the spectacle of Eddie Stobart or Tesco providing the service. The Co-op has been mentioned recently, and I am a great supporter of the Co-op. It is an admirable place to go to buy food and it has a fine record of burying people—the Co-op funeral service is very good—but we should not be using such examples to justify changes to the legal system.
I am greatly concerned about the capacity of companies such as Capita, GEOAmey, Serco and G4S—and whether they are best placed to represent my constituents. My colleague in another place, Lord Thomas of Gresford alerted us in a Queen’s Speech contribution to Stobart Barristers—an offshoot of Eddie Stobart trucks. Lord Thomas noted that the Stobart Barristers legal director, Trevor Howarth, had confirmed that the firm would bid for the new criminal defence contracts and had said:
“We can deliver the service at a cost that’s palatable for the taxpayer… Our business model was developed with this in mind. We at Stobart are well known for taking out the waste and the waste here is the duplication of solicitors going to the courtroom. At the moment there are 1,600 legal aid firms; in future there will be 400. At Stobart, we wouldn’t use 10 trucks to deliver one product”.
As my noble Friend concluded, the problem with that is that criminal law is not a unit and justice is not a product that can be delivered like a load of bricks. That is the contrast in terms of what we are facing. There is a real fear that many of our high street solicitors will be lost; many will go out of business. The firms with the most cut-throat prices and cut-throat tactics will be the most successful, but I believe that liberty should be in the hands of the best, not the cheapest.
I come now to the loss of specialisms.
Roger Williams (Brecon and Radnorshire) (LD)
My hon. Friend is making many very good points, but surely one of them is that the people who supply these legal services will be given a financial incentive to get their clients to plead guilty. Surely, that is a characteristic of a totalitarian state, not the liberal democracy to which we aspire.
Mr Williams
My hon. Friend and I agree. He uses a very emotive word to describe what I think will be the reality on the ground.
Under the proposals, a call centre will allocate a lawyer from any background—an impersonal experience in itself—who might provide a minimal service to meet the requirements of the contract. People will not be able to select a firm by reputation, by personal recommendation or, sadly, by past experience. That discourages good practice and good performance among professionals, as those who gain a contract will get clients regardless of performance. Therefore, clients will be unable to choose a firm according to the nature—sometimes, the specialised nature—of their case. I have said this before and it is worth repeating: let us not understate the importance of the relationship between solicitors and clients and the trust that has been built up.
Solicitors in my constituency are concerned that the consultation document encourages solicitors not to provide a good service—not to provide the best service. The aim is to be “above acceptable levels”. That is a worrying prospect.
There will be a lack of choice. Owing to the call centre allocation of solicitors, clients will be left with no choice of representation. They may have a lawyer who does not know them or the area in which they live and who certainly does not know the background to their case. As the hon. Member for Llanelli (Nia Griffith) said, a different company could represent them at different stages. I think that that is bad.
The consultation document suggests that the same fee will be paid—this is the point made by my hon. Friend the Member for Brecon and Radnorshire (Roger Williams)—whether or not the matter is contested. Those firms that are awarded contracts will have a financial incentive to do minimal work to make their business sustainable, to the detriment of the client’s case. That could lead to a perverse incentive for legal advisers to recommend that clients plead guilty, as they would receive the same fee regardless of plea—a conclusion that certainly the solicitors whom I have spoken to are concerned about. They believe that suspicion may be created between client and lawyer.
I want to end where I started, with the effects on language. When we are talking about the consultation, there remain serious issues surrounding the provision of language services. I have anecdotal evidence that the large firm Capita is regularly unable to provide interpreting services to courts in a timely manner. In my constituency, as I said, Welsh is the first language of about half the population. In many parts of Ceredigion, it is overwhelmingly the language of everyday use, so the issue to which I refer is a worry and a barrier preventing many people from accessing the representation to which they are entitled.
I want to ask the Minister and particularly those behind the scenes in the Ministry of Justice about their awareness of Wales and of the Welsh language. As the Welsh Government pointed out in their submission to the consultation, the Ministry of Justice’s own Welsh language scheme—a point that the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) mentioned—declares the Ministry’s commitment to the principle of treating the English and Welsh languages on the basis of equality. The current system of more local provision means that someone is more likely to satisfy Welsh language needs. These proposals mean that it is much more likely that a provider will be based outside the relevant area and even outside Wales, allowing no provision for Welsh language services at all.
The proposals are socially divisive, as only the wealthy will be able to afford to choose their own lawyer. Only those who can afford to will be able to determine how they are represented. Everyone else, if they are eligible for legal aid, will be allocated a lawyer via a call centre.
Some of the public narrative on the issue has characterised it as one of fat cat lawyers acting in their own interests, although if we talk to solicitors on the ground, the story is somewhat different. In reality, it is far more worrying. It is about universal access to justice, the credibility of our court and justice system and the responsibility of Parliament to ensure the continued efficacy of our justice system.
Overall, what has been billed as a simple money-saving measure will have far deeper ramifications for society. The proposals take the fundamental principle of access to justice away from anyone who cannot afford it, but it is a right, not a commodity to be bought and sold.
The Minister knows that this is a consultation, and the deliberations will go on about the various submissions. I sincerely hope that it is a real consultation and that the Government will look at the submissions, particularly those from us in Wales and the concerns that we have raised; and I hope that the Minister and the Ministry of Justice will therefore reflect favourably on the needs of rural Wales.
The Lord Commissioner of Her Majesty’s Treasury (Mr David Evennett)
I warmly congratulate my hon. Friend the Member for Ceredigion (Mr Williams) on securing the debate. I have been asked to respond on behalf of the Ministry of Justice by my right hon. Friend the Lord Chancellor and I will of course ensure that he is aware of the representations and comments made this afternoon by my hon. Friend and by other hon. Members present. I am delighted that the Under-Secretary of State for Wales, my hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb), is able to be with us at this important debate. I am well aware that the Wales Office has received many representations from Welsh MPs on these matters. I would like to point out that my right hon. Friend the Secretary of State for Wales has discussed these issues with the Lord Chancellor and we are sensitive to the interests and needs of the Principality.
Albert Owen (Ynys Môn) (Lab)
I apologise for not being present at the very beginning of the debate. Is the Minister saying that he is looking favourably at a Welsh dimension to the whole consultation process? In addition to that, we are talking about rural areas that are on the periphery—areas that have lost court services and lost other forms of access to justice.
Mr Evennett
I am grateful for that intervention. Of course, we are aware of and sensitive to the issues that are being raised. We will obviously take into account everything from the debate and the consultation.
The Government must always be mindful of the impact of their policies on those affected by them. Debates such as this are most welcome, as they help to strengthen and improve Government policy by ensuring that hon. Members’ expertise and local knowledge are fully considered. Before I respond to the substantive parts of the debate, I would like to make three general points about the changes that have been consulted on in respect of legal aid.
First, the Government will continue to uphold everyone’s right to a fair trial. We do, however, have a duty to look at how the system is working, taking into account the taxpayer, legal aid applicants and the legal profession as a whole. Secondly, access to justice and access to taxpayer-funded legal aid should not be confused. We have a duty to ensure that all public expenditure is justified. Thirdly, the Legal Aid Agency would ensure, as part of the tendering process, that all providers were capable of delivering the full range of criminal legal aid services under contract across their procurement areas. Quality-assured duty solicitors and lawyers would still be available if these changes were implemented, just as they are now.
I would like to outline the rationale behind the legal aid proposals and their potential impact in Wales. In its programme for government, the coalition set out its intention to undertake a full review of the legal aid scheme. Following consultation, the Government’s final proposals culminated in the Legal Aid, Sentencing and Punishment of Offenders Act 2012. As well as reducing the scope of the civil legal aid scheme, the Act made sweeping reforms to the central administration of the legal aid system. Through the introduction of the Legal Aid Agency, we have strengthened accountability and introduced a more rigorous approach to financial management. We estimate that those and other reforms will save about £320 million per year by 2014-15, but our legal aid scheme remains one of the most expensive in the world. Legal aid spending in Wales has increased, as it has dramatically in England.
Mr Llwyd
First, spending is in the median area of the league; it is not being compared with like common-law jurisdictions. Secondly, the Act to which the Minister refers has a specific section that says, “Of course, people will always have an entitlement to choose their own lawyer.” That is now being swept away.
Mr Evennett
The right hon. Gentleman does not highlight the fact that the cost to the taxpayer of criminal legal aid is still around £1 billion a year, which is a phenomenal amount of money.
Mr Evennett
And yet we are talking about a phenomenal amount of taxpayers’ money.
The Government’s latest reforms, published in the “Transforming Legal Aid” consultation in April this year, tackle the cost of criminal legal aid, as well as finding further savings from the civil legal aid scheme. In particular, the proposal to introduce price-competitive tendering into the market for criminal litigation services has attracted a number of comments, such as those made by my hon. Friend the Member for Ceredigion and others this afternoon. If our proposals are implemented, the number of contracts tendered by the Legal Aid Agency will reduce from about 1,600 to about 400.
For the record, I would like to dispel a few myths, which have been highlighted this afternoon, about the model on which we consulted. The 400 figure relates to the number of contracts the Legal Aid Agency would tender, not the number of firms in the market or the volume of work available. The proposals on which we consulted do not prescribe how many lawyers would be available or how those who have the contracts can divide the work allocated to them. The proposed model would result in a consolidation of the market, but that does not mean that smaller firms of solicitors will go out of business. Some may choose to join together to bid for contracts. Others may decide to act as agents.
Mr Evennett
I would like to make a little progress, because otherwise I will not answer my hon. Friend’s points.
Importantly, specialist services—vital for niche areas of law and for clients with particular needs—will be able to continue. We received approximately 16,000 responses to the consultation, many of which address the competition model in detail. We are carefully considering all responses before final decisions are taken. This afternoon’s debate will go forward as part of that consultation and will be fed back to the Lord Chancellor and Ministers in the Department. It will be examined in the pot with the other considerations.
Mr Evennett
I will not be able to answer the questions and points raised if I take lots of interventions, but I will take one in a minute.
Among the particular needs to be met in the provision of legal aid is of course the provision of services in Welsh for those who want them. The Government have no intention of changing the requirements placed on legal aid providers operating in Wales to offer a bilingual service—I can nail that concern for my hon. Friend. That that issue, alongside many other practical considerations, is not expressly addressed in the consultation document reflects the fact that it will be, as at present, given effect through the Legal Aid Agency contracts with providers. The document does not propose any change in current practice, but that issue has been raised by some respondents to the consultation and we will provide simple reassurance when we publish the Government response. As well as raising the provision of services in Welsh, a number of legal aid providers have set out their concerns about the operation of the proposed competition model in rural areas, including rural Wales. Some of those concerns have been echoed here this afternoon, and I propose to raise them, highlighting the points made, with the Lord Chancellor to inform his decision making when the consultation concludes.
The consultation sets out a model of competition to cover the whole of England and Wales and seeks to address the needs of both urban and rural areas. In the cases of two regions—the areas covered by West Mercia-Warwickshire and Avon and Somerset-Gloucestershire—it makes an exception to the rule that procurement areas will be based on current criminal justice areas, by combining each pair into a single area. That proposal, however, is based on the volume and type of work, rather than the areas’ rural geography. The consultation in fact sought views on whether the geographical arrangement of contracts it set out was the right one and sought alternatives. We are of course open to good suggestions and urge the profession to work with us to come up with the best solution. The appropriateness of the model to rural Wales was raised during the engagement events held by the Ministry of Justice during the consultation period. We will consider carefully the views raised, before finalising our proposals.
Concerns have been expressed about the Government’s decision to publish the transforming legal aid consultation in English before the Welsh translation was ready. I shall address that issue directly, because it is unfair to suggest that the Ministry of Justice has not taken its commitments under its Welsh language scheme seriously. The Department has committed to treating English and Welsh equally, as far as is reasonably practicable, and that is what we did. Translating a document of that length and complexity takes time, and it was published as soon as it was available. In translating the entirety of the document, we have gone further than the previous 2010 legal aid consultation. In deciding not to delay publication of the English version until the Welsh version was ready, we were conscious that the majority of the target audience in Wales comprises legal aid providers required to provide services in English, as well as Welsh. Moreover, when the previous legal aid consultation was published in 2010, only the executive summary was translated; the Department did not receive requests for a full translation in Welsh and we did not receive any responses in Welsh. We have so far identified about 10 responses to the current consultation in Welsh. That we have had responses in Welsh reflects, I hope, that legal professionals working in Wales have shown their own expertise in responding to our proposals.
Officials are in the process of studying all the consultation responses received and will consider carefully all views on how Wales’s particular rural geography should be accounted for before final decisions are taken.
Mr Mark Williams
I have two questions. The first relates to remarks the Minister made some time ago. The consultation ends on 8 June and we have a short time to get the system up and running. How optimistic is he that that can happen and in particular that the consortia he mentioned, of small solicitors, practices coming together, can be realised? Finally, he mentioned a consultation event in Cardiff, where I know some of my local solicitors were keen to ask Ministry of Justice officials about the extent of their detailed knowledge of rural, north and mid-Wales and the challenges of rural transport. How much detail has gone into the assessment of rural Wales, or for that matter rural England?
Mr Evennett
I will have to write to my hon. Friend, because I do not have that information to hand. All I will say is that we have engaged with many professionals and received lots of consultation responses in the Department. We are very aware of the difficulties and the particular issues he raises.
Time is ever so short, but I want to mention the Government’s compliance with the Equality Act 2010. We are mindful of the importance of considering the impact of our policies on different groups. In accordance with our obligations under the 2010 Act, we have considered the impact of the proposals, in order to give due regard to the need to eliminate unlawful conduct, advance equality of opportunity and foster good relations. Our initial assessment was published with the consultation paper, and we will update it in light of responses, before final decisions are taken on the equality issues.
I am aware that a half-hour debate is not long enough, but there is of course a debate tomorrow on the Floor of the House, where issues can be developed further. I thank my hon. Friend the Member for Ceredigion for securing this important debate and I thank right hon. and hon. Members for the contributions that they have made. I am confident that, after long discussions and a long thought-out process, which will include the consultation information, the Ministry of Justice will publish final proposals that command the confidence of those who provide and use legal aid-funded services in Wales. Final decisions have not yet been taken, and today’s debate will certainly be read and noted by the Lord Chancellor and his ministerial team. I have listened to the views raised. I again commend my hon. Friend for securing the debate. I will certainly pass on to my right hon. Friend the comprehensive views that have come up this afternoon. The Under-Secretary of State for Wales and I will discuss the issues raised. I am grateful for the opportunity to put forward the Government view.
Kettering General Hospital A and E
(10 years, 10 months ago)
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Andy Sawford (Corby) (Lab/Co-op)
It is a pleasure to serve under your chairmanship, Mrs Brooke. I am grateful for the opportunity to debate the future of Kettering General hospital’s accident and emergency services.
Kettering General hospital has served the people of my constituency for 115 years. It is where my children were born, and where my granddads received care at the end of their lives—where I said goodbye to them—and today it is a place that is relied on by my family and my constituents. I declare an interest in that it is where my mum, like many thousands of local people, works. Kettering General hospital is a huge part of the community, because of the care it provides and because it is one of the major local employers. Many of my constituents are employed there, as nurses, doctors and auxiliary staff, and I take this opportunity to thank them, in whatever capacity they work. Working in our health services is demanding and, for most health workers, not particularly well paid. The hours are long and the demands are great, but the overwhelming majority of my constituents receive good care, and for that we are all grateful.
However, we have to face some hard truths. The quality of care at the hospital is not good for everyone. It is not realistic to think that 100% of my constituents will get perfect care every time, but it is something for which we should surely strive. All the evidence shows that too many people do not get the care they need. Kettering General hospital employs more than 3,000 staff, and has more than 600 in-patient and day-case beds and 17 operating theatres. The hospital has a consultant-led level 2 trauma unit in its 24-hours-a-day, seven-days-a-week accident and emergency department, and there are currently two locums and five consultants who are on site until 11 o’clock in the evening and on call until 8 o’clock in the morning. Some cases, such as severe burns and head injuries, are transferred, often by air ambulance, to Coventry, which has a level 3 trauma facility, but Kettering General hospital is where most trauma patients go. It serves the accident and emergency needs of a wide population across north Northamptonshire.
The hospital’s location, right next to one of the busiest arteries in the midlands—the A14—makes it the most accessible accident and emergency for many people, not only in north Northamptonshire but across the whole county and in neighbouring counties, particularly Leicestershire. The core of the hospital’s patients, however, is from my constituency and that of my two neighbours, the hon. Members for Kettering (Mr Hollobone) and for Wellingborough (Mr Bone).
Today, I want to speak about the challenges that our accident and emergency services face, and to seek Government support in meeting them. The context is highly political, and the Minister and I will strongly disagree on some health policies, but I would much prefer us to have as constructive a debate as possible today. Much of what I have to say will be supported by the hon. Members for Kettering and for Wellingborough who are unable to be here, but with whom I am working closely and regularly in support of the hospital. We have formed a campaign group, consisting not only of the three of us, but of the local media, the local authorities and many other interested local organisations.
As three Members of Parliament, we meet regularly with the chair and the chief executive of the hospital, and I am pleased to say that, as of last night, we have a meeting arranged with the Minister’s colleague, the Under-Secretary of State for Health, the hon. Member for Central Suffolk and North Ipswich (Dr Poulter). We are also in dialogue with the local clinical commissioning groups. A and E services are our top priority.
The Minister will be aware of the Healthier Together proposals for the south midlands area. Last autumn, there was a hurried timetable and inadequate consultation on the proposals. The public gradually became aware of them, the thrust of which was for five hospitals to go into three for some of the services, particularly full accident and emergency, obstetrics and maternity, and in-patient paediatrics. The detailed model underpinning the proposals stated that the best option, according to their criteria, was that Kettering lose its full accident and emergency.
I am pleased to say that, in response to a strong cross-party community campaign, Healthier Together and all those involved, including the clinical commissioning groups and the hospitals, recognised that communities in my constituency and across the north of Northamptonshire would not support the proposals. Our nearest accident and emergency would be at Northampton general, and anyone who knows the county and understands its geography will recognise that that is not acceptable. We do not need the independent experts—as they were called—employed by the Healthier Together team to tell us that it is almost impossible to get from Corby to Northampton along the A43 during peak times without coming to a standstill. There is no rail link between the towns in the north of the county and Northampton, and the bus service is intermittent.
The Department says that it expects proposals for local health service changes to meet four key criteria: support from GPs; strengthened public and patient engagement; sound clinical evidence; and that the proposals support patient choice. I do not believe, nor do the hon. Members for Kettering and for Wellingborough, that those four criteria were met in the Healthier Together work. And it is not just in my area. Councillor Hannah O’Neill, the deputy leader of the Labour group on Milton Keynes council, told me that Healthier Together caused uncertainty across Milton Keynes, that neither communities nor the council was properly consulted, and that they were left with no information about the future of the programme for their hospital. A critical issue for the whole south midlands Healthier Together area is that we do not know where the proposals will take us next.
The final Healthier Together report, published in March, states:
“Current A&E staffing levels do not meet national guidance, which recommends a minimum of ten consultants for a medium-sized A&E department.”
It also raises concerns about the long-term viability of retaining five acute surgical rotas:
“Concentrating A&E and general surgeons onto fewer sites could improve sustainability, but there would still be a need to recruit further A&E consultants to provide consultant presence.”
The report proposes an alternative model of four fully supported accident and emergency sites, with the fifth being a “warm” site, managing and transferring some patients under protocols. In the north of Northamptonshire, the worst case scenario is that we would have to assume, based on the previous detailed proposals, that Kettering would be in line to be that “warm” accident and emergency. That is simply not on, not just because of the geography, but because of the demand from the area that Kettering serves.
We recognise, however, that there is a challenge to improve accident and emergency at Kettering. The hospital had to save £11 million last year, and has to save a further £12 million next year, but the answer lies not in taking away our proper accident and emergency and maternity services but in improving the health system. We need a more integrated health and social care system. I will study the detail of today’s spending review announcements, and if they reflect the integration policies that my right hon. Friend the Member for Leigh (Andy Burnham) and my hon. Friend the Member for Leicester West (Liz Kendall) have been championing, they will have my support.
We need local authorities to act more quickly to get elderly patients out of hospital once they have been treated, so that they can have the care they need in the community and so that hospital beds are freed up. That happened just last year with my nan, after she had a stroke. A critical issue is how primary and acute care will work together in the future. It is also about prevention, about which I heard the Minister speak last week at an event organised by Cambridge Manufacturing, a great Corby-based company that exports across the world and helps people become fitter. If the Minister is wondering, the event was at the National Obesity Forum, and Cambridge Manufacturing was the partner organisation. The issue is also about the hospital itself becoming as efficient and effective as possible.
I am sorry to tell the Minister that instead of moving towards an improved service, there are very serious issues at Kettering A and E. This is a very worrying time. The hospital simply cannot cope with demand; we have rising demand, and an ageing and growing population. There are issues relating to the local doctor services and the out-of-hour services, and twice this year the general hospital had to close the doors of the A and E to patients other than those arriving by ambulance, announcing it to the media and asking local Members of Parliament to tell patients not to turn up. We have been told that the principal factor in that was the 111 changes.
Corby is the fastest-growing town in the UK and has the highest birth rate, but there is population growth right across north Northamptonshire. The number of people attending the A and E department at Kettering General has doubled over the past 20 years, from 40,000 in 1992 to 80,000 in 2012. That 100% increase is far greater than the rate of population growth, and growth continued last year. We have continued growth in Northamptonshire’s elderly population, so an increase in acuity, for example, is to be expected, with more people with more complex problems who really do need A and E care. The trust’s emergency department was not designed to see that many patients. In the hospital’s own words, it is now “not fit for purpose”: it is too small and does not have enough rooms to provide appropriate care.
There are significant issues around the inappropriate use of accident and emergency. A recent patient education project in Northamptonshire showed that 70% of patients did not try to contact out-of-hours GP services before going to A and E. The trust is currently investigating and pricing ways in which it could expand its emergency care department’s footprint to make it more suitable for patients and to make it more efficient to help reduce waiting times.
On accident and emergency waiting times, there has been a dramatic increase in the number of people waiting for more than four hours. In April 2012, 262 people waited more than four hours, but in April 2013 that figure stood at 1,530 people. A year on, we can see how significant the rise in the number of people waiting for more than four hours is. Breaches of the target are largely because of patients waiting in A and E for hospital beds to become available. Kettering General hospital’s bed base runs very hot: 95% to 100% of beds are full. It is therefore often bed availability in the whole hospital, rather than issues in A and E, that leads to breaches of the transit time.
The hospital has launched a transformation programme, which local MPs support, by creating new direct access services for GPs, putting in a new discharge team to improve discharges and expanding the A and E department—for example, with an observation bay for patients needing short-term observation and tests. The hospital is investigating the creation of more of its own step-down facilities in the community.
There are other positive developments. The Corby urgent care centre has improved facilities, particularly for my constituents in Corby. It is not the hospital that Corby people really wanted, but it brings many services closer to my constituency. It is open from 8 am to 8 pm, and it reduces the need for patients to travel to A and E. It is only now coming fully into use, so it will be some time before it takes significant pressure off A and E at Kettering.
I went to the opening of the new foundation wing at Kettering, which is a fantastic new facility. It will improve some of the problems in the hospital, and it increases the number of beds. The hospital is to be congratulated on developing the proposals for that wing. It has been 10 years in the making, and there was a delay in its opening, but it is a significant improvement.
In a few weeks, with the hon. Members for Kettering and for Wellingborough, I will meet the local clinical commissioning groups to discuss GP out-of-hours services. A key issue relates to people using a GP where appropriate, rather than presenting at accident and emergency.
I hope that the Minister will comment on the seriousness of the Care Quality Commission report published in March. It stated that action is needed on cleanliness and infection control, on supporting workers and, in particular, on assessing and monitoring the quality of service provision. In fact, so severe were its findings that it has taken enforcement action against the hospital.
The report makes mixed reading. Most patients seen by the CQC generally commend the hospital. As I said at the outset, most people’s experience is good, but where it is not good, it can be very disappointing. For example, because of that huge rise in demand in accident and emergency, the CQC found open storage of needles and syringes, containers overflowing with syringes, and noisy and rusty bins in areas of the department, and it observed that the public toilets were dirty and that floors appeared dirty and stained.
As the CQC has stated, that situation was not because the hospital staff were not working incredibly hard—it observed that the staff were working with clear protocols and trying to do the right thing—but the facility is now frankly too small for what is really needed to serve the north of Northamptonshire. It is cramped, which really affects the quality of care.
The CQC specifically mentioned long waiting times. I have heard cases of people waiting up to 10 hours, which is clearly unacceptable. Not only are there the waits in accident and emergency, but, having been seen in A and E, there are the waits to be transferred to wards in the hospital. There are also knock-on effects. The CQC highlighted issues in orthopaedic and surgical wards, where other medical admissions from A and E have become a way of life, because the beds are needed, but those wards do not have the staff, the expertise or the capacity to meet the needs of the patients transferred.
I want to hear from the Minister an understanding of the pressures facing us in Kettering General hospital’s accident and emergency, and support for initiatives that the local chair, chief executive, trust and staff are taking and which we are trying to support. We want to support this incredibly important hospital. We also want a commitment to capital improvements in accident and emergency. Whether that comes from what I understand is a dedicated fund in the Department of Health for capital improvements for A and E that is underspent or from the general NHS underspend, I hope that we will hear about it today. I also hope that she will comment on the issues about how the health system works locally.
The Parliamentary Under-Secretary of State for Health (Anna Soubry)
As ever, it is a pleasure to serve under your chairmanship, Mrs Brooke. I congratulate the hon. Member for Corby (Andy Sawford) on securing the debate. He quite properly brings forward his constituents’ concerns about their hospital. I am delighted that he is working with two other Members of Parliament whose constituencies are served by the hospital.
I am especially grateful to the hon. Gentleman, if I may say so, for having contacted my office and spoken to my officials before the debate. If only all hon. Members took such a positive step, because it assists hugely. He is quite right to make the point that this is not the stuff of party politics. I fear that I may not be able to answer some questions that he quite properly asked. If that is the case, I or my officials will write to him to ensure that all the matters he raised and all the questions he asked are given proper and full answers.
I am very pleased that the hon. Gentleman will meet the Under-Secretary of State for Health, my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter), on 16 July, with my hon. Friends the Members for Kettering (Mr Hollobone) and for Wellingborough (Mr Bone). I am sure that there is no connection, but having said that, a frog has entered my throat. I am going to stop for a minute.
Anna Soubry
I am sorry.
The hon. Member for Corby has raised important issues about accident and emergency services, although I will not be dealing with the national situation. As we know, there have been some issues and problems in emergency departments throughout the country, many of which have been well rehearsed in this place.
Underlying themes and problems are often common to all our accident and emergency departments. Undoubtedly, many of the problems at Kettering’s accident and emergency are exactly the same as those that have caused so much difficulty in other A and E departments in this country. I am pleased that huge progress has been made and that overall performance is improving across the country as might be expected, especially given my Department’s efforts.
The hon. Gentleman has pointed out how health services are under pressure in his constituency and having a knock-on effect at Kettering, and those pressures are being experienced across the whole system. He quite properly identified that the reasons for that are complex. Dealing with those pressures means looking at the underlying causes, which the Department has been doing by working with NHS England.
The hon. Gentleman pointed out that Kettering General Hospital NHS Foundation Trust is experiencing many of the issues that I have highlighted. I am aware that, as he told us, the trust has not met the A and E standard. It has struggled with that difficulty for some time. He will know that Monitor, as the regulator of foundation trusts, has unfortunately found that the trust is in breach of its licence in relation to its A and E performance, as well as wider financial and governance issues. That will cause concern not only to the people who use the hospital, but to its outstanding staff.
Monitor has required the trust to implement an urgent care action plan to ensure that it can return to compliance against the A and E standard. The deadline for that is 1 July, so it will not be long before the trust has to implement it. Monitor is working with local commissioners and NHS England to support the trust to meet that requirement.
I appreciate that the hon. Gentleman feels that further investment is needed to expand facilities at the trust to improve its position. It is right that, as I understand it, he has had meetings with the chair of the trust and other Members of Parliament, and that letters have been written, to request assistance in securing extra capital funding. Some £5 million to £10 million has been requested, so that the trust can redevelop and expand its A and E department.
Of course it is for NHS foundation trusts to develop and take forward their own capital investment proposals, and trusts such as Kettering can apply to the Department for a capital investment loan. We understand that the trust has allocated some of its capital budget this year to make improvements within A and E, and it has worked with commissioners to redesign what we call pathways to improve flow. Hot clinics and ambulatory pathways have been developed, which divert patients away from A and E and avoid GP admissions, which, as we know, often stack up in the Department.
On the matter of whether Kettering has ever closed its doors, I am told that its accident and emergency department has never done so, and it is important to put that on the record. I am told that there was a period in February when the hospital trust effectively advised members of the public—I think that this sounds like a sensible piece of advice—to ensure that they only went to A and E if they had had an accident or an emergency. In other words, to use the jargon, they were told to use the department appropriately, because the trust had become aware of a sudden and acute rise in people using A and E. Actually, that is a good message for all of us to take back to our constituents. The department is not called “accident and emergency” for no good reason; it is for accidents and emergencies.
When we had a debate on A and E in the main Chamber, Members from both sides told stories about people presenting at A and E when they could have gone to the pharmacy or just taken a paracetamol. The point I am making is that, often for understandable reasons, people attend A and E when they cannot get the appointment they want at the GP surgery. There is this wider issue that perhaps we do not do what we used to do in the past, which was to self-administer, take advice from our brilliant pharmacies or ring the GP surgery for advice before simply turning up at A and E.
As I have said, meetings have taken place, and, as I understand it, the trust has been working with local commissioners in the way that I have described. The hon. Gentleman mentioned the new Corby urgent care centre. I think I saw it before I was in this position—I was there for other reasons which I am sure the hon. Gentleman will understand—when it was in the process of being constructed. I am delighted that it is now open. It is called an urgent care centre. To be frank, we do not always use the best language when it comes to naming places where patients can go. In fact, the review, which is being conducted in the Department of Health, is looking at the sort of language that should be used, so that people understand where they have to go when they have a particular problem. I am delighted that the centre has opened in Corby and is providing additional urgent care services to the hon. Gentleman’s constituents, which should help to ease the unnecessary attendances at the A and E department of Kettering General.
I also want to mention the East Midlands Ambulance Service NHS Trust, because it is of concern to all of us who represent seats in the east midlands. I know that the hon. Gentleman has rightly talked about how problems with EMAS have affected services in his constituency.
Andy Sawford
I wanted to cover more issues in my opening remarks. The Minister is absolutely right to say that EMAS is a huge concern for all MPs across the region. I am sure that she is aware that the proposal is for the hub that would serve my constituents now to be at Kettering and for the level of service to be reduced at Corby, which is a concern for us.
Anna Soubry
Indeed, and it is right that the hon. Gentleman should raise that concern. I think I am right in saying that Earl Howe, who is the Minister with responsibility for the ambulance service, has agreed to meet the hon. Gentleman. If he has not agreed that, then he just has. In any event, Earl Howe will be more than happy to meet the hon. Gentleman to talk about the various issues.
The hon. Gentleman will also be aware that the NHS Trust Development Authority has intervened at the East Midlands Ambulance Service NHS Trust and is working with local commissioners to ensure that it has robust turnaround plans in place to improve its performance. The fact that the ambulance service has not been meeting the high standards that we all expect of it has been a long-standing problem in the east midlands. It is now implementing proposals to improve the way it delivers services across the east midlands through its “being the best” programme. That includes the replacement of some ambulance stations, including the one in Corby. It is creating 108 community ambulance posts, 19 ambulance stations and nine purpose-built hubs or superstations to enable ambulances to be dispatched from strategic points across the region to meet demand. I know that the “being the best” proposals have been referred to the Secretary of State by Lincolnshire county council. I do not know whether Northamptonshire will now take the same course, but it may not need to as Lincolnshire has already made the referral. As a result, the Independent Reconfiguration Panel is due to advise in the next few days, so it would not be right for me to make any further comments on that matter.
I will conclude now unless of course the hon. Gentleman wants to intervene again, which I am more than happy about because we still have four minutes.
Andy Sawford
I thank the Minister for giving way again and I am delighted to take up the opportunity to use up a little more of the time we have available. It is of course very welcome news that those proposals have been referred to the Independent Reconfiguration Panel. However, I must say to her that, irrespective of how those proposals proceed, I have no confidence in the trust board of the East Midlands Ambulance Service NHS Trust or in its leadership and management.
I will be interested to hear the Minister’s comments about what role, if any, the Department of Health can play in intervening when there are concerns about the management of an ambulance trust. I know that hon. Members from across the eastern region ambulance service, which also serves some of my constituency, have—frankly—successfully changed the leadership of that service. I feel that we may need to make some progress in that regard ourselves.
Anna Soubry
The diplomatic answer to that is to say that, yes indeed, east of England MPs have quite rightly taken their concerns to the highest level and there has been some serious intervention. There has been a report; we had a 90-minute debate here in Westminster Hall only yesterday on it. I have to say that apparently most members of the board of that ambulance service still remain in place, but the board has a new chair. There has been a full report into the service and there is hope that many of the report’s recommendations will now be put forward.
I must say that the Care Quality Commission, notwithstanding some of the comments that were made last week, can play a hugely important role in looking at the performance of ambulance trusts. I speak now as a constituency MP when I say that I myself have been in contact with the CQC and I urge the hon. Gentleman perhaps to take the same course, because the CQC can really play an important role in ensuring that ambulance services and indeed many other providers of health care are absolutely up to standard and providing the services that they should be providing. That may be of some assistance, but I must say that I think things have improved.
Andy Sawford
The Minister says that there are issues at Kettering General hospital’s A and E department that are in common with those in other hospitals. Finally, I draw her attention to the exceptional case for investment in Kettering General hospital, because of the growth in population locally. Corby has the highest birth rate in the country; it is the fastest growing town in the country; and the Northamptonshire area is one of the fastest growing areas in the country, so this is an exceptional case.
Anna Soubry
That is a good point well made, and no doubt this will all be discussed at the meeting to be held on 16 July and the hon. Gentleman will make that point again with all the right force that he should.
I was going to say “in all seriousness”, as if I was being flippant, which I was not being. However, I hope that Kettering General hospital continues to work with Monitor, NHS England and its local commissioners to put in place robust plans for improving its position. That should also include working with all the elected Members in the area, so that we can be sure that the hospital delivers absolutely the best services to the people it seeks to serve and should be serving.
Question put and agreed to.
Written Statements
(10 years, 10 months ago)
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Departmental Business Plans 2013
(10 years, 10 months ago)
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The Minister for Government Policy (Mr Oliver Letwin)
Today the Government published, in a digital format, an updated set of departmental business plans.
Each Department’s business plan sets out:
the Department’s coalition priorities;
the actions each Department will undertake to meet these priorities and the dates when it will implement these actions;
expenditure for each year of the current spending review; and
indicators and other data it will publish on the cost and impact of the public services for which it is responsible.
In particular, the business plans have been updated to reflect:
a new growth priority has been added showing each Department’s contribution to promoting UK growth; and
the commitments made in the coalition Government’s mid-term review.
The business plans can be accessed at, http://transparency.number10.gov.uk, which also sets out cross-Government priorities and details of departmental input and impact indicators.
A full list of the changes to the structural reform plan and input and impact indicators contained in the business plans is also attached. This list can also be found at, http://transparency.number10.gov.uk.
Financial Policy Committee
(10 years, 10 months ago)
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The Financial Secretary to the Treasury (Greg Clark)
The June 2013 “Financial Stability Report” of the Financial Policy Committee (FPC) and the FPC’s response to the Chancellor’s “Remit and Recommendations for the Financial Policy Committee” have today been laid before Parliament.
The “Financial Stability Report” includes the committee’s view of the current stability of the UK financial system, its assessment of the outlook for stability, a summary of the activities of the committee over the previous five months, and any new policy decisions by the committee by way of recommendations and directions.
The report forms a key part of the accountability mechanism for the FPC under the Bank of England Act 1998 as amended by the Financial Services Act 2012.
On 30 April 2013, the Chancellor wrote to the Governor of the Bank of England, as chair of the FPC, to specify the Government’s economic policy and to make recommendations to the committee concerning its objectives and functions.
The FPC is required to respond to the Treasury setting out any action it has taken or intends to take in accordance with the Treasury’s recommendations and, if it does not intend to act in accordance with a recommendation, why not.
2014 Local Elections
(10 years, 10 months ago)
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The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)
As I informed the House on 26 March, Official Report, column 84WS, we published a consultation document inviting views on whether or not we should, subject to parliamentary approval, move the date of the English local elections from Thursday 1 May 2014 to the same day as the European parliamentary election. At the time of the consultation the actual date of the European parliamentary elections had yet to be formally decided.
That consultation closed on 13 May and we have received 155 representations, including from the Electoral Commission, the Association of Electoral Administrators, the Local Government Association and many of the councils that would be affected. While the consultation shows there are mixed views on moving the date, some two thirds of the 155 consultation responses favoured the change of date, including the Electoral Commission.
The Council of the European Union has now confirmed that the European parliamentary elections will be held between 22 to 25 May 2014 and so the date for elections to the European Parliament in the United Kingdom will be 22 May.
In the light of the European decision, and having carefully considered all the representations received, the practical course of action is to move the local government elections to the same day. Holding two elections within three weeks of each other would be inconvenient to voters. I appreciate that the arguments are finely balanced, and I would observe that this does not necessarily create a precedent for any future set of elections.
So I am today laying a draft of the Local Elections (Ordinary Day of Elections in 2014) Order 2013 which, if approved by Parliament and made no later than 31 October, would move the local election day in England, in 2014, to the date of the European parliamentary election.
The local elections which are affected by this change of date are the elections to over 90 district councils in England, all metropolitan district councils, and all London boroughs plus a small number of parishes, as well as five mayoral elections. A list of the relevant local authorities is included in the explanatory memorandum which accompanies the draft order I have today laid before the House.
Grand Committee
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Local Audit and Accountability Bill [HL]
(10 years, 10 months ago)
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Lord Wallace of Saltaire
Lord Wallace of Saltaire
My Lords, in moving Amendment 18, which amends paragraph 4(9) of Schedule 9, I shall also speak to Amendment 19, which makes an identical amendment to paragraph 5(2) of Schedule 11. These are minor and technical amendments that ensure the provisions in the Bill which limit fines for unauthorised disclosure of information incorporate the changes being made to limits on fines by the Legal Aid, Sentencing and Punishment of Offenders Act 2012, known lovingly to many noble Lords as the LASPO Act.
The Bill currently provides for what happens if the provisions in the 2012 Act come into force before the day on which the Bill is passed. It omits to provide for what happens if the 2012 Act comes into force on the same day as this Bill is passed. The amendments correct that omission. If commencement of this Bill precedes commencement of the relevant part of LASPO, that legislation provides for such changes to be applied to earlier legislation. This means that, once the provisions of the 2012 Act are in effect, which, among other things not relevant here, removes the upper limit—previously set at £5,000—on level 5 fines, any offences committed after that time which would be subject to such a fine would no longer be limited to a maximum fine of £5,000.
The effect of this part of the LASPO Act 2012 on the Bill is that it will ensure that offences relating to the unauthorised disclosure of audit information provided for data-matching exercises or the wrongful disclosure of information by an auditor or inspector or a person acting on their behalf will continue to be treated as seriously as other offences previously subject to level 5 fines, and will ensure that for more serious offences the punishment can better fit the crime. I therefore beg to move Amendment 18 and that Amendment 19 be moved at the appropriate time during discussion of Schedule 11.
Lord McKenzie of Luton
“(d) to assist in the prevention and detection of maladministration and error.”
Lord McKenzie of Luton
My Lords, this amendment refers to Schedule 9, and in particular paragraph 8(2).
The power to conduct data-matching exercises is currently exercisable for the purpose of assisting in the prevention and detection of fraud. However, a relevant Minister, which is the Secretary of State or Minister for the Cabinet Office, can add a purpose for which such exercises can be used provided they fall within the specified purposes. These are currently the prevention and detection of crimes other than fraud, apprehension and prosecution of offenders and recovery of debt owing to public bodies. The amendment would add another purpose,
“the prevention and detection of maladministration and error”.
It should be stressed that neither the further purposes described nor the additional one arising from this amendment can be a proper purpose of data matching until introduced by regulation following wide consultation.
The data-matching powers currently exercised by the Audit Commission through the national fraud initiative have been a considerable success, having identified nearly £1 billion of fraud, errors and overpayments since 1996. It is important that the NFI is found an appropriate home in the new regime and we understand and accept that discussions are under way to make this happen. Probing this is not the purpose of the amendment although if the Minister has an update for us it would be good to hear.
The amendment has been prompted by the Audit Commission, which has expressed concern that some of the data-matching exercises that it undertakes at present under its audit powers would not be available to any new body as they would not fall within the additional purposes provided for in Clause 8(2). However, it has instanced a data-matching exercise to assist with identifying maladministration which it undertook concerning GP lists. This was done as part of the national duplicate registration initiative and sought to identify such matters as deceased persons registrations or duplicate registrations. The two most recent exercises led to more than a quarter of a million patient registrations being removed—saving some £16 million—and some 30,000 patient records ending up with current rather than previous GPs.
This work targets error rather than fraud so would not be covered by the Bill as it stands. There is quite properly a sensitivity about data matching and we support the safeguards which are included in Schedule 9 restricting the use of such exercises and protecting certain data. There is also the code of data-matching practice which has been drawn up by the Audit Commission, the maintenance of which will become the responsibility of a relevant Minister under the Bill. Clearly, data matching has, as a matter of fact, been undertaken under powers which will seemingly not be available in the future under the Bill. Where does this leave exercises such as the national duplicate registration initiative in the future? Will the initiative be conducted, at least in part, by data matching, by whom and under what powers? The NDRI is just one example. Perhaps I may ask the Minister whether there have been discussions with the Audit Commission about the demise of its audit powers in this regard and how matters will be handled in the future.
There is a further matter concerning the extent to which those fall within the mandatory provisions of data requirements. The Bill retains this requirement for those currently required to do so and now includes foundation trusts. The Bill also enables the adding-in of other public bodies subject to consultation and regulation. Has any consideration been given to adding in any further public bodies? What assessment has been undertaken of this possibility? One possibility raised with us has been adding in housing associations which currently participate only on a voluntary basis. Data matching has proved to be a powerful tool in helping bodies to detect potential tenancy fraud and we are advised that just one RSL which participated in 2010-11 recovered 12 properties from illegal occupation which were able to be reallocated to general tenants. There is a continuing imperative for local authorities and RSLs to manage their stock in the most effective way given the housing crisis which faces the country and punitive measures such as the bedroom tax.
We have a shared interest in targeting fraud but also—I hope—in the prevention and detection of maladministration and error. This is all the more important given the huge cuts in local authority budgets and of course the further dreadful announcements from the Chancellor just a few hours ago. Data matching has a role to play provided there are robust safeguards. At the very least the Government should justify any diminution in the opportunity to use these as a result of the demise of the Audit Commission. I beg to move.
Lord Palmer of Childs Hill
My Lords, what worries me with this is the possibility of spreading the data protection rules and investigations even further than they are now. They are pretty strong already in the Bill and detection of maladministration and error is done by many local authorities—I am not sure about health authorities—in their internal and external audits. One of the main raisons d’être for that is to look for maladministration and error. As my noble friend will know, such audits are independent of the other departments of the local authority or health service.
I therefore ask the Minister to say how this is or is not already covered at present. What worries me is the creep of adding more and more things all the time in order to look behind what is happening. I understand the motives for that but this is perhaps going a step too far.
Lord McKenzie of Luton
Will the noble Lord accept that the purpose of the amendment is not to spread anything further but to preserve what is there? The point that the Audit Commission has made is that it can use its audit powers to do this data matching to achieve the objective at the moment. Obviously, once the commission disappears, it will not have those powers. If those powers are to go somewhere else, that is fine. I accept entirely that internal audit would be one means of helping to address the issue but data matching across bodies has proved to be effective. This is not about seeking to extend what currently happens but preserving what the Audit Commission is able to do under its audit powers.
Lord Palmer of Childs Hill
Let me give an example. If one is looking into housing fraud, one does not, as a local authority, look only at the housing department and benefits claims. I know that local authorities such as mine look towards the UK Border Agency, with which they have a great relationship. When they look into possible fraud, administration error and all the other things that the noble Lord spoke about, the powers already exist. I am asking whether they need to be enshrined in the Bill.
Lord Wallace of Saltaire
My Lords, for these purposes, I should remind noble Lords that I am the spokesman in the Lords and the Minister for the Cabinet Office and have spent long hours in this Room discussing data sharing and data matching during consideration of the Electoral Registration and Administration Act, when many similar issues came up. I must say that I had not appreciated how extensive data sharing was within the Audit Commission and local government. Central government has been approaching this matter with a rather greater degree of caution and hesitation. Perhaps I should phone the Guardian and tell it just what the Audit Commission has been doing in this regard. I am sure that that newspaper would like to make it a front-page spread.
I am very conscious that this whole issue of data matching and data sharing in the public and private sectors, given that they overlap, will occupy us all over the next three or four years. I have no doubt that at some stage, under whichever Government we have in two or three years’ time, we will be discussing some major new legislation in this area because the data revolution is moving so fast.
The possibilities for data matching and data sharing are increasing rapidly. I am conscious from my discussions around this issue within the Cabinet Office and with outside bodies, including the Information Commissioner’s Office, that national patient records are among the most sensitive issues for citizens as regards information sharing. As noble Lords will know, whether one can share limited information without allowing access to full information is one of the great issues in the area of data matching. Therefore, when one talks about data-matching success in local government—and I recognise, as we all do, that the detection of fraud and error is an extremely valuable and useful activity—we nevertheless all have to be aware that issues of privacy are very strong and powerful, and are protected by various lobbies in this country. We must therefore proceed with caution.
Discussions are well advanced on the issue of an appropriate home and we hope to be able to announce by Report stage that the matter will finally have been agreed. However, there are a number of final issues about accountability and management that still have to be settled within Whitehall.
Lord McKenzie of Luton
I am grateful to the Minister, and that we got two for the price of one with the Minister for the Cabinet Office as well, which is particularly apt. I am grateful, too, for the offer of a meeting, which I would be very happy to have. The noble Lord acknowledged the point that once the Audit Commission goes, some of the powers that it has used to do data matching will fall with it. Those will not automatically be picked up in the Bill or elsewhere, but that is the subject of ongoing discussion. I should just say in defence of the Audit Commission, if it needs it, that these data-matching exercises were not done in any sort of clandestine way. It published the results, particularly on this one initiative to show its benefits. I am grateful for the opportunity to discuss this point further.
I take the point entirely that there is already provision in the Bill for those who have to participate on a mandatory basis. I guess that part of my question was: is it intended in relation to housing associations to perhaps kick-start a consultation? Some do participate but I understand that it is quite a small percentage, and it looks as if some of the benefits could be quite significant for them to participate. That has nothing to do with extending the powers of data matching, but just extending the basis of those who are required to participate. Having said all that, I am grateful for what I take to be a positive response and beg leave to withdraw the amendment.
Lord Wallace of Saltaire
“Omit section 22(1) (Audit Commission).”
Lord Wallace of Saltaire
My Lords, in moving Amendment 18ZZA, which applies to paragraph 8 of Schedule 10, I shall also speak to Amendments 20, 21, 22 and 23, which make a range of minor and technical amendments to Schedule 12. These amendments remove redundant references to the Audit Commission and make clarifications to related provisions in existing legislation.
Amendment 18ZZA applies to paragraph 8 of Schedule 10. This is a consequential amendment to the Local Government Act 1999 to remove a reference to the Audit Commission. This has the effect of ensuring that the Audit Commission is no longer specified as having a role in relation to best value inspections.
Amendment 20 changes the definition of “local auditor” in the Social Security Administration Act 1992. This amends paragraph 23 of Schedule 12 and ensures that “local auditor” is now defined as within the meaning of the Local Audit and Accountability Act 2013—as it will be after Royal Assent—rather than simply within the context of any specific part of that Act.
Amendment 21 makes a consequential amendment to Section 125(2)(b) of the Greater London Authority Act 1999. This applies to paragraph 34 of Schedule 12 and has the effect of removing the provision allowing the Audit Commission to certify information provided by a functional body to the Mayor of London.
Amendments 22 and 23 make minor and consequential amendments to Section 212 of the Local Government and Public Involvement in Health Act 2007. These amend paragraph 66 of Schedule 12, which makes consequential amendments to that Act, and seek to clarify the Government’s intent that only the UK Secretary of State can make provision about entities connected with cross-border local authorities. These amendments also tighten the definition of “local authority” in this context.
These are minor and technical amendments that remove redundant references to the Audit Commission and make clarifications to related provisions in existing legislation. I beg to move.
The Earl of Lytton
The Earl of Lytton
My Lords, this amendment returns to an issue that was flagged up by more than one noble Lord at Second Reading—the question of mission creep.
One of the problems of local democracy is the perception that there is very little for the elector to influence beyond which party happens to rule the roost. The process of localism—and indeed the fruits of the Government’s initiatives on this—must surely be to redress this balance. That means having current, live and important issues, including matters of expenditure, at stake in local elections. I will return to this subject in respect of Clause 39, so I will leave it for the moment.
If the role of the National Audit Office is allowed to expand, as would be possible under this Bill, the question that the Local Government Association has asked—indeed, this amendment comes with its imprimatur—is: what is left for the voter to determine? Democracy and democratic accountability are clearly in point here.
The Local Government Association’s second question is: what is there to prevent the National Audit Office effectively replicating the investigative adventurism— my words, not those of the Local Government Association—of the Audit Commission? On our first day in Committee, the Minister said that a recreation of the Audit Commission by the back door is to be avoided and I entirely understand that. Just so, the recreation of its functions by an expansion of the National Audit Office is equally to be guarded against.
Amendment 18ZA would restrict the role of the National Audit Office to prevent this mission creep and the potential erosion of the proper function and role of local democracy. Its scrutiny would therefore apply to expenditure, principally that from central government. I will speak also to Amendment 18ZB, but on the detail of Amendment 18ZA I can see that the Minister may feel that this is too wide a get-out clause. However, if he could indicate whether the principle might be acceptable, I dare say that we could talk about the detail of the wording and how we can deal with that as the Bill proceeds.
Amendment 18ZB has been tabled, of course, to prevent mission creep, to which I have referred. It seems that the Bill effectively risks reintroducing some of the intrusive and costly activities that the abolition of the Audit Commission was supposed to have removed. Looking at the overall geometry, as the LGA would put it, the role of the National Audit Office would be restricted to evaluating expenditure that has a majority of its funding from the central government grant. It goes on to say that the NAO should be precluded from replicating the activities of the Audit Commission under its previous assessment and inspection regime.
I will leave it there. I dare say that the noble Lord, Lord Tope, may have some comments to make, as will other noble Lords. I beg to move.
Lord Tope
My Lords, I am grateful to the noble Earl, Lord Lytton, for moving his amendment, to which I have added my name. I endorse all that he said and, in deference to the Grand Committee, I will not repeat it; I will simply add a number of points.
The amendments of course come at the instigation of the Local Government Association, but reflect fairly widespread concern, based upon experience with the Audit Commission, about what is termed “mission creep”. Most, or perhaps all, of us would agree that the Audit Commission started very well. It did some very good work and continued to do so, but its mission and role expanded to such an extent that the Government, without too much objection elsewhere, have determined that it has now reached the end of its useful life. There is concern, whether well founded or not only time will tell, that the same experience could come to the National Audit Office—that having now got the limited role that was intended, over time, just as with the Audit Commission, the mission will expand.
I have had a useful briefing from the National Audit Office. It was mostly factual and very reassuring. Paragraph 2 states:
“The NAO considers that any future responsibilities it takes on within the Government’s new framework for local public audit should … align with the NAO’s core role of providing assurance to Parliament and holding Government to account over its use of resources”.
That is the intention behind Amendment 18ZA: to try to give effect to that. It may not be the best way of doing so; I do not know. However, the intention is there to say that if the NAO’s role is to Parliament in respect of the use of government resources, then those resources which are raised locally—which in some authorities are considerable; it varies—are outside the core role of the NAO as defined by Parliament and repeated by the NAO itself.
Lord Beecham
My Lords, I am a vice-president of the LGA but I am not sure that I will retain that position after what I have to say. I am afraid that I do not entirely concur with the sentiments and positions taken by the two noble Lords who have spoken thus far. I said in a previous Committee sitting that I had a concern that, although the Audit Commission was, in fairness, asked by the previous Government to over-regulate, overprescribe and over-report, it nevertheless performed a valuable role in looking particularly at the interface between services and the comparisons between different types of authority. Actually that information, contrary to what the noble Earl, Lord Lytton, said, should inform local debate. It does not supplant it. It should help to facilitate the citizens to hold their local authority to account, because they must have some comparative data to see how well or badly they are doing in relation to other authorities. That will be one of the things that we will miss. I express a hope—or, put another way, a fear—that with only six value-for-money studies to be carried out by the NAO, which I understand is the position, we would lose that independent assessment of what local authorities are doing.
I am a great supporter of peer review and of the work that the LGA has done in promoting improvements across the sector, and it has done very well in that regard, but when it comes to an objective assessment, the perception will be that that is an in-house job. It is better in my view that there should be a role for a body like the Audit Commission was—and currently still is, temporarily—or the National Audit Office will be. That is something that this amendment would very much restrict. Yet the formulation here depends on a division of resources, and whence comes the money? Of course, increasingly we will see national organisations, be it in the health service or other bodies—the Chancellor again mentioned what was called “total place” and is now called whole community budgeting—
Lord Beecham
Yes, whole place. It is playing with words, and of course Labour words such as “total” are not acceptable. Within these areas there will of course be collaboration, and the proportion of funding will vary considerably. For example, in public health, less than 50% of government money will be coming in, so the Audit Commission would presumably be prohibited from taking a look at the effectiveness of that. It is not an audit job in that sense, but it is particularly desirable that it should address the issues of effectiveness and outcome, not purely in financial terms but across the piece as well, and that in itself should facilitate the work that the LGA and individual local authorities are doing, particularly in their scrutiny functions, to see how they are faring relative to others, and for that information to be communicated to the people who elect them. So I certainly could not support these amendments. I understand what the noble Lords are saying, but I think that a mission creep has overtaken their amendments as well. They were going too far in the interests of local democracy and the effectiveness of local government.
Lord McKenzie of Luton
My Lords, like my noble friend who was unable to support these amendments from the noble Earl, Lord Lytton, and the noble Lord, Lord Tope, I understand that—apart from the issue around this 50% funding—the Bill does what they are seeking to achieve. If you look particularly at paragraph 117 of the Explanatory Notes to the Bill, it says:
“These powers do not enable examinations of individual relevant authorities and are not designed to produce assessment of the performance of individual relevant authorities or comparative analyses in the form of published league tables”.
Unless that wording is defective—doubtless the Minister can help us on that—it achieves what the noble Lords want. As my noble friend says, whether it achieves what we want is another matter.
In relation to the other test in Amendment 18ZA—that is, an authority,
“who receives more than half their income from government funds”—
I can see that, for certain bodies, it is a test that is currently relatively straightforward to determine. However, if you seek to apply it to a local authority you can imagine the sort of criteria that you would have to unpick and examine. Presumably it is not part of government funds to take account of its income which comes from council tax. What happens when you come to the business rate? Is it part of its income? Do you look at the gross amount or the 50% under business retention that goes to central government and then comes back? Is that still government funding? Does it originate with the local authorities? All the issues around how tariffs, top-ups and safety nets work just from that regime itself could make that particular test in the context of local authorities extremely difficult to apply. It would be easy in some cases where either they would be clearly in or clearly out but I would be surprised if there were not a whole range where it would be extremely problematic.
The test at the moment, as I understand it, is that the Auditor-General can carry out examinations of bodies when more than half of their income comes from public funds and where they are appointed by or on behalf of the Crown. I am not quite sure how you translate that into the local authority context but it seems to me that the basic proposition which the noble Lords are seeking to achieve in terms of avoiding mission creep and certainly league tables is already in the Bill.
If that is right—and for that reason some of the comparative stuff to which my noble friend was referring is not available—it raises again the question we discussed earlier about the value-for-money profiles, the guardian of which is currently the Audit Commission. We discussed who was going to maintain those profiles, which I think would be part of the data that my noble friend and I would be looking for. We do not yet know where that is going to end up and how those profiles are going to be maintained, but I think that that is a slightly different issue from the one pursued by the noble Lord, Lord Tope.
The Parliamentary Under-Secretary of State, Department for Communities and Local Government (Baroness Hanham)
My Lords, it is not very often that the noble Lord, Lord McKenzie, makes my case for me, and I am delighted to be in this unusual situation. Perhaps I should sit down without going any further. As always, however, the noble Lord provides a sting in the tail somewhere. On this occasion it was in his final question—to which I may not, even now, be able to give him an answer, but we will try.
Under the National Audit Act 1983 the Comptroller and Auditor-General can undertake examinations into the economy, efficiency and effectiveness or value for money with which a government department it audits has used its resources. He or she can also undertake these examinations in relation to bodies that receive more than half their income from public funds and which are appointed by or on behalf of the Crown.
Clause 34 broadens the Comptroller and Auditor-General’s powers to enable the National Audit Office to undertake examinations on groups of relevant authorities, enabling a more end-to-end view on the use of public money. The powers in Clause 34 have been designed deliberately to support the National Audit Office in undertaking its core roles. It enables examinations that support the National Audit Office either in holding the Government to account to Parliament or in providing analysis and advice that is useful to the sector. By definition, this does not mean that the NAO will be examining or reporting on individual authorities. It means that the comptroller can look at what is going on in a local authority but only in relevance to a wider group or area in relation to the money coming from Parliament.
The amendment would limit these powers to enable the Comptroller and Auditor-General to undertake examinations only on groups of relevant authorities that received more than half their funds from government. I think that that is where the noble Lord, Lord McKenzie, has stepped in and given a pretty clear explanation of why this is not going to work. The amendment is overly restrictive and would not support the National Audit Office in fulfilling its core roles. The Audit Commission currently has powers to undertake examinations in relation to all relevant authorities. Removing relevant authorities that receive less than half their resources from the Government would mean that the National Audit Office could not look across the whole spectrum and thus do its job. The amendment would also reduce the level of scrutiny of public spending that the NAO could carry out, including all the other elements mentioned by the noble Lord regarding the way that grants are paid and the money that goes into local authorities.
Amendment 18ZB would prevent the Comptroller and Auditor-General from undertaking examinations for the purpose of assessing the performance of individual authorities or the production of league tables. Clause 34(2) already provides for the first part of this. It states that a value-for-money examination must relate either to all authorities or to a particular description of relevant authority, and it is extremely unlikely that an individual authority would meet those criteria. An individual authority could be looked at but only in relation to a group and could not be identified as one authority. The Explanatory Notes set out that these powers are not designed for the National Audit Office to produce an assessment of the performance of individual authorities or comparative analyses in the form of published league tables. The Government do not wish to see a return to the comprehensive area assessment of local authorities. The NAO’s evidence to the pre-legislative scrutiny committee on the draft Bill confirmed that it is seeking neither to audit individual local authorities nor to interfere with the primary accountability of local authorities to the local electorate.
However, the clause does not prohibit comparisons of individual authorities during the course of the examination. This is because such group or overall analysis is necessary in order for the National Audit Office to make conclusions about the economy, efficiency and effectiveness with which authorities in a particular group are using resources, or to provide evaluation, commentary and advice to relevant authorities. We believe that the Clause 34 will give the National Audit Office a strengthened role in the assessment of value for money, which the Government said we wanted to achieve when we announced the intention to close the Audit Commission. I know that that intention has received a great deal of parliamentary support, including from the Communities and Local Government Select Committee, the committee which undertook scrutiny of the draft local audit Bill last autumn, and from many noble Lords during our discussions.
However, I understand—and I know that the National Audit Office does too—the concerns that have been expressed about the risks of scope drift or expansion of the programme beyond what is intended. I believe that there are safeguards in the Bill that mitigate against these risks. I emphasise that it is not the Government’s intention to replicate the Audit Commission’s programme of studies. The powers are narrower than the Audit Commission’s and there will be fewer studies. Although the examinations programme is ultimately a matter for the Comptroller and Auditor-General, Parliament undertakes a full and thorough scrutiny of the National Audit Office’s strategy and budget. The House of Commons Public Accounts Committee scrutinises the strategy and budget annually, including the balance of work between different roles, before approving the National Audit Office’s budget for the year ahead.
The Earl of Lytton
My Lords, first, I thank the noble Lord, Lord Tope, for his support and the noble Lords, Lord McKenzie and Lord Beecham, for their comments. All three have a much greater knowledge of local government matters than I can claim to possess but I would say to the noble Lord, Lord Beecham, in particular that it is important not to take amendments of this sort at this stage of the Bill too literally. The intention was to try to probe the parameters and get that on the record so that we know where we are.
Turning to the Minister’s comments, I hope I did not say that there would necessarily be mission creep, damage to democracy or any of the other things; only if it is uncontrolled and unconstrained could there be circumstances in which such things arise. But I am very comforted by what she said, particularly about the safeguards already in the Bill in connection with Amendment 18ZB.
It is my view that audit is a right and proper process. I am not suggesting for one minute that it should be removed, far from it; I do not think that anybody would advance that. However, it needs to be consistent with cost efficiency and done in a way that is not intrusive or that displaces other proper avenues of choice. I will leave it there for the time being but may return to it at a later stage.
Lord McKenzie of Luton
Before the noble Earl withdraws his amendment, can the Minister tell us any more about the value-for-money profiles, and in particular what the plans are to maintain those? Obviously that requires the compilation of data and comparative data.
Baroness Hanham
We are currently considering the future management of the Audit Commission’s value for money—the question asked. I cannot say anything more today but we will come back to this before Report, I hope, and I will certainly make sure that noble Lords are kept in touch with progress, which I think is what I said last time.
The Earl of Lytton
Not to prolong the matter, I beg leave to withdraw the amendment.
Baroness Hanham
“Local authority publicity requirements
(1) The enactments set out in Schedule (Local authority publicity requirements) shall have effect as follows.
(2) Any requirement for a local authority (in whatever capacity) to publish a notice, an advertisement or any other matter in a newspaper shall cease to have effect.
(3) Instead, the local authority shall publish the notice, advertisement or other matter in question in such a manner as the local authority thinks is likely to bring it to the attention of persons who live in its area.
(4) The Secretary of State may be regulations amend Schedule (Local authority publicity requirements) by adding or removing enactments.
(5) In this section, “local authority” means—
(a) a county council in England or Wales,(b) a district council,(c) a London borough council,(d) the Common Council of the City of London in its capacity as a local authority,(e) a county borough council in Wales,(f) the Council of the Isles of Scilly,(g) a parish council, or(h) a community council.”
Lord Tope
My Lords, in moving Amendment 19B I shall also speak to Amendment 19E, which must be the longest amendment I have ever tabled in 19 years in your Lordships’ House.
Amendment 19B would remove the statutory requirement to publish certain notices in the local press, and Amendment 19E, which runs to nine pages, lists the 163 enactments that require publication of statutory notices in the local press. I am grateful, I assume, to the Local Government Association for that list of 163—it certainly was not my homework. Subsection (2) of the proposed new clause would remove the statutory requirement to publish in a newspaper. Subsection (3) still requires a local authority to,
“publish the notice, advertisement or other matter in question in such a manner as the local authority thinks is likely to bring it to the attention of persons who live in its area”.
The requirement to publish statutory notices in the local newspaper was introduced in 1972. We lived in a completely different world 40 years ago where we would not have envisaged the enormous changes in communication and media opportunities that have taken place over that time. In 1972 a statutory notice in a well-read local newspaper quite probably was the most effective way of communicating with residents. In 2013, I would suggest that a frankly rather boring, hard-to-read notice published somewhere in the middle and back pages of, perhaps sadly, a much less well-read local newspaper, is the least effective way of all the opportunities now available to communicate any information to anybody, whether they be local residents or people with professional or organisational interests.
It is high time for us to remove that statutory requirement, something which has long been championed by local government. Indeed, a survey by the Local Government Association indicated that 84% of councils believe that there are less expensive and/or more effective ways to disseminate information contained in public notices. The only surprise to me is that 16% of authorities apparently do not share that view, although I suspect that they might be in the “did not respond “or “do not know” categories.
I have yet to meet members of the public who regularly look for and read statutory notices in the local newspaper. I will leave for another day the question of how widely read and circulated local newspapers now are, certainly in London, and how wide their reach is. Again, the Local Government Association’s survey suggests that in 54% of council areas—not London in particular, but council areas generally—local newspapers reach less than 40% of the population. Of that 40%, very few will be reading statutory notices. If this amendment were enacted, it would still of course be possible for a local authority to place a public notice in a local newspaper if it wished to. It may on occasion think that that is a desirable thing to do, but it would no longer be a statutory requirement.
We all know the considerable financial pressure facing local authorities, which is no doubt increased with today’s announcements. However, local authorities have spent a little over £26 million in the past year paying local newspapers for the cost not of general advertising but of statutory notices. They pay another £17 million, voluntarily and entirely properly, for general advertising. That is something that they can do of their own volition, but the £26 million is something that they are required to do by the 163 statutory enactments listed in Amendment 19E. I can think of little greater waste of money. I have said earlier that statutory notices are possibly the least effective means of communication. They must certainly be the least cost-effective means of communication.
Some of this is born of the understandable concern over the demise of many local papers. The demise of the regional press is an important issue which we have debated previously; it is not really a debate for this context. However, I do not think, and I do not think that anyone else thinks, that requiring the publication of statutory notices—in effect requiring local authorities to provide a £26 million-a-year subsidy to local newspapers—is in any sense the answer to the demise of and difficulties facing local media due to the changing world of communications. That is a much bigger force than that with which we are here to deal. Continuing this requirement seems rather Canute-like, facing the incoming tide of the change in how people receive their communications, which is no longer through statutory notices.
Rather more concerning to me—and something of which I was less well aware—is the fact that the LGA survey to which I referred found that 42% of local councils are charged by their local newspapers a higher rate for public notices, which they have no choice but to publish in the local newspaper, than exists for general advertising. That is perhaps a matter between the local authority and the local media, but nearly half of local authorities in the country have found that to be the situation. There is, again, something seriously wrong there.
We raised this issue at Second Reading and the Minister kindly wrote to the noble Lord, Lord McKenzie, and sent a copy to all of us who took part in the debate. There was an interesting section headed “Statutory notice”, in which she responded to some of the points that I had made. She said that it was a contentious issue, but I am not sure that it is. It is in the sense that local authorities have long said that this is a waste of money and they do not want to do it, but whether that is contentious or agreed by 84%—but not, perhaps, by the newspaper industry for understandable reasons—may be another matter. She concluded that section of her letter with the following comments. I want to quote from it because I would like to expand her remarks. She wrote:
“This is an issue that the Government continues to take seriously and look at. The Government will continue to work with those who have an interest in the future of statutory notices to better understand the key issues and evidence. We are currently exploring the scale of current requirements placed on public bodies”—
I hope that my Amendment 19E gives some indication of the scale of the requirement—
“and other sectors to put notices in newspapers. However, the Government has no plans, at this stage, to include anything on statutory notices in the Bill. It is more important that we take time to properly consider this complex subject rather than reach rushed conclusions”.
I am not sure that we are rushing this as the matter has been under consideration for many years. However, what we have before us now is the fairly rare legislative opportunity to repeal a very outdated statutory requirement and replace it with one which better reflects the 21st century complexities of communication in a multimedia society.
I hope that before the Bill concludes its passage in the other place and perhaps returns to this place—which may well occur towards the end of this year—the Government will reach conclusions on something which is hardly a new or surprising issue and take the legislative opportunity provided by the Bill to repeal that out-of-date 1972 requirement. I beg to move.
Lord Beecham
My Lords, I have a certain sympathy with the amendment moved by the noble Lord. It is a long time since I recall seeing a notice about the provision of a cattle grid, a busker’s licence or even acupuncture, which feature among the interesting series of regulations which apparently apply, and it seems that an overhaul of the requirement is long overdue. However, I do not completely follow the line he has taken. We must not forget that a significant proportion of the population are still not involved with modern communications and are therefore not able to log on to a council website, for example. Moreover, if you log on to a council website, generally speaking you are looking for something, whereas if you are perusing a newspaper you are more likely to come across things. The question is: what things ought to be included in this provision? That is a perfectly legitimate point which the Government need to address to reduce substantially the scope of the present requirement.
However, I do not have too much sympathy with local authorities which complain that they are being charged a differential rate as the answer is in their own hands. They should threaten to withdraw the relevant advertising from the local paper if they do not get better terms. I should think that that would be a pretty powerful sanction. I think that my authority spends £88,000 a year on statutory notice advertising. There is ample scope to reduce that with a more sensible list but I would not like to see the requirement go altogether. Certain other things also have to be published by way of statutory notice—for example, in the realm of probate, licensing matters and things of that kind. Certain things in this enormously long list ought to be retained. I am with the noble Lord in hoping that the Government review this issue and come forward with a much reduced list which would make more sense and perhaps reduce the cost. However, I would not go all the way with him and support the amendment as it stands.
The Earl of Lytton
My Lords, I will follow what the noble Lord, Lord Beecham, said, in the same vein, because I think that getting rid of the requirement altogether would create all sorts of difficulties, which the noble Lord, Lord Beecham, has referred to.
I cannot help commenting that for all the money that is spent on these things, they seem to be reproduced in the smallest print and in the most insignificant parts of the relevant newspaper. One always wonders whether a local authority chooses its moment to stick in an important announcement when the local football team has been moved up to the next division or whatever it happens to be, and nobody is going to read the small print in the public notices part of the paper. Maybe it is because they are being charged so much that the print is so small so they need to cram it into a smaller number of column inches in order to get value for money—but that is speculation on my part.
I agree that better and more efficient ways should increasingly be used to disseminate this information. Very often I hear about things not through the pages of the press, where they are carefully hidden, but because the parish council or some other organisation sends a round robin e-mail and I happen to be on the circulation list and that is how I get to know about it. I think that must be the experience of many noble Lords and many members of the public. So I support the general purpose here. Certainly, I would not necessarily support the removal of public advertising in the press for every single thing that is on the list of the noble Lord, Lord Tope.
Baroness Hanham
My Lords, happily, noble Lords have not quite agreed on this again, which is always very useful as far as I am concerned, but they have raised issues that are important and I want to acknowledge that.
The purpose of statutory notices is to inform the public about decisions that will affect their lives, their property and their amenity. There are 162 aspects they will need to be informed about but they are all relevant to local people, either individually or in groups. The amendment does not consider the effect on the public or on business and other groups, and would potentially put local people in the dark. We must acknowledge that there are still people who do not access information other than through newspapers. The local paper, where it exists, still fulfils a very public duty in that regard.
Removing statutory notices from the requirement to publish for local authorities would also stifle local transparency and the rights of local people to challenge decisions that impact upon their lives, because they would not know about them. This is a complex and contentious issue, as my letter to the noble Lord, Lord Tope, acknowledged. I do not believe there is any consensus about taking them out of local newspapers even if they cost a small amount to put in.
The burden of statutory advertising is one that we acknowledge, and the Communities and Local Government Select Committee’s recommendation a couple of years ago for a review of publication requirements for statutory notices cannot be ignored in the long term. Against this background, local newspapers remain an important part of local democracy, ensuring that local people are informed about the decisions that affect their daily lives. It is essential that local people have free and open access to information that can affect them or impinge upon them rather than having to rely on other means. I acknowledge that the requirement to publish some notices in newspapers comes from an age which has long since gone—1972 was a very different time from now—and they could perhaps be removed. However, other requirements remain as valid today as they always have been.
Looking at planning applications, there is a limited amount of time for local residents to make representations, yet applications can and do affect their and their neighbours’ quality of life and property. The previous Administration consulted in 2009 on removing the statutory requirements to publish planning notices in newspapers. It was not well received. The noble Lord, Lord McKenzie, may remember that.
The then Government concluded that it was clear from responses that some members of the public and community groups relied on the statutory notices in newspapers to learn about planning applications in their area. There was no conviction that good alternative arrangements could readily be rolled out. The effect of this amendment would therefore be to reduce public scrutiny regarding, for example, planning decisions, the provision of sex shops, bus-lane fines, casinos, betting shops and councillor allowances, among myriad others. I acknowledge that all 162 are laid out in Amendment 19E, but I have understandably mentioned a few which are important. Although some may be willing to see all these go, we would ask whether the blanket removal of a huge swathe of statutory notices is really in the public interest or ideal. That does not stop us looking at the statutory notices under initiatives such as the Red Tape Challenge, but they are currently as listed.
It is vital that we understand how local people receive and use information in the 21st century. Some make use of innovative technology, and everyone here sits with their little iPads making sure they know exactly what is going on at home when they are sitting here taking important decisions about legislation. However, not everyone is as privileged and not everybody has, or wants, easy access to technology. They like reading what they want in papers and we cannot disregard that.
It is also true that the money that pays for these statutory notices helps to keep local newspapers in existence. That is important to ensure that those who are not going to be tied up to the internet have ready access to information not only about statutory notices but about what is going on their local area. The newspaper industry is clear that competition with local authority newspapers for advertising revenue is damaging their primary source of revenue and preventing newspapers reporting on what local authorities are doing on behalf of local people.
It would be unfair to remove statutory notices in such a blanket way as proposed, particularly while independent newspapers are—as the noble Lord, Lord Tope, acknowledged—under threat and need to be kept in business. A small contribution to that is through the statutory notices, which seems a good use of public money. We would not wish to accept the amendment. With the comments I have made, and with the understanding that the coalition agreement was that we would try to protect local newspapers, I would ask the noble Lord to withdraw his amendment.
Lord Tope
My Lords, I am searching for the words in the coalition agreement which certainly comply with the amendment. I am, of course, grateful to all noble Lords who have spoken in the debate. Perhaps it was the way in which I introduced it; there seems to be some misunderstanding. There is nothing in what I am seeking, nothing in this amendment, which removes the requirement to publish statutory notices. What I am seeking to remove is the requirement to publish them in local newspapers; that is an important difference. I entirely agree, and wholly sympathise, with the view expressed by several speakers that by no means everybody accesses the web or electronic means of communications. The noble Earl, Lord Lytton, may well receive his parish notices by e-mail, but I suspect that not all in the parish study the parish e-mails. Maybe one day that will be the case, but it is not yet and I do not suggest that it should be.
This amendment would still require local authorities to publish their statutory notices, but it would require them to do so in a way that they thought likely to bring them to the attention of persons who live in the area. That could be in the local newspaper—perhaps in a better form than most statutory notices—by e-mail or on their website. Possibly the most effective way is still on a piece of paper put through the letterbox, which is still, I suspect, where many people get their information on planning applications and other matters of direct interest to their immediate vicinity. It is for the local authority to decide, depending on the circumstances of its own area, which is the most effective and cost-effective way of meeting a statutory requirement to publish public notices. Among the least effective ways is this statutory notice—with which we are all familiar but which is seldom read—published in the back pages of a newspaper.
Lord Beecham
“(3) In section 4 of the Local Government Act 1986 (codes of recommended practice as regards publicity) after subsection 8 insert—
“(9) In respect of the characteristics set out in section 4 of the Equality Act 2010, nothing in section 38 shall restrict the rights of authorities in pursuance of their obligations under section 149 of the Equalities Act 2010 to publish at any time factual material by way of correction or rebuttal of inaccurate statements which promote discrimination, harassment or promotes or constitutes other unlawful acts.”
Lord Beecham
My Lords, this rather intimidating-looking amendment is a probing amendment. It arises somewhat curiously from my membership of a committee set up by the All-Party Inquiry into Electoral Conduct, which is preparing a report on material produced in elections that might be racist or discriminatory in one way or another. In the course of discussions, some doubts were expressed about whether, under the present code of practice, it is possible for authorities to publish statements of fact correcting statements of that kind. I put it no higher than that there is a doubt about that. There is a legal opinion that it is perfectly legitimate to do so but certain reservations are held in the world of community relations and local government that it may not be permissible to make clear that what other people are saying is wrong in particular areas.
The reference here to the characteristics set out in the Equality Act cover the following areas: race, gender, age, gender reassignment, sexual orientation, and religion and belief. The concern is that particularly—but not exclusively—around the time of elections we may get significant misstatements which can be calculated to mislead people and may indeed in themselves be unlawful. The amendment seeks to clarify the position. The Minister may be able to say today or subsequently that, having taken advice from government lawyers, the position is okay and authorities are able to correct such misstatements.
To illustrate the kind of problem that one might face, a ludicrous urban myth is currently developing around the infamous bedroom tax, purporting to say that if you are a Muslim householder, you can describe one of your rooms as a prayer room and that will avoid the bedroom tax. This is complete nonsense but one can see how statements of that kind can cause considerable problems and, in the context of an election, be influential.
Therefore, the amendment seeks simply to sanction or confirm, if it is indeed the case, that it is permissible for authorities to publish,
“factual material by way of correction or rebuttal of inaccurate statements that promote discrimination, harassment or promotes or constitutes other unlawful acts”,
in the areas to which I referred. It is particularly important that it be made clear that that is permissible during the purdah of an election period because that is precisely when it may be that those with a particular axe to grind will be most likely to produce such material. It is important that it be rebutted, not in a party or political sense but in a purely factual sense, as quickly as possible in order that the situation should not be inflamed.
I hope that the Minister can assure me that the advice is that such publicity is permissible, including during an election period. If not, I invite the Minister to consider the position further and see whether the amendment or something along the same lines can be incorporated into the Bill. It is an area where, particularly given present tensions, councils acting responsibly can correct factual misstatements, thereby helping to promote community cohesion and avoid any discrimination or harassment of any of the groups identifiable within the characteristics listed in the Equalities Act. Of course, authorities have a duty under that Act; the question is whether we can confirm that that duty will allow them to take the steps to which I referred. I beg to move.
Baroness Hanham
My Lords, I just want to check for the noble Lord the exact position regarding elections because that is probably the most salient purpose of the amendment. Perhaps I may first reply in general.
As the noble Lord has acknowledged, Section 149 of the Equity Act 2010 places a duty on local authorities to tackle discrimination in all the areas that he mentioned. The Code of Recommended Practice on Local Authority Publicity, to which local authorities have a statutory requirement to have regard, sets out the seven principles that local authorities must abide by when producing any publicity. Publicity must be, lawful, cost-effective, objective, even-handed, appropriate, have regard to equality and diversity, and be issued with care during periods of heightened sensitivity.
The publicity code, in its guidance on the principle of publicity about equality and diversity, is clear that local authorities may seek to influence the attitudes of local people or public behaviour in relation to matters including race relations, equality, diversity and community matters. The provisions in the Bill relating to the publicity code allow the Secretary of State to make a direction requiring a local authority or group of local authorities to comply with some or all of the publicity code. As I understand it, the amendment is intended to ensure that any direction about compliance with the code would not prevent a local authority from exercising its obligations under Section 149 of the Equality Act. The code makes provision for just this sort of publicity; a direction to comply with the code would serve only to put the guidance on a statutory footing.
Paragraph 35 in the current code states:
“It is acceptable to publish material relating to the subject matter of a referendum, for example to correct any factual inaccuracies which have appeared in publicity produced by third parties, so long as this is even-handed and objective and does not support or oppose any of the options which are the subject of the vote”.
I think that that clears up the matter as regards being able to respond during elections, in particular.
Lord Beecham
Is an election to be treated the same as a referendum because a referendum is putting an issue? I am not sure that that is right. If that is the intention and that can be confirmed, that would be sufficient.
Baroness Hanham
My Lords, this is an important point. If the noble Lord withdraws the amendment, perhaps we can discuss this further before the next stage and identify whether, in parliamentary terms, a referendum would cover elections. If that is so, the noble Lord is right—the issue is not covered. Is the noble Lord happy to withdraw the amendment with that assurance?
Lord Beecham
Yes. I am grateful for the assurance and I beg leave to withdraw the amendment.
Lord Tope
My Lords, I gave notice of my intention to oppose Clause 38 standing part of the Bill, and I did so to enable us to have a debate on what for many in local government is arguably the most contentious part of the Bill, or certainly one of the most contentious. I did not wish to try to amend the clause; I simply wanted to facilitate a debate to enable the Minister to give us the evidence that the abuse of the voluntary publicity code is sufficiently serious and widespread, and indeed is a prime cause of the threat to local newspapers, as to justify giving very considerable powers to the Secretary of State over the local publicity that councils can undertake.
I have been supplied with the wording of the coalition agreement which relates to this issue rather more than to the statutory notice one. The agreement states:
“We will impose tougher rules to stop unfair competition by local authority newspapers”.
For added value, the Liberal Democrat manifesto stated that we:
“Support a diverse regional and local media. We will help to maintain independent local sources of news and information by enabling partnerships between TV, radio and newspaper companies to reduce costs, and by limiting publicly-subsidised competition for paid advertising from local council free-sheets”.
I will leave it to the Minister to tell us what the Conservative Party’s 2010 manifesto stated, as I am sure she knows it off by heart.
As I said, I am asking the Minister for the evidence on which the Government are basing what I consider to be fairly draconian measures. I ought to say that I entirely agree with that section of the coalition agreement and, indeed, with that part of my own party’s manifesto. I believe that I am sitting next to the author of that, so I have little choice but to agree. However, I do agree. I offer no personal or political support for that tiny number of local authorities—I believe that it is a tiny number—which have gone too far in a party-political sense when publishing newspapers, magazines or other material. That criticism applies whichever party is involved or even, in one case, no party. I think that we all hold that view. However, is that abuse so widespread and general as to justify legislating to give the Secretary of State this power? I am not sure which words to use as I do not want to say, “power to control the publicity output of local authorities”, but that is where this is leading.
The measure gives the Secretary of State power to intervene even if a local authority has complied with the currently voluntary publicity code. I find that worrying. I have never believed that a small number of abuses, however wrong or undesirable or however much we all oppose them, is ever sufficient justification to legislate for everybody. However, that is what I think we are doing. I believe that the vast majority of publications, of whatever nature—magazines, newspapers, newssheets, letters from the leader—comply with the voluntary code. Of course, people may or may not agree with some of the comments but they give no cause for general concern and certainly no requirement for legislation.
Clearly, my Government take a different view so, by enabling this debate today, I am asking the Minister to give us more widespread evidence—rather than two or three perhaps misguided local authorities—that this is a problem that needs to be tackled in this way. I also wonder whether the continuing budget cuts are actually proving a far more effective restraint on local authority publications, whatever their content, than anything that we may legislate for; that may be something that we need to examine further.
I will pause now and give the Minister the opportunity to provide the evidence that many of us are seeking.
Lord Beecham
My Lords, perhaps I can give the Minister a few more minutes to assemble her thoughts.
Once again we are dealing with one of Mr Pickles’s little obsessions. It is unfortunate that so often our parliamentary time is taken up with dealing with these notions of his. I entirely support the amendment and the sentiments with which the noble Lord, Lord Tope, has moved it.
It is interesting to look at the justification—perhaps that is the wrong word; the explanation—for the proposals in the government document, which describes their objectives in revising the code. The code speaks of competition but of course it does not deal with competition, which can and should be dealt with by the appropriate legislation. The department, however, considers that the publicity code is,
“the right vehicle for imposing tougher rules to stop unfair competition by local authority newspapers”.
That is quite extraordinary. It goes on to say:
“The Department’s view is that the proliferation of council newspapers can have the effect of reducing the impact of independent local newspapers. A healthy free press is important in providing information to the public to hold their local authority to account”.
I could not agree more. I deplore the decline in the coverage of the affairs of my council and many others, which has gone on now, to my certain knowledge, for 20 years. Those sentiments are quite right but the statement goes on, risibly, to suggest:
“Council newspapers, issued frequently and designed to resemble a local newspaper can mislead members of the public reading them that they are local newspapers covering council events and give communities a biased view of the activities of the council”.
So the residents of Newcastle are so dim as not to be able to distinguish between the Evening Chronicle or the Newcastle Journal and the occasional distribution of the council’s Citylife? This is a ludicrous proposition.
The suggestion that somehow the terrible decline in the newspaper industry, local newspapers in particular, is the responsibility of local government is just absurd. I can quote some figures about that. Trinity Mirror, which runs papers in my part of the world, employed 6,000 production and editorial staff in 2004; the figure is now fewer than 2,700. The Daily Mail has shed a quarter of its 3,000-strong workforce since 2010. This is not because people are rushing out to get hold of a council newspaper, or waiting eagerly for it to arrive through the door, and therefore no longer need to read these other papers, it is because of the changes in the industry; it is because we now have the internet and social media; and it is perhaps because people are less interested in news.
Certainly, in my experience, local newspapers are much less interested in covering council affairs than they ever were. That process is still going on and I regret it. When I was leader of the council—this is going back a long time—I used to get daily calls from a newspaper correspondent. That stopped before I finished as leader, which was in 1994. They do not come to council meetings and never cover scrutiny meetings, because the industry is in an altogether different position now.
One of the more useful briefings that some of us have received has come from the National Union of Journalists. It opposes this government stance and this clause. As it puts it:
“The NUJ has no difficulty with additional guidance being issued to local authorities and councils. However, the new publicity code ‘includes specific guidance about the frequency, content and appearance of local authority newspapers, including recommending that principal local authorities limit the publication’”—
well, we know about that. The journalists go on to say:
“We do not believe that this element of guidance reflects the needs of many communities, nor the practicalities of providing prompt, accurate advice and information to communities”.
That is, of course, right. They also make the point that it is perfectly possible that if authorities stray into the area of political propaganda—which they should not—they can be,
“referred to the appropriate body for investigating improper use of council funds for political aims”.
Proper officers of the council should be keeping an eye precisely on that sort of area. If they do not, perhaps the auditors should be doing so. They presumably will be getting copies of any civic newspaper while they are about their business.
The Audit Commission itself, three years ago, rebutted the suggestion by newspaper proprietors that local authority publications represented unfair competition. It found that the money spent by councils was not unreasonable, that few council publications were published sufficiently frequently to be viable media for most local advertising—which is where the press think that they are being deprived of revenues—and that the current accountability framework is adequate. That seems a pretty unanswerable case. The position that the Government are adopting bears no relationship to the reality.
However, that is only publications and the press. There is another aspect to this code, which the noble Lord has not mentioned—the question of lobbying and the effective injunction against councils employing firms to lobby on their behalf. Again, if there were any suggestion that the lobbying was of a political nature, that would be caught in exactly the same way as any political material in a newspaper. But why should a council not seek to use lobbyists—preferably registered ones, which I hope will come, even if we have not got round to it yet—to develop an argument with Members of this House or the other House, or to influence government or public opinion? There is nothing wrong with that provided it is not a political exercise. However, that is also excluded under the revised code of practice.
Again, too much power is accruing in the hands of the Secretary of State, who in this case is being set up as a censor or inquisitor prepared to put something on the index of prohibited publications. That is not the function of the Secretary of State. This is an intrusion into local democracy under the specious argument that somehow local council publications are undermining the press. It is an absurd proposition and I support the noble Lord.
The Earl of Lytton
My Lords, the noble Lord, Lord Tope, will be pleased to know that the National Association of Local Councils supports the thrust of what he has advanced here. It does not believe that there is a problem, nor does it see a need to change the present code status. It is not aware of a single instance of the Secretary of State intervening in a parish council publicity matter. It says that the taking of additional powers by the Secretary of State is distinctly non-localist, and there are some concerns at the potential longer-term implications for parish newsletters. It certainly does not think that this is a legislative priority. I am at one with what has been said on this.
I have a separate concern that I expressed at Second Reading on the suitability of the present code to become a statutory code at all. When I put this to the Local Government Association, it agreed with me that the current drafting appears to be less than precise and said that it was a matter on which the LGA had taken some advice. However, that is not to say that the general thrust of the code is wrong. It actually contains some good principles but is qualified by all sorts of terms, mainly prefaced by the word “should”, and includes phrases such as “likely to be perceived”. There are also imperatives about there being no,
“commentary on contentious areas of public policy”,
and positions being presented “in a fair manner”. Authorities should not do anything,
“designed to influence members of political parties”.
Paragraph 13 of the code states:
“The purchase of advertising space should not be used as a method of subsidising voluntary, public or commercial organisations”.
That begs the question: when is a subsidy merely part of a cost contribution? I note also that the definition of what might be unreasonably partisan, contentious, sensitive or likely to have an influence if not even-handed is probably not a constant between Parliament at this level and the parish pump at that level. I certainly question whether it applies in equal manner to everything in between. How would making this code statutory improve things? Would it be simply an avenue for contention whereby the matter would have to be thrashed out in the courts—the Secretary of State versus some borough, parish or other?
Is that a profitable way to go forward, bearing in mind that there do not seem to have been any substantial problems? It is said there have been one or two in some London boroughs but I do not know whether they are regarded as being typical or whether those boroughs that have had the finger wagged at them have failed to observe the wagging finger. Other noble Lords may know more about than I do, but it seems to me that the case for the clause is not made.
Baroness Hanham
My Lords, I recognise that the Room is not with me but it is none the less extremely important that the clause stands part of the Bill.
The code of recommended practice, agreed by both Houses of Parliament, is the guidance to which local authorities must have regard when producing their publicity. It sets out the seven principles that local authorities have to abide by when producing their publicity. We know what they are and I shall not read them out. The publicity code is necessary because local authority publicity can be expensive and contentious. We acknowledge that the majority of local authorities abide by the guidance in the publicity code. However, there are some that do not. There are examples of local authorities that still produce weekly newspapers that are highly contentious and political. While there may be only one or two authorities that have done this, it is proper that someone is able to make sure that that does not happen.
Clause 38 provides the Secretary of State with the power to take action where a local authority is not complying with the publicity code. This would be taking action by direction. The Secretary of State can direct a local authority or a group of local authorities to fulfil or take notice of the publicity code and can require compliance. Such directions do not require all local authorities to comply—although it could do so, which would make the power statutory, if there were to be a real outbreak across every single local authority.
However, that is not what this clause is directed at. It is directed at the one or two authorities that are still not conforming to the publicity code. If a publicity notice is excessive and people complain, it enables the Secretary of State to direct the local authority to comply with that code. The clause sets out the procedures to be followed before a direction is given and these require the Secretary of State to give proper notice of the proposed direction and for an authority to make representations within 14 days.
Lord Beecham
Lord Beecham
My Lords, with the leave of the Committee, I will speak to both this amendment and the following one, Amendment 19BC, since they both relate to council tax referendums, which is a highly contentious issue—to use the noble Baroness’s phrase—about which no doubt several authorities would be only too pleased to be able to lobby. I do not think a telephone call would suffice to deal with this issue.
Amendment 19BB deals with a particularly objectionable part of the Government’s proposals. I remind your Lordships that the ad hoc committee on the Bill had no opportunity of considering these amendments, or indeed the code of practice that we have just discussed, because these matters came very late in the day and were added to the Bill as a convenient vehicle for the Secretary of State’s obsessions, to which I have already referred. In terms of the council tax referendum, what is particularly objectionable is that there is a potentially retrospective effect here, because decisions already taken in the past can be used as the basis for requiring a referendum in the future. That is particularly objectionable where the decisions might have been taken by a body that is not actually the individual local authority. If it is a precepting authority or, as this Bill is seeking to require, a levying authority, that is even more objectionable. There is no justification whatever for this element of retrospectivity and I hope that on reflection the Government will see that it is a departure from normal practice and one that cannot be justified except in the most exceptional circumstances. In my submission these simply do not arise.
Amendment 19BC acknowledges—as do both amendments—the fact that we are living with a provision about council tax referendums. Many of us opposed them when they were inserted into what is now the Local Government Act but they are there and we have to live with that. What this amendment deals with is the position that might arise as a result of not simply a decision in the past but a decision in the past with a continuing effect on expenditure. So, for example there are authorities—I understand that Leeds has raised this—with city deals that have entered arrangements which would require expenditure over a period which, if the current referendum provision is applied, might severely impact on the schemes to which the Government are party.
The city deal, which one welcomes, is an opportunity for the Government, local government and private sector partners to work together. It involves a commitment of expenditure on all parts. If such decisions are not to be thwarted, given the ever tightening situation affecting local authorities, at the very least the Government should be making transitional provision to ensure that decisions fairly recently arrived at, but which will have a continuing impact, will not merely be on the finances but on the economic state of the area with which these arrangements are very largely concerned. The Government’s proposed changes could cause very severe problems, whether they are over transport—which I think was the case in Leeds—or about city deals such as that in which my own authority has been involved. No doubt we shall hear from my noble friend Lord Smith about Greater Manchester Combined Authority and its arrangements.
Referendums are both costly and unpredictable in their outcome. You cannot have that situation when you are dealing with third parties and have entered into arrangements that could be disrupted as a result of the change which is now being proposed. I think that the Government should take both of these matters back. The first point is really a matter of principle about retrospective legislation and requirements. The second is to deal with what appears potentially to be a significant issue for a number of authorities which are endeavouring to do their best in many respects to work with government on agreed programmes that could be rendered difficult—no doubt unintended—as a result of the provisions. I beg to move.
Lord Smith of Leigh
My Lords, before I speak on this matter I shall declare my interests. I am a vice-president of the LGA and also, as my noble friend indicated, the chairman of the Greater Manchester Combined Authority. Greater Manchester is one of the areas where the Secretary of State was somewhat upset by the level of council tax rises which were entirely consistent with the law as it stood. Before I begin I would like to quote from a document published by DCLG on 12 January 2012 on council tax referendums.
“The definition of ‘relevant basic amount of council tax’ . . . is essentially an adjusted Band D amount which is derived from a calculation of the authority’s basic amount of council tax. This amount is modified by omitting local precepts issued to or anticipated by a local authority, and levies issued to or anticipated by an authority, from the calculation. This is to ensure that increases in levies, over which authorities have minimal or no control, are not a factor in triggering a council tax referendum”.
Those were the words of the department in issuing guidance on council tax. As my noble friend indicated, levies come in to local authorities in a number of different guises. In Greater Manchester last year, two particular things impacted on the levy situation. First, not quite like Leeds, we had an agreement between authorities on transport expenditure, which will put a 3% increase above the day-to-day spending needs of the transport authority to invest in transport infrastructure. That programme began in 2009 with the commitment of the 10 authorities in Greater Manchester—which took some getting, I assure you, but we got there—to put that money in for six years. When we went to the Government and negotiated our city deal—we were the first conurbation to get a city deal—this transport expenditure was seized upon by the Government as an innovative way forward for local authority spending. It has taken some time, but we have devised an earn-back model and have now agreed that the Treasury will reallocate some of the increased taxation back to Greater Manchester. We will be able to spend that money on future investment. It is a good deal, and I understand that it will be part of the announcement on the public spending review.
Last year, the increase for the Greater Manchester transport levy was 3.6%. In other words, it was 0.6% for day-to-day transport needs—the cost of fuel and other things; this meant that there were big impacts on costs. The other 3% was that commitment made back in 2009, which continues to roll forward in future years—a contribution to investment and transport. We can prove that the transport investment is taking place. If noble Lords go to Manchester, they will see that the new Metrolink system is up and running, and new bus ways beginning in my area. There are all sorts of things going on which meet our commitment, and government commitments, to reduce greenhouse gases and all sorts of things. We thought that we would agree that with the Government but, obviously, they pushed up the levy.
I step back slightly from the second impact because Wigan is not part of the Greater Manchester waste disposal authority. The waste disposal authority signed a new PFI deal a couple of years ago because it did not have the facilities to deal with modern waste and needed expenditure on a new facility. So often with PFI deals, the early years have a really high cost which inevitably falls over future years. The effect on the waste disposal levy was 4.5%; obviously a very big increase for those authorities. A number of authorities in Greater Manchester therefore raised their council tax by more than the 2%, which the Secretary of State said would trigger a referendum. This was entirely legitimate within the rules of council tax referendums as they then were. In fact, the ironic thing was that a number of authorities, including those which seemed to have the biggest increase, actually reduced the proportion of the council tax take for their own services to meet the needs of external levies. That means that if this clause goes through, then the threat of the Secretary of State—the revenge of Eric Pickles—will be that any authority which raised its council tax by, say, 3.5% while the guideline figure remained at 2% can only increase its council tax next year by 0.5%. The rules have changed.
Who knows what would have happened if the council had known that that was the situation last year? Different decisions might have been made. How can we predict the mind of the Secretary of State and the mind of the department when it wants to change the rules in this manner? It is grossly unfair that some authorities, in addition to the awful amount of cuts that they are taking on board, will have to make savage cutbacks in services to cope with this part of Clause 39. This is bad and retrospective legislation and the Committee should think very carefully before it commits to Clause 39.
Lord Tope
My Lords, I, too, have some concerns about this clause although I am a little unsure about whether to raise these concerns on these amendments or perhaps in a few minutes in the debate on whether the clause should stand part of the Bill. However, I will deal specifically with Amendment 19BB, which deals with the issue of retrospection. The case has been well made with particular instances. I have concerns about the retrospective nature of subsection (15) on rather practical grounds. By the time this Bill is enacted, all attention will be focused on the next financial year and not the current one. For the Secretary of State, whoever that may be at that time, to be penalising authorities at that stage for acting lawfully at the time when they took the action in respect of this current financial year seems to be both wrong and impractical. Should the Secretary of State take that view, what will be the practical implications by the time we are very nearly through the current financial year? I hope that when the Minister responds in a moment she will at least be able to give us some reassurance on the particular issue of retrospection, which is causing quite proper practical concern as well as political and philosophical concern.
Baroness Hanham
My Lords, as I understand it, the noble Lord has grouped together Amendments 19BB and 19BC. Amendment 19BB challenges the Secretary of State’s power to determine categories of authority and to set excessiveness principles which apply to them accordingly. Subsection (15) makes it explicit that, in doing so, he may differentiate between authorities on the basis of past council tax decisions. The amendment would remove subsection (15) because of concerns, as raised in our discussion, about retrospection and about it providing much wider powers to the Secretary of State when setting excessiveness principles.
I am happy to confirm that subsection (15) does not apply referendum principles retrospectively. It does not make any changes to the setting of council tax in previous years or change the referendum limits that applied. The Government were clear before council tax and levies were set for 2013-14 that they would take into account the decisions taken by local authorities on council tax in setting future principles. As already stated, no changes will be made to those principles that applied in 2013-14 or, indeed, to any other year. Both authorities and levying bodies can continue to plan accordingly.
In light of the fact that local authorities have had a pretty clear indication that their decisions for 2013-14 would be taken into account—what they did, where and why—in setting future principles, there is no argument that authorities were not aware of the Government’s intentions or justification for accusations of unfairness, given the Written Ministerial Statement of 30 January 2013, followed by an information note sent to all to local authorities on 8 February. Decisions taken on council tax increases for 2013-14 were taken in full knowledge of those warnings. Subsection (15) does not radically extend the Secretary of State’s existing powers. It clarifies those powers and removes any doubt as to whether they allow him to continue to take into account past council tax decisions when making decisions on the following year.
Amendment 19BC would provide that during a transitional period specified expenditure could be exempt from inclusion within the calculation on whether a council tax increase was excessive. The noble Lord will be aware that the excessiveness principles, which are set annually, already allow for different principles to be set for different categories of authority. For this reason, I assume this amendment is intended to press the case for the additional flexibility that we have been talking about.
It is intended that the detailed excessiveness principles for 2014-15 will be made later in the year. However, the principle will remain that local taxpayers should be protected from unwanted excessive council tax increases. It is local residents who should have the final say on whether to accept an excessive increase. We recognise that there may be specific reasons as to why a particular local authority may wish to set an increase above that level; the noble Lord, Lord Beecham, referred to the city deal in Leeds, and the noble Lord, Lord Smith, referred to Manchester. The city deal with Leeds on private sector investment has been predicated on increases in levies from the West Yorkshire Integrated Transport Authority. It is right that the levy set by the 22 elected councillors from the five district councils that manage the authority should be treated in exactly the same way as the costs of every other local authority investing in local transport projects. The Government accept that neither this nor any other city deal is dependent on setting an excessive council tax increase, nor that excessive increases in levies were agreed as part of the deal. The chair of the West Yorkshire Integrated Transport Authority put it well himself. He said that,
“transport will be managed locally rather than from Whitehall, with decision making to suit local needs, accountability to Council Tax-payers and creating a transport network fit for purpose”.
Local decision-making and local accountability to council taxpayers are what the current clause would provide by extending the transparency of decisions taken by bodies funded from council tax receipts and ensuring that local residents have their say when those decisions would require larger increases. In summary, the Secretary Of State already has flexibility to set referendum principles that address particular situations and the right to take into account the 2013-14 council tax level. With those explanations, I hope that the noble Lord will be willing to withdraw his amendments.
Lord Beecham
My Lords, of course I am not going to seek to test the opinion of the Committee today, but this is a matter to which I and other noble Lords from different parts of the House will want to return. I confess that I used the word “sophistry” to my noble friend to describe some of the assertions made by the noble Baroness—assertions no doubt made at the behest of those in somewhat higher positions within the department. This is not a satisfactory position. We will clearly need to look in detail at what she said but the reality is that decisions were taken in good faith, along with the Government, to establish a range of agreed policies without the expectation that these would somehow be affected by decisions of the kind to which the noble Baroness referred. If those agreements reached with government and other partners are to be sustained, it will, on the basis of the Government’s announced policy, be at the expense of core services. That was not envisaged at the time these deals were entered into, and it will make councils extremely reluctant to enter into any further arrangements with government when that could have the impact that it appears is now facing a number of significant authorities that are doing their best to work with government. It is an unsatisfactory position to which we will no doubt return on Report, but I beg leave to withdraw the amendment.
The Deputy Speaker (Lord Geddes)
It may assist the Grand Committee if I advise that this is not an amendment as such but an opportunity for one or more noble Lords to voice their opposition to the Question that the clause stand part of the Bill.
The Earl of Lytton
My Lords, my entire purpose in objecting to the clause came not only at the request of the LGA but as a result of a question that I put to it about the interface between the council tax referendum regime on the one hand and local democracy on the other. It felt, as do I, that the Government’s position needed further explanation. The National Association of Local Councils has also raised doubts about the wisdom of this part of the Bill, so here I am opening up the point for debate.
The Committee will know better than I about the frequency of local elections, depending on the type of authority and whether all the seats are up for election—a third, a half, or whatever, depending on the type of authority. The authorities that seem to have the least frequent elections seem to be the shire counties and the London boroughs, according to a potted account with which I have been provided by the LGA. The unitary and district authorities obviously have a different range of election frequencies and proportions of those standing for election, so the only slightly tongue-in-cheek question is this: how many council tax referenda equate to an election? As I say, that is slightly tongue in cheek.
I accept that a council tax referendum may be advanced on a narrower basis than a local election but it seems to be obvious that if a council is elected and starts to implement its programme, but is then subject to a further check on progress via a referendum on the logical outcomes of its policies, it begins to look like a recipe for potential gridlock. Giving the electorate the right to chop and change midway through an electoral cycle is curious. I suggest that the open-ended nature of that needs to be looked at. I do not necessarily say that the principle of intervening in council tax referenda is wrong or anything like that, but they do not necessarily coincide with the normal electoral cycle, and there is therefore the possibility of such referenda being quite disruptive.
As I said earlier, in order to galvanise the local electorate, which is sorely needed in some cases, it is necessary to have matters of substance and of relevance to the electors on which their votes can make a difference. That is a very important point. The LGA certainly feels—I noted the comments of the noble Baroness in another context—that the referendum provision risks compromising the thrust of local democracy in certain circumstances and that the main decision should be via the normal electoral ballot box. That is certainly the view of the LGA. As I say, we cannot guarantee that a referendum and a local election will coincide. A further explanation is needed from the Government.
In terms of forward investments, I noted what the noble Baroness said a few minutes ago about the way in which the previous amendments might be brought to bear on this whole matter. I did not quite understand the thread that a longer-term investment process would necessarily be proof against the effects of a referendum. That was my intention at this stage. I noted that no other noble Lord had added their name to the amendment and therefore anticipated that I might be in a minority of one standing before the Committee. On the broader principle, however, I should be interested to hear the Minister’s comments and those of other noble Lords.
Lord Tope
I begin by reassuring the noble Earl, Lord Lytton, that he may be in a minority of two. I share his concerns and would ask the Minister a question for clarification. Is it the case that, if a referendum on what is deemed to be an excessive levy is lost, that so-called excessive levy will still apply but the local council will have to cut its own budget in order to levy an appropriate council tax to meet the levy demand? Noble Lords opposite are saying yes; that is clearly the answer I am going to get and I want it to be clear and specific on the record. If so, we need to understand the implications of what we are doing. I can pick many examples, but flood defences might be appropriate. One can well understand where a drainage board wishes to put in a so-called excessive levy for particular work in a particular area and the public at large, who pay the council tax, may well feel that they do not want to contribute to that. As others have said, it can lead to unforeseen and undesirable consequences.
In addition to supporting the noble Earl, I also rise because my noble friend Lady Eaton is unable to be here today; she is at the Council of Europe. She has asked me to raise an issue in respect of the West Yorkshire transport fund. I will read into the record the contents of an e-mail she has received from the director of finance of the City of Bradford:
“You asked about the implications of the proposal that rises in levies, as well as Council Tax levels, could trigger a referendum.
The most significant implication for Bradford relates to current plans across the Leeds City Region to create a West Yorkshire Transport Fund. This fund is planned to grow to a total of £1bn by 2025/26 to pay for investment in the transport infrastructure. It will comprise, roughly, £150m from Dept for Transport, £100m from Local Transport Plan, £750m from the participating Councils, each of whom will contribute an increasing amount each year, by way of a levy. The current plan means that Bradford Council would put in £1.2m in Year 1, £2.4m in Year 2, £3.6m in Year 3 etc. The total investment over the period to 2025/26 from Bradford would be £161m.
It’s worth pointing out that the Transport Fund is a central plan in the Leeds City Deal, a key part of the Government's regional policy. While the Transport Fund is not the only element, it provides the underpinning infrastructure investment on which other investment activity builds.
Now, before the proposal to treat the levy by the same referendum rules as Council Tax, this plan held good. For citizens, the plan did of course mean that, while the Council Tax element of their bill would be restrained at below 2%, they would pay an increasing amount for transport investment. (And leaving aside the referendum issue, the decision to create and sustain the Fund ranks among the most significant decisions in the next budgeting rounds for participating Councils.)
The Bill’s proposal means that the Transport Fund can only be afforded in its current form if offsetting reductions are made across other services in the Council. So, by Year 3, for example, savings in other services would need to be roughly £2.4m higher than otherwise, for Bradford to afford its currently planned contribution of £3.6m in that year.
From a financial perspective, the proposal means … If investment in transport remains a priority, and the planned regional-level investment makes sense, there is now much sharper trade-off between transport and other choices. … If investment in transport has to be significantly reined in to satisfy the ‘below 2% rise’ rule, the investment returns will be significantly curtailed, with the reduced economic impact (which in turn would expect to feed through to a weaker taxation base of citizens in work and firms in business paying rates) ... For individual citizens/households, a lower aggregate taxation burden than they otherwise would face”.
That ends the quote from the director of finance at the City of Bradford, which I undertook to raise today. I hope the Minister is able to respond, if not today then later, particularly to the noble Baroness, Lady Eaton, on whose behalf I have raised this.
Lord Smith of Leigh
My Lords, I agree with the noble Earl about the problems of the electoral cycle. It was a bit disappointing that this is the fallow year for metropolitan authorities so we did not have elections. Noble Lords may recall that Wigan won the FA Cup and the feel-good factor was particularly good; obviously there have been fantastic comments on social media, but unfortunately we did not have any local elections to take advantage of that.
It was really interesting that the noble Lord, Lord Tope, read out the views of the director of finance from Bradford. The answer that the Minister gave to the earlier amendment was that, under Clause 39, the current provisions of the Localism Act, which define the relevant basic amount of council tax increase, will change from being what the council itself sets to include levies and other charges. Therefore, decisions that were entirely within the law as it stood earlier this year in March will be affected.
We had a debate earlier on the council tax referendum principle. The Government say they are not capping but actually they are. In my long experience of local government, I cannot believe that once the Secretary of State sets out the guidelines to which a referendum will apply, any local authority would want to set an amount of council tax increase above that guideline. If it does, it is on to an absolute loser. There is no way it will win a referendum on that. Which council tax payer is going to vote for higher council tax? They are not asking, “What services are being cut?”. It is a simple referendum on the increase in council tax and nobody wants it. The Secretary of State may want and need that part of it but effectively it is capping local authorities.
Capping does not always have the longer-term political impact that Governments may think. When capping was first introduced, my authority was one of the 22 Labour authorities that were all capped at once; no Conservative authorities were. We set a budget, but the Government said we could not and that we had to reset it and make significant cuts. When we came to the elections that May, we had a really big increase in our majority, so it did not have any negative political impact. I have great sympathy with the noble Earl’s position. Do we need this clause? I do not think so.
Lord Beecham
My Lords, I shall be brief. The position is a curious one in relation to what the Government regard as an area of excessive increases and what they regard as something else. An increase of more than 2% in council tax is excessive but an increase of 5.8% in social housing rents is acceptable. Indeed, the Chancellor has said today that social rents will increase by CPI plus 1% a year for virtually a decade. That actually will be rather less than the increases imposed in this past year but whichever way you look at it, it means that what is an unacceptable increase for council tax payers is well below what social housing tenants will be expected to pay. It is an interesting anomaly.
However, on the referendum point, it should be noted that three sets of organisations are involved in local government finance at the local level—the council, the levying bodies and the precepting bodies such as police commissioners. Several police commissioners increased their levies by significantly more than the 2% figure. That was acceptable because it did not raise the overall increase significantly. On the other hand, technically, their regime is rather different and rather more generous in terms of potential increases. However, if they breach the limit for precepting authorities, I understand that they would have to have a referendum. Therefore, there are two referendum systems here, as it were. It is odd that there are in effect two external bodies—some bodies, admittedly, comprise a combination of local authorities, but many do not—which can, by means of a levy, potentially force the council to have a referendum on its overall council tax levy, whereas precepting authorities are in a different category. That anomaly certainly raises questions to which we may want to return on Report.
I anticipate that the noble Earl will not seek to test the opinion of the Committee tonight. Given the fact that referendums are now, unfortunately, part of the system, despite the opposition of many of us when the Local Government Bill went through, I am not sure that we will get very far in that regard on Report. However, in this curious area of anomalous situations and differential rates of what is acceptable and what is not, we might at least provoke the Government into thinking about the system they are creating and the degree to which it is being made more elaborate, complex and, ultimately, less accountable to people with every successive announcement.
Baroness Hanham
My Lords, I thank noble Lords who have contributed to this debate. I shall try to deal with one or two specific questions at the end of my remarks. I shall lay out the purpose behind Clause 39 and pick up some of the questions as I go along.
Clause 39 amends the calculation that authorities must make each year to determine whether their council tax increase is excessive and therefore requires the approval of local people in a referendum. It changes the definition of excessiveness from an amount that excludes levies to one including levies. It will ensure that people get the final say over an excessive increase in the total council tax charged by an authority. The noble Lord, Lord Beecham, properly drew attention to the fact that precepts are already part of the local government charge. Currently, the excessiveness calculation is based on the relevant basic amount of council tax, defined so as to exclude changes in levies raised on an authority by levying bodies. The level of levies varies in different areas, but can make up more than 50% of an authority’s council tax requirement. This year, many council tax payers have seen their total bill increase by a higher percentage than they might have expected due to the impact of levies, with the overall increase appearing to be above the referendum threshold set by the Secretary of State and approved by the other place.
In short, a levy is a demand for payment by a levying body on a local authority. A large number of organisations and bodies have historically been granted the power to issue levies. Some of these are relatively small organisations but others are much larger. We have discussed more recent creations such as integrated transport authorities and joint waste disposal bodies, which carry out substantial functions across cities or regions.
Combined authorities can bring together a number of others to pool their resources and make savings, removing duplication and giving them an opportunity to make sure that the levy is not as much as it would otherwise be. However, we are clear that levying bodies are part of the local government landscape; they are funded to varying degrees by local council tax payers. We discussed the levies briefly. They were removed from the provisions of the Localism Bill, and it is partly an attempt now to exempt certain types of expenditure from the excessiveness calculation, such as that which has been approved by a local referendum. I have missed a page and shall go back.
Baroness Hanham
I was trying to be brief; it is always a mistake.
I want to make it clear that the Secretary of State is able to set excessiveness principles which compare council tax figures in 2013-14 with 2014-15, using the methods set out in this clause, and now including the cost of levies. This remains consistent with current arrangements, where the Secretary of State takes into account all relevant factors, including previous council tax levels. Noble Lords will be aware that the effect of the clause is to reinstate the model for council tax referendums contained in the Localism Bill when it was introduced to Parliament in 2010. Not one objection was raised to the inclusion of levies during the consultation or the parliamentary debate on council tax referendums. The concept of taking account of those is familiar, having been part of the consideration of the excessiveness under the old capping regime, to which reference has been made.
Levies were removed from the provisions of the Localism Bill as part of an effort to keep certain types of expenditure from the excessiveness calculation, such as expenditure which was approved by referendum or which was not under the direct control of the authority. However, since the passing of the Localism Act, there have been two developments. First, the rate of levy increases has outstripped the national increase in council tax. In total, the levy increased by 4.1% in 2011-12 at the time of an overall council tax freeze. The coalition Government have been clear from the outset about their wish to protect people from excessive council tax increases, and the inclusion of levies in the referendum legislation supports that. Secondly, authorities have shown themselves to be consistently capable of working with levying bodies in setting them and considering the cumulative pressure on council tax. Local authorities are well represented on the majority of boards of levying authorities, and there are hundreds of examples of councils and levying bodies already meeting the terms of the schemes which require a freeze or reduction in the overall council tax bill.
The Government do not accept that local councils will simply have an excessive increase forced on them by levying bodies. We have had representations that this clause could constrain authorities that have already come together to collaborate and pool resources. We must be clear about this, too. In many areas, transport and waste disposal are run by local authorities—the noble Lord, Lord Smith, drew attention to that—and are funded through the council tax, which is subject to referendum principles. In larger metropolitan areas, these functions are carried out by joint waste and transport authorities, funded by levies that are not currently subject to the referendum principles. It is right that the spending by these large organisations, with budgets in the hundreds of millions of pounds, should be subject to the same scrutiny and accountability as happens elsewhere in the country.
I should like to make it clear that a number of authorities lobbied for this change. One was Liverpool City Council, which approached the department last year, making the case for increased consistency in the treatment of different classes of local authority. That council may be alone, but it has been done.
The question was asked about elections, including those for thirds. Decisions on council tax and on the amount of council tax charges are taken in March and local elections take place in May. If there was a referendum at the same time, local electors would be very clear what the situation was and what they were voting on. I hope that that will, if not satisfy noble Lords, clarify the points raised, and as a result I beg to move that this clause stand part of the Bill.
The Earl of Lytton
“Parish polls
(1) The Secretary of State may by order amend Schedule 12 to the Local Government Act 1972 to provide for the circumstances in which a parish poll may be demanded in relation to parish financial matters.
(2) An order under this section may make provision for—
(a) different requirements having regard to the purposes for which a parish poll is sought;(b) different requirements having regard to smaller authorities or authorities with electorates below a threshold to be specified in the order;(c) safeguarding an authority against misuse or disproportionate costs of a parish poll, including circumstances in which the authority may require reimbursement of the cost of a poll; and(d) the circumstances in which a demand for a poll gives rise to a mandatory or discretionary requirement to comply.”
The Earl of Lytton
My Lords, I tabled this amendment in order to raise the wider issues of parish polls. In order to do that, and in order to get it underneath the clerical radar in the Public Bill Office, I had to specify that the amendment related to such polls only on matters of parish finance, but the Minister will know very well where I am coming from on this. I recognise that the wider issues may well fall outside the scope of this Bill, but none the less the principle is very important and applies to financial matters also that will clearly fall within the scope of this Bill.
The Committee may well recall that the original draft of what is now the Localism Act included a provision in Clause 53 for the Secretary of State to amend the parish polls regime by regulation. This unfortunately was deleted along with other clauses on referendums during the passage of the Act. In particular it said:
“Regulations under this section may (a) apply or reproduce, with or without modifications, any provision of, or any provision made under, this Chapter; (b) amend, repeal or revoke any enactment (whenever passed or made)”.
It goes on in the next subsection:
“The Secretary of State may make or arrange for the making of payments to parish councils to enable them to meet the additional expenditure they incur as a result of regulations under this section”.
In Committee in another place the Minister’s right honourable friend Andrew Stunell confirmed the situation in debate on Clause 53, saying that this was clearly a problem that needed to be addressed. He said that he wished to modernise the existing regime to make it fit for purpose in the modern world and he intended to work with key partners such as the National Association of Local Councils and the Society of Local Council Clerks. That would have been fine had there been an order-making provision that survived the course of that Bill but it did not.
The situation there remains that Schedule 12 of the Local Government Act 1972 governs the circumstances in which a parish poll may be demanded. That, in short, means that at a parish meeting either the chairman or 10 members or one-third of the electors present can force a parish poll. It is whichever is the less, so it may be a very small number indeed. Once triggered, of course, the process kicks in and the principal authority then holds the poll and the cost is rechargeable by that principal authority to the parish. The potential for making payments to parishes which was lost as part of the Clause 53 issues in the original draft of the Localism Act was an important omission.
Apart from that, the poll must be about a “parish matter”, but “parish matter” unfortunately is not defined in law. There are therefore no mechanisms to prevent vexatious use of this particular provision. Moreover if a poll is demanded and it cannot at that particular stage be shown to be a non-parish matter—sometimes these things are bounced on parish councils—but subsequently may so be shown, the auditor may disallow the expenditure and that probably occurs many months after the event. Furthermore, the poll result is not even legally binding. There are enormous financial consequences and is an enormous potential, as will be apparent, for vexatious pursuit of various hobby-horses.
Action for Communities in Rural England—ACRE—produced an excellent briefing note in 2010 on the process and the outcomes. It referred to a number of case studies and identified some typical cost elements. For instance, it identified ones listed for them by Shropshire Council under the following headings: “Staff charges”, “Publicity” and,
“Hire and fitting up of premises”.
Staff charges related to posts such as presiding officers, poll clerks, counting supervisors and so on. Many examples of parish costs have been produced, some quite recently. According to the briefing:
“Newark Town Council estimated the costs of a recent poll at £3,900 … An estimate of between £3,000 and £4,000 to cover costs was submitted to Whitby Town Council by their local authority for a poll that eventually resulted in a turnout of 5.27% of electors … Haydon Wick Parish Council with 14,000 electors estimated the cost of a contested election (roughly equivalent to the costs of a poll) at £4,500”—
it was extrapolating the information from something similar—
“South Marston Parish Council, with 600 electors, estimates the cost of a poll at £1,500 which represents around 8% of their annual income”.
Those sorts of figures tend to be fairly typical.
I have further information that reveals the same sort of thing: sadly, a very similar pattern of voter disenchantment or a complete lack of results. Parish polls were triggered in several town councils—Hythe, Sandgate and Folkestone—in 2010 on a district council parking strategy. For Hythe Town Council, with an electorate of 8,000, a population of 14,000 and a precept of £300,000, the cost was around £9,000. For Folkestone Town Council it was £20,000—it has an electorate of 15,000, a population of 50,000 and a precept of around £500,000.
These are not insignificant sums of money. If they happened only sporadically and on rare occasions, that might not matter. However, it begins to look as if this is the route of preference for certain people to try to get their particular view across. Never mind the fact that there may have been a poll in a normal election process and that a council, having been given a mandate, should be given a fair crack of the whip to try to get on with and deliver some of its policies. The list goes on and I will provide it to the Minister because it is important that some of this is known. The point I am making here is that clearly the problem has not gone away.
The questions I need to ask are as follows. First, is the Minister able to suggest anything in the context of this Bill? As I said earlier, clearly the principle applies to parish finance matters and is a legitimate subject for consideration even though the concept of parish polls applies to a much wider category of activity.
Secondly, and probably most importantly, do the Government remain committed to the comments raised by Andrew Stunnell in Committee in another place? If so, the National Association of Local Councils and the Society of Local Council Clerks would appreciate further dialogue.
Thirdly, on the wider issues to which parish polls can be applied, I appreciate that I am taking this outside the scope of the Bill but it is important to ask whether we can look forward to the measures of which the Minister spoke so warmly in Committee in another place being introduced. If they can be, could it please be fairly soon?
That is all I have to say on these things. As we know from the announcement today, we all now have to do as much, if not more, with a great deal less. The question of parish polls is a drain on community endeavour. It is a drain on financial resources. It is a drain on human volunteer resources. It seems that something needs to be addressed here for good order at the parish council level. I beg to move.
Lord Beecham
My Lords, the noble Earl has made a compelling case. We seem to be moving from the high politics of Greater Manchester and West Yorkshire to Clochmerle or Eatanswill. There is nevertheless a real issue here, of which I was certainly unaware. The ridiculous numbers involved to call a poll, the non-binding nature of the result and the financial cost all seem to add up to a pretty lethal cocktail which ought to be addressed. I hope that the Minister will give the noble Earl an indication that the Government will look at this and seek, either on the basis of his amendment or in some other way, to deal with what looks like a highly anomalous situation in which a tiny handful of people—even fewer than voted in police commissioner elections—can wreak havoc in a local community.
Lord Wallace of Saltaire
My Lords, I was unaware of the parish poll dimension. I say from the outset that, although we are very much on the outer edges of the scope of the Bill, the noble Earl’s points are clearly of importance for the modernisation of parish polls, which has rather fallen through the net. The questions of the threshold for triggering the poll and what a legitimate subject for a poll should be are issues to which we would be happy to give further consideration. We would happy to meet the noble Earl to discuss this further. I am rapidly turning over in my mind the question of how one deals with that. Even though this is a relatively limited area, it might be the sort of thing that is appropriate for a Private Member’s Bill in a future Session, which might be given a fair wind. It is a relatively self-contained set of issues.
We are aware of the issue of whether one could institute postal or proxy votes. Certainly, we should be lengthening the time during which a vote could be cast and modifying regulations about the threshold for triggering a parish poll. All those issues really need to be considered.
I understand that the provisions of the regulations limit the content of polls to matters which have been considered by the parish meeting, which means that the person chairing a parish meeting could rule out of order any attempt to discuss matters which are not parish affairs and so prevent parish polls on, for example, EU referendums, or whatever it may be. However, we are all conscious that different parishes and local communities are often dominated by different small groups. This is one of the problems we have with getting back to community self-government. I am often conscious that I am extremely lucky to live in the community of Saltaire, which has far too many people who are highly educated. We are overstuffed with activists, and there are other areas around Bradford which are not so blessed with local activists willing to turn up to lengthy committee meetings in the evenings and take part in local community activities. With that assurance and that offer to talk further on this small but important issue, I hope that the noble Lord will feel able to withdraw his amendment.
The Earl of Lytton
My Lords, it was not my intention to press the amendment, particularly as we are in Grand Committee, but I am extremely grateful to the Minister for his comments and for his offer at any rate to look into the matter further and have a further discussion. It is a narrow but important issue, and it will be even more important if what I might call the fruits of the localism agenda in terms of expanding the number of organisations that operate at this level—perhaps not in name but effectively as parish and town councils—are set to increase. I hope that it will become the model of preference at community level. The matter is not without ongoing consequence and I will certainly forward to the Minister some of my paperwork. That will do for this evening and I beg leave to withdraw the amendment.
Lord McKenzie of Luton
“Report to Parliament on the new audit regime
Within three years of the passing of this Act, the Secretary of State shall report to Parliament on the effectiveness of the new audit regime, covering in particular—(a) how the regime is being coordinated across government departments,(b) how the proposed arrangements are enabling accounting officers and Parliament to obtain assurance that the audit regime is performing effectively, (c) assurance that the independence of audit and quality of audit is being maintained,(d) the extent of diversity of provision in the audit market, and(e) the application of the regime for all relevant authorities including health bodies and smaller authorities.”
Lord McKenzie of Luton
My Lords, the amendment calls for a report to Parliament on the impact of the new audit regime and for this to be made within three years of the passing of the Act.
Let me acknowledge at the start the undertaking given by the Government on a post-implementation review but its objectives appear to be somewhat narrowly based and do not address some of the fundamental issues. The Bill provides for arrangements that are significantly different from the current regime whereby the Audit Commission effectively acts as regulator, commissioner and provider of audit. As the pre-legislative scrutiny committee report sets out, the new regime is more complex and certainly more fragmented. The regulation of local audit will transfer to the Financial Reporting Council, professional accounting bodies and the National Audit Office. Commissioning of local audit will transfer to local public bodies, and the provision of local audit will go to private sector firms. Research and value for money will be picked up by the NAO to a limited extent and by the sector’s own self-improvement. The National Fraud Initiative’s ultimate destination has yet to be determined, as we have discussed, and the co-ordination of grant certification remains a little vague.
Although some of the bases have been covered, potential gaps remain. Some of the bodies that are subject to the new regime are accountable to government departments other than CLG. How is this to be co-ordinated across government? Audited bodies themselves will have to liaise with government departments, the NAO and auditors because the commission will not be on hand to act as an intermediary. The role of accounting officers within departments is fundamental to the management and control of resources. They are currently able to draw on information on the outcome of audits, implementation of major initiatives and value for money outcomes analysed by the Audit Commission. How is this all to happen in the future? Unless the Minister can tell us otherwise, there appears to be no organisation that will be publishing the outputs of more than £200 billion of public expenditure.
Clearly, quality of audits is paramount. The role of the FRC as overall regulator and its specific role in providing quality assurance to just a few “major audits” has been the cause of some concern. We hear the government assurances on this but consider that Parliament is entitled to a more formal report on how this is working in practice. Can the Minister confirm that the reports of the recognised supervisory bodies monitoring auditor performance outside major audits will be in the public domain?
There is also the need for oversight on how this is working for all “relevant authorities”, including health bodies and smaller authorities. Many of the provisions in the Bill are not applicable to health service bodies because equivalent provision is made in other legislation. We have not thus far sought to compare or contrast these provisions with those applicable to other relevant authorities. Contemplating consolidation may give the Ministers a nightmare at the moment but the Bill does not give us a sense of how joined up this is all going to be in practice. A report to Parliament would cover this. I beg to move.
Lord Wallace of Saltaire
My Lords, the Government support the intention behind this amendment. Post-implementation review is acknowledged good practice. It will provide the assurances that Parliament and the general public will want that the new audit arrangements are achieving the outcomes that we expect, and it will identify how policies might be improved if they prove to be less effective than we anticipate. For these reasons, the Government have already committed to undertake such a review. This is set out in the impact assessment, at Section K.
However, I am not persuaded that the timeframe envisaged in the amendment is the right one. The commitment in the impact assessment is to a review within three to five years of Royal Assent. This is in line with the Government’s general commitment to post-legislative review. The reason for preferring a slightly longer period in the case of this legislation relates to the implementation of local auditor appointment.
Assuming that this Act is passed in early 2014, the amendment would require a report in early 2017. As noble Lords are aware, the earliest date at which local auditor appointment would begin is 2017. It would seem to make sense to include some assessment of the move to local appointment in the proposed review. This would enable a robust assessment of audit quality and auditor independence in the new regime, and of the impact of local appointment on the audit supply market.
Nevertheless, government departments, through the accounting officer, are accountable to Parliament annually for the money voted to them. Where this money is distributed to others, accounting officers need to be able to demonstrate that appropriate accountability arrangements are in place, usually through an accountability systems statement. The external audit of local bodies is one of the evidence sources that will help to demonstrate whether the system is working effectively. We will ensure that the necessary assurance can be provided to accounting officers and to Parliament.
The provisions for the audit regime of health bodies have been designed to provide at least the same level of assurance to the Department of Health accounting officer and Parliament on the use of resources by the health sector as current arrangements. All the health bodies covered by this Bill are included in the annual accounts of the Department of Health. The department reviews the outcome of the audits and annual governance statements of all health bodies and the NAO also uses these to inform its audit of the departmental accounts.
Finally, I would like to say a few words of reassurance about the scope of the proposed post-implementation review. The impact assessment explains that the review will look at how well the core objectives of the local audit reforms are being met. I remind noble Lords that these objectives are: to deliver greater localism, decentralisation and transparency; to maintain competitive audit fees; and to uphold high standards of auditing.
There does not appear to be anything in the list of specific requirements in the amendment which is obviously out of scope. The impact assessment makes a commitment that we will work up the detail of the review with representatives from local government and other interested parties. I hope that these reassurances will satisfy the noble Lord and he will be willing to withdraw the amendment.
Lord McKenzie of Luton
My Lords, I thank the noble Lord for his response. Of course, I will withdraw the amendment.
As I said in moving the amendment, I was aware of the proposal to have a post-implementation review. I accept the point about the timeframe. If it was done within three years, we would not have had any—or certainly many—local appointments of auditors so would not be able to judge the ramifications.
I do not know whether the noble Lord can help me on a further point, or write to me on it. In considering the Bill, I do not think that we have done enough work on how the regime for health bodies and other relevant bodies fits together. They are all defined as being relevant authorities. However, a whole raft of provisions appear to apply to relevant authorities other than health bodies. We may not have an overall view of how that fits together but one would hope that any review of how the measure will work in practice would pick up what the inconsistencies and consistencies of the regimes are and what lessons can be learnt from one stream which could benefit the other. That aspect appears to have received less attention than many other aspects of the Bill. However, I accept the undertaking that there will be a post-implementation review based on consultation with relevant bodies. I accept the point about a three to five-year timescale rather than within three years. That seems to me entirely reasonable. I do not know whether the noble Lord can say anything further on the health bodies point.
Lord Wallace of Saltaire
I take the point about health bodies. This clearly is an important part of the arrangement. We, of course, intend to include health service bodies in the post-implementation review. If there are other matters about the health bodies that the noble Lord would like to discuss between Committee and Report, I am very happy to do so. We recognise that this is an important part of the whole shift.
Lord McKenzie of Luton
I welcome that and would like to take up that opportunity. In the mean time, I beg leave to withdraw the amendment.
Lord Wallace of Saltaire
“In section 125(2) (certification of information)—
(a) omit “in one or both of the following ways”, and(b) omit paragraph (b), and the “and” which precedes it.”
“( ) in the definition of “English local authority” after “England” insert “, and includes a local authority which exercises functions in relation to an area which is partly in England and partly in Wales”,”
Lord Wallace of Saltaire
“(1) Section 210A (extraordinary report: local authorities) is amended as follows.
(2) In subsection (1), for the words from “the Audit Commission” to the end substitute “the regulator may require the local authority to allow its accounts, so far as they relate to the provision of social housing, to be audited by a local auditor appointed by the regulator.”
(3) After subsection (1) insert—
“(1A) The regulator may not appoint a local auditor to audit the accounts of a local authority if that person—
(a) is the person (or one of the persons) appointed under or by virtue of the Local Audit and Accountability Act 2013 to audit the authority’s accounts, or(b) was the person (or one of the persons) who carried out the most recent completed audit of the authority’s accounts under or by virtue of that Act.“(1B) Sections 19(1), (2), (5) and (6), 21 and 22 of the Local Audit and Accountability Act 2013 (local auditors’ general duties and right to documents etc.) apply in relation to an audit under this section as they apply in relation to an audit of the local authority under or by virtue of that Act.
(1C) On completion of the audit under this section, the local auditor must report to the regulator about such matters and in such form as the regulator determines.”
(4) Omit subsections (2) and (3).
(5) In subsection (4) for “Audit Commission’s costs of preparing the report” substitute “costs of the audit (including the local auditor’s remuneration)”.
(6) For subsection (5) substitute—
“(5) In this section—
“accounts” has the meaning given by section 4 of the Local Audit and Accountability Act 2013;“local auditor” means a person who is eligible for appointment under or by virtue of the Local Audit and Accountability Act 2013 as an auditor of the local authority’s accounts.”(7) In the heading, for “report” substitute “audit”.
In section 249(1) (management transfer) after “section 210” insert “or 210A”.”
Lord Wallace of Saltaire
Amendment 23A would add new provisions within Schedule 12. The purpose of this amendment is to include local authority social housing providers within the Homes and Communities Agency’s existing powers to require a separate audit report into social housing accounts, once the Audit Commission has been abolished.
Currently, Section 210 of the Housing and Regeneration Act 2008 gives the Homes and Communities Agency a power to order an extraordinary audit as part of an inquiry under Section 206 of that Act in respect of a private registered provider of social housing where it has serious concerns that a housing provider has mismanaged its affairs. The agency can require the registered provider to allow its accounts and balance sheet to be audited by a qualified auditor appointed by the regulator.
Section 210A applies this regime to local authority housing providers by placing a duty on the Audit Commission, if asked by the regulator, to provide a report on the local authority’s accounts, so far as they relate to the authority’s provision of social housing. Amendment 23A ensures that local authority social housing accounts continue—upon closure of the Audit Commission—to be subject to examination as part of a Section 206 inquiry by enabling the Homes and Communities Agency to appoint an auditor which is on the register held by the recognised supervisory body to undertake an extraordinary audit. I therefore beg to move this amendment.
Lord Wallace of Saltaire
“Charities Act 2011 (c. 25)99A The Charities Act 2011 is amended as follows.
99B (1) Section 149 (audit or examination of English NHS charity accounts) is amended as follows.
(2) In subsection (2) for “a person appointed by the Audit Commission” substitute “a person who—
(a) is eligible for appointment as a statutory auditor under Part 42 of the Companies Act 2006,(b) is eligible for appointment as a local auditor (see Part 4 of the Local Audit and Accountability Act 2013), or(c) is a member of a body for the time being specified in regulations under section 154 and is under the rules of that body eligible for appointment as auditor of the charity.”(3) In subsection (3)—
(a) for “the Audit Commission” (where it first occurs) substitute “the charity trustees”,(b) in paragraph (a) for “a person appointed by the Audit Commission” substitute “a person who is within subsection (2)(a), (b) or (c)”, and(c) in paragraph (b) for “a person so appointed” substitute “a person who is qualified to be an independent examiner”. (4) After subsection (3) insert—
“(3A) For the purposes of subsection (3)(b), a person is qualified to be an independent examiner if (and only if)—
(a) the person is independent,(b) the charity trustees reasonably believe that the person has the requisite ability and practical experience to carry out a competent examination of the accounts, and(c) the person—(i) falls within a description of person for the time being included in the list in section 145(3), or(ii) is eligible for appointment as a local auditor (see Part 4 of the Local Audit and Accountability Act 2013).”(5) Omit subsection (4).
(6) For subsection (5) substitute—
“(5) The Commission may—
(a) give guidance to charity trustees of an English NHS charity in connection with the selection of a person for appointment as an independent examiner;(b) give such directions as it thinks appropriate with respect to the carrying out of an examination in pursuance of subsection (3)(b);and any such guidance or directions may either be of general application or apply to a particular charity only.”(7) Omit subsection (8).
99C (1) Section 151 (audit of accounts of larger groups) is amended as follows.
(2) In subsection (4)(b), for “a person appointed by the Audit Commission” substitute “a person, appointed by the charity trustees of the parent charity, who is within section 149(2)(a), (b) or (c)”.
(3) In subsection (6)—
(a) for “Subsections (4) and (6) of section 149 apply” substitute “Section 149(6) applies”, and(b) for “they apply” substitute “it applies”. 99D (1) Section 152 (examination of accounts an option for smaller groups) is amended as follows.
(2) In subsection (6)—
(a) for the words from “the Audit Commission” (where it first occurs) to “so appointed” substitute “the charity trustees of the parent charity be audited by a person, appointed by those trustees, who is within section 149(2)(a), (b) or (c); or examined by a person, appointed by those trustees, who is qualified to be an independent examiner”,(b) for “(4) to (6)” substitute “(3A), (5) and (6)”, and(c) after “section 149(3)” insert “; except that in subsection (3A)(b) of that section the reference to “the charity trustees” is to be read as a reference to “the charity trustees of the parent charity”.”99E In section 154(1) (regulations relating to audits and examinations) after paragraph (a) insert—
“(aa) specifying one or more bodies for the purposes of section 149(2)(c);”.”
Lord Wallace of Saltaire
My Lords, as Cabinet Office spokesman in the Lords with some responsibility for charities, this is another amendment on which I shall speak. This is, indeed, about health service charities.
Amendment 24 makes changes to the Charities Act 2011 in respect of English NHS charities as a result of the abolition of the Audit Commission. Currently, the auditors of English NHS charities are appointed by the Audit Commission, so this amendment ensures that arrangements are in place for the audit of English NHS charities’ accounts after its abolition.
The trustees of English NHS charities will be able to appoint a person who is eligible to act as an auditor under the Companies Act 2006, this Bill or regulations under the Charities Act 2011. The amendment allows smaller English NHS charities, with income of between £25,000 and £500,000 in the year in question, to opt for an examination of their accounts as an alternative to audit, which is intended to minimise costs of producing accounts to the charities. This is consistent with the way smaller non-NHS charities are treated in the Charities Act 2011.
The criteria for who may undertake such examinations are set out in the amendment. An examiner of an English NHS charity’s accounts must be independent and the charity’s trustees must reasonably believe that the person has the requisite ability and experience to carry out a competent examination of the accounts. The examiner of an English NHS charity’s accounts must also be a member of a professional body as set out in Section 145(3) of the Charities Act 2011 if the gross income of the English NHS charity is between £250,000 and £500,000 a year, or be eligible under the Local Audit and Accountability Bill, once enacted.
The amendment enables the Charity Commission to give guidance to NHS charity trustees on the selection of an independent examiner and directions as to how an examination is to be carried out. The amendment also applies the same provisions to the group accounts of a parent NHS charity as have been set out for individual NHS charities. I beg to move.
Lord McKenzie of Luton
I have only one question for the noble Lord which concerns his reference to an independent examiner and a person who is independent. Can he remind us which definition of “independent” we are dealing with here?
Lord Wallace of Saltaire
I think we are referring back to the definition as in the Charities Act 2011. Since we have batted forward and back on the question of what exactly “independent” means in this respect, I may need to write to the noble Lord just to confirm the exact definition being used here.
House of Lords
Payday Loans
Lord Kennedy of Southwark
To ask Her Majesty’s Government what further action they plan to take to tackle the issue of payday lending.
The Parliamentary Under-Secretary of State, Department for Business, Innovation and Skills (Viscount Younger of Leckie)
As I highlighted in last week’s debate, the Government are deeply concerned at the evidence of consumer harm in the payday loans market. That is why the Government and regulators have jointly announced a strong action plan, with both immediate and longer-term measures. Tough enforcement and compliance action by the OFT now, combined with a move to a new regulatory regime equipped to deliver robust consumer protections in the future, will tackle the real concerns about this market.
Lord Kennedy of Southwark
My Lords, the most reverend Primate the Archbishop of Canterbury and I both called for a summit on payday lending in the debate last Thursday, so on the face of it the Government’s announcement is very good news. Then we get the announcement in the CSR today of the seven-day waiting period for benefits. That must have Wonga and the rest of the payday lenders jumping for joy. What assurance can the noble Viscount give the House that the summit is not a sham exercise and that something will actually come out of it?
Viscount Younger of Leckie
I welcome the noble Lord’s mention of the summit and am delighted that this will be an opportunity for the Government and regulators to take stock of progress in delivering on actions set out on 6 March. It will provide a firm forum for discussion of what more is needed to address the outstanding concerns, and I look forward the results. The announcement was made by my honourable friend Jo Swinson.
Baroness Gardner of Parkes
My Lords, is the Minister aware that there is a great lack of financial understanding among a lot of ordinary people, such as me, as to exactly what rates of interest are being charged? I then read in today’s paper of the worry about the shortfall that might occur with all the young people getting mortgages. The reason is the same: if interest rates go up they will find that they are out of pocket. Does he not think that it is terribly important for us to try to see that everyone has a degree of understanding of what they are letting themselves in for? People get terrible shocks with this payday lending in particular.
Viscount Younger of Leckie
My noble friend makes a very good point. This is precisely why the summit will, I hope, be helpful in highlighting the concerns. However, I stress that the Government have been taking some tough action and have given 50 firms—90% of the market—12 weeks to change their business practices or risk facing legal requirements or the loss of their licences. Two have already told the OFT that they are surrendering their licences. Since 6 March, the OFT has revoked the licences of three firms engaged in payday lending and has three further investigations open.
Lord Mitchell
Noble Lords will be as horrified as I was yesterday to discover that the leading online payday lending company has raised the interest rate on its loans from 4,214% to 5,853%. Religious leaders, community leaders and Members of both Houses of Parliament have begged the Government to cap interest rates, but they continue to refuse. Why is this? Could it be that some of the shareholders in some of the payday lending companies are also some of the donors to the Conservative Party?
Viscount Younger of Leckie
The Government remain very concerned by the evidence of harm in the payday loan market, but we do not think that the current evidence points to a cap on the cost of credit as a solution at this time. The Bristol report on high-cost credit indicates that a cap could have unintended consequences and risks harm, such as reducing consumers’ access to credit and leading to crime, lenders imposing new charges outside the cap, and less understanding shown to customers. Therefore, we do not agree that this is right or, indeed, that a ban would be right.
Lord Elystan-Morgan
My Lords, I will raise a purely legal point. Does the Minister accept that under the Consumer Credit Act 2006 there is substantial protection—potentially, at any rate—for a debtor who would otherwise suffer injustice? Under that Act, a judge is entitled, where he considers that there are unfair provisions in the loan contract or that the lender has acted in an unconscionable way, to deprive that creditor of relief or to rewrite the contract to make it fairer. Can the Minister show the House that such matters are brought constantly to the attention of judges, particularly district judges, who deal with these matters, so that such cases of gross unfairness are properly dealt with?
Viscount Younger of Leckie
The noble Lord is right to raise the issue of continuous payment authorities. The Government have real concerns about the way in which payday lenders can access money from their customers’ bank accounts. We have been pressing the industry on further transparency, and payday lending codes commit lenders to explaining clearly what a CPA is, how it works and how to cancel a CPA.
The Lord Bishop of Bristol
My Lords, given the Government’s racing willingness to import financial expertise from Canada, can my noble friend tell your Lordships’ House whether he has any plans, in the light of the forthcoming payday loan summit, to appraise and learn from the very good, robust and helpful code of practice developed in Canada, which covers such important issues as the non-rollover of loans, no multiple loans, and a responsible policy towards advertising such loans?
Viscount Younger of Leckie
The right reverend Prelate is right to point out that we can learn, as ever, from other countries. In the debate last week, my noble friend Lady Kramer made a valuable point about community development finance institutions. In the UK, the Prime Minister announced the co-operatives consolidation Bill in January 2012, and work on drafting the legislation has begun. The focus should be on credit unions and community-based credit access.
Baroness Kramer
My Lords, I am one of those who believe that a cap is workable. Can the Minister give me his assurance that at the summit that issue will be thoroughly discussed and considered and that the Government will not come to a judgment in advance on such a crucial question?
Viscount Younger of Leckie
I am very certain that it will be part of the discussions. I can give no guarantees, but the whole point of the summit is to discuss these important matters further.
Baroness Lister of Burtersett
My Lords, what action will the Government take to ensure that the monthly payment of universal credit on top of benefits now being delayed for a week does not send more people in poverty into the hands of payday lenders, as has been predicted?
Viscount Younger of Leckie
The noble Baroness makes a valuable point on the transition to universal credit. When it is complete, we estimate that there will be approximately 8 million universal credit claims. My colleagues in the DWP and the Treasury are working together to produce the right sort of advice, and they have made clear that some claimants might need additional help to budget. We are working with the advice sector to provide the appropriate advice.
Legal Aid
(10 years, 10 months ago)
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The Minister of State, Ministry of Justice (Lord McNally)
My Lords, the reasoning behind the proposed changes is that they will ensure that contract holders have enough certainty about work volumes so that efficiencies and economies of scale are achievable. However, we are carefully considering the consultation responses to this proposal.
Lord Bach
My Lords, I thank the Minister for his Answer and confess to being somewhat—a little—encouraged by it. The choice of lawyer is an essential part of our criminal justice system, as of course is the presumption of innocence. Does the Minister agree with his right honourable friend the Lord Chancellor’s justification of the proposal to abolish choice of lawyer, given in a recent interview in the Law Society Gazette? That seemed to be based on the absurd principle of “too thick to pick”. Or, does he agree with his right honourable friend the Deputy Prime Minister and leader of his own party, who is quoted as saying last weekend that it would be “perverse” to go ahead with this proposal? He cannot agree with both. What is the Government’s position?
Lord McNally
The Government’s position is that we put forward a model for competition, as proposed in our transformed legal aid consultation. That said that the client would generally have no choice in the provider allocated to them but that, in exceptional circumstances, a client might be permitted to change their provider. We put that matter out for consultation. As I indicated in my Answer, we are now considering the responses to the consultation and will come forward with further proposals.
Lord Lloyd of Berwick
My Lords, does the noble Lord remember a letter that appeared in the Telegraph about a month ago signed by some 70 or more QCs? It said that the denial of choice in representation would lead to what they called a rapid and probably irreversible deterioration in the standards of representation. Does he accept that analysis? If so, is he happy with those consequences?
Lord McNally
No, my Lords. When one gets into one of these processes, those kinds of letters are sent to various distinguished newspapers and of course we take note of them. We are doing two things. We have never hidden the fact that part of what we are doing is because of financial constraints. The legal aid budget has to take its share of the burden of our spending cuts but we are trying to do that in a way that retains the fundamental access to justice. We have consulted very thoroughly. We have had some 16,000 responses, which we are working through. We will try to come back with constructive proposals, so long as the legal profession recognises that we have to make the savings that are necessary for the taxpayer.
The Chancellor of the Duchy of Lancaster (Lord Hill of Oareford)
It is the Lib Dems and then we will come to the noble and learned Baroness.
Lord Marks of Henley-on-Thames
My Lords, it was a Labour Question to begin with. If the responses to the consultation demonstrate that there are savings to be made in other areas, particularly in the resource-hungry high-cost criminal cases, will my noble friend’s department use those savings to mitigate the harshness of the legal aid cuts in other areas where the effect of the proposed cuts is most serious?
Lord McNally
We are certainly looking across the piece and making decisions. Our current thinking is not to compete crown court advocacy and very high-cost crime cases. We have made separate proposals to reduce fees in this area, which are set out in the consultation. However, my noble friend is right. Under the current system, the most expensive single criminal legal aid case in 2010-12 cost the taxpayer £8.5 million. Under our present system, this would reduce to £6 million. The total cost to the taxpayer of just the top three cases in 2011-12 was £21 million.
Baroness Scotland of Asthal
My Lords, I understand that the Minister is able to disregard what 70 QCs have said in a newspaper, but will he tell the House whether the Government intend to disregard their current Attorney-General, who has expressed concerns and who remains the guardian of the public interest and the rule of law? Will they disregard him, too?
Lord McNally
On the contrary. The Attorney-General’s advice, which is invariably wise and measured, is taken fully into account in this consultation. I say again: we are going through a consultation and 69 QCs and 300 economists are part of this kind of exercise. Of course there is a free press, but in the end I hope that the legal profession will engage with us in a constructive dialogue. This will allow us to meet the realities of the economic situation in which we find ourselves, but also to meet the realities that were referred to about access to justice and the rule of law. These are important issues and sometimes they can be trivialised by wild statements about their implications.
Lord McNally
Shocking? The last Labour manifesto said the party would cut legal aid. For three years, all that I have heard from the Opposition Benches is: “Not this bit of legal aid” or, “Not that bit of legal aid”. No wonder they got into the economic mess they did, because they are frightened of making a decision. We are not.
Lord Phillips of Sudbury
My Lords, my noble friend talked about economies of scale. Will he accept that there is an iron law in the legal profession: the bigger the firm, the bigger the fees? Will he have regard to local justice and the cost to somebody accused of a crime of having to travel miles away in order to see his or her nominated lawyer?
Lord McNally
These are extremely important issues. They have been raised in the consultation and we are considering them.
Flooding: Insurance
(10 years, 10 months ago)
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Lord Knight of Weymouth
To ask Her Majesty’s Government what agreement they have reached with the insurance industry to ensure that owners of homes at risk of flooding can obtain affordable home insurance.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)
My Lords, we are at an advanced stage in discussions with the insurance industry about the future of flood insurance. We aim to conclude those discussions and announce future measures as soon as possible to ensure that households can continue to access affordable flood insurance in the future.
Lord Knight of Weymouth
My Lords, the Secretary of State is currently struggling to agree a fair deal on CAP reform for UK farmers, and his department has one of the worst settlements in Whitehall in today’s CSR. I hope that he does a lot better for 200,000 householders in this negotiation with insurers. This House rises on the deadline for concluding the negotiation. Given the persistent interest from noble Lords on all sides, can the Minister therefore guarantee us an opportunity to question him in here on the conclusion of the negotiations before we break for the Recess?
Lord De Mauley
My Lords, I had hoped we might have a constructive debate about this. However, since the noble Lord has raised the common agricultural policy, perhaps I should say that it was Labour’s leadership in the last round of CAP reform that cost us €550 million in disallowance and led us to the disastrous administration of the single farm payment. We, by contrast, are tackling another immensely complex negotiation on flood insurance in a measured and sensible way. We have to balance the interests of those at high risk of flood, wider policyholders and taxpayers, while the ABI is a membership organisation with a lot of interests to represent. The noble Lord asks about an opportunity to debate the eventual outcome. I would be pleased about that; it is not my role to guarantee it, but I am sure that we will have a chance to do that.
The Earl of Selborne
My Lords, to bring the question back to flood insurance, has my noble friend looked at the precedent in America, and are there lessons to be learnt as to how to deal with flood insurance from the treatment of vulnerable homeowners in America?
Lord De Mauley
My Lords, that is something to which we have given considerable thought. However, international comparisons provide no clear model. The state-backed national disaster insurance system in the US was in debt to the taxpayer by $17 billion even before Hurricane Sandy struck. Emergency legislation was required in January 2013 to increase the fund’s borrowing by $9.7 billion when the scheme was days from running out of money, to enable claims to be paid. So we have considered it, but it has its limitations.
Lord Dubs
My Lords, given that previous deadlines have already been missed, as regards bringing the negotiations to a conclusion, what assurance can the Minister give that this will not be announced some time in the middle of August or September, when there is no chance for us to scrutinise the detail? Further, the Question uses the wording “affordable insurance”. Will he comment on the fact that after the Cockermouth floods, my insurance company for my house in Cumbria increased my premium more than sixfold?
Lord De Mauley
Yes, my Lords. In answer to the noble Lord’s first question, the ABI, in its letter to which we referred when we last debated this subject a month ago, has expressed confidence that we will be able to conclude this before the end of July, and I have every confidence in that. We need a solution that provides affordable insurance, as the noble Lord said, for those at risk, but that does not place unsustainable costs on wider policyholders or the taxpayer. Obtaining insurance might involve some householders shopping around or going through specialist brokers if flood risks are significant. In terms of help for householders, in July last year, we published a guide to obtaining flood insurance in high-risk areas in collaboration with the National Flood Forum and industry representatives.
Lord Greaves
My Lords, I heard this morning a rustling in the undergrowth, and it was not oncoming water: it was a suggestion that an agreement has actually now been reached between the Association of British Insurers and Defra—the Government. I do not know whether the Minister is able to confirm that, because it has perhaps has not been signed, sealed and delivered yet, but the agreement is there. When that news arrives—perhaps tomorrow—will it be given by an Oral Statement? That would then allow the Opposition in this House to have the Statement taken here, which would be the normal procedure, but can happen only if it is an Oral Statement?
Lord De Mauley
My Lords, my noble friend is unique among your Lordships in that he seems to have both ears to the ground at the same time. As I said, we are at an advanced stage in discussions with the insurance industry about the future of flood insurance. We aim to announce future measures shortly to ensure that households can continue to access affordable flood insurance.
Lord Campbell-Savours
My Lords, why should not all policyholders carry the risk? It would mean a very marginal difference in premiums.
Lord De Mauley
Yes, my Lords. We are trying to arrange a system where those at the highest risk who have difficulty affording the insurance effectively have a continued cross-subsidy from wider policyholders. It is a very complicated negotiation, as I think that the noble Lord is effectively pointing out, and we have a lot of interests to keep in mind here.
Lord Elton
Would the negotiations be made easier if the Government decided and announced that any agreement to insure flood-risk property would not extend to any property on flood plains for the building of which planning permission had been given after, let us say, today’s date?
Lord De Mauley
My noble friend is persistent in raising this issue. The Environment Agency provides advice to local planning authorities on the flood risk associated with new developments, which is used to develop strategic flood-risk assessments. During 2012-13, 99% of planning objections raised by the Environment Agency were amended in line with the advice of the NPPF. Where development is allowed because the risk is low, the proposed development should be designed to ensure that it is safe even in a one-in-1,000-year-scale flood.
Genetically Modified Crops
(10 years, 10 months ago)
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Lord Taverne
To ask Her Majesty’s Government what progress they have made in seeking to reform the regulations regarding the commercial cultivation of genetically modified crops.
The Parliamentary Under-Secretary of State, Department for Environment, Food and Rural Affairs (Lord De Mauley)
My Lords, the EU has robust and comprehensive regulations governing GM crops. These regulations were designed to provide fair and predictable market access for products that have undergone a rigorous, case-by-case safety assessment. In practice, polarised views across EU member states mean that the scientific evidence is often ignored and crops remain stuck in the system. It is therefore difficult to make progress on this issue.
Lord Taverne
I should declare an interest as founder of the charity, Sense About Science. Over 14 years ago, several reports from the Royal Society, supported by every single national academy of sciences in the world, concluded that GM crops were no danger and caused no harm to human health or the environment. Since then, the enormous expansion in the cultivation of GM crops outside Europe and especially in emerging countries has strongly reinforced that conclusion. Will my noble friend convey to the Secretary of State congratulations on basing policy on evidence? Will he assure us that the Government will stand firm against the scaremongering of the Daily Mail, our leading anti-science paper, and recognise that its attacks on GM crops have no more evidence to support them than its disgraceful and scandalous campaign against MMR vaccines?
Lord De Mauley
My Lords, first, let me say that my noble friend has a great deal of knowledge in the area of science and GM specifically. His science-based approach is very welcome. I agree with what he says. That is why, despite the difficulties, we will work to unblock the situation. As my right honourable friend the Secretary of State says, we are going to need all the tools in the box to feed the rapidly growing world population. As he also says, we want the United Kingdom to have a leading role in feeding the world and increasing the resilience of global food supplies, and not to stand by watching others take the lead and forge ahead. The UK is the natural home for scientific research. We want companies and research providers to know that the UK is the best place for them to carry out their work.
Lord Winston
My Lords, I am sure that it will not have escaped the Minister’s attention that a number of Members of your Lordships’ House are genetically modified. When it comes to plants, does he not agree that there is colossal evidence that, given the shortage of water in the world and of food in many countries, the need for genetically modified plants is ever increasing and that this is an important technology to help many people who are starving?
Lord Walton of Detchant
My Lords, as the noble Lord, Lord Taverne, has said, there is no shred of scientific evidence to suggest that GM foods carry any risk to human health. All talk in the media of “Frankenstein foods” is nonsense. Many GM crops have been cultivated with improvement in the quality of the crops and in their yields in many countries across the world. Is it not now perverse and misguided for the European Union, for instance, to have imposed a ban on the cultivation of GM crops? Can we do better?
Lord De Mauley
The noble Lord makes a really important point. My right honourable friend the Secretary of State and I have discussed this issue with Commissioner Borg in order to emphasise the importance of finding a solution that gets the current system working. The commissioner has signalled that he wants to try to resolve the problems at European level and we look forward to further discussions on this issue.
Viscount Ridley
My Lords, can my noble friend explain why, for 20 years, a group of environmental activists has been allowed to deny the British consumer choice in this matter: the choice to buy GM crops if they prefer them because they think they are good for human health and the environment?
Lord De Mauley
My noble friend is quite right that there are groups—interests—that have been successful in creating controversy around GM which has devalued the public debate and means that people have not been able to reach a balanced view of the pros and cons. We will strive to change that.
Baroness Hayman
My Lords, will the Minister undertake to express to his right honourable friend the Secretary of State the strength of support in this House for the science and evidence-based approach that he is advocating and wish him luck in the European Union in taking that forward? Would it not be truly irresponsible, given the need, as he has said, to cope with a rapidly expanding and often malnourished and starving population, not to take the opportunities offered by GM and by the independent scientific expertise in this country to move forward and save lives, as GM cotton manufacture has saved the lives of agricultural workers across the world?
Lord De Mauley
I agree with the noble Baroness. I am extremely grateful to her and other noble Lords who have spoken positively today, and I will certainly take her words and the words of other noble Lords back to my right honourable friend.
Baroness O’Cathain
My Lords, in all this euphoria about GM crops—and I think it is wonderful that at last we have some positive news—let us not forget that there are areas in the world that are going to be badly affected by this because the plants do not produce seeds on the same basis as current crops. I suggest that in all discussions that go on about this, particularly with the European Union, steps should be taken to ensure that the people who are going to make a lot of money out of these GM crops, such as seed merchants, do something to help those people in other areas in the world who will not be able to do the usual agriculture they have at the moment. We just cannot lose sight of that. I would like him to make sure that that will happen.
Lord De Mauley
My noble friend raises an issue that is known as “terminator technology”; that is, the concept that seeds may not reproduce. Terminator technology is a concept rather than something that is being applied in practice. There are no GM crops in existence, to my knowledge, that produce sterile seed and no plans to market such crops.
Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013
(10 years, 10 months ago)
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Lord De Mauley
That the draft Water Industry (Specified Infrastructure Projects) (English Undertakers) Regulations 2013 laid before the House on 15 May be approved.
Relevant documents: 2nd Report from the Joint Committee on Statutory Instruments, 3rd Report from the Secondary Legislation Scrutiny Committee, considered in Grand Committee on 12 June
Spending Review
(10 years, 10 months ago)
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The Commercial Secretary to the Treasury (Lord Deighton)
My Lords, I refer the House to the spending review Statement made earlier in another place by my right honourable friend the Chancellor of the Exchequer. Copies of the document have been made available in the Printed Paper Office and its text will be printed in full in the Official Report. I commend my right honourable friend’s Statement to this House.
“This coalition came into office with a commitment to address with firmness and resolve one of the biggest economic crises of the post-war era. The action we have taken, together with the British people, has brought the deficit down by a third, helped a record number of people into work, and taken our economy back from the brink of bankruptcy; and it allows us to say that, while recovery from such a deep recession can never be straightforward, Britain is moving out of intensive care, and from rescue to recovery.
Today we announce the latest action to secure the recovery. We act on behalf of every taxpayer and every future taxpayer who wants high-quality public services at a price our country can afford. We act on behalf of everyone who knows that Britain has got to live within its means. We have applied three principles to the spending round I will set out today: reform, to get more from every pound we spend; growth, to give Britain the education, enterprise and economic infrastructure it needs to win the global race; and fairness, making sure we are all in it together by ensuring those with the broadest shoulders bear the largest burden and making sure the unfairness of the something-for-nothing culture in our welfare system is changed.
We have always understood that the greatest unfairness was loading debts on to our children that our generation did not have the courage to tackle ourselves. We have always believed, against much opposition, that it is possible to get better public services at lower cost—that you can cut bureaucracy and boost enterprise by taking burdens off the back of business. In the face of all the evidence, the opposition to these ideas has collapsed into incoherence. We have always believed that the deficit mattered—that we needed to take tough decisions to deal with our debts—and the opposition to that has collapsed into incoherence too. Today I announce the next stage of our economic plan to turn Britain around.
Let me start with the overall picture on spending. In their last year in office, the previous Government were borrowing £1 in every £4 that they spent. It was a record for a British Government in peacetime and a calamitous risk with our economic stability. As the note we saw again this week from their outgoing Chief Secretary put it,
“I’m afraid there is no money”.
So we acted immediately. Three years ago, we set out plans to make savings and to reduce our borrowing. Instead of the £157 billion the last Government were borrowing, this year we are set to borrow £108 billion pounds: that is £49 billion less in borrowing. That is virtually the entire education budget.
So we have made real progress, putting right what went so badly wrong. But while we have been acting, the challenges from abroad have grown: a eurozone in crisis, rising oil prices, and the damage from our own banking crisis worse than anyone feared. The truth is that we have to deal with the world as it is, not as we would wish it to be, so this country has to continue to make savings. I can report to the House that the biggest single saving we have made in government is the £6 billion a year less we are paying to service our debts than the previous Government budgeted for. Bear that number in mind when you hear the Opposition complaining about cuts.
The deficit has come down by a third, yet at over 7% it remains far too high, so we must continue to take action—not just because it is wrong to go on adding debts to our children’s shoulders, but because we know from the global turbulence of the past few years that the economic risks are real and the recovery has to be sustained. If we abandoned our deficit plan, Britain would be back in intensive care. So the figures today show that until 2017-18, total managed expenditure —in other words, the total amount of government spending—will continue to fall in real terms at the same average rate as it is falling today.
The task before us today is to spell out what that means for 2015-16. Total managed expenditure will be £745 billion. To put that huge sum into context, consider this: if government spending had been allowed to rise through this Parliament at the average rate of the past three decades, that total would have been £120 billion higher. This Government have taken unprecedented steps to achieve that expenditure control. Now we need to find £11.5 billion of further savings. I want to pay a personal tribute to my right honourable friend the Chief Secretary for the huge effort that he has put into delivering them. Finding savings on that scale has not been easy. These are difficult decisions that will affect people in our country, but there never was an easy way to bring spending under control. Reform, growth and fairness are the principles. Let me take each in turn.
I will start with reform and the obligation that we all have in this House to ensure that we get more for every pound of taxpayers’ money that we spend. With the help of my right honourable friend the Minister for the Cabinet Office, we have been combing through Whitehall, driving out costs, renegotiating contracts and reducing the size of government. Cutting money that the previous Government were spending on marketing and consultants, reforming government IT and negotiating harder on behalf of the taxpayer have already saved almost £5 billion. In this spending round, we will find a further £5 billion of efficiency savings. That is nearly half of the total savings we need to achieve.
We are reforming pay in the public sector. We are holding down pay awards, and public sector pay rises will be limited to an average of up to 1% for 2015-16. However, the biggest reform that we will make on pay is to automatic progression pay. That is the practice whereby many employees not only get a pay rise every year, but automatically move up a pay grade every single year, regardless of performance. Some public sector employees see annual pay rises of 7%. Progression pay can at best be described as antiquated; at worst, it is deeply unfair to other parts of the public sector that do not get it and to the private sector that has to pay for it. So we will end automatic progression pay in the Civil Service by 2015-16, and we are working to remove automatic pay rises simply for time served in our schools, NHS, prisons and police. The Armed Forces will be excluded from those reforms.
Keeping pay awards down and ending automatic progression pay means that, for every pound we have to save in central administration, we can better limit job losses. I do not want to disguise from the House that there will be further reductions in the number of people working in the public sector. The Office for Budget Responsibility has forecast that the total number of people working for the Government will fall by a further 144,000 by 2015-16. I know that for those who are affected that is difficult. That is the consequence of the country spending far beyond its means.
When I presented the spending round three years ago, I said that about half a million posts in the public sector were forecast to have to go. That is indeed what has happened, and we are saving £2 billion a year, with a Civil Service now smaller than at any time since the war. I also said three years ago that I was confident that job creation in the private sector would more than make up for the losses. That prediction created more controversy than almost anything else at the time, including with the Opposition. The shadow Chancellor called it “a complete fantasy”. Instead, every job lost in the public sector has been offset by three new jobs in the private sector. In the past year, five new jobs have been created for every job cut in the public sector. The central argument of those who fought against our plan is completely demolished by the ingenuity, enterprise and ambition of Britain’s businesses. I pay tribute to the hard-working people of this country who proved their pessimism wrong.
In this spending round, the Treasury will, as one would expect, lead by example. In 2015-16, our resource budget will be reduced by 10%. The Cabinet Office will also see its resource budget reduced by 10%. However, within that we will continue to fund support for social action, including the National Citizen Service. Ninety thousand places will be available for young adults in the citizen service next year, rising to 150,000 by 2016. It is a fantastic programme that teaches young people about their responsibilities as well as their rights, and we are expanding it.
Local government will have to make further savings too. My right honourable friend the Communities and Local Government Secretary has set an example to all his colleagues in reducing the size of his department by 60% and abolishing 12 quangos. He is a model of lean government, and has agreed to a further 10% saving in his resource budget. But we are committing to more than £3 billion capital investment in affordable housing and we will extend the troubled families programme to reach 400,000 more vulnerable families who need extra support. We are proving that it is possible to save money and create more progressive government. That is the right priority.
Here is another of the Government’s priorities: helping families with the cost of living. Because we know that times are tough, we have helped to keep mortgage rates low, increased the personal allowance, cut fuel duty and frozen council tax. That council tax freeze is due to come to an end next April. I do not want that to happen, so I can tell the House today that because of the savings we have made we can help families with their bills. We will fund councils to freeze council tax for the next two years. That is nearly £100 off the average council tax bill for families, and brings savings on these bills for families to £600 over this Parliament. That demonstrates our commitment to all those who want to work hard and get on.
There is one more thing that we can do to help with the cost of living in one part of the country. For years, Members from the south-west of England have fought on behalf of their constituents who face exceptionally high water bills. Nothing was done until we came to office. Now we have cut those water bills by £50 per household every year until 2015. My honourable friend the Member for Camborne and Redruth and many others have campaigned to extend that rebate beyond 2015. I am happy to confirm today that we will do that. Taking money out of the cost of government and putting it in the pockets of families—that is what we mean by reform.
Local government has already taken difficult decisions to reduce staff numbers, share services and make savings. I pay tribute to Sir Merrick Cockell for all he has done in showing how this can be achieved. We were told by the scaremongers that savings in local government would decimate local services. Instead, public satisfaction with local council services has gone up under this Government. That is because, with our reforms, communities have more control over their own destiny. That is because we have devolved power and responsibility to manage budgets locally. That is because we have let councils benefit from the tax receipts that come when the local economy grows. Today, we give more freedom, including greater flexibility over assets, and we will drive greater integration of local emergency services. I thank my honourable friend the Member for Bournemouth East for his fresh thinking in this area, which has helped to inform us.
We are also embarking on major reforms to the way we spend money locally through the creation of the single local growth fund that Lord Heseltine proposed. This will be £2 billion per year, which is at least £10 billion over the next Parliament. Local enterprise partnerships can bid for that sum, and the details will be set out tomorrow. Our philosophy is simple: trust people to make their own decisions and they will usually make better decisions. But in return for those freedoms, we have to ask local government for the kind of sacrifices central government are making. The local government resource budget will be reduced by 10% in 2015-16, but when all the changes affecting local government that I will set out are taken into account, including local income and other central government funding, local government spending reduces by around 2%.
I set out today the block grants to the devolved Administrations. Because we have prioritised health and schools in England, this feeds through the Barnett formula to require resource savings of about 2% in Scotland, Wales and Northern Ireland. The Scottish resource budget will be set at £25.7 billion, and Scotland will benefit from new capital borrowing powers of almost £300 million. Being part of the UK means that Scotland will see its capital spending power increase by almost 13% in real terms in 2015-16. It is rightly for the Scottish Parliament to decide how best to use it. That is devolution within a United Kingdom delivering for Scotland.
The Welsh resource budget will be £13.6 billion, and we will shortly publish our response to the Silk commission on further devolution of taxation and borrowing. When we do so, we will be able to say more about the impressive plans to improve the M4 in south Wales that my honourable friend the Member for Vale of Glamorgan and others have been campaigning for. The Northern Ireland resource budget will be £9.6 billion. We have agreed to provide an additional £31 million in 2015 to help the Police Service of Northern Ireland tackle the threat posed by terrorism. Those police officers do an incredibly brave job on our behalf, and we salute them. Separately, we will make 10% savings to the Scotland, Wales and Northern Ireland Offices.
We believe that the cultural heritage of our nations is not just an economic asset, but has intrinsic value. When times are tough, they too must make a contribution to the savings this country requires. The Department for Culture, Media and Sport will make savings of 7% in its resource budget. Elite sports will be protected and the funding of community sports, arts and museums will be reduced by just 5%, but because we recognise the value of our greatest museums, galleries and English Heritage, we are giving them much greater freedom from state control, which they have long called for, applying our reforming principles across the board and empowering those on the front line who know best—what the director of the British Museum called:
“good news in a tough economic climate”.
And while we are at it, we will make sure that the site of the Battle of Waterloo is restored in time for the 200th anniversary to commemorate those who died there and to celebrate a great victory of coalition forces over a discredited former regime that impoverished millions.
We still have the finest Armed Forces in the world, and we intend to keep it that way. The first line of national defence is sound public finances and a balanced defence budget, and my right honourable friend the Defence Secretary is helping to deliver both. He and his predecessor, my right honourable friend the Member for North Somerset, have filled the £38 billion black hole they inherited in the finances of the Ministry of Defence. We will continue to ensure we get maximum value for money from what will remain, which, at over 2% of our GDP, is one of the largest defence budgets in the world. The defence resource budget will be maintained in cash terms at £24 billion, while the equipment budget will be £14 billion and will grow by 1% in real terms thereafter. We will further reduce the civilian workforce and their allowances; renegotiate more of the hopeless private finance initiative contracts signed in the past decade; and overhaul the way we buy equipment.
My right honourable friend the Prime Minister has rightly been clear throughout, however, that he is not prepared to see a reduction in Britain’s military capabilities. This spending round not only protects those capabilities, but enhances them with the latest technologies. We will not cut the number of soldiers, sailors or airmen—we need them to defend our country—and we will give them the best kit to do that job: new aircraft carriers, submarines, stealth fighters, destroyers and state-of-the art armoured vehicles. We also make a major commitment to invest in cyber. It is the new frontier of defence and a priority for the Government.
We will look after families who have lost their loved ones and those injured protecting us long after the wars they fought in are over. We previously committed to fund the military covenant for five years, and today I commit to funding the Armed Forces covenant permanently. We will do that with the money we have collected from the LIBOR fines, so those who represented the very worst values will support those who represent the very best of British values. Our veterans will not be forgotten.
The intelligence services are on the front line too. Silently, and often heroically, these fellow citizens protect us and our way of life, and so we will protect them in return, with a 3.4% increase in their combined resource budget. The Foreign Office is the public face of our diplomacy, and my right honourable friend the Member for Richmond (Yorks) is quite simply the best Foreign Secretary we have had in a generation. He, too, has demonstrated how we can make our taxpayer pound go further. While making savings in his budget, he has managed to expand our network of embassies in the emerging world and focus his diplomats on British commercial interests. There will be further savings in that budget of 8% in 2015, but he is still committing to strengthen our embassy network in high-growth markets, from Shanghai to Abuja.
The Foreign Office projects our values abroad, and the Home Office protects our values here in Britain. Police reform is a model of what we can achieve across Government. Police forces are more accountable to the public, with modern working practices, the latest equipment and democratic oversight, and all that on a smaller budget. What was the Opposition’s prediction? They said that crime would rise, and what has happened instead? Crime has fallen by more than 10%. Thanks to the hard work of police officers up and down this country, crime is at its lowest level for 30 years. What was their prediction about our borders? They said that because of cuts we would not be able to control immigration, and what has happened instead? Net immigration is down by more than one third.
This Home Secretary is demonstrating that responsible budgets and reform can deliver better services for the public. In 2015, she will work with a resource budget of £9.9 billion, which is a saving of 6%, but the police budget will be cut by less than that. There will be further savings in the central department, police forces will be encouraged to share services and some visa fees will go up, but protecting Britain from the terrorist threat remains a top priority, so I can confirm that the police counterterrorism budget will not be cut at all.
For the police to do their job, they need a criminal justice system that works a lot better. A case of common assault can take 240 days to pass through the courts and involves five separate sets of case papers generated on three different computer systems. In some prisons, the cost of keeping a prisoner is £40,000 a year, but in others, it is one third of that, while the cost of legal aid per head is double the European average. My right honourable friend the Lord Chancellor is reforming all these things, and by doing so will make savings of 10% in his departmental budget—and he will do that while for the first time offering probation services for those who have served short sentences to help to end the revolving door of crime and reoffending.
That is an example of the reform we are bringing in across Government, and every step of the way, every penny saved, every programme reformed, every entitlement reduced, every difficult choice taken, has been opposed by vested interests and those who got Britain into this mess in the first place. We will not let up. I will not let that happen. The reform will continue.
Government spending does not alone create sustainable growth; enterprise does, and the job of the state is to provide the schools, science, transport links and reliable energy that enable business to grow. Britain was once the place where the future was invented, from the railway to jet engine to the world wide web. We can be that country again, and today we set out how to get there. A huge amount of innovation and discovery still goes on, but successive Governments, of all colours, have put short-term pressures over long-term needs and refused to commit to capital spending plans that match the horizons of a modern economy. Today we change that. We commit now to £50 billion of capital investment in 2015. From roads to railways, bridges to broadband, science to schools, it will amount to more than £300 billion of capital spending guaranteed to the end of this decade.
Today, we raise our national game. That means that Britain will spend on average more as a percentage of its national income on capital investment in this decade, despite the fact that money is tight, than in the previous decade, when government spending was being wasted in industrial quantities.
My right honourable friend the Chief Secretary to the Treasury will tomorrow set out the next stage of our economic infrastructure plan, with specific plans for more than £100 billion of infrastructure projects. Here is what that will mean for the departments. The Department for Transport will make a 9% saving in its day-to-day resource spending, bearing down on the running costs of Transport for London and on rail administration, but its capital budget will rise to £9.5 billion —the largest rise of any part of Government—and we will repeat that commitment for every year to 2020.
We are already massively expanding investment on major road schemes, but we will do more. We are announcing the largest programme of investment in our roads for half a century. We have already expanded our investment in the railways, but we will do more. We are committing to the largest investment in our railways since the Victorian age, and with the legislation before this House today, we should give the green light to HS2, which will provide a huge boost to the north of England and a transformation of the economic geography of this country.
Here in London, we are digging Crossrail, the largest urban infrastructure project in Europe, but we will do more. We are looking now at the case for Crossrail 2, linking London from north to south. We are going to give the mayor almost £9 billion pounds of capital spending and additional financing power to the end of this decade.
Investing in our economic infrastructure also means investing in energy, so we will provide the certainty that investors are crying out for in western countries. This country is already spending more on renewables than ever before. Now we will provide future strike prices for low carbon. We are restarting our civil nuclear programme when other countries are unable to continue theirs, and now we are providing guarantees for new nuclear. Our exploitation of gas in the North Sea is already second to none. Now we are making the tax and planning changes that will put Britain at the forefront of exploiting shale gas. We will provide our country with the energy of the future at a price that we can afford. Taken together, this should support over £100 billion of private sector investment in energy.
The Department of Energy and Climate Change will do this while reducing its resource budget by 8%. The Department for Environment, Food and Rural Affairs will see a 10% reduction, but we will set out plans for a major commitment to new flood defences for the rest of this decade. Again, we are prioritising long-term capital through day-to-day cost savings, which is exactly the tough choice that Britain should be making.
It is not enough to have roads, power stations and flood defences. That is just the physical infrastructure we need to compete in the 21st century. We need the intellectual capital, too. This country needs to invent, pioneer and export around the world. That means backing the Department for Business, Innovation and Skills, which helps us to do that. And it means taking tough decisions about what we should support. My right honourable friend the Secretary of State for Business, Innovation and Skills has agreed to a reduction of 6% in the cost of the department. That means that we are making savings to student maintenance, keeping grants but not increasing them, and the cost of the central department will also be cut further. That means that, within the reduced budget, we can put more money into apprenticeships and continue with the dramatic increase in support that we have provided to exporters through UK Trade & Investment.
We are not going to shift medical training and research out of that department, because they are working well where they are. And in that department too, we can shift from day-to-day spending to a huge 9% increase in capital investment. That includes a huge investment in science. Scientific discovery is first and foremost an expression of the relentless human search to know more about our world, but it is also an enormous strength for a modern economy. From synthetic biology to graphene, Britain is very good at it and we are going to keep it that way. Today, I am committing to maintaining the resource budget for science at £4.6 billion, to increasing the capital budget for science in real terms to £1.1 billion, and to maintaining that real increase to the end of this decade. Investment in science is an investment in our future. So yes, from the next generation of jet engines to cutting-edge supercomputers, we say: keep inventing, keep delivering; this country will back you all the way.
We have infrastructure and we have science, but we still need an educated work force to make it happen. Because of our ongoing reforms to our universities, they are now better funded than before. People will remember that the reforms to higher education were bitterly contested in the House. We remember the scaremongering about fees, and the claims that they would destroy social mobility and put off students from poorer communities applying. And what has happened since? We now have the highest ever proportion of students from the most deprived neighbourhoods applying to universities. We should all welcome that.
There is no greater long-term investment a country can make than in the education and skills of its children. Because of the tough decisions that we have taken elsewhere, we have been able to invest in education and accelerate school reform. When we took office, our country’s education system was falling behind other parts of the world. Now, thanks to the brilliant programme of reform by my right honourable friend the Secretary of State for Education and the Minister for Schools, my right honourable friend the Member for Yeovil, we are once again leading the way.
We have applied our reform principles in education too, freeing schools and teachers to concentrate on teaching and turning the majority of secondary schools into academies. In this spending round, that momentum of reform will grow. The Department for Education’s overall budget will increase to £53 billion and schools spending will be protected in real terms, fulfilling the pledge we made at the beginning of this Parliament, for all of this Parliament. We will transfer power and money from town halls and central bureaucracy to schools, so that more of the money for education is spent on education. So, while grants to councils and spending on central agencies are reduced, the cash going to schools will go up.
I can announce today that schools spending will be allocated in a fairer way than ever before. School funding across the country is not equally distributed; it is distributed on a historical basis with no logical reason. The result is that some schools get much more than others in the same circumstances. That is unfair and we are going to put it right. Many MPs on both sides of the House have campaigned for that. My honourable friend the Member for Worcester has been a particular champion in this Parliament. Now, the lowest-funded local authorities in this country will at last receive an increase in their per-pupil funding as we introduce a national funding formula to ensure that no child in any part of our country is discriminated against. We will consult on all the details so that we get this historic reform right. The pupil premium that we have introduced also ensures that we are fair to children from low income backgrounds. It will be protected in real terms, so that every poor child will have more cash spent on their future than ever before. The capital budget will be set at £4.6 billion in 2015-16, with over £21 billion of investment over the next Parliament.
We will also tackle the backlog of maintenance in existing schools and we will invest in new school places. We will fund 20 new studio schools as well as 20 new university technical colleges, as they are outstanding new vocational institutions. Free schools are giving parents the opportunity to aspire to a better education for their children. The Opposition have said that they want no more of them, but we will not allow such an attack on aspiration to happen. Instead, we must accelerate the programme and bring more hope to more children. That is why I can announce that we will fund an unprecedented increase in the number of free schools. We will provide for 180 great new free schools in 2015-16.
The schools budget will be protected, there will be fairer funding across the nation, the pupil premium will be extended to more students than ever before and there will be a transformation in the free school programme. We will not make our children pay for the mistakes of the past. We will give them every chance for the future, because that is the single best investment we can make for Britain.
Our education settlement is also consistent with the third and final principle of this spending round—fairness. It is not possible to reduce a deficit of this size without asking all sections of the population to play their part, but those with the broadest shoulders should bear the greatest burden. The Treasury’s distributional analysis shows that the top fifth of the population lose the most after this spending round, and the independent Institute for Fiscal Studies is unequivocal that the richest 10% have paid the most. In every year of this Parliament, the rich will pay a greater proportion of income tax revenues than they did in any one of 13 years under the last Labour Government.
When it comes to Her Majesty’s Revenue and Customs, despite the fact that this department will see a 5% reduction in its resource budget, we are committed to extra resources to tackle tax evasion. The result is that we expect to raise over £1 billion more in tax revenues from those who try and avoid paying their fair share.
Fairness also means refusing to balance the budget on the backs of the world’s poorest. I know that not everyone believes we should fulfil our commitment to spend 0.7% of our national income on development—but I do. I am proud to support a Government who are the first in our history to meet our pledge and meet it not only this year, but next year and the year after that. Of course, overseas development is about more than just the Department for International Development budget, and we comply with internationally policed rules. The DfID budget is, however, the lion’s share, and it will be set at £11.1 billion in 2015-16. Even in these tough times, the decisions we make mean we keep to our commitments.
That includes our commitment to the National Health Service—an institution that is the very embodiment of fairness in our society. The NHS is much more than the Government’s priority; it is the people’s priority. When we came to office, the health budget was £96 billion; in 2015-16, it will be £110 billion—and capital spending will rise to £4.7 billion. New medical treatments and an ageing population mean that the demand for NHS services is rising, so we have not spared in also demanding reform and value for money in this service. This will not insulate the health service from tough choices; there are already 7,000 fewer managers, and the NHS will continue to make efficiency savings. Those savings will, however, enable new investment in mental health and funding for new treatments for cancers such as prostate and breast cancer. Let me respond directly to the breast cancer research campaign in which so many have taken part. We will continue to back the charity research support fund and look into making it easier for these organisations to benefit from gift aid.
Many older people do not just use the NHS; they also use the social care system. If we are honest, they often fall between the cracks of the two systems, being pushed from pillar to post, not getting the care they should. None of us here would want that for our parents or grandparents, and in a compassionate society, no one should endure it. It is a failure that also costs us billions of pounds: Britain can do better.
We said in the 2010 spending review that the NHS would make available around £1 billion a year to support the health needs of people in social care. It worked, and saved hundreds of millions in the process. Last year, these improvements meant almost 50,000 fewer bed days were lost to the NHS. So today, I can announce that I will bring together a significant chunk of the health and social care budgets. I want to make sure that everyone gets a properly joined-up service where they will not have to worry about whether a service is coming from the NHS or the local council.
Let us stop the tragedy of people being dropped in A&E on a Friday night to spend the weekend in hospital because we cannot look after them properly in social care. By 2015-16, over £3 billion will be spent on services that are commissioned jointly and seamlessly by the local NHS and local councils working together. It is a huge and historic commitment of resources to social care, tied to real reform on the ground, to help end the scandal of older people trapped in hospitals because they cannot get a social care bed. This will help relieve pressures on A&E, help local government to deliver on its obligations and will save the NHS at least £1 billion. This is integrated health and social care—no longer a vague aspiration, but a concrete reality transforming the way we look after people who need our care most.
So these are the three principles that guide the spending round: reform, growth and fairness. Nowhere could these principles be more clearly applied than in our approach to welfare. Two groups of people need to be satisfied with our welfare system: those who need it who are old, vulnerable, disabled or have lost their job, whom we as a compassionate society want to support. Then there is a second group: the people who pay for this welfare system who go out to work, pay their taxes and expect it to be fair on them, too.
So we have taken huge steps to reform welfare: changing working age benefits with universal credit so that work always pays; removing child benefit from the better off; capping benefits so that no family out of work gets more than the average family gets in work. And we have been making sure that benefit payments do not rise faster than wages. The steps we have taken will save £18 billion a year—and every single one of them was opposed by the welfare party on the Opposition Benches.
Now we propose to do three further welfare reforms. First, as I said in the Budget, we are going to introduce a new welfare cap to control the overall costs of the benefits bill. We have already capped the benefits of individuals, and now we cap the system as a whole. Under the system we inherited, welfare spending was put into a category called annually managed expenditure, but the problem was that it was not managed at all. The cost of welfare went up by a staggering 50%—even before the crash. Our welfare cap will stop that happening again. The cap will be set each year at the Budget for four years. It will apply from April 2015 and will reflect forecast inflation, but it will be set in cash terms. In future, when a Government look to breach the cap because they are failing to control welfare, the Office for Budget Responsibility will issue a public warning. The Government will then be forced to take action to cut welfare costs or publicly breach the cap and explain it to Parliament.
We will exclude a small number of the most cyclical benefits that directly rise and fall with the unemployment rate to preserve the automatic stabilisers: housing benefit, tax credits, disability benefits and pensioner benefits will all be included—but the state pension will not. I have had representations that we should include the basic state pension in the welfare cap. That would mean that a future Government could offset a rise in working age benefits by cutting the pensions of older people. That penalises those who have worked hard all their lives. Cutting pensions to pay for working age benefits is a choice this Government are certainly not prepared to make. It is unfair; we will not do it and we reject those representations completely.
The new welfare cap is proof that Britain is serious about living within its means: controlling spending, protecting the taxpayer and being fundamentally fair. Today we are introducing a limit on the nation’s credit card. The principles enshrined in the cap apply to our second reform today. We will act to ensure that we stop the cost of paying the winter fuel payments made to those who live abroad from rising in a way that no one ever intended. EU law now says that people living in the European Economic Area can claim winter fuel payments from us, even if they did not get them before they left the UK. Paying out even more money to people from all nationalities who might have worked in this country years ago, but no longer live here is not a fair use of the nation’s cash. So from the autumn of 2015, we will link the winter fuel payment to a temperature test; people in hot countries will no longer get it. It is, after all, a payment for winter fuel.
The third welfare reform I announce today is about making sure we do everything to help people get into work. My right honourable friend the Secretary of State for Work and Pensions has changed the national debate about welfare, and has comprehensively won the argument. He has committed himself to finding a further 9.5% of savings in his department’s running costs. That will require a difficult drive for efficiency, and a hard-headed assessment of underperforming programmes.
However, welfare reform is about much more than saving money, vital though that is. It is about reducing dependency and changing people’s lives for the better. I am determined to go further to reduce worklessness with all its social consequences. Where is the fairness in condemning people to a life on benefits because the system will not help them to get back into work?
Today we are introducing Upfront Work Search. We are going to make sure that people turn up with a CV, register for online job search, and start looking for work. Only then will they receive their benefits. Thanks to this Government, lone parents who are out of work can now receive free childcare for all their three and four-year-olds, so it is reasonable to ask that they start regularly attending jobcentres and preparing to return to work.
We are announcing further changes today. Half all jobseekers need more help with looking for work, so we will require them to go to the jobcentre every week rather than once a fortnight. We will give people more time with jobcentre advisers, and proper progress reviews every three months. We will also introduce a new seven-day wait before people can claim their benefits. Those first few days should be spent looking for work, not looking to sign on. We are doing those things because we know that they help people to stay off benefits, and help those who are on benefits to get back into work faster.
Here is a further change. From now on, if claimants do not speak English, they will have to attend language courses until they do. That is a reasonable requirement in this country. It will help people to find work, but if they are not prepared to learn English, their benefits will be cut.
As a whole, this new contract with people on benefits will save more than £350 million a year, and all that money will enable us to afford extra support to help people to get into work. Help to work, incentives to work, and an expectation that people should do everything that they can to find work: that is fair to people who are out of work, and it is fair to those in work who pay for them. Together, these reforms bring the total additional welfare savings in 2015 up to £4 billion.
Step by step, this reforming Government are making sure that Britain lives within its means. The decisions that we make today are not easy, and these are difficult times; but with this Statement, we make more progress towards an economy that prospers, a state that we can afford, a deficit coming down, and a Britain on the rise. I commend this economic plan to the country”.
Lord Davies of Oldham
My Lords, as the Minister indicated, we are considering a spending review that the Chancellor of the Exchequer said represents reform, growth and fairness, but there is little in the Statement to back up any of those assertions. In fact, the real reason we are here today is because of this Government’s economic failure. They have been forced back, begging for more: more cuts to the police, more cuts in the defence budget and more cuts to local services. This Government have failed on living standards, growth and the deficit, and families and businesses are paying the price. We have been told—in fact, it has even been boasted by the Government—that there was no intention for it to turn out like this. The Chancellor told the other place in his first Budget in the halcyon days of 2010 that the economy would grow by 6%, but in fact the economy has grown by 1%.
The Government pledged to get the banks lending, but at this stage lending is still down, month by month. There has been no reform of the banking industry, and competition and lending to individuals and small and medium-sized enterprises has gone backwards. The Government made keeping the AAA credit rating the No. 1 test of their economic credibility. However, on its watch Britain has been downgraded not once but twice. The Government promised that living standards would rise, but they have fallen year on year. They said that they would balance the books, but the end to austerity is being pushed further and further into the future, way beyond the next general election, which of course was their original target date. This is all because of failure. What a legacy to leave. What a straitened inheritance for the next Labour Government to sort out—and we will sort it out, in a fairer way.
Plan A has failed. The need for this Statement today could not demonstrate that more clearly. However, where is the change of course? Where is the plan for growth and jobs that we—and, of course, the International Monetary Fund—called for? It does not have to be this way. Instead of planning cuts in 2015, two years ahead, surely the Government should be taking bold action now to boost growth this year and the next—investment that would get our economy going and bring in the tax revenue to get the deficit down. More revenue would mean that our police, Armed Forces and public services would not face cuts. Housebuilding is at the lowest level since the 1920s, so where do the Government plan to build 400,000 affordable homes this year and the next? There is no point in the Government boasting about infrastructure investment in five or seven years’ time when we need action now.
What a boast that is. The Green Book reveals that capital expenditure by departments will actually be cut. So much for the Prime Minister’s assurances at this morning’s Question Time that a great deal of progress is being made in this area. Year on year, real departmental capital budgets have been cut. Where do we see these figures? The book shows, in black and white, a 1.7% cut. If I am not believed, PricewaterhouseCoopers surely will be, because it said the same thing. There is a pattern here. Investment has fallen in real terms under this Government. It fell an astonishing 50% in the first three months of this year. Projects such as Labour’s successful Building Schools for the Future programme have been cancelled, and developments promised by the Government have never materialised. Just seven projects have been completed and 80% of projects have not even been started.
We need action now, not more empty promises for the years ahead. The Chancellor in his Statement insisted that we must plan for the long term, look to the future and secure a recovery for future generations. However, there is no substance to these statements. Where is the proper British investment bank that business clearly needs and wants? Where is the 2030 decarbonisation target to give energy companies the certainty they need to make their long-term investment for the future? Where is the backstop power to break up the banks, which the parliamentary commission called for? What happened to the plan of the noble Lord, Lord Heseltine, and its much-heralded £49 billion single-pot growth fund for the regions? A measly £2 billion is all that has been announced today.
Instead of action to boost growth and long-term investment, all we have today is more of the same failing plan and more of the same on social security and welfare spending. We have had plenty of tough talk and divisive rhetoric, but on the Chancellor’s watch the benefits bill is still rising. Social security spending is £21 billion higher than he planned. This is because the Government have failed to get growth going and to get people back into work—work that pays decent wages and does not discriminate, work that holds a compulsory job guarantee, paid for by a tax on bank bonuses. We hear the call for a cap on social security spending. Will the Minister enlighten the House with a few more details on this and how it will be administered? Why not get our housing benefit bill down by tackling high rents and the shortage of affordable homes? Why not stop the winter fuel allowance for the richest 5% of pensioners, while keeping the triple lock for basic state pensions? Why not make work pay with a 10% tax rate paid for by a mansion tax, instead of huge tax cuts for millionaires?
This Government are making the wrong choices on growth and social security spending—decisions that are unfair and do not reflect the sort of society we want to live in. The Government are also making the wrong choices on departmental spending. When thousands of front-line police officers are being cut, why are they spending more on police commissioners than on the old police authorities? Why have the Government wasted £3 billion on a reckless reorganisation of the NHS, when there is a crisis in our social care system that needs to be addressed, and which they are now somehow going to spatchcock by transferring resources? Why are they funding new free schools in areas with enough school places, while parents in other areas cannot get their children into a local school? Will this spending review mean fewer police officers in 2015-16, on top of the 15,000 we have lost in this Parliament? Will it mean fewer nurses on top of the 4,000 we have lost from the NHS? Will it mean fewer Sure Start children’s centres on top of the 500 that have already closed?
It is clear that the Government will continue to impose deeper cuts on local authorities in areas with the greatest need. It is the areas with the greatest need that continue to suffer the deepest cuts. People up and down the country need to know about this Government’s real intentions. The Government have comprehensively failed on living standards, on growth and on the deficit. That is why the Chancellor was before the House of Commons earlier today. We see prices rising faster than wages, families worse off, long-term unemployment up, welfare spending soaring, the economy flatlining and the slowest recovery for a century. The result of this failure is not balancing the books as promised, but in 2015 a deficit of £96 billion. That is why there is a need for more borrowing to pay for the coalition’s economic failure. That is why the Government have been forced to make this Statement and impose these cuts on our public services.
Two years ago, when the intake of breath was so severe at the cuts at that time, the Chancellor said that,
“we have already asked the British people for what is needed, and … we do not need to ask for more”.—[Official Report, Commons, 23/3/11; col. 951.]
—another broken promise.
Lord Deighton
My Lords, I should like to put both the spending review and the comments of the noble Lord, Lord Davies, into context. He said a great deal about a failed economic strategy. We inherited one. Any of us who have worked with the management challenges of a significant budget would recognise that in 2010, when this Government came into power, spending was out of control. This spending round represents a continuing exercise in getting our public finances back into shape. This Government and the officials working in this area should absolutely be commended. They laid out a very clear plan in 2010 to deliver £80 billion of savings through to 2014-15. Sixty-five per cent of that—just over £50 billion—has already been delivered and the rest is on target. Therefore, the purpose of this spending round is to make a further £11.5 billion of savings, which have been thoughtfully and effectively made based on the criteria, as the noble Lord pointed out, of reform, growth and fairness. Within that £11.5 billion of savings, we have of course made some extremely tough choices. There are no easy choices in this current environment. We have protected the priorities that we promised and laid out at the election—those relating to health, schools and overseas aid.
The principles underlying how we have dealt with each department have revolved around making sure that the departments work and operate on a highly efficient basis with the right number of people, with the right degree of automation, with the right degree of procurement, and with commercial skills being brought to the purchasing decisions they make so that we can get our costs down and operate efficiently. That is true right across the departments and it is where those savings have come from.
I shall give an example of reform. Probably the most significant reform laid out in this programme is that we are establishing a new £3.8 billion health and social care pot to be shared between the National Health Service and local authorities to make sure that the services between hospital and the home are much better delivered and so that we can take care of people who need that help. We do not want the situation where somebody is delivered into a hospital bed on a Friday night because there is nowhere else for them to go and they are sent home again on a Monday because we cannot take care of them over the weekend. That is the kind of service reform that we have been talking about, and that has been the basis on which this £11.5 billion saving has been made.
Where does that take us? It will mean that by 2015-16 we will be well down the path of taking public expenditure as a proportion of total expenditure back to a sensible level. It should be back to just over 43% from the 30-year high of 47% or 48% in 2009. By the end of our consolidation in 2017-18, it will be back to 40%. That is the repair that this Government have had to undertake because of the spending profligacy that took place under the previous regime.
The deficit has fallen by a third as a percentage of GDP and is set to continue falling to below the pre-crisis level by the end of this Parliament. Most interestingly, the biggest saving that we have made is on our debt interest costs because we have got borrowing under control. Those costs are £9 billion lower than was forecast in the Budget of 2011. For me, that is probably the most telling statistic. Of course, we introduced savings on welfare bills through the Autumn Statement decisions.
We have talked about the situation with respect to capital spend and perhaps I may exchange some statistics. Effectively, through each of the fiscal events, the Government have saved money on current spending and invested it in capital spending. That is how we have chosen to do it; we are not doing it by increasing borrowing, and that is absolutely the right strategy to pursue. The sum involved is £10 billion over this Parliament. Public investment will be higher on average over 2010-11 to 2014-15 than it was under the previous Government. We are investing more in roads than at any point under the previous Government—and that is now. We are building more school places than at any time under the previous Government, and next year we will be building more affordable houses than at any point in the past 20 years.
There will be much more detail about this tomorrow, when the Chief Secretary comes out with details on the capital plan. Accompanying that will be a document called Investing in Britain’s Future, which will lay out how we will spend £100 billion on infrastructure investment over the next Parliament. We all want it to happen quicker. I am here today because the Chancellor and the Prime Minister wanted some help in making it happen quicker. We have an urgent and focused plan to deliver on that, and the Chief Secretary will lay it out in detail tomorrow.
In summary, we currently have the largest investment in railways since the Victorian age. Crossrail, which is being dug at the moment, is the largest urban infrastructure project in Europe. In this spending round, we are funding the case for Crossrail 2, which would link London from north to south. We have given the mayor almost £9 billion of capital spending. We have completed Kings Cross station. We are funding science at higher levels than ever before, with a long-term commitment. We are developing our intellectual as well as our physical infrastructure.
The noble Lord talked a little about where we were in delivering on the Government’s infrastructure programme. He said about 20% of it was under way. By next year, half will be under way. That is the whole point of a pipeline. The Government can really add value by getting through the difficult early stages of choosing the project, finding the funding and dealing with planning and environmental considerations. We are focused where we should be—dealing with ideas and getting them through to the “shovel in the ground” stage. That is really the hard bit in any project. It is right that the projects we are focused on are the ones that have not started yet. Our record in this country, once we start, for delivering things on time and on budget—I have been part of some of it—is extremely good.
Lord Forsyth of Drumlean
My Lords, can my noble friend confirm that at the end of the previous Government’s period of office the national debt had doubled, and that on the figures presented today the national debt will have doubled again by the time of the election? Can he explain what the effects would be of a rise in interest rates of, say, 1% on the repayments which the Government will have to make on their borrowings and on the value of the government gilts held by the Bank of England? How will that hole be dealt with? He mentioned that interest rates have been held down, but we are already seeing rates beginning to rise, so what contingency plans are in place? Should we not be very much more concerned about the future of the economy, given that the outgoing Governor of the Bank of England has today warned our youngsters about the possible impact on mortgages and on the balance sheets of the bank themselves? Where is the contingency planning for that eventuality in the Government’s Statement today?
Lord Deighton
I thank my noble friend for raising, as he has done on many occasions before, everyone’s awareness of the fact that when we discuss the deficit we are talking about the annual addition to our stock of borrowing. Until that deficit turns into a surplus we will not reduce our stock of borrowing, and the increased stock of borrowing leaves us with a significant exposure. My noble friend Lord Newby informs me that a 1% increase in interest rates will have an economic effect of approximately £4 billion, but we will review that number.
The way to provide for the contingency to be able to cope with any additional expenditure, whether it is interest, overseas issues or events that crop up, is to continue to drive down our deficit to give us as much flexibility as possible to handle whatever events face us in the future.
Lord Wigley
My Lords, can the Minister address the question of fairness with regard to the devolved Administrations? Under the title of fairness, the Green Paper refers to the Barnett formula going on until the end of 2016 at least. Surely, as a committee reported to this House—the noble Lord, Lord Barnett, himself has been involved in this—whatever the situation is with regard to Scotland and Northern Ireland, the Barnett formula is patently unfair to Wales and is underfunding the Welsh Assembly for essential services. When are the Government going to get to grips with this?
Lord Deighton
We do not have any proposals to adjust the Barnett formula in this Parliament. As I understand it, the Welsh resource budget will be approximately £13.6 billion, and we will publish our response shortly to the Silk commission on the further devolution of taxation and borrowing.
Lord Myners
My Lords, the Minister has said a number of things that I think are significantly challengeable. First, his maths in response to the noble Lord, Lord Forsyth, are clearly substantially deficient and lead one to ask how much a Treasury Minister really knows about the state of government finances.
Secondly, the Minister said that debt as a percentage of GDP will be below pre-crisis levels by the end of this Parliament. I would like to see the evidence on which the Minister makes that statement. Clearly, it is not consistent with the OBR’s forecast.
My question, however, is about the relationship between monetary policy and fiscal policy. The Government have consistently talked about an accommodative monetary policy linked to a tighter fiscal policy. They now own £325 billion of their own debt through the QE programme. Why do they not simply cancel the debt that they have bought for fair value in the markets from banks and pension funds with the proceeds that they have in the QE portfolio on the asset purchase scheme?
Why do the Government not recognise that they can manage a pretty low inflation risk through using sterilisation techniques in the money markets and adjusting reserve ratios, and acknowledge that, despite QE, monetary growth is not increasing and inflation risk is low? That would be a simple answer that would at a stroke reduce debt as a percentage of GDP by 30%.
Lord Deighton
The question of how we unwind QE is a matter for the Monetary Policy Committee. It is not for me to give advice here.
Baroness Kramer
My Lords, when it comes to not understanding, I have to say that from the conversations that I have had in the media today with members of the Labour Party and listening to today’s speech, I am unclear whether they want different cuts or more borrowing, but it seems to be one response or the other to this particular spending round. I am very pleased with many aspects of this spending round, particularly the emphasis now on future growth.
Will the Minister confirm that the decision to put more money into schools, thereby protecting the schools budget as well as being a real-terms increase in the pupil premium, is because they have proven to be successful and effective programmes? On the infrastructure area, which is his area of specialty, will he assure me that although there is the Heseltine pot for local areas, the big national infrastructure expenditures will be co-ordinated with local activity so that we can maximise the opportunities that spin off from this very substantial increase in infrastructure?
Lord Deighton
I thank my noble friend for her observations about the education programme being a prime example of investing in the success of an effective programme. That is absolutely right. On the local pot and infrastructure spend, it is absolutely our intention to make sure that there is a strong relationship between the regional plans—ultimately, all infrastructure operates at a local level—and that we co-ordinate those at a national level to ensure that we get the maximum leverage from the money that we are spending at both ends.
Lord Martin of Springburn
My Lords, I noted when I listened to the Chancellor that he made a commitment to apprentice training. My thoughts go back to the 1980s when there were many closures, particularly in engineering. No one was taking on apprentices. Within 10 years, employers were calling out for trained journeymen. There were complaints sometimes that skilled labour had to come from abroad. I am on my feet today to say that I hope that the Chancellor and the Government keep their promise to take on apprentices. Not only does that help the apprentices, but it gives a great source of pride to the family when a young person is taken on for skilled work.
Lord Deighton
I thank the noble Lord for raising this important issue. It is the Government’s intention to implement the recommendations of the Richard review, which will see through the apprentice programme. It sits very neatly alongside the success that we have seen over the past four years, with the private sector picking up and generating employment to compensate for the small number of losses in the public sector. A strong apprentice programme sits very nicely with that.
Lord Morris of Aberavon
My Lords, will the Minister comment on whether the Government have fulfilled all their statutory obligations, in particular the Public Bodies Act 2011, in their spending review decisions?
Lord Deighton
My Lords, I am working on the assumption that we have fulfilled those, but I am sure somebody will tell me very quickly if we have not. It is not a stipulation I am familiar with.
Lord Higgins
My Lords, when the coalition was formed, I stressed that it would be far more difficult to reduce the deficit than was generally supposed. Having been involved in spending cuts in previous Governments, I would certainly not underestimate the task facing the Chancellor. None the less, there is a danger that we are underestimating what still needs to be done. The Government keep repeating the mantra, “Oh well, we have reduced the deficit by a third”. Actually, this means that we are borrowing more at two-thirds of the rate that we inherited from the previous Government.
We are still living way beyond our means, in part because we are paying for Gordon Brown’s proposals, for which there was no money then and for which no money is available now, except by borrowing. Does my noble friend agree that we really have to press on with much more determination in tackling this whole issue and that it would be wrong to say that we are all right just because we reduced the deficit by a certain amount?
Lord Deighton
I agree with my noble friend that managing the public finances responsibly will be a continuing exercise of considerable discipline. On managing current spending, we have introduced the welfare cap on the overall budget as well as the cap on specific benefits that we saw in the previous Budget. Departmental budgets are being managed with discipline. There has also been a real focus on switching from current expenditure to capital expenditure, which should support the enhancement of the productive capacity of the economy and thus help us with tax revenues. Those components should continue to be an urgent and aggressive focus of the Government’s fiscal management.
Lord Christopher
Page 5 of the Printed Paper Office version of the speech says:
“We will end automatic progression pay in the Civil Service by 2015-16”.
That is a very serious breach of faith. Quite apart from anything else, how are the Government going to do it?
Lord Deighton
We are going to do it simply by implementing it in 2015-16. As I understand it, many of the structural changes to Civil Service pay have already been made in many departments. This is just equalising the system right across the service.
Lord Barnett
My Lords, I start by acknowledging the very difficult economic situation that every Government are going to face. People are living longer and I am the last person in the world to complain about that.
Given that every forecast made by the Chancellor since 2010 has had to be adjusted, how do we know that we need exactly £11.5 billion of cuts in 2015? What was his economic forecast for that year? We now know that no economic forecast by anybody can be expected to be accurate, even if it is based on next year. Perhaps the Minister will tell us why we should assume, when every forecast that the Chancellor has previously made has been wrong, that a forecast based the economy in two years’ time will do precisely what he said. In one line, he says:
“We commit now to £50 billion of capital investment in 2015”.
That is rather a lot of money for one year. How long a period is that planned to be spent over? The cuts are going to take place after 2015. When will that £50 billion of capital expenditure be spent: this year, next year or only after 2015? We all know that we need it now. Why is he delaying it?
Lord Deighton
I absolutely share the noble Lord’s experience that economic forecasting is a hazardous art form. However, if done thoughtfully, it gives us the basis for creating a long-term plan against which we can make the best decisions possible, given the information we have. One of the things that I have been working on with the Chancellor is to take a longer-term perspective, particularly of our capital budget, and to have that budget as a foundation for our long-term fiscal management rather than being the bit that gets added on at the end. That is what results in the stop-go approach to investment which has plagued us for many years. For me, what it rather reflects is a shift in priorities to deal with the things for which you need to create a longer-term planning horizon, so that we can get the investment side of what we are doing sorted out over the right kind of horizon.
Lord Stoddart of Swindon
My Lords, to get back to a point raised by the noble Lord, Lord Forsyth, about quantitative easing, or the printing of money, there is of course the fact that the Government have saved £9 billion because of low interest charges. Those savings have been made at the expense of interest rates on savings, particularly those on pensions. Pensioners have been very badly hit because their expectations, and indeed their pensions, have been lowered for the future. Is it not a shame that some of the most vulnerable people in our society, such as the pensioners, have been made very much poorer in order to finance government spending, which is still far too high?
Lord Deighton
I of course accept that one of the consequences of lower interest rates is lower returns to savers. That absolutely follows on and it is a consequence in part of our current monetary policy, and indeed the monetary policy of every major nation. One compensating comment I would make is that of all the constituencies which this Government have striven to protect, looking at the triple-lock protection on pensions the basic state pension has clearly been kept in very good shape during this period of economic challenge.
Lord Marlesford
My Lords, the Chancellor said:
“EU law now says that people living in the European economic area can claim winter fuel payments from us, even if they did not get them before they left the UK”.
When on earth did that start and what are the Government doing to persuade the Europeans to change it? When the Chancellor suggests that he will deal with it by linking,
“the winter fuel payment to a temperature test”,
from 2015, what will that save? If it is worth doing it in 2015, why should he not do it in 2014, if not autumn 2013?
Lord Deighton
I thank my noble friend for pointing out this unfortunate anomaly in European legislation, which puts us in that position. The Chancellor’s position is that he has dealt with that anomaly in the best possible practical way to reduce that payment, given the timing of its introduction and the form of the obligation we have on us.
Lord Brooke of Alverthorpe
My Lords, the Chancellor said in his Statement:
“The first line of national defence is sound public finances”.
Following the theme of the noble Lord, Lord Higgins, why can the Chancellor then go on to boast that we have one of the largest defence budgets in the world? Here, I do not speak on behalf of my party but as an individual member of the community in this country. However, I suspect that I represent a fair point of view when we hear about the possible incursions into Syria and read of the Prime Minister saying that he is not prepared to see a reduction in Britain’s military capabilities. If we are to take truly tough decisions, is it not time that we really faced up to our position in the world—what we can do, what we cannot do and what we can afford?
Lord Deighton
That is a very broad question. In terms of the spending review, over time we have already taken some very difficult decisions with the Ministry of Defence. The focus of this particular spending round was to ensure that we put in place some economies in the support areas, but kept our front-line capability and made absolutely sure we had an equipment budget that could support our troops and the work that they were called on to do. That was the policy decision behind which the spending decisions fell into line.
Lord Cormack
My Lords, what is there in the Statement to boost our very important tourism industry? Cultural and heritage attractions, the things that tourists come to our country to enjoy, are going to suffer. What are we doing to boost tourism?
Lord Deighton
If noble Lords look across the contributions to the spending reduction, it is evident that the Department for Culture, Media and Sport, which oversees tourism, had one of the milder settlements, with cuts of something like 7%. In addition, museums in particular have been given some flexibilities in how they manage their finances and organise themselves, in order to help them cope with any changes in their grants. That is the sum total of specific points with respect to tourism.
The Economic Implications for the United Kingdom of Scottish Independence
(10 years, 10 months ago)
Lords ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Lord MacGregor of Pulham Market
That this House takes note of the Report of the Economic Affairs Committee on The Economic Implications for the United Kingdom of Scottish Independence (2nd Report, Session 2012–13, HL Paper 152).
Lord MacGregor of Pulham Market
My Lords, we launched our inquiry in February 2012, when it seemed likely that there would be a referendum on independence in Scotland in autumn 2014. Since then this has, of course, been confirmed. We did so because we were concerned that, on what was widely recognised as an issue of momentous consequences not only for the people of Scotland but for the rest of the UK, it was vital that such a vote should be based not only on sentiment and patriotic fervour but on a full understanding of all the implications. At that time, these consequences had simply not been fully analysed, let alone widely exposed to public debate. We did not make the case for or against independence. We did not go into the constitutional or legal issues on the referendum process. We focused entirely on the economic implications, primarily for Scotland, but which are just as important for the rest of the UK as well.
The need for a properly informed debate before the referendum seemed to us to be all the greater as it became clear that if there were a yes vote for independence, it would probably take years to separate the Scottish economy from the rest of the UK and for it to negotiate entry into the EU as a new state. This would cause great economic uncertainty and possibly damage to Scottish businesses in the mean time. In our view, all the key issues and consequences needed to be fully explored beforehand, and not left to negotiations afterwards.
We heard from 44 witnesses in all, including British and Scottish Ministers, academics, trade unions and local authorities, with a wide range of opinions on business, finance and politics. We heard evidence in Glasgow and Edinburgh, a first for the committee. One disappointment was that some Scottish companies from which we would have liked to have taken evidence declined to do so. One witness described there being a possible “climate of fear”, with witnesses having fears about the impact on their business of speaking out. Another disappointment was the First Minister’s declining to give evidence himself before the Committee, much as we pressed him to do so.
I would like to stress yet again that our report is based on the evidence that we received. I thank all our witnesses, and on behalf of the committee express especially warm thanks to our specialist adviser, Dr Angus Armstrong of the National Institute of Economic and Social Research, for his most helpful contribution to our deliberations. As always I thank Bill Sinton, clerk to the committee, and his staff, for the huge amount of work they undertook. I am also most grateful to all my colleagues, who gave a great deal of their time to this inquiry and contributed greatly to the lengthy discussion that we had on the final report.
As our inquiry progressed, it helped to shine increasing light on the economic implications of a yes vote and what they might entail. As we reached the drafting stage of our report, the British and Scottish Governments have each started to publish their own analyses of the various economic implications, which we warmly welcome. Much more needs to be done, however, if the Scottish voters are to make a fully informed choice in October 2014, and the wider British public—and I do mean the wider British public—are to understand the implications for them. As the UK Government say in their response to our report:
“It is crucial that the referendum debate is properly informed”.
I turn to some of the main issues and, given the time available, can only highlight the key ones. Some are already much clearer than when we embarked on our report. For example, it became apparent during our inquiry, not least because of the exchanges that we had with the President of EU Commission, President Barroso, and then of the UK Government’s own analysis, that in the event of a yes vote Scotland would become an entirely new state and that the continuing UK would retain the rights and obligations of the UK as it currently stands. This is important particularly in the context of the EU, but, for Scotland, it would also apply to many other international bodies and treaties. Indeed, it was during our visit to Scotland that the Scottish Government’s claim to have legal advice to the contrary was blown apart.
Given the complexities in particular of negotiations with the EU and the need for unanimity of all member states in the EU in accepting a new member, it must be extremely unlikely that these negotiations would be completed by the spring of 2016, as some hope, and there is no certainty of outcome. Meanwhile, there would among other things be great uncertainty for Scottish companies operating internationally, for inward investment to Scotland and for other sectors of the Scottish economy.
One particular impact is on international trade. Most of our business witnesses spoke of the importance of being within the EU. One particular advantage was stressed by some chief executives of Scottish-based international companies, who spoke of the benefits of international trading deals done by the EU for their companies. The significance of this is underlined by the launch of the negotiations for an EU-US trade agreement at the recent G8 summit.
I turn next to currency choices. Our analysis is very similar to that of the UK Government. After some toing and froing, the Scottish Government seem to have settled for continuing to use sterling in a sterling currency union. The UK Government state in their Scotland Analysis document:
“A formal … currency union is very different to the current arrangements and would be a profound economic change for both states … the economic rationale for the UK to agree to enter a formal sterling union with a separate state is not clear”.
We in our report are even more specific, as we state:
“A monetary union as advocated by the Scottish Government would require robust and credible limits on borrowing and indebtedness by both member states. So far the Eurozone has found this problem intractable”—
a point acknowledged also by the UK Government in their document. We continue:
“We believe that it would be difficult for any such agreements to be made binding in all circumstances”.
On Bank of England and monetary policy, again our report and the Government’s analysis are similar. The Government’s conclusion is that,
“the economic rationale for the UK to agree to enter a formal sterling union with a separate state is not clear”,
and that it is likely that economic and fiscal plans of a separate Scottish state would be subject to rigorous oversight by continuing UK authorities. We agree with that but are rather more direct. We do not see how the UK Government could extend central banking services to an independent Scotland, since the UK Government would lack control over its tax and spending policies. Crucially, we argued that this, along with the continued use of sterling by an independent Scotland in monetary union with the rest of the UK, could only come about, if at all, on terms agreed by the UK Government and that—a point to which I will return—arrangements should be clear before the referendum. We add that,
“the proposal for the Scottish Government to exert some influence over the Bank of England, let alone the rest of the UK exchequer, is devoid of precedent and entirely fanciful”.
I note that in his letter to me, the Chief Secretary to the Treasury quotes the Chancellor of the Exchequer as saying that,
“it is highly unlikely that the rest of the UK would agree to enter into a formal sterling currency union with an independent Scotland”.
We entirely agree with that and believe that it should be confirmed before the referendum.
I turn now to the other paper that the UK Government have so far produced, published last month, on financial services and banking. Time prevents me from going into detail—others may wish to do so—but, again, we are in broad agreement. We agree on the significance of Scotland’s financial sector to its economy and the fact that 90% of its customers are located in the rest of the UK; on the need for a separate Scottish financial regulator for an independent Scotland, adding to compliance costs and complexity for Scottish financial institutions; and on the fact that the assets of the whole UK banking sector, including Scotland’s banks, are around 492% of total UK GDP whereas, by contrast, Scottish banks would have assets totalling around 1,254% of an independent Scotland’s GDP, with all the implications for financial shocks such as we have experienced in recent years.
All of these are key considerations for the Scottish electorate. As the Chief Secretary points out, that proportion of GDP is massively greater than was the case with Iceland, Ireland and Cyprus. The problems that would face Scottish banks, savers and depositors in the event of a financial crisis in an independent Scotland could be immense and need to be thought through in advance. We await government papers on assets and liabilities in defence, all of which are substantially covered in our report.
On North Sea oil and gas, there is a broad equivalence between Scotland’s gain on North Sea oil revenues and what it would lose from abolition of the Barnett formula. I notice that the noble Lord, Lord Barnett, is in his place, and this is interesting for many of us in your Lordships’ House who have been arguing, one way or another, that the Barnett formula needs to be resolved in the near future. An independent Scotland, curiously, would resolve the question, although we would still have to worry about it if the independence vote did not say yes. However, that is not an answer to the Scottish issues. One of our witnesses, Professor McCrone, said that, on the expected geographical division, which we in our committee accept, about 90% of revenues would accrue to an independent Scotland. On the other hand, there is substantial volatility in oil prices, uncertainty over future oil revenues and the need to deal with substantial North Sea oil decommissioning costs. It is no long-term panacea.
Division of assets and liabilities will be complex, including for PFI and public sector pensions. Indeed, the subject of pensions as a whole needs detailed consideration, including the need for a Scottish pension regulator for private sector pensions, a pension protection fund and a separate financial services compensation scheme for Scottish financial institutions. An independent Scotland will need to handle the difficult questions of the ensuing public sector debate as a consequence of looking at the division of assets and liabilities, with volatile tax revenue, the loss of risk-sharing with the rest of the UK and no record of issuing debt to global lenders. Those are all issues that the Scottish Government will need to spell out for the comfort of the Scottish electorate before the referendum.
I turn next to defence, which is an absolutely key issue, particularly for the rest of the UK. We were disappointed that Defence Ministers refused to give evidence to us and we had to rely on others. We are particularly grateful to the noble Lord, Lord West, who gave some very compelling evidence to our committee. The UK Government’s position is that it is for the Scottish Government to set out for the Scottish people how the defence of an independent Scotland would be arranged and, for the rest of the UK, the UK Government cannot prenegotiate the deals of independence ahead of the referendum. We certainly recognise the security aspects and are clear that any post-referendum negotiation would be huge, lengthy and complex on defence issues. We are also clear that the defence implications, not least cost, are immense for the rest of the UK, and we hope that substantial contingency planning is already under way in the Ministry of Defence. Others may wish to comment on defence in greater detail today. I certainly welcome the fact that the Government are planning a detailed paper on shared defence and security services, and I hope that it will cover the issues that we have raised, on which we have so far not had a proper government response.
This leads me to my final point. There is general agreement that this will be a momentous decision for the people of Scotland, but it is not so well recognised that this will also be a momentous decision for the rest of the UK. There are huge implications for the rest of the UK—over 90% of those affected.
Lord Steel of Aikwood
This excellent report is full of questions, some of which are directed to the UK Government—but mainly they are directed to the Scottish Government. As they have known for two years that they will have a referendum, does not the noble Lord find it extraordinary that these questions have not yet been approached?
Lord MacGregor of Pulham Market
I cannot speak for my committee as a whole—although I suspect I am doing so—but that exact point occurred to us as we went through all the evidence. Many of the responses that we were getting, or not getting, did not deal with the points that I am raising now. I put my emphasis on the UK Government’s position today because we are in the UK Government’s Parliament, but I hope that many of the issues that we have raised—and, incidentally, that have been raised by Scottish business and some Scottish local authorities, such as the Glasgow City Council—will get a better answer than we have had so far.
As I was saying, we have spelt out many of the consequences of Scottish independence in our report. On defence in particular, there are potentially huge cost implications. Also included are such major issues as the division of assets and liabilities, negotiations on sterling and monetary policy, and so on. That is all very well. On the other hand, so much hinges on the subsequent negotiations. It is not enough, it seems to us, to leave it to those advocating independence to make the case, as the Chief Secretary to the Treasury has argued. He argued the case on our questions on the need to have the negotiations clarified as follows:
“The UK Government believes that people in Scotland will vote to remain part of the United Kingdom and therefore is not making plans for Scottish separation from the UK. This is not complacency but rather based on a strong belief that the UK works, and works well. Scotland contributes to, and benefits from being part of the UK”.
He goes on to say:
“It is for those advocating independence to set out a clear and well evidenced case to people in Scotland about what the implications of leaving the UK would mean for them—including some of the unavoidable choices that will have to be made”.
We do not think that that is a sufficient response because, in fact, the implications for the rest of the UK are very substantial as well. That is why we have argued the particular point that I stress now. We have argued in our report that:
“Scotland needs and deserves a fully informed debate, based on fact and free from rancour, well before the referendum vote”.
It continues with the following key point:
“To help bring it about the Scottish and British Governments should be more open about how they see the outcome of negotiations after a ‘Yes’ vote; each should indicate the ‘red lines’ of its negotiating stance on such crucial issues as currency, defence, division of assets and debts and negotiations with the EU before the referendum so that voters can make an informed choice”.
I regard this as a critical point. The debate is becoming much clearer and better informed, particularly since we took evidence and completed our report. The UK Government have produced very helpful and detailed analyses of some key issues and we look forward to more. However, there is still this issue about not discussing the negotiations in advance of the referendum. One argument has been that that should wait until after the negotiations, but one problem is that could make it very easy for many of the people intending to vote in the referendum to vote “yes”, on the assumption that all the negotiations would take place afterwards and that there would then be a second vote afterwards, once they were completed. That is not satisfactory and it is not the way it should operate. That is why we have urged—
Lord Forsyth of Drumlean
I am most grateful to my noble friend. Does he not think that the Government are facing two ways on these issues of referenda? On the one hand, on Scotland they say that we should have the referendum and then look at the detail afterwards, whereas on Europe the argument is that we must have the negotiations first so people know what they are voting for.
Lord MacGregor of Pulham Market
Well, yes. That is exactly why we must be much clearer about the negotiations before the vote takes place. I have explained the UK Government’s position on this and we do not think that that is sufficient. That is why we made the recommendation for the red lines to be clearly established beforehand so that no one is in any doubt as to where both Governments, but particularly the UK Government, would stand firm on some key issues.
To conclude, since we took evidence and completed our report, the UK Government have produced very helpful and detailed analyses of some key issues and we look forward to more. But it is critical that they also address this issue of the red lines and they should undertake to do so well before the referendum. That is the upshot of our report. There is some very helpful analysis in it and it will continue to stand the test of time as we get towards the end of the negotiations. It is on the point of the red lines, which the Government in their response to our report have so far sidestepped, that I would particularly welcome the views of the noble and learned Lord on the Front Bench in the wind-up. I commend the report to the House.
Lord Kerr of Kinlochard
Had I managed to ask the noble Lord before he sat down, I would have asked—
Lord McFall of Alcluith
My Lords, it is a pleasure to follow the noble Lord, Lord MacGregor, in this debate. I am open to intervention if need be on that issue. I thank him for his chairmanship. Allied to the question asked by the noble Lord, Lord Steel, the committee deliberately visited both Edinburgh and Glasgow, and spoke to the leaders of every party, including the former Chancellor, to the leader of Glasgow City Council and to business people. The only person missing was the First Minister. He would not come along to engage in the debate. That was an omission from the Scottish Government on this very important issue.
The debate in Scotland will centre around two themes: identity and economics. On the issue of identity, there is an assumption that if one feels intensely Scottish one will vote for independence. The paradox is that the debate in Scotland will not be about how Scottish one feels but how British the people of Scotland still regard themselves. That is according to the Scottish Social Attitudes survey. So it is about the degree to which people in Scotland still share some sense of fellow-feeling with those living elsewhere in the United Kingdom. That will be central to the choice that is made. It is important that we highlight that in the debate in this Chamber today. It will come down to whether Scots feel that they can assert their Scottishness by parting with the unionist part of their soul.
Michael Ignatieff, the UK journalist and leader of the Liberal Party in Canada, has a number of cautionary words for us in that area, because he took part in a referendum in Quebec. He said:
“We learnt the strongest argument for leaving countries as they are turns out to be that most people don’t want to choose between different parts of their identity”.
He added that post-referendum in Canada,
“Canadians were able to joke that what Quebeckers really wanted was an independent Quebec inside a united Canada. I suspect a majority of Scots want something similar”.
I was interested to see the Early Day Motion put down in the House of Commons on Dundee’s bid to become the UK City of Culture in 2017. It stated:
“That this House welcomes the decision of Dundee City Council to bid to become UK City of Culture in 2017… and wishes the city of Dundee every success in its bid to become UK City of Culture in 2017”.
It was signed by two prominent SNP Members of the House of Commons. Maybe there was an element of identity confusion there, along with the rest of the Scots.
The conclusion on identity is that both sides need to engage. If this is about a sense of Britishness, we cannot stand back; there has to be full engagement. The letter to which the noble Lord referred was from the Chief Secretary to the Treasury on 10 June. I commend every noble Lord to read paragraph 9 of that letter, because more pressure needs to be put on the British Government. Otherwise they will seem to be complacent, since the evidence shows that we must demonstrate that sense of Britishness.
What has characterised the debate in Scotland and elsewhere to date is the lack of good information. That is why it was wise of the Economic Affairs Committee, under the chairmanship of the noble Lord, Lord MacGregor, to start this debate. At the beginning, there was a sparsity of information, indeed a reluctance to talk, on the part of business. Rupert Soames, the chief executive of Aggreko, which was based in my former constituency and started life as a very small company—a two-man business—and is now a FTSE 100 company, built his new headquarters in Dumbarton. It was the last thing he did before I stood down from the House of Commons. He told the committee that if business opens its mouth, “bile and ire” rains down on people, the language is intemperate and business people feel that there are better things to do than be hauled over the coals.
The situation is now changing, and one thing that we have to remember is that the tone of the debate will matter greatly. Michael Ignatieff said that the referendum in Quebec produced fracture and division. We want to minimise that, because we have to live with each other after this referendum. That tone is still very important, but the uncertainty remains and I am glad to see that the CBI, the Scottish Council for Development and Industry and universities have been participating in this debate in asking the question.
Along with lots of others, I have no doubt that if Scotland decides to become a politically independent nation, it can do that, but the crucial question is how much economic independence Scotland will achieve. Jim Sillars, a former leader of the SNP, says, “Not very much”. That is why he rejects the proposals by the present SNP Government. Professor Gavin McCrone, a most esteemed economist for the Scottish Government over the years, has said that currency choice is the most important economic decision that Scotland will make.
Over the past 25 years, the Scottish National Party has adopted the stance of supporting an independent Scottish pound, then the euro and now the pound sterling, but the First Minister is on record as saying that the pound is a millstone around the Scottish neck. That is a most inauspicious start to a monetary union between Scotland and the rest of the United Kingdom. If we go ahead with this, it will raise the most complex problems of cross-border monetary policy, taxpayer exposure and multiple financial regulators. We have only to remember the crisis in the financial services in Scotland in 2009, when both our major banks, RBS and the Bank of Scotland, were bailed out to the tune of 211% of the GDP of Scotland. That is the extent of the issue if problems arise as a result.
Any monetary union can come about only on terms agreed by the UK Government. The question then will be: who will provide the lender of last resort facilities to an independent country if there is little control over the tax and spending risk to which the larger entity is exposed? The committee put it in very straight language—language with which I agreed—when we said that,
“the proposal for the Scottish Government to exert some influence over the Bank of England, let alone the rest of the UK exchequer, is devoid of precedent and entirely fanciful”.
We have to go back to square one in how we approach monetary union. It is for the Scottish Government to come up with proposals, vague as they are at the moment.
Another area that affects us is the issue of the single market in both domestic and European terms. If the integrity of the domestic single market has to be maintained, a lot of thought must go into the relationship between manufacturing and the financial sector on both sides of the border. I mentioned Aggreko. The chairman of Aggreko said that for his FTSE 100 company, it would impose a permanent layer of additional complexity, with headquarters and manufacturing in Scotland and listing elsewhere. We received a lot of evidence from the financial services community, particularly in Edinburgh, on that point, because 96% of its financial products are sold elsewhere in the United Kingdom, with 4% being sold in Scotland.
The issue of the single market in Europe will also matter. I know that the noble Lord, Lord Kerr, has written extensively on the subject and made very wise comments on it. We have to assume that there will be a smooth entry, but there are big question marks over whether there will be. That smooth entry might provide some reassurance, but it will not provide much if the EU imposes tougher membership conditions relative to those of the rest of the United Kingdom in, say, financial regulation and employment law. The question that that sparks is: will that weaken Scottish competitiveness with the rest of the United Kingdom?
One could say that that being the case, the Scottish Government might soft-pedal the negotiations on EU entry to delay such problems, but that would be a mistake. It would also be a mistake for the British Government not to come out with further information, as we have required. Professor John Kay, in giving evidence, said that post the referendum, that will entail years of complex negotiations. We must face up to that. We should not minimise the complexity of the negotiations but start to understand what the issues and problems are.
Is there a climate of fear and uncertainty in Scotland today? Yes, there is an element of that. That was articulated by the leader of Glasgow City Council. It is for us to reduce that climate of fear and uncertainty and speak to one another in a civilised tone in this debate.
Lord Kerr of Kinlochard
I thank the noble Lord warmly for his reference to me. On the EU angle, does he agree that if an independent Scotland applies for membership of the European Union, the one thing that it cannot possibly obtain as an applicant from outside is a rebate on its budget contribution? Does he agree that if/when an independent Scotland becomes a full member of the European Union, all Scots will pay more into the budget than all English people?
Lord McFall of Alcluith
Absolutely. Mention has been made of the letter that President Barroso sent to the committee on 10 December 2012. I will quote two parts of that. First:
“If part of the territory of a Member State would cease to be part of that state because it were to become a new independent state, the Treaties would no longer apply to that territory”.
This means a renegotiation of all these treaties. The letter continued:
“In other words, a new independent state would, by the fact of its independence, become a third country with respect to the EU and the Treaties would no longer apply on its territory”.
The notion of a rebate, on that point, is really out the window.
Secondly, speaking of Article 49, President Barroso went on to say:
“If the application is accepted by the Council acting unanimously, an agreement is then negotiated between the applicant state”.
I ask noble Lords whether we will have unanimity on a rebate for an independent Scotland. That notion not only vanishes; it is non-existent. I agree with the noble Lord on that.
In my peroration I said that one of the chief executives said of the debate that nothing dispels a climate of fear and uncertainty better than the sunshine of information. I thank the noble Lord, Lord MacGregor, for providing that ray of sunshine in this debate on the economic implications of Scottish independence.
Lord Maclennan of Rogart
My Lords, I should like to thank the Economic Affairs Select Committee for having produced a report that raises many questions that need to be answered, some by the Scottish Government and some by the United Kingdom Government. However, some are not entirely answerable because they depend for their answers on global issues that are not necessarily predictable.
There seems to be an optimistic assumption in certain quarters of Scotland that North Sea oil will provide a base for macroeconomic management of the economy. That seems to me wishful thinking of a kind to which we should not give any sustenance. The global price of oil could fluctuate considerably. As the noble Lord, Lord McFall, remarked, the costs of decommissioning will also have to be borne in mind. It is not entirely clear how much oil there is.
There are many other uncertainties that need to be addressed. An overarching one must be the relationship between Scotland, if it becomes independent, and the European Union. The United Kingdom cannot resolve that of itself. It seems quite likely that, this being the first time that a member country has split up since the European Union was formed, there must be a certain amount of fear on the part of other countries, such as Spain, that we could be paving the way to a disintegration of the Union.
Other issues that raise problems that cannot be foreseen, although their outcome can be discussed, are the effect of independence on the financial services industry, which is of such importance to Scotland. Some 7% of employment in Scotland depends on those services. I cannot comfortably predict that companies such as Standard Life would necessarily remain in Scotland if Scotland were controlling the domestic economy when Standard Life’s services would mostly be provided outside Scotland.
That raises another issue that has been addressed by the committee, which is the attitude to currency. We have heard, even from those who are not necessarily favourably disposed towards the European Union, that the eurozone needs to have greater regulatory authority, fiscal uniformity and acceptance of centralisation of the management of the economy. That has some lessons for those who are thinking in terms of a separation of Scotland from the United Kingdom. I do not see how the First Minister can proclaim his desire to be part of the United Kingdom currency and have some kind of currency union without accepting that we will have to have monetary policy controlled by the Bank of England. The report raises the question of whether the Bank of England could readily accept that role or a regulatory role if it does not have control over the direction of the economy and taxation. Frankly, these questions are not answerable in terms of the prediction of policy, but they are important issues that ought to be discussed by those who are considering what the future might bring.
It is disturbing that yesterday, in its main front page article, the Scotsman revealed that 60% of the members of the Scottish Chambers of Commerce have no sense of how this would all come together. That opinion exists despite the fact that the Government have brought out some very useful papers. We have to consider carefully how to get these messages across so that opinion-formers in Scotland can influence the way the debate is concluded. We also have to consider the division of debt between the two successor nations. That would weigh heavily on the independent nation of Scotland if it were formulated.
The overarching question is whether Scotland, with a population of just over 5 million, would have any influence in global governance. I think it highly improbable. The fact that it would have very little say on trade matters, particularly if it were excluded from the European Union, would seem to bear down very heavily on Scotland’s prospects. The Government have to consider how best to get their messages across. Although I am very grateful for the three policy papers that have been analytically presented, they will not be given headlines in the organs of opinion or the media in Scotland. They will provide ammunition for individual speakers, but will not get through to the electorate. We need to have conferences in Scotland at which these issues are discussed. Such conferences would need to be directed towards those who will have some forward thinking about the prosperity of their own companies, and towards interest groups that will also be affected.
I take the point made by the noble Lord about identity being one of the issues, but hope and fear will play a major part in the debate. We have to project a sense of hope about the British part in the improvement of the condition of the people of Scotland. It is not too difficult—we have a remarkable record. We are not unique in having this national debate about how to manage the economy at the moment; it would exist in Scotland if it were seeking macroeconomically to manage itself. However, the prosperity of the country is at grave risk if we do not resist these arguments about identity. We can—and in the modern world we should—have multiple identities.
I was very surprised to read in the report produced by the Scottish Government’s Fiscal Commission Working Group, published in February of this year:
“Under independence, the Scottish Government would be responsible for the design and implementation of its own macroeconomic framework”.
That is an impossibilist view—for a small country such as Scotland to manage its macroeconomic future by itself without acknowledgement of the influence and importance of the integration of the domestic market in the United Kingdom, the possibility of greater integration in the European Union and the possibility of having more influence on the direction of the global economy.
I beg the Government to think about how they can get their very wise messages across to the people of Scotland. If we leave it too late, arguments from identity could prevail, which would be potentially disastrous.
Lord Rowe-Beddoe
My Lords, as a Welshman I have more than a passing interest in matters devolutionary. I was therefore most pleased to learn of this inquiry, which was the first subject undertaken by your Lordships’ Economic Affairs Committee at the time of my appointment.
Unlike some of the headlines that greeted our report, which suggested criticism of the UK Government’s position, in reality we did not call for or indeed suggest detailed pre-referendum negotiations. We asked both the United Kingdom Government and the Scottish Government to define clearly their respective positions on the vital matters that we have raised. By so doing, it was our wish to inform the people of Scotland and provide for them proper understanding of both the probable and possible economic consequences resulting from a 2014 referendum. Whether plans are being made for an outcome for one side or the other is not the concern, though many of your Lordships, perhaps, may well say that they are.
The Government have helpfully grouped our conclusions and recommendations into 17 sections, in which the Chief Secretary to the Treasury, in his response, “notes” our findings in eight sections, while “agrees” with our findings in nine sections. That is a better batting average than previous committees on which I have had the privilege to serve. I recall a question that was raised during the Chancellor’s Statement on the Barnett formula. I sat on your Lordships’ Select Committee on the Barnett formula, chaired by the noble Lord, Lord Richard, who is not in his place. The noble Lord, Lord Lawson, was also a member of that committee. We made many recommendations, but to my recollection, not one of them was accepted by the Government at that time. Of course, your Lordships can understand why, and why now even more so the question of the Barnett formula is kicked into the 2016 grass.
However, as the noble Lord, Lord MacGregor, mentioned, the Government have started the publication of “Scotland analysis”—documents dealing with devolution and its implications; currency and monetary policy; and, in May, referred to by the noble Lord, Lord McFall, the financial services and banking. They are most helpful documents, but they will serve the concerns that your Lordships’ committee has raised only if they provide proper understanding of the issues and are given wider publicity, discourse and debate. More documents are promised—two or three, I believe—and that is to be welcomed. However, I remain deeply concerned that both Westminster and Edinburgh are not being as open as they should be to inform both peoples—each side of the border—in addressing our recommendations, very importantly, on “the red lines”.
I should like to focus for a minute or two on two topics: business and the economy, and defence-related jobs. As the noble Lord, Lord McFall, mentioned, CBI Scotland remains greatly concerned with matters that it brought forward just four weeks ago. Its questions concerned anything from the meaning of a hard border between the nations, to the overseas markets in which Scottish businesses will receive consular support and how; Royal Mail, or its Scottish successor, continuing to be subject to the universal service obligation; and the transitional arrangements that are envisaged for diplomatic representation at the European Union prior to entry, the World Bank, the World Trade Organisation and so on. Its last paper lists many issues which exercised the membership. I think some noble Lords said that 60% were very unsure. All of these are, of course, exacerbated in this rather infamous phrase now “the climate of fear” that is clearly engendered—a phrase used, as your Lordships know, by one of our witnesses. Also, your Lordships’ committee gained the impression of a conspiracy of silence, by our failure—really it was a big failure—to receive evidence from many Scottish companies which we had asked, with, thankfully, four most notable exceptions which helped to inform our discussions in this area. This is not acceptable to the people and to the business enterprise of Scotland. They need and we—the rest of the United Kingdom—need good solid information. I say again in support of Westminster that this does not mean pre-referendum negotiations, but that is very different from the red lines.
In regard to defence and related employment, I am delighted that the noble Lord, Lord West, is in his place, for without him we would be most uninformed. As the House has already heard from our chairman, the noble Lord, Lord MacGregor, no Ministry of Defence official or Minister was prepared to talk to us. Currently, as we were informed, there are 11,000 regular Armed Forces and 4,000 Ministry of Defence personnel at some 50 sites in Scotland. By 2020, the number of regular Armed Forces is planned to rise to 12,500. In addition, as was pointed out to us, there are thousands of skilled jobs in Scotland as a result of Ministry of Defence capital spending. How will a separated Government of Scotland address that?
I was rather taken this week with a paragraph in an editorial in the New Statesman, which said that, with Mr Salmond pledged to preserve so many features of the British state—the monarchy, the pound, the welfare system and NATO membership—independence looks increasingly like a solution in search of a problem. But—and it is a big “but”—the peoples of both Scotland and the rest of the United Kingdom must not allow complacency to influence our and their approach to this most historical and significant event. Whatever the polls may say now, I remind your Lordships that in 1995 Quebec voted “no” to separation from Canada by the slenderest of margins—50.58%—despite polls showing just 12 months earlier margins of 60:40 against.
Lord Forsyth of Drumlean
My Lords, it is a pleasure to follow the noble Lord, Lord Rowe-Beddoe. We have served together not only on this committee but on the Barnett committee. I also pay tribute to my noble friend Lord MacGregor, who chaired this committee absolutely brilliantly. I have never known so much work to go into producing the final draft report of any committee. I certainly enjoyed it, although I did find it a great discipline avoiding being too partisan on the committee. The report is not partisan—it sets out the issues fairly and objectively—and I hope that the House will indulge me now if I get just a little partisan, because I spent many weeks on good behaviour. My noble friend played an important part in bringing this document to bear.
I am certainly a nationalist in the sense that I give way to no one in my passion for Scotland, but if I were a Scottish nationalist, by which I mean a separatist, I would be absolutely horrified on reading this report. I would be saying, “What on earth are Mr Salmond and our leadership up to? They have had 50 years to think about the answers to some of these questions, but not only do they not appear to know the answers to the questions but it would appear that no thought whatever has been given to these issues. Yet here we are embarking headlong on a referendum, which will take place in 2014, and what are my people”—if I am a nationalist—“thinking of? How do they expect to go into a referendum for that?”. That is to show that I am fair and balanced, looking at the issue from their point of view.
The noble Lord, Lord Rowe-Beddoe, talked about the climate of fear, as did the noble Lord, Lord McFall, and my noble friend Lord MacGregor. Talking to businessmen and to the leader of the city council, we had evidence of that climate of fear. However, I do not need to tell my noble friend about it; he knows all about how Alex Salmond and the Scotland Office operate.
The Advocate-General for Scotland (Lord Wallace of Tankerness)
I hope that my noble friend will accept that it is the Scottish Government, not the Scotland Office.
Lord Forsyth of Drumlean
As my noble and learned friend knows, I am still stuck in the past on some of these devolutionary aspects. He is absolutely right. I am referring to the Scottish Government—or the Scottish Executive as they were quite rightly called until he changed that in an Act that I spent quite a lot of time opposing in this House—and the way they behave. My noble and learned friend—I am sure he will not be embarrassed if I say this—was invited to speak at, I think, the 25th anniversary—
Lord Forsyth of Drumlean
He was invited to speak at the 50th anniversary of Loganair. My noble and learned friend must have been a very good customer of Loganair when he represented his constituency so well. He was asked to do that but an official from the Scottish Government rang Loganair and said, “We understand that you have Lord Wallace speaking at this dinner; we think it should be a Scottish Minister”, and it withdrew the invitation. I have no doubt it was thinking about the financial support it receives for its airlines from the Scottish Government. This is the kind of brazen way in which the Scottish Government operate. Are we surprised that few businessmen were prepared to come to give evidence to the committee? The only great nationalist-supporting businessman with any credibility in Scotland who agreed to come and speak to the committee was Brian Souter, who has built a very successful business, but at the last moment—literally days beforehand—he cried off because he did not feel able to do so.
A climate of fear is operating in Scotland. It comes from having a single party dominating a Parliament, without an upper Chamber of this kind and without very much accountability from the Scottish media. Despite that, the First Minister has found it extremely difficult to get cheerleaders for his campaign. He started off with celebrities, all of whom seemed either to live abroad or pay no tax in this country. He has got so desperate to find celebrities for his cause that he is now having to recruit the dead. Only this week we heard from Alex Salmond that Robert Burns would vote yes in the referendum. He quoted these lines from Burns as conclusive proof:
“We’re bought and sold for English gold—
Such a parcel of rogues in a nation!”.
The “rogues in a nation” are not in this part of the United Kingdom; I think they may be north of the border. Of course, that is a reference to how the union came into being in the first place. We should remember how that happened. It came into being because of a financial crisis: something like a quarter of the money in circulation had been invested in the Darien scheme and the Scottish economy was no longer able to sustain that level of financial shock. The Scottish economy could not get access to the single market that was England and her Commonwealth. It was a trade deal. From the English point of view, it was a way of ensuring the succession of the Protestant monarchy, which was a matter of some controversy and of great national security because of the Jacobites.
This union came into being on the basis of maintaining financial security and defence. They are the two matters that come out of this report as being threatened absolutely by the break-up of the United Kingdom now—from Scotland’s point of view, not England’s. The size of the Scottish economy relative to the English one makes it less important for England. Why would Scotland want to give up access to a single market—the rest of the United Kingdom—where most of its goods and services are sold? Why would it, after what we have been through since 2008, wish to remove itself from the security of the Bank of England, the Treasury and a larger country? Why on earth would it want to become so dependent on the revenue from North Sea oil, which, as the report points out, is a very substantial part of the revenue for Scotland as an independent nation, whereas as part of the United Kingdom it is a smaller part and therefore less vulnerable to fluctuations in the oil price? If that sounds like an academic argument, the tax revenue in 2012, as set out in the report, was £6.5 billion. That is 40% less than the previous year. The lack of stability, which dependency on North Sea oil would bring, makes the economic consequences for people living in Scotland very uncertain indeed.
Then we have financial services—financial services that depend on the rest of the United Kingdom for most of their customers, and which also depend on having the security of the Bank of England and the whole apparatus that we have seen working so effectively. As my noble friend pointed out, the Royal Bank of Scotland and the HBOS part of Lloyds account for 1,254% of GDP for Scotland as an independent country. That makes Iceland look as if it was in a very secure position when the financial crisis came along.
When confronted with these issues, answers come there none. On the question of the security of the Bank of England, we are told that it will be fine because, “We will have a representative on the Bank of England and the Bank of England will still stand guarantee”. Why would any English taxpayer wish to put their money on the line for a foreign country called Scotland? This is Walter Mitty economics coming from the First Minister of Scotland, who refused to come to the committee to justify his view.
For those who think that there is some easy way out of this from North Sea oil, there is also the whole question of the decommissioning costs, estimated at some £30 billion and which have to be met by relief on the tax that would otherwise be levied on those oil revenues. Again, answer comes there none, except that the English should pay for the decommissioning because they had the benefit of the revenue in the early years. The lines that are being put are, “We can keep the monarchy and be independent, we can keep the welfare system and have the pensions and welfare administered by the English but be independent, and we can keep the security of the Bank of England”. They are nonsense lines and they are not being properly debated in Scotland as they should be. That is the danger, as the noble Lord, Lord Rowe-Beddoe, pointed out, when things happen on the basis of emotion.
For those who want to see the future, the Minister very unwisely championed the Scotland Act through this Parliament. We are already seeing the first effects of what will happen. The Scottish Government now have the power to set stamp duty. They have just issued a consultation document in Scotland. They are refusing to say what the levels of stamp duty will be until after the referendum—I cannot think why. Everyone in the House will know that stamp duty on houses up to a threshold of £250,000 is 1% in the United Kingdom. In the consultation paper, the Scottish Government propose, as an example, that stamp duty should increase to 7.5% on any amount over £180,000 and 9.5% on properties worth more than £250,000. That is the first effect of these tax-raising powers. To say that an independent Scotland, with the volatility of North Sea oil revenue and all the other matters that I have pointed to that would damage the economy, would be able to reduce tax and not add to it is extraordinary.
The Scottish Government are also, even now, setting up their own inland revenue called Revenue Scotland. We will have two sets of bodies collecting tax north of the border. It is being set up specifically to collect this new land and property tax—this mansion tax that is being imposed on the Scottish people.
I am conscious that time is moving on. I started with a quotation from Robert Burns, which Alex Salmond claimed as his own. I have my own quotation, which I will try to translate later for those who may find some of it a little obscure. It is from the address to the Dumfries volunteers:
“O let us not, like snarling curs,
In wrangling be divided,
Till, slap! come in an unco loun,
And wi’ a rung decide it!
Be Britain still to Britain true,
Amang ourselves united;
For never but by British hands
Maun British wrangs be righted!”.
That echoes the sentiments that are included in this report and is a clear endorsement that Burns was on the side of the Unionists.
Lord Hollick
My Lords, I would also like to thank our chairman, Lord MacGregor, for shepherding the committee so successfully through this review. As we have just heard from the noble Lord, Lord Forsyth, some committee members held strong and well known positions on the merits of Scottish independence. Others were neutral or undecided. All of us shared the desire to make sure that the Scottish electorate are as well informed as possible on the key economic issues before they vote.
The main question for many voters is whether or not the Scottish economy will perform better as an independent nation, rather than as part of the United Kingdom: a simple question with no certain answer. The committee’s report identifies and sets out a number of crucial long-term issues, such as the choice of currency, the regulatory framework and the fiscal position and a range of transitional challenges. However, in the absence of detailed negotiations between the Governments in London and Scotland or a clear statement on red lines by both Governments, the outcome on all these matters remains, sadly, uncertain, which is far from ideal.
As the noble Lord, Lord Maclennan, said, the Scottish Chamber of Commerce called yesterday, on the basis of a poll of 800 companies, for detailed discussion to fill in these information gaps. Its members complained that they do not know enough to take a view on the implications of independence for their businesses. Both Governments need to heed the demand for more and more detailed information if the referendum is to be more than a noisy beauty parade. A position paper setting out the UK Government’s approach to the division of assets and liabilities, the division of the tax base and of long-term oil decommissioning costs and pension liabilities is essential to any meaningful analysis of an independent Scotland’s fiscal position.
The position papers published to date have been most helpful. Can the Minister give the House details of the further position papers to be published by the UK Government before the referendum? For their part, the Scottish Government must set out their views on these issues in their promised White Paper and respond to the clear message from the Treasury that the Bank of England would have no power to act in or for an independent Scotland. The problems that we have seen in the European Union, where you have a monetary union without a fiscal union, are evidence of the need to have a union around both issues. The Scottish Government also need to respond to the president of the European Commission’s view that an independent Scotland would have to apply for membership of the EU, an issue which they have tried to skirt round. Clarity and candour on these issues is essential if the referendum is to be more than voting for a leap in the dark.
The IFS and other witnesses were in general agreement that, assuming that the split of assets and liabilities was in line with its share of the population and that 90% of oil and gas revenues accrued to Scotland, an independent Scotland would, at the outset, take its place alongside countries of a similar size, such as Denmark and Finland, as a prosperous, stand-alone country. To reach that position, however, some very difficult challenges must be addressed both during the transition and in the longer term. Based on 2012 figures, Scotland would assume a public sector debt of £93 billion, rising to £185 billion when pension liabilities, PFI liabilities and other liabilities are included. This is equivalent to 123% of GDP. Transferring the debt to Scotland in today’s challenging sovereign debt markets would be complex and fraught with enormous difficulty. There is also the continuing need to finance the annual fiscal deficit of some £18 billion. The Scottish Government must set out their detailed plans to manage this transition and to fund this level of debt in these markets.
Upon independence, Scotland would be swapping the known and, by reference to population size, somewhat generous transfer under the Barnett formula for general tax receipts, which have not yet been separately quantified, and the significant and important receipts from oil and gas production. Professor John Kay pointed out that, by their nature, oil revenues are unstable whereas transfers under the Barnett formula are relatively secured. Professor Kemp pointed out that oil and gas tax receipts were vulnerable not only to prices and depletion but to the gearing effect of price and investment levels on production, so that a sustained rise in prices will lead to increased production of oil, whereas the reverse is true if prices decline.
This uncertainty of income stands in contrast to the certainty of expenditure. Scotland, with free care and free tuition, already bestows a generous level of expenditure on its citizens—a generosity which will be compounded by having a faster rise than the rest of the UK in the share of over-65 year-olds relative to the workforce. The interplay of these factors leads to a higher risk of serious fiscal imbalance. What upsides does an independent Scottish economy have to offer to compete with these downside risks? Will the Scottish economy perform better if there is a greater degree of autonomy? First Minister Salmond and Mr Swinney believe so. Scotland, they say, would not have followed the Chancellor’s policy of cutting back on public investment and infrastructure and would have had the flexibility, subject to convincing the bond markets of course, to increase investment allowances to promote private sector investment and achieve a rebalancing of the economy.
These are of course policies which many in this House have consistently advocated over the past two and a half years. The noble Lord, Lord Heseltine, has written persuasively about the benefits of handing responsibility for growth, investment, skills and business formation from Whitehall to the regions. He cited many examples of successful local and regional growth initiatives in and within other countries, but Scotland has many of these powers already and has chosen not to use some of them. Whatever the outcome of the referendum, all the nations and regions of the UK are likely to have more powers devolved to them.
The Scottish Government need to address the concerns of Scottish business. Uncertainty is no friend of business or inward investors. The refusal of many Scottish businesses to give evidence was indeed disappointing. Those companies we met were, as noble Lords have said, insistent that Scotland remains part of the EU. Ironically, the UK Prime Minister’s in-out referendum might have handed a buttress to the SNP campaign for independence. RBS chairman Sir Philip Hampton was clear about the importance of the single market to Scotland’s important financial services sector. An ebullient Rupert Soames, CEO of Aggreko, who has been referred to, pointed out that although his HQ was in Scotland less than 10% of its business was there, and that if Aggreko is to continue to thrive it needs a single market and the benefit of an EU trade agreement. Mr Soames went on to say that the beneficial impact of independence on his business would be small, tenuous and unlikely to arise, whereas the disadvantages could be large, serious and very likely to arise.
An independent Scotland’s decision to expel the Trident nuclear fleet from Faslane within days of independence would place a large question mark over the future of some 10,000 jobs, many of them highly skilled. When he gave evidence, Mr Swinney was vague to the point of complacency about the plans to replace those jobs and redeploy the skills. Other witnesses suggested that job losses among service, civilian and defence manufacturing personnel could amount to an additional 30,000. We had the benefit of the noble Lord, Lord West, to help us on this. The surprising reluctance of the MoD to give evidence deprived us of the opportunity to hear its assessment of the estimated job losses among military and civilian personnel if the policies of the Scottish Government were implemented. Can the Minister tell the House the UK Government’s estimate of the likely level of job losses in the defence and related sectors?
There is no easy answer to the question, “Will an independent Scotland be more prosperous?”. Will it, at one extreme, be a huge hedge fund, heavily exposed to the volatile oil and financial sectors while burdened with a growing public sector deficit and unfunded pension and decommissioning liabilities? Or will it, at the other, become a munificent tiger economy like some of its Nordic neighbours? Unless and until the Scottish and UK Governments set out their positions clearly and address the questions set out in the report, the Scottish electorate can only guess at the answer.
Lord Shipley
My Lords, I have spent much of my life as a firm advocate of increased devolution in the United Kingdom. I would have voted for a Scottish Parliament had I lived north of the border. I have watched with enthusiasm the devolutionary trend in Wales, Northern Ireland, Scotland and London, and now increasingly in England, through local enterprise partnerships and the single local growth fund announced today. This will require local authorities to work more closely together in much more strategic ways.
The debate today is about the extent of devolution and what responsibilities should follow from it. In recent years, the Calman report has made a number of important observations and recommendations about Scotland. In the north-east of England we had a referendum on whether to have a regional assembly, which would have introduced an elected regional dimension of a kind similar to Wales. As we know, in that referendum an assembly was rejected, but other solutions for joint working have had to be found. Coming from the north-east of England, I feel a very close association with Scotland. There is a lot of close working between Scottish and north-east institutions, which I want to see enhanced rather than being made more difficult.
The report of the Economic Affairs Committee on the economic implications for the UK of Scottish independence is therefore timely and important. As we have heard, it is the outcome of a lot of work. I, too, pay tribute to our chair, the noble Lord, Lord MacGregor of Pulham Market, for his leadership of our committee over many months. We concluded that the implications of Scottish independence are too important to be left unexplained, either for those in Scotland with a vote in the referendum, or those elsewhere in the UK with an interest in the outcome of that vote.
The title of our report is important. It addresses the economic implications because this can never be just a political debate, which takes me to the referendum. Like others, I have not understood why the referendum due next year will be a vote in principle. In the case of a yes vote, negotiation after that decision in principle will be undertaken in a very limited period of time, which is clearly too short. This does not seem to me to be the right way to run a referendum. As our report states:
“Voters in Scotland deserve the best evidence-based assessment of the likely economic consequences of independence”.
Because independence would have consequences for the whole of the UK, everyone living in the UK needs to understand what the economic consequences may be for them. It follows that voters who will make the decision in Scotland should not be expected to do so without a full explanation of the matters they should consider before casting their vote. For example, Scotland and the rest of the United Kingdom have benefitted from a single market which enables free trade and investment. Differences in currency, regulation and levels of taxation could all have a significant impact on both the United Kingdom and Scotland. Voters need clear information.
Paragraph 20 of our report makes the point that:
“The United Kingdom single market has helped the Scottish financial services sector to grow”.
However, as we point out, on its own the Scottish economy is dwarfed by the balance sheets of Scottish banks, with the total assets of RBS and HBOS being over 15 times Scottish GDP. The Chief Secretary to the Treasury and the right honourable Alistair Darling were correct to remind us that UK government support for RBS amounted to more than 200% of Scotland’s GDP. As the Chief Secretary to the Treasury said in his reply to the Committee's report, if Scotland were to separate from the UK, this integrated domestic market would split into two separate markets, subject to separate legal and regulatory regimes. This could create additional difficulties for financial services firms and increase costs for households and businesses in areas such as pensions, ISAs and insurance. It could also mean that consumers living in different parts of the UK were offered different standards of protection when purchasing financial services. I am not sure that all these matters have been fully understood by consumers both sides of the border and they need to be so.
I shall not say much about defence or currency—the issues have been well explained in our report. However, on defence, I was interested in the report of the Scotland Institute, published on Monday this week, which said that independence would result in a “wholesale dismantling” of Scotland’s defence industry and that the process of separation from the UK would be “a monumental task”, with the consequences “deleterious” in which Scotland would have a defence force which,
“hardly constitutes an armed force in any meaningful sense”.
That report should be taken note of.
Public spending per head in Scotland is higher than in the UK overall. It is not clear why it should be, although one understandable factor is geographical size—and then, of course, there is the Barnett formula. In 2011-12, spending in Scotland was 11% higher than in the UK overall. If Scotland became independent, that level of public spending as a share of the UK’s budget would not continue. As we have heard, oil revenues might make up the difference, but they could be uncertain and would fluctuate. The best estimates are that the Scottish sector would receive net tax revenues from oil production of between £5 billion and £10 billion a year. The difference in revenue between years could of course be substantial. If the division of the physical assets was on a geographical basis, 90% of oil reserves would be in Scotland and, broadly speaking, the tax gain would make up the loss of the Barnett formula, although people would need to be clear—again, as we have heard—about the consequences of decommissioning costs. Overall, it would seem that in the past five years the average annual tax revenue from oil and gas has been just over £9 billion, but that is one-fifth of onshore tax revenues for Scotland but less than 2% of the UK’s onshore tax revenues overall. I think that there would be a serious overdependency on oil if Scotland became independent.
The committee concluded that that a division of financial assets and liabilities should be on a population basis, but that the process would be complicated. We emphasise in paragraph 91 that the Scottish Government should explain to voters before the referendum exactly how they would plan to take over their share of public sector debt and liabilities.
Then there is Scotland’s credit rating. It will almost certainly have to pay a premium on its debt because of its small size. It is important that the Scottish Government should be clear to voters what level of debt Scotland will carry and how that debt will be serviced.
On tax revenues, the Institute of Chartered Accountants of Scotland reminded us that there are no official statistics for tax raised in Scotland; in other words, we do not know what the gap is between tax revenue raised and the spending of block grant. It seems pretty fundamental to the referendum that people should understand the current tax yield for Scotland. I understand that Oxford Economics has done an exercise which has shown that there could be a fiscal deficit even if we counted all oil and gas as Scottish, which is unlikely to be the case. Official statistics are needed nevertheless, otherwise how do Scottish voters make an informed decision? We should note that the Institute of Chartered Accountants of Scotland also said that to design a new tax system for Scotland could take a decade.
There is a whole set of assumptions about how independence would be progressed in the event of a yes vote, but the issues are not as straightforward as some would wish them to be: on currency, on credit rating, on tax, on assets and liabilities, on loss of the Barnett formula, on oil and gas reserves, on EU membership, on pensions, on regulation and on defence. All need to be clearer before people are asked to make an irrevocable decision. The Chief Secretary to the Treasury, in his reply to the report, agreed that:
“It is crucial that the referendum debate is properly informed”.
As we have heard, papers are now being published and we should welcome that.
However, we also need to identify the cost of independence—of the process and the need to create a separate system of government. The issue cannot simply be: “Should Scotland be independent?”. Rather, it is whether Scotland—or any other part of the United Kingdom for that matter—can be independent in economic as well as political terms. Our report shows that Scotland would face similar constraints to now should it become independent. Indeed, it shows that those constraints may well prove to be even greater than they are now.
The Earl of Caithness
My Lords, I was not fortunate enough to be a member of the committee chaired by my noble friend Lord MacGregor, but I thank it very much for its work and its very readable report.
I will follow on from what the noble Lord, Lord Shipley, said, right at the end. Independence is a misnomer for what is proposed. There is no way that Scotland is going to become an independent country. It could become a separate country and exist as one— although to what extent that is possible and how successful it would be is not yet known—but it would certainly not become an independent country. If it wants a sterling area, it will be subject to the Bank of England, and if it is to have its own currency—which I will come on to—and wants to join Europe, it will be subject to all the rules and regulations of Europe. Even if it stays out of Europe, it will be in the same position as Norway, with most of its laws having to abide by those decided in Europe, over which it would have no input.
With the situation as it is at the moment, I believe that we are in potential danger of sleepwalking into a disaster, because there is a stand-off between Edinburgh and Westminster. Mr Salmond has set out his stall very clearly, saying:
“The plan is to do what is appropriate and in the best interests of Scotland”.
He wants to negotiate on a number of issues and the UK Government have said that they will not. That worries me, because we do not have the information to make a decision, and the longer that goes on, the more chance there is of a yes vote. In the event of a yes vote, it will certainly be no velvet divorce—it will be a very nasty situation. I do not think that a no vote is by any means certain, given the latest opinion polls. I have detected a feeling that separation is better than the status quo, but they do not know what separation is. At a time when the SNP has made a number of changes of position on fundamental issues as it struggles to find a coherent set of positions prior to the vote, the opinion polls are not really moving to reflect that. There has certainly been little change in people’s perception about the economy but Mr Salmond’s plans for corporation tax have been condemned as,
“an excruciatingly awful piece of work”.
Perhaps that is not surprising since Mr Salmond not only signed a letter in support of Mr Goodwin when he was RBS chief executive and bidding for ABN AMRO, but signed it, “Yours, Scotland”.
Let us please have some answers from the Government. What will be the position with regard to the Scottish banks—RBS and HBOS—considering that they were bailed out by the UK taxpayer? Can my noble and learned friend give a definitive statement that there will be no formal sterling area? The Chancellor, my right honourable friend Mr Osborne, has hinted that he does not think it is in the interests of either Scotland or the UK, but there needs to be a stronger statement than that. Mr Salmond has, on a number of occasions, made his demand for a sterling area a prerequisite for a settlement on the disposition of assets and liabilities. We need to be absolutely clear whether the Government will negotiate on a sterling area or not. Of course, if there is no formal sterling area, Scotland could retain sterling, but all analysis has shown that this would be bad for the country and it would probably be better for it to opt for its own currency. If it does so—indeed, it might be sensible to do so—it will have to have all the necessary financial institutions, including its own central bank. If it wants to join the EU, it will have to have its own currency up and working for at least two years to meet the requirements imposed for new EU membership.
It is well known that a separate Scotland would want to join the EU. Can my noble friend say whether it will be a net contributor or beneficiary of the EU budget, and, if so, by how much? Can my noble friend confirm that the UK’s abatement will stay with the rest of the UK and not with Scotland? These are some of the fundamental questions.
To me, the most critical question is how one settles the matter of assets and liabilities. Will the assets—in particular, oil and gas—be apportioned on a geographical basis, as recommended in the report? What would be the situation should Orkney and Shetland decisively vote no to a separate Scotland and negotiate with the Scottish Government to have a separation? How would that affect the geographical assets?
As for liabilities, it is crucial that we know what the plans are for the public sector debt. Will it be apportioned on a population basis, as suggested in paragraphs 86 to 89 of the report? Paragraph 87 states that by 2016 the public sector debt would go up to £185 billion, based on current figures, if you add pensions and other such costs. Indeed, the public sector debt will increase, so the figure will be somewhere between £185 billion and £213 billion, in round figures. Whatever the figure, it is a colossal sum of money, and Scotland does not have that amount of money.
How will it be financed? Will the Government accept an IOU, and, if so, on what terms? If there are no appropriate guarantees and securities, it would be similar to losing 10% of your economy while retaining all your debt. That is a hugely worrying situation. Not only do we, who are going to vote on separation in September next year, need to know that information; more importantly, the markets need to know it. If the markets do not know it and begin to sense that there might be a yes vote, I fear very much that speculators will cause havoc in the markets with the pound sterling. The Government will then be in an infinitely more difficult situation in which to negotiate any deal with the Scottish Government. That scenario is extremely worrying and can be avoided.
I thought that the letter accompanying the Government’s reply to the report was contradictory. On the one hand, the Chief Secretary says that he wants as much information as possible and that all of us in Scotland who are going to vote should know all the facts. He then goes on to say that he is not making any plans for Scottish separation in the UK and is not going to negotiate. That is a totally contradictory position and, I say to my noble friend on the Front Bench, a very unhelpful one.
Lord Lipsey
My Lords, I join in thanking the noble Lord, Lord MacGregor, for his brilliant chairmanship of this committee. It was a bit like climbing Ben Nevis in slippers while hoping that the view from the summit repays the labours that have gone before. Indeed, the response to the report has been fair and favourable. I think the reason is that we were very objective in our approach. Some on the committee have, you might say, form on this issue—the noble Lord, Lord Forsyth, will not mind me mentioning him in this context. However, others—and I count myself—have no form on it at all. I had not thought about the issues since I was one of those advising the Callaghan Government on their rather ill-fated attempt at devolution. From that position, we as a committee took evidence, learnt, pondered and, unanimously, concluded.
As an Englishman who lives in Wales, I do not have a vote in the referendum in 2014, and if I did I would have mixed feelings about how I would cast it. On the one hand, I am very aware of how much Scotland, over three centuries, has brought to the national table culturally, intellectually and economically. I am also aware, as a loyal member of the Labour Party, how much it has brought to my party. It has been traditionally strong in Scotland, and Scotland has given it some of its greatest leaders, from Keir Hardie on. However, wearing another hat, as a taxpayer, I feel very differently. I hate paying for the extravagances of the Scottish Government. It weighs particularly heavily on me that the Scottish people have free care for the elderly, which was a recommendation of a UK royal commission chaired by a distinguished Scot, the noble Lord, Lord Sutherland, to which I appended a note of dissent on this point. I do not mind them doing that if that is what they want to do—although I think it is daft—but I object to my pocket being tapped to pay for it. As I said, I do not have a vote, but if I were a Scot, and if I had read, marked and inwardly digested the report in front of us, what then? I would pay a piper to escort me to the polls to the ancient Scottish reel, “Will ye no, no, no to independence”.
I will not go over in detail all the arguments in our report and which the noble Lord, Lord MacGregor, and other noble Lords have so eloquently laid before the House this afternoon. However, as we took evidence, it struck me that there is a very strong asymmetry between the economic arguments for independence and those against independence. One of the arguments for independence is that it will of itself set loose Scottish entrepreneurial spirits and result in a huge economic boom. These arguments are nebulous and theoretical. They are hopes and dreams and have no substance, and no economist will tell you that these things will happen. In contrast, the arguments against independence are concrete and powerful, and, if I were a Scot, they would frighten me half to death.
I will cite some examples. As regards North Sea oil, if the price of oil goes up, the Scottish people will get a wee bit more revenue. However, if it goes down, they will not get a wee bit less revenue because, quite close to the present price, you get to a stage where it is not worth getting the damn stuff out of the ground, so they get no revenues. Furthermore, that loss of revenue will not be shared over an entire United Kingdom, with many taxpayers taking the burden. It will fall entirely on the Scottish taxpayer.
As for national debt, Scotland cannot simply take over a share of Britain's national debt, as that debt has been legally incurred by Britain as a whole. It would have to fund its share by issuing its own bonds. It is by no means obvious that international markets will be racing to buy them, from an untested Government in a brand-new country, whose economic viability has yet to be proven.
A related issue is monetary policy. None of Scotland’s choices of currency is very attractive, is it? SNP policy used to favour the euro but recent events have led it to drop that. There is the pound sterling but the dangers are palpable for an independent Scotland in having a currency run by the Bank of England whose duty is to run it in the interests of England. There is the groat but will investors want a groat-denominated Scotland bond? I do not think the queues will be very long down the streets of Glasgow and Edinburgh.
Then there is European Union membership. If Scotland goes independent it will, ipso facto, not be a member of the EU—despite the protestations of John Swinney, among others. The rules are perfectly clear and have been clarified by the British Government as well as by the president of the Commission. Scotland can apply for membership and no doubt it will, but many existing members will be very pleased to block it, if only to scare their own local separatist movements. As the noble Lord, Lord Kerr, made clear, the chances of Scotland getting a rebate would make a snowball’s lifetime in hell seem, in comparison, a long one. Then, is a county the size of Scotland outside the EU likely to remain, as Scotland has hitherto been, a first choice of headquarters for major companies and financial institutions? I doubt it.
In my heart, I have some sympathy with those Scots who want independence. I love the country very much. I was up there only recently and its beauty and the character of its people commend it to us all. I can quite see that if I were a Scot, I would find it a bit much to be part of a larger country that still hankers after great power status when I want it to be a decent little social democracy going about its business. Those things will weigh but the Scots are a canny people. When the referendum comes, they will weigh the arguments and come to understand that they are faced, in independence, with a huge threat that could ruin the remaining prosperity that exists with them. I cannot help but believe—and from their viewpoint, hope—that they will stick with auld acquaintances for the sake of auld lang syne.
The Earl of Mar and Kellie
My Lords, the noble Lord, Lord Lipsey, was very lucky that he still had his slippers on when climbing the Ben, because for me this is an even grimmer debate. I read this report with interest and found it helpful. The committee and the United Kingdom Government presume a victory for the “no” campaign. The committee has considered its angle on possible economic implications which, while significant, are of course not the central point of the referendum. I will talk more about constitution than economics.
The committee did not consider the central issue, that of Scottish democracy and self-government. In a sentence: with political independence the people of Scotland always get the Government of their choice. The “no” campaign has not brought forward enough about Scotland’s possible future within the United Kingdom. The “no” parties have probably not finalised their positions. The presumption is of greater powers for Scotland, though I wonder whether there is much more that could be devolved if the four pillars of reservation are to be retained: defence, foreign affairs, macroeconomics and welfare. I hope that my Liberal Democrat noble friends will develop and promote their federal proposal, similar in many ways to that successfully established in Germany after 1945. This federal solution would at least secure a limited sovereign status for the powers of the Scottish Parliament and also define and limit the powers of the United Kingdom Parliament as the federal Parliament.
King James VI was, I believe, keen to become the emperor of Britain in 1603, arguing that he presided over three sovereign states thereby creating an empire. He failed to win his argument. Unfortunately, he also failed to secure sufficient entrenchment for his Scottish kingdom. That made possible the disappointing development of the incorporating union agreed in 1706, led and driven by the Earl of Godolphin.
Heading back to the report, the committee produced a list of the risks of leaving. I ask that the risks of staying be considered. Some of these are as follows. First, as the noble Lord, Lord Lipsey, mentioned, there is involvement in wars which more meet England’s need to be a major power. Secondly, there is the risk of being removed from the European Union because people in south-east England think they will be better off outwith it. Thirdly, the United Kingdom Government might continue to act without consent from Scotland, as happened over the development of the Clyde naval base. Fourthly, consider this: if the people of Scotland wished to develop into a Scandinavian-style social democracy, they would not be allowed to do so. I am sure there are many more risks.
I turn to the use of campaign metaphors. The “no” campaign would have us use the divorce analogy while “yes” campaigners use the metaphor of the family growing up and going their own ways. Noble Lords will generally be familiar with the risks of entering into a marriage and of selecting a career. Neither can political independence be risk free. There seems to be a presumption in the report that the SNP will form the Scottish Government in 2016. I suspect that Labour may well form the Scottish Government, somewhat perversely, after a “yes” vote. In that case, today’s Scottish Government can hardly make hard and fast predictions about what will be negotiated.
It concerns me that the committee seemed to approve of the idea that after a “yes” vote the remainder of the United Kingdom Government should act in a generally hostile fashion towards Scotland, despite the continuation of the regnal union. I know there is the precedent of the trade war with Ireland, which has at least been worked through. That is curious behaviour for the mother of Parliaments. It smacks of “Leave me and I’ll make your life miserable”—surely a relationship with a poor foundation.
Lord Forsyth of Drumlean
I am most grateful to the noble Earl for giving way. Where in the report is there any suggestion that there would be hostility towards an independent Scotland? The report goes out of its way to avoid any language of that kind. Surely the noble Earl is not suggesting that it is hostile to say that if Scotland became independent it could not expect the Bank of England to look after its interests. That is a matter of fact, not of hostility or gentility.
The Earl of Mar and Kellie
My noble friend is probably right but I read the report and that is what I felt.
Finally, Scotland needs to emerge from its 300-year constitutional sleep. Clearly, the limited powers granted in 1998 were the early stages of that awakening. Our neighbour and comparator country, Norway, emerged in 1905 from a 400-year constitutional sleep. After becoming one of the poorest countries in western Europe, look at it now. The key is that it achieved democracy before it obtained wealth. It decided in 1990 to set up a sovereign wealth fund. The United Kingdom decided not to do so, thereby depriving Scotland of any choice in the matter. I am confident that there will be more constitutional developments in favour of Scottish autonomy irrespective of the actual referendum result. After all, the status quo is not on offer as the Scotland Act 2012 will be implemented between now and 2016. There must be more such developments because a sustainable, permanent settlement is needed. Economics, though significant, must follow the new settlement.
Lord Lyell
My Lords, I shall not attempt to follow the noble Earl, whose family goes right back into Scottish history, even to the death of James I in Perth in 1437. We Lyells are mere pawns on this massive chessboard of Scottish history. I am a resident of Angus and declare such interests as are in the register. I have one other particular interest to declare and I was thrilled and happy to hear the wonderful comments and support of the noble Lord, Lord Shipley. I am a member of the Institute of Chartered Accountants of Scotland. I am proud of this and declare that interest. That is why I thank my noble friend Lord MacGregor. If I may take 10 seconds of your Lordships’ time I will say that his is an outstanding report, quite one of the best that I have had the pleasure of reading—and even understanding—in all my years in your Lordships’ House, because it sets out a number of problems and queries.
Originally in 1962 I thought the symbol of the Institute of Chartered Accountants of Scotland was a vulture with the word “vigilance” underneath. That cost me three extra weeks of working on a Saturday. In fact, the motto is “seek the truth”, which is exactly what my noble friend and his committee have done, and I as a Back-Bencher and possible Scottish taxpayer thank them very much for their work. With the amount of material it contains, the report is almost indigestible, but where it goes into detail it is perfectly relevant, enormously helpful and very clear.
With your Lordships’ permission, I shall concentrate on chapter 7, dealing with fiscal aspects and tax. I ducked low when I heard the comments of my noble friend Lord Forsyth about stamp duty and landfill, and this happy new institution known as Revenue Scotland. It sounds friendly, but I wonder how it will develop and grow. I was rather cynical and thought that I would add the comments of the famed Frenchman Jean-Baptiste Colbert, who said that the art of taxation was to pluck the feathers from the goose until it either does not squeal or you get away with it. Colbert, who lived from 1619 to 1683, was chief minister of Louis XIV. He finished that aspect of his life and, indeed, died in 1683. I hope it was not plucking geese that hammered him, but you never know.
Discussing personal tax in Scotland has been like a shuttlecock going between my noble and learned friend on the Front Bench and my noble friend Lord Forsyth. Who will and who will not be a Scottish taxpayer? My noble friend Lord Forsyth, my noble friend Lord Courtown, who, alas, is not here, and I have an annual ski race in Switzerland. Once a year we head down the ski run, terrified. There are 46 gates and an icy slope and I wonder what will be new this time. Will I survive or will I fall? It is exactly the same with the definitions of who will and who will not be a Scottish taxpayer. Perhaps my noble and learned friend will write to me in the course of the next week or two about any developments or any new concepts of the Scottish back-tax payer since his last comments when he spoke in a debate with my noble friend Lord Forsyth.
I refer your Lordships to paragraph 180 of the excellent report of my noble friend’s committee. It looks at the lack of data about who would be an identifiable Scottish taxpayer for the purpose of income tax and the Scottish variable rate. Paragraph 94 refers to the Institute of Chartered Accountants of Scotland which stated:
“Let no-one be misled, there are no official statistics for tax paid by those in Scotland”.
That was referred to by the noble Lord, Lord Shipley. It seems there is even now no definite basis on which to decide who is or is not a Scottish taxpayer and we have only two years to go before we have to start thinking about what to do.
The report states that in 2009-10 the top 1% of Scottish taxpayers paid £2.1 billion. Whether the individuals total 4,000 or 2,500 I could not be sure—it depends on the definition by Professor Bell—but the amount of income tax they paid was £2.1 billion. That seems a fair amount. Simple arithmetic shows what is being paid by these individuals. The Scottish variable rate has been mentioned and is part of the calculations referred to by my noble friend Lord Mar and Kellie. If this system is put into effect it will mean that each and every taxpayer in Scotland may well have to fill in not one, but two tax returns. The Scottish variable rate, as presented now, will have differing rates and allowances. This takes me back to my early studies of tax law in Scotland in 1962 and earned and unearned income. Earned income is spelled out in the Scottish variable rate in the Scotland Act and unearned income will be pensions and rents. I hope that I am not being unjust to my noble friend Lord Forsyth, but he indicated that one of the many thoughts he had was that every pensioner south of the border would scuttle north of the border because their pensions and other non-earned income would not be subject to the Scottish variable rate. I hope I am not maligning him. He may take it up later if I am.
Some chartered accountants sent me a wonderful briefing saying that they were not aware that the question of finance and tax was of paramount importance to all Scots. Indeed, they referred to the three “f”s of football, fishing and fashion as being of much more interest. I was not necessarily aware of that—certainly not looking at the fashion in Kirriemuir on a winter day. However, I am immensely grateful to my noble and learned friend, who has given so much help so far. Will he now confirm to me that pensions will be part of the Scottish variable rate? I glanced at an instructive programme over the weekend which said that 90% of the mortgage and pension products of the Scottish financial industry go to customers and clients with a non-Scottish postcode—I assume that is across the border in what might well be a separate country.
That is quite enough about the Scottish taxpayer, fiscal matters and chapter 7. However, I thank my noble friend for his excellent report. Even I can understand it and I hope that if these comments are reported in Scotland, chartered accountants will not kick my shins too hard because I hope that I have got it right.
Lord West of Spithead
My Lords, to my mind the separation of Scotland would diminish the defence and security of all of us. The SNP statements on defence just do not stack up. The complexity and cost of establishing a new Ministry of Defence, all of the administrative functions and intelligence, logistics, medical support, training and procurement organisations are absolutely huge. Just looking at the intelligence world, for example, would a separate Scotland want a GCHQ equivalent? Having worked in that world for a time, I can assure your Lordships that this is hugely difficult to create and hugely expensive. Would it have an SIS? Again, there are huge complexities in doing something like that. Would Scotland be part of the Five Eyes arrangement? I have severe doubts, because the Americans would not be at all happy to have a country in the Five Eyes which has said the sort of things about nuclear that the SNP has said. Bearing in mind all of those costs and with the money that, by any calculation, one could see being available for defence in a separate Scotland, the front line would be dramatically smaller than the figures that the SNP has talked about.
To talk of Denmark as a comparator is nonsense. Denmark at one stage had a very large military and over many, many, many years has reduced it, so the infrastructure was all there and all those things were there. That is not an accurate comparator. There would be huge implications for the forces available. There would be massive job losses, to my mind, at Faslane, where jobs would be down from about 8,500 to, at a maximum, about 500 if you consider the force level that Scotland will have in terms of ships. I believe that there will be massive job losses elsewhere in Scotland. It is very unfortunate that we have had no accurate assessment from the MoD or the SNP of the reality of what those would be. A lot of nonsense has been talked.
As has been mentioned, the large defence firms would without doubt come south. I have talked to the boards of some of those firms; they are scared stiff to mention anything about it. I think that that is appalling. There is a climate of fear. They would move south because there will be no money, or tiny amounts, for procurement in Scotland. Those firms move where the money is. That is bound to happen. I think it is quite likely—a horrific thought, because I went to school up on the Clyde and remember seeing magnificent ships being built there—that warship building would finish on the Clyde.
The SNP positions on nuclear weapons and being part of NATO, which is a nuclear alliance, are, to say the least, confused. I think that they are totally confusing and make no sense at all. I am not sure where the SNP stands on that.
To end, because I may speak for only a short time in the gap, I believe that it is the task of the military to plan for the unexpected. That is our job; that is what we have to do all the time. Even with very unlikely things, we have to be prepared for the unexpected. For us not to be looking at the defence implications of the separation of Scotland and doing contingency planning is, I believe, dereliction of duty. That work should be going on. I hope to goodness that it is going on somewhere, because if it is not, that is wrong. There is a very short timescale and it is important. Should separation occur, I fear for the future security of our islands, on which we all live.
Lord Davies of Oldham
My Lords, the House owes a debt of gratitude to the Select Committee and to its chairman, the noble Lord, Lord MacGregor, who introduced this debate. It has clarified issues that we all know need clarifying. I hope that the Minister will aid in that clarification. I hope that he is able to give forthright answers to certain questions addressed directly to him.
I shall keep my contribution short, in keeping with the declining length of the contributions as the debate has gone on. It is quite clear that there is broad unanimity in the House about these issues and the necessity of getting out the arguments behind them. What worries me is the obvious point that we have been debating this issue in a vacuum today because there is no member of the Scottish nationalist party to represent a different perspective. The noble Earl, Lord Mar and Kellie, did a little to introduce a discordant element, and even provoked the noble Lord, Lord Forsyth, although provocation is unnecessary for the noble Lord, who was able to bring the Scottish First Minister among us without any difficulty and argue with him forcefully, to such an extent that I found myself nodding in agreement with almost every word that the noble Lord expressed.
That is the nature of the problem. I went to a meeting of the Economic and Social Research Council the other day, which it held in Portcullis House. It indicated the significant areas in which it intended to carry out research to clarify fundamental issues. I was delighted by that, because, apart from the work of the Select Committee, very little seems to be going on on the issues. What worried me about the Economic and Social Research Council’s approach is that it seemed to have that slightly leisurely quality that academics tend to bring to the necessary research proposals that they are to follow through. The issue is urgent. When we have clarified the issues, the question is: can we communicate effectively to people on the other side of the debate who at present have expressed a great weight of opinion, often in extremely emotive terms, which we need to confront?
I think that in this debate we have clarified all the key issues that ought to exercise people in their concern about the future of an independent Scotland and the risks involved. I hope that we can present those issues in the context that we are all part of the United Kingdom, with excellent relationships among all its parts, and that in no way, shape or form should we let there be any suggestion of punitive action by the Bank of England or anyone else if the vote went the way of independence. I hope that the result of the work of the Select Committee and all the expressions of opinion in the House today, perhaps with the exception of the noble Earl, will be concern about how the issues are to be presented to the Scottish people and how the cases are to be presented effectively.
The Minister can aid us a great deal by indicating how the Government are going to play their part in that. However, this is an issue not for the Government but for effective campaigning to win the hearts and minds of the Scots for the continuation of the union.
The Advocate-General for Scotland (Lord Wallace of Tankerness)
My Lords, first, I welcome today’s debate discussing the important report from your Lordships’ Economic Affairs Committee. I thank all committee members, but I thank in particular the committee chairman, my noble friend Lord MacGregor of Pulham Market, who introduced the debate. Although I pay tribute to all who have contributed to the debate, perhaps I may pick out the noble Lords, Lord Rowe-Beddoe, Lord Hollick, Lord Lipsey, Lord West and Lord Davies of Oldham, on the basis that they are non-Scots. In making the case of the United Kingdom, I think it is very important that we hear voices from outwith Scotland saying how important the union is for all of us.
We have heard valuable contributions. I share the view of the noble Lord, Lord Davies, that it is perhaps unfortunate that there is no representative of the Scottish National Party in this House. That is the party’s choice and a matter for it, but it would have been useful, not least to answer some of the legitimate questions put. My noble friend Lord Steel of Aikwood interrupted my noble friend Lord MacGregor to say that it was odd that, having had two years since we knew that this referendum was coming, the Scottish Government had not come up with the answers. My noble friend Lord Forsyth hit the nail on the head when he said that it has been Scottish National Party policy for more than 50 years. One might have expected that, as it has been its policy, it might have had some answers, rather than either the deafening silence or the change of position which we sometimes get.
Perhaps I may say something about the tone of the debate that we expect in Scotland. It is important that we have a rational and well reasoned debate. I have heard the concerns expressed by a number of your Lordships from all parts of the House about the fears expressed to the committee. I will not comment further, but I can confirm the withdrawal of my invitation to a 50th anniversary dinner referred to by my noble friend Lord Forsyth.
It is healthy when we get contributions from people who do not necessarily have any axe to grind. My noble friend Lord Lyell declared his interest as a member of the Institute of Chartered Accountants of Scotland. That institute, with its distinguished history, has indicated that it will not come out on one side or the other but has already shown its willingness to ask pertinent questions, not least with regard to pensions. It is important that bodies such as that, which have a track record and can be seen as having professional status in Scotland but are not backing one side or the other, make such a contribution.
As we approach the referendum in September next year, it is important that both sides of the debate are robust in their arguments but conduct them with respect and, echoing what has been said, with information. I welcome the fact that a number of your Lordships who have contributed to the debate have commented on the Scotland analysis papers. The three that have been published so far are fairly heavy tomes. I can confirm that another will be published in the next few weeks. To inform the debate, we as a Government have undertaken that programme. There will be further papers on the United Kingdom’s position in the world, the protection of our citizens and defence, the economic benefits of the United Kingdom, and as my right honourable friend the Chief Secretary said in replying to the committee, on issues such as energy and welfare, as well as the important issue of pensions, mentioned by my noble friend Lord Lyell.
In addition, I have heard the disappointment expressed about the Ministry of Defence, but it has contributed to a number of other Select Committees. My right honourable friend the Secretary of State for Defence is to give evidence to the Defence Select Committee next week. There have been reports by the Scottish Affairs Committee, to which evidence has been given. The noble Lord, Lord Rowe-Beddoe, mentioned postal services. I understand that the Business, Innovation and Skills Select Committee in the other place is conducting an inquiry into the implications of Scottish independence for business, higher education, research and postal services. Undoubtedly the Government will give evidence to that committee.
With the possible exception of the constitutional issues raised in the comments of my noble friend Lord Mar and Kellie, there was general unanimity across the Chamber about the importance of Scotland as part of the United Kingdom. Also mentioned in one or two contributions was that it is important that we are not complacent. I assure your Lordships that the Government are not complacent. Earlier today I heard my right honourable friend the Secretary of State for Scotland refer to the referendum in Quebec. It is difficult to draw too many parallels, but he reflected on the fact that the federalists thought that it was in the bag and won by 1% only. We had the benefit of a lecture in Dover House last month by Monsieur Jean Chrétien, who was Prime Minister of Canada, and we certainly got the message from him. That will keep us on our toes. We know that this is a battle that we must win with both head and heart.
Lord Forsyth of Drumlean
Does my noble and learned friend not think that it is a trifle complacent of the Ministry of Defence, taking up the point made by the noble Lord, Lord West, to say that it is not looking at any contingency plans for the future of Trident, because it takes the view that Scotland is going to remain part of the United Kingdom?
Lord Wallace of Tankerness
My Lords, the Ministry of Defence, as I am sure the noble Lord, Lord West, knows, makes contingencies for many things. As for saying any more on issues of our nuclear deterrent and matters of national security, I am not prepared to go there.
The noble Lord, Lord McFall, referred to Michael Ignatieff and his point that we can have different identities. There is a British identity, although I appreciate that some, if not all, feel a European identity, and there is a Scottish identity. Having made my adopted home in Orkney for the past 30 years, I can share and feel affinity with that Orcadian heritage. I am sure that the point that was being made was that we do not want to choose between these. What we wish to secure by winning this referendum is that we are not forced to make that choice—something that I reflect on after my noble friend Lord Caithness’s comment as to whether I would have to choose between an Orcadian and Scottish identity and a British identity and affinity. Issues of the heart will be involved, but this debate has focused on the importance of the arguments of the head as well.
There are important things that we can say. The United Kingdom Government are producing an increasing amount of information, and I will say more about the communication of that later. We know that the United Kingdom is one of the most successful monetary, fiscal and political unions in history. It is a union that has brought economic benefits to all parts of the United Kingdom, because taxation, spending, monetary policy and financial stability policy are co-ordinated across the United Kingdom.
We know that Scotland and the rest of the UK are economically well placed as members of a single market and a single currency area in the current United Kingdom arrangements. Data published by the Scottish Government suggested that in 2011 nearly 60% of Scottish exports went to the rest of the United Kingdom and that 70% per cent of Scottish imports came from the rest of the United Kingdom. We know that Scottish independence would create an international border between Scotland and the rest of the United Kingdom. International experience shows that there is a border effect. It reduces flows of product, money and people.
We know that the current currency and monetary policy arrangements within the United Kingdom serve Scotland well. Perhaps I can take issue with what my noble friend Lord Caithness said about the First Minister setting out his case very clearly. As my noble friend Lord Forsyth pointed out, within the past five years the Scottish National Party has supported the euro. We were told that sterling was a millstone around Scotland’s neck, but then it supported sterling, either by a currency union or by so-called sterlingisation. Some people in the yes campaign have called for an independent Scottish currency.
The paper that we produced on the currency identified the four options. First, there is an independent Scottish currency. Secondly, there is the euro. Thirdly, there is a sterlingisation, where the Scots keep sterling but are not part of a formal monetary union. Fourthly, there is formal monetary union. None of these is as successful and workable as having our current arrangements within the United Kingdom. The alternative currency arrangements open to an independent Scotland would be less economically suitable for Scotland and the rest of the UK.
We know that the Chancellor, when launching the Treasury paper on currency, said:
“The SNP asserts that it would be in everyone’s interests for an independent Scotland to keep the pound as part of a Eurozone-style sterling zone. … Let’s … look at the evidence… Could a situation where an independent Scotland and the rest of the UK share the pound and the Bank of England be made to work? Frankly, it’s unlikely”.
While the Scottish Government might like to tell people what they think that they want to hear, we are focused on telling people what the evidence says, what the options are and what the consequences of those options are. You do not have to know too much about economics or look too far to see that the eurozone cannot exactly be described as a dream currency union. This was reflected in what my noble friend Lord Maclennan of Rogart said. It was mentioned too by the noble Lord, Lord Hollick, who said that you cannot have monetary union without fiscal union. Countries with the euro are witnessing closer fiscal integration at a time when the Scottish Government would have you believe that you could sign up to a currency union and achieve political and fiscal independence.
It is not just Scotland’s overall economy and currency that we know about. We know that in Scotland we have a strong and vibrant financial services industry as part of the United Kingdom. Financial services contributed £8.8 billion to the Scottish economy in 2010, more than 8% of Scottish onshore economic activity. The sector directly employs 85,000 people in Scotland and a further 100,000 indirectly, which is around 7% of total Scottish employment. We know that our firms and individuals benefit from a world-leading financial services sector and a large integrated domestic market. Our consumers benefit from the UK’s protection and compensation bodies that are able to pool risk across a large and diverse market.
Noble Lords who have contributed to the debate have reflected on the fact that the United Kingdom Government came to the rescue when the Royal Bank of Scotland and HBOS experienced their catastrophic difficulties. In evidence to your Lordships’ committee, Mr David Nish, the CEO of Standard Life, said that what he benefited from today was having a single regulator in a geographical area and that he did not think that there was a working model of cross-border regulation that he could find.
I pick up on the point made by my noble friend Lord Lyell that 70% of pension products bought by Scottish consumers are from firms based in the rest of the United Kingdom, and work by the Institute of Chartered Accountants of Scotland shows that if Scotland were to become independent, the,
“potential impact on funding requirements for employers operating defined benefit or hybrid schemes across the UK is likely to be substantial”.
Another important industry for Scotland is oil and gas. My noble friend Lord Shipley and the noble Lords, Lord Lipsey and Lord Hollick, referred to this. They made the point that wherever this valuable resource is, the revenues are volatile and in long-term decline. The UK has a broad and diverse enough economy to be able to absorb this volatility, but it would loom larger in a Scottish economy that would be less able to absorb it. My noble friend Lord Forsyth asserted that the First Minister would clearly want the United Kingdom to bear the decommissioning costs and quoted the Minister who, when asked on 25 April last year whether Scotland would take these costs on, said that the answer was yes. That contrasted with what his Energy Minister, Fergus Ewing, said on 17 April, which was that the UK had a moral and certainly a legal obligation to be responsible for the decommissioning of these rigs. Within a period of 10 days, there had been a diametrically conflicting view of what the position would be on these costs. It is incumbent on the Scottish Government to be a bit more direct in giving answers to these questions.
Lord Forsyth of Drumlean
I apologise for interrupting my noble and learned friend again, but is it not a matter of choice because the decommissioning costs are given by tax relief on the tax revenues? If the oil becomes part of Scotland’s assets, it is not a matter of choice whether it meets the decommissioning costs; they would have to be met because they would be part of the tax regime. Otherwise, it would be too expensive to take the oil out of the ground, in which case the revenue would be zero.
Lord Wallace of Tankerness
My noble friend makes an important point. I am simply pointing out that the Scottish Government do not seem to have worked out which way it is. I am not trying to offload a moral or legal obligation on to the United Kingdom.
A number of noble Lords, including my noble friend Lord Caithness and the noble Lord, Lord Hollick, mentioned the assets and liabilities. Clearly the division of liabilities and assets would be a significant part of any negotiations to create a new state. In the case of Scotland and the rest of the United Kingdom, it would have to be settled by negotiation. Unpicking the United Kingdom’s institutional and governmental infrastructure framework would be a huge task, and it is impossible to say with confidence what the outcome would be. Although there are some general principles of international law that could impact upon this matter, there is no clear set of rules in international practice about the precise allocation of national debt in these circumstances, but there would be an expectation that an independent Scottish state would take on an equitable share of the UK’s national debt. How an equitable share would be calculated is open to question, although I think the Finance Secretary, Mr John Swinney, accepted that there would be that obligation when he gave evidence to your Lordships’ committee.
Europe and Scotland’s place in Europe also featured in the report and in our debate. Again, we know that if Scotland left this union, the rest of the United Kingdom would be a continuator state. That was set out very clearly in the first Scotland analysis paper that we produced. The United Kingdom as a continuing state would maintain the same set of terms and conditions, rights and responsibilities that we enjoy today in Europe, NATO and the G8. Scotland would be a new state and would have to seek to join all those international bodies. That is a fact that the Scottish Government initially sought to deny. With regard to Europe, they said it would be seamless, automatic membership. Now, in the face of the evidence, they publicly accept that they would have to negotiate their way in. We could debate this. There are differing views about how that negotiation would take place, but there can be no doubt that it would be a very difficult negotiation. As the noble Lord, Lord McFall, pointed out, there would be no guarantee of an exemption from euro membership, or from Schengen, as the noble Lord, Lord Kerr of Kinlochard, stated. My noble friend Lord Caithness asked about the share of the rebate. It is impossible to say what the share of the rebate would be or whether the European Union would even grant any rebate to the Scottish Government. It would be a matter of negotiation not with the United Kingdom Government, although as a member state we would have a part to play in it, but, after the accession of Croatia next week, with 27 other Governments, and there is no guarantee about the outcome of such negotiations.
Defence was quite properly raised by a number of noble Lords. In our responses to other Select Committees we have sought to give some indication of the number of defence-related jobs in Scotland. How many would be lost would to some extent depend on the configuration of Scottish defence. My noble friend Lord Shipley mentioned the report this week from the Scotland Institute, which did not really offer much about what the profile of Scottish Armed Forces would be. As at 1 April 2103, there were more than 11,000 regular armed forces and 4,000 Ministry of Defence civilian personnel in around 50 sites throughout the country. Following the Defence Secretary’s announcement on 5 March about the Army basing plan, by 2020, there will be some 12,500 regular armed forces based here and Scotland will be home to all the Royal Navy’s submarines, one of the Army’s seven adaptable force brigades and one of the three RAF fast jet main operating bases.
With regard to civilian defence jobs, the Scottish Government’s agency Scottish Development International estimates that the defence sector in Scotland employs more than 12,600 people. The building of the Queen Elizabeth class carriers, initially on the Clyde and with further construction in Rosyth, underlines the commitment to defence jobs in Scotland. We can confidently say that that could not by any stretch of the imagination be maintained at that level in an independent Scotland.
I recognise that calls for more information have come in this debate. We are committed to setting out facts and evidence to ensure that people take an informed decision. I take the point that we, not just as a Government, but all of us who support the union, have an obligation to go out and sell the message. It may be that these weighty tomes are a bit weighty for leaflets or for a snappy column in some of our newspapers. Certainly, that has been represented to us, and the tenor of some of the contributions to this debate was that we should think of ways in which we can put out a more popular version. We are aware that these requests have been made, and we will give consideration to that.
Ministers have a particular responsibility, but others can get out and talk. On Friday, I will be speaking to the Scottish Council for Development and Industry in Aberdeen on constitutional issues. I know when my right honourable friend the Secretary of State for Scotland saw the report about the Scottish Chambers of Commerce and those who did not think that they were informed enough, he said—he will probably not like me for this—that he would be happy to go to talk to some of the chambers of commerce up and down Scotland. If anyone is listening from the various component parts of what I think is a federation of SCCs, there is an opportunity there to invite the Secretary of State for Scotland, but others of us would be willing to do so.
I heard the request that we should engage in pre-negotiation. I am not going to side-step it, and I know it will be a disappointment to my noble friend Lord MacGregor, but the United Kingdom Government have made it clear that we are not going to enter into pre-negotiations. My noble friend Lord Caithness said that the First Minister had said that we should. In fact, in a letter to my right honourable friend the Deputy Prime Minister, the Deputy First Minister said:
“The Scottish Government has not asked you to pre-empt the referendum vote in that way. Indeed, I was clear in my speech at Strathclyde University on 3 December that ‘independence negotiations [... ] will follow a yes vote’”.
There are a number of reasons for this. Many people in your Lordships’ House are involved in business, and I do not know how many of them would go into a negotiation showing their negotiating hand and their red lines. Perhaps more fundamentally than that, I belong to a Government who represent the whole of the United Kingdom. If we were to have that kind of pre-negotiation, I suspect it would not be possible for my right honourable friend the Chief Secretary to be part of it because, in the event of independence, he would have a different standpoint. He is a Scot. You would then have part of the United Kingdom Government perhaps debating against another part. My noble friend Lord Caithness might expect me, as someone who is resident in Orkney, to have an interest in that too, and I might not be able to take part either. I cannot think of anything that would better suit the argument of those who want to break up the United Kingdom than that those who want to maintain the United Kingdom spend the next 15 months arguing with each other about what the negotiating position would be. This Government believe in a United Kingdom. If there are negotiations post a referendum, someone will need to represent the interests of England, Wales and Northern Ireland, but that cannot happen before the referendum. We believe in the integrity of the United Kingdom, and once you start unstitching the threads of the United Kingdom by that kind of approach, I fear that we would be in a very difficult position indeed.
When my noble friend Lord Forsyth was quoting the First Minister quoting Robert Burns, I sent a note to the Box asking for the words of a poem that starts:
“Does Haughty Gaul Invasion Threat”.
The Box came back with the verse:
“Be Britain still to Britain true,
Amang ourselves united;
For never but by British hands
Maun British wrangs be righted!”.
I got the words from the Box, but my noble friend quoted the poem by himself. There is so much truth in it. If we want to put out a very clear position, there is a way in which people in Scotland can have the same currency as people in the rest of the United Kingdom, the same financial regulations, the same passports, the Bank of England as lender of last resort, the same welfare provisions and the BBC. It is called the United Kingdom, and I hope people will vote for the United Kingdom on 18 September next year.
Lord MacGregor of Pulham Market
My Lords, I was very grateful to my noble and learned friend for not including me among the English when he made his opening remarks. I was born, brought up and educated in Scotland, but I have spent nearly all my political life in England and have been proud to represent an English constituency, so I hope I can see both sides of the argument.
As we were debating this issue today, I was reflecting on the fact that we set up our committee in February 2012. We are now halfway towards the vote, and so many of the issues that we debated today are clearly not understood by the electorate outside in either Scotland or England in the way that we have understood them today. I take comfort from the fact that our report has identified very nearly all the key economic issues on which Scottish voters will have to make up their minds before—or when—they vote. I do not yet take comfort from the fact that, certainly among English voters, they still do not realise that there are many issues that will have great implications for them in terms of a Scottish vote. I will come back to that in a moment. I also do not take comfort in the fact that so much more effort still needs to be made to make the voters of Scotland aware of the many implications there will be for them when they vote.
I take comfort from the very robust reply that my noble and learned friend has made. It is quite clear on where he stands on most of these issues, and clearly he will put that case across. I also welcome the fact that we will have more of these lengthy but very helpful analyses from the UK Government. These are all good issues. I slightly differ from him in that I think that English electors need to be made much more aware of the implications for them, and ensure that the UK Government protect them from the serious consequences in relation to defence, currency and the many other issues that we have identified today. That awareness does not yet exist among people in the rest of the UK. I understand his point about not entering into pre-negotiations, but there is a difference between that and identifying the issues that will be crucial for the rest of the UK if the Scots vote for independence. That is what I and my committee are calling for. That is what we meant by the red lines—they are the key issues that affect the rest of the UK.
I welcome the extra papers. This has been a most helpful debate. There has been a large measure of agreement among all of us, who are from all parts of the UK, on the issues that are so important and need to be resolved, and on the need for awareness in Scotland of these issues before they vote. As I said, my noble friend’s wind-up speech has been very helpful in relation to that. I thank all Members who have taken part, in particular the members of my committee for the huge amount of work that they did on this issue. We will continue to take an interest.
Small and Medium-Sized Enterprises
(10 years, 10 months ago)
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Lord Cope of Berkeley
That this House takes note of the Report of the Select Committee on Small and Medium Sized Enterprises (Session 2012-13, HL Paper 131).
Lord Popat
My Lords, there are 14 speakers in this debate. If Back-Bench speeches were kept to a maximum of eight minutes, with 10 minutes each for my noble friends Lord Cope and Lord Green, we can expect to conclude this debate just before 9 pm.
Lord Cope of Berkeley
My Lords, I was delighted to be appointed to this Select Committee and honoured to chair it. I have long thought and argued that SMEs—small and medium-sized enterprises—are the single most important variable in whether our economy is successful, and that the Government have a duty to do what they can to help them succeed.
Economists argue, particularly on days like today, about what the Chancellor of the Exchequer and the Governor of the Bank of England should do. That is interesting but not the real clue to whether our grandchildren will live in prosperous times. I am an accountant and have seen some companies falter and others flourish because of the enterprise, long-sighted decisions and flair of the people who run them. These days, it is no easy task to run an SME at a sustained profit. Regulations of every kind stand around you to prevent you doing the wrong thing. However, a positive attitude matters—spotting the opportunities and making the right decisions on time. If we can get the climate for SMEs right, if our entrepreneurs are motivated and successful and if sufficient of our young people have the optimism to take responsibility for their own future and for employing others, we will prosper as a nation. If we value our SMEs, we lay the foundations of the future. In particular, if our SMEs can export, we can thrive in world markets and pay our way in a vastly changing world.
Our committee was set up to see if government could help more. The initiative came from my noble friend Lord Popat, and we are grateful to him for that. He served on our committee until he was—as one can see—rightly appointed to the Government. The noble Lord, Lord Mitchell, was also promoted to the opposition Front Bench from among our ranks. The committee members have proved to have huge practical experience in running businesses of very varied kinds. Two of our members have apologised to me for not coming today because of board meetings that they have to attend.
Personally, I found serving on the committee most encouraging. Wherever we went—we travelled widely across the UK and a bit in Europe, too—we met vigorous businesses, many of which were taking advantage of the Government’s various programmes of assistance and finding them valuable. In south Wales, Concrete Canvas impregnates fabric with cement so that one can line a ditch or erect a hut with fabric that turns into concrete when you wet it. It is selling that all over the place, including to the MoD for use in Afghanistan. Viv Parry from Leeds opened up a market in New York for her Exquisite Handmade Cakes, although she was allowed to take over only a sample of the tin she sells them in, not the cakes. Noble Lords will understand that they are food products. Who would have thought a few years ago that a combination of plasticine models and sheer wit would give rise to Aardman Animations, which we met in Bristol and which sells all over the world, including in China? We give other examples in our report. We had to pick only a few and I have picked those, which is unfair. However, I wished to give some examples.
There is a whole series of ways in which UK Trade & Investment—UKTI—and other government agencies help SMEs, both directly and, most importantly, through local enterprise partnerships, chambers of commerce and so on. Our message to SMEs, if there is a single message, is, “If you have a problem, share it. Don’t be frightened of the undoubted complexities of exporting. Take them on and get advice”. Our main criticism of UKTI was not the services it delivers but the fact that it is too little known and therefore too little used. In the case of UK Export Finance, the very low take-up of its programmes shocked us, and very little use is made in the United Kingdom of the European Investment Bank facilities to support SMEs.
There is no doubt that availability of finance is a most serious problem for SMEs, as your Lordships’ House discussed again only yesterday. The large clearing banks did their best to reassure us. However, as we went round we heard constant criticism of their distant, formulaic and sometimes slow decision-making processes, which inhibit the ability of SMEs to borrow from them. We also heard of other options for funding, which are available and growing. The Government’s agencies, including UKEF, the coming business bank, Funding for Lending and the new regional export finance advisers are addressing the problem. We shall see in the next few years how successful this proves to be.
In the time available I will mention briefly three of the other specific areas that concerned us: languages, intellectual property and the Bribery Act. Languages are important in exporting. As we all know, English is very widely spoken in the world and for that reason we are not good at speaking other languages. Some businesses in very expert sectors said that they needed no other language. Clearly, however, in most sectors people prefer to buy from someone who speaks their own language. We drew attention in our report to the fact that these days the United Kingdom has a high degree of linguistic diversity as a result of immigration. We should use that fact more to help exports. I also think that more careful thought about how languages are taught could prove valuable.
Intellectual property protection is ever more important as the world gets smaller. The Government have been negotiating hard internationally and stepping up their ability to advise firms on the risks and what to do about them. It is most important to keep up this work.
The vagueness of the Bribery Act 2010 also proved a controversial issue. In the two years since it came into force, there have been no prosecutions, but it has caused constant worry to exporters about just what is permissible. We want more clarity about all this and suggested post-legislative scrutiny to find out what the authorities and others concerned think the Act means and promulgate it more widely. The Government’s attitude, shared, it seems, by the House of Commons Justice Committee, is that until the courts have pronounced, there is no value in having post-legislative scrutiny. In other words, we have to wait until some particular businessmen are selected to spend months and no doubt much money being dragged through the courts over some practice deemed doubtful in this country, but normal in the country in which they were trying to sell. Meanwhile, everyone concerned becomes thoroughly inhibited when selling in some markets by comparison with their competitors.
It has been an interesting time for me and I want to thank all my colleagues on the committee for their very positive and supportive approach. We had first-class help from our clerks, firmly led by Christine Salmon Percival, even after an accident from her sick bed. The noble Baroness, Lady Cohen, did the same, when she, too, suffered in the snow and ice. We had an excellent adviser in Professor Robert Blackburn of Kingston University, one of the most entrepreneurial universities in the land. By the way, in case any noble Lords read the small print in some of the Sunday papers, I should make it clear that they advised me as chairman what I might say, as you would expect, but I chose what to say and bear sole responsibility for my words. Our committee was also assisted by the positive attitude to our work of my noble friend Lord Green and his colleagues.
We were an ad hoc committee, which means, of course, a temporary one. Our collective work as a committee is finished, but the Government’s work goes on. It is urgent but long-term, and given the importance of SMEs, I think our most important recommendation was Recommendation 1—that the Government should report back, not only now, but in a year’s time. I am delighted that the Government have committed themselves to do this in 2014 and 2015. We are promised further debates then. In that way, I hope, the work of our committee will live on. Meanwhile, I commend the report to the House.
Lord Haskel
My Lords, rebalancing the economy is in favour all round the House and rebalancing means a move away from consumer spending and a rising housing market fuelled by debt towards producing and selling more goods and services through investment. It particularly means selling overseas so that we can cut our current account trade deficit and cut it by encouraging SMEs to export.
During my business life, part of my activity was exporting, so I was delighted to serve on this topical committee; a committee so ably led by the noble Lord, Lord Cope, so ably advised by Professor Blackburn and so conscientiously served by staff led by Christine Salmon Percival. We are fortunate to have such an able and versatile staff. To my knowledge, Christine Salmon Percival has been clerk to a committee reporting on science and technology; a committee reporting on legal and constitutional matters; and a committee reporting on the economy—now that is versatility.
We started our inquiry by taking evidence from BIS. It soon became obvious that it was in the process of setting itself up, of putting into practice, its plans to encourage SMEs to export. The Government’s response tells us that UKTI continues to hire more staff. The Chancellor in his Autumn Statement provided additional funds for support in the next two financial years. We are also told that there are plans to use a number of websites to bring existing and future services of UKTI to the attention of business; services for contacts, for mentoring and for other practical help. All this confirms the importance the Government attach to encouraging SMEs to export and it is very welcome, as are the Minister’s efforts, because I know he travels around a lot.
However, it has to be put into practice. The noble Lord, Lord Cope, told us that our inquiries indicated that many SMEs are not aware that all these services are available. We would like business intermediaries, professional advisers, LEPs, chambers of commerce and all the professional organisations also to convey the message. The Government's response agrees with this and I think this is beginning to happen. I do not know whether the Minister went to the BIS open event in the Jubilee Room last Wednesday, but we were told that the Government’s commitments are to do more of the same. It was a very good demonstration of what the Government are proposing to do.
Is it working? Figures published last week show that the value of exports has fallen by 1.3% in the past quarter. The CBI describes these trade figures as “unsatisfactory” and comments that the Government need to do more to help to raise exports to the fast-growing economies. Is there anything more or anything different that can be done?
Did the Minister hear the maiden speech of the noble Baroness, Lady Lane-Fox? She is working with the Cabinet Office to help us make the most of digital technology in communications. She said:
“British businesses also need support, as has been mentioned here already, and small and medium-sized business in particular. We know that only 30% of them are able effectively to use online tools, and that there is a potential £18 billion in the economy if we are able to give them more advanced skills to sell and buy online”.—[Official Report, 13/5/13; col. 160.]
If 70% of SMEs do not have the IT skills to use online tools, maybe UKTI should be working with the Cabinet Office and the noble Baroness to train UK small and medium-sized businesses to use these tools—a bit of joined-up government perhaps?
On 13 June, at col. 1716 of Hansard, the Minister’s noble friend Lord Howell of Guildford argued that trade is operating in a completely different way and that the world's largest single market is now the cybermarket on the world wide web. Are the Government listening to their friends and advisers? What is being done to give SMEs these more advanced skills to help convert them into exporters?
The world of business is changing in other ways. There are other ways of exporting which may be more suited to particular companies or markets or products. Franchising, licensing the product, licensing the know-how, the patent, the trademark—is UKTI helping with this? There was very little evidence of this. Perhaps another way is for UKTI to be more selective and to try to nurture new export sectors—those sectors where the UK has a competitive advantage. Last November the Chancellor, in his address to the Royal Society, listed eight such sectors that would receive special encouragement and money. Again, a bit of joined-up government could make UKTI part of this arrangement by encouraging the SMEs in these sectors to export.
Our report and the noble Lord, Lord Cope, spoke of the problems that SMEs have in getting export finance. We learnt of one solution during our visit to Bavaria. Incidentally, the single state of Bavaria exports to the United Kingdom more in value than the whole of the United Kingdom exports to Germany. For 60 years, it has had its own local state-backed investment bank, which makes export finance one of its priorities. Surely this must be one of the reasons for its success. What is happening to our Government’s business bank, and will it be as local as the noble Lord, Lord Heseltine, would obviously like it to be? In fact, aiding and encouraging local firms to export could well be part of the Heseltine proposals to localise business services by government. However, today’s Statement is not very encouraging about that.
We know from our inquiry—and the noble Lord, Lord Cope, reminded us—that it is not easy for small companies to export. There is the inconvenience, the time, the expense and the preparation. Time and again we were told that the most important thing is for people to have the get up and go—the will and the initiative—to do it. In small and medium-sized companies, exporting often depends on the personality of just one or two people, irrespective of the benefits and financial rewards that exporting brings to the business. So how do you identify these people and these companies? There is a supplement in today’s Financial Times telling us how. Firms using big data identify a potential customer for their style of clothing or people who like a particular kind of holiday or food. Could not UKTI write an algorithm that would identify from big data potential exporters among the SME community? That would be a wonderful cost-cutter.
The point I am trying to make is that the objective of inquiries such as this is not criticism by political point-scoring; it is to question the policy, to question the strategy and to question what is being done.
I think that we all welcome the enthusiasm and energy that UKTI is putting into the work, but the Government’s response seems to say, “Yes, we agree with your analysis. Thank you for your recommendations but we are going on as we are”. I found that rather disappointing because there is obviously more that can be done to achieve what we all seek, which is to rebalance the economy.
Baroness Coussins
My Lords, I want to comment specifically on Chapter 6 of the report, which deals with the topic of languages and culture. I declare interests as vice-president of the Chartered Institute of Linguists and as chair of the All-Party Parliamentary Group on Modern Languages, on whose behalf I submitted evidence to the Select Committee.
I congratulate the Select Committee on taking language skills seriously as a mainstream issue. This makes a very welcome change from the approach that we often see, which is either to overlook language skills or, at best, to mention them as a footnote. However, since the report’s publication, two new authoritative pieces of research have been published—a new report from the British Academy and another, only two weeks ago, from the British Chambers of Commerce. I think that if the committee had had the benefit of these two latest studies, its recommendations might have been even stronger and had a slightly different focus. The Government, of course, do have this advantage, so I hope that in his reply the Minister will comment on how they might update their response to the recommendations on languages in the added light of the recent findings.
It was disappointing that the committee received mixed evidence on the importance of foreign languages and that in some sections of British business there is still an outdated belief that English, vital thought it is, is enough. The latest British Academy report shows how ingrained monolingual attitudes are not only harming the export potential of current businesses but standing in the way of developing a strong supply of language skills for the next generation by preventing successful functioning of the market for language skills.
It is true that some surveys show very small numbers of firms identifying languages as a barrier to export growth. However, the British Academy points out that discrepancies in findings can be accounted for by differences in the sample and profile of respondents, whereas in Kingston University’s more focused study of SMEs’ approach to doing business overseas, The eXport Factor, issues relating to language and foreign cultures were seen as the biggest barrier of all, cited by 31% of SMEs.
The recent report from the British Chambers of Commerce showed that the proportion of non-exporters who would like to trade internationally has risen slightly even since the Select Committee’s deliberations. Its latest survey covered 4,500 businesses, more than 90% of them employing fewer than 250 people and three-quarters fewer than 50. The BCC calls the extent of the language deficit “sobering”, pointing out that 70% of respondents had no foreign language ability for the markets they served, and that the deficit is greatest in the fastest-growing markets. For example, only 0.5% had any ability in Russian or Chinese. With the importance of market growth in Latin America, it is equally shocking to me that 64% speak no Spanish, never mind Portuguese.
The impact of this on the bottom line of business, and therefore on the UK’s economy and competitiveness, is plain and was clearly recognised by the Select Committee. The UK could be missing out each year on contracts worth between £9 billion and £21 billion, whereas firms that proactively use their language skills and the cultural knowledge that goes with them achieve on average 45% extra sales.
The report acknowledges the weakness in the argument that English is enough because it is the universal language of business, pointing out that only 6% of the world’s population consists of native English speakers. Even the dominance of English on the internet is declining. In the past decade, the report tells us that web content in English has increased by 300% but that content in Chinese has gone up by 1,500%, in Russian by 1,800% and in Arabic by 2,500%.
There is also a circularity in the argument that English is enough because, as the report points out, UK companies tend to trade only or mainly with other English-speaking markets. Therefore, the lack of language skills is self-limiting and constraining. We are cutting ourselves off from opportunities for growth by being blind to the languages barrier.
A perfect example of that is the languages industry itself. This sector includes interpreting, translating, language-teaching tools such as text books, CDs and online resources, subtitling, dubbing, web localisation and much more. In 2009, the EU published the first ever study of the size of the language industry, estimating its value at €8.4 billion and on target to double to €16.5 billion by 2015. The study makes recommendations to help businesses to seize the opportunities to benefit from multilingual competence. SMEs in particular are advised, for example, against assuming that localising a website into the language of a target market is enough to generate sales, and EU member states are urged to introduce compatible statistical measures to help foreign language planning. I should like to ask the Minister whether this particular recommendation is what the Government had in mind when they said on page 9 of their response to the Select Committee report that they were developing a metric to quantify the problem. Can the Minister say what that metric might be?
I should also like the Minister to comment further on the recommendation that UKTI should make a priority of dispelling misperceptions to do with language difficulty and help SMEs to deal with the problem. I find this recommendation a little unsettling because it is not clear to me whether the committee regards the employment of native speakers and outsourced translation services as the best strategies. I would be concerned if it were or indeed if that were the opinion of the Government. The report overstates what can be done with technology and native speakers and is not quite strong enough on the importance of developing the UK’s own capacity on languages. Every native speaker employed for their language skills acts as a disincentive for UK nationals to develop their own.
The committee indicated just how bad the UK is in comparison to its EU partners. It is pretty much bottom of or worst at every type of language skill you can measure. The take-up of languages at GCSE has halved since they were made optional after the age of 14 in 2004. The boost provided by the introduction of the EBacc seems already to have run its course, with last year’s take up showing no increase over the previous year’s. Although I am in strong agreement with the Select Committee in welcoming the Government’s move to make languages compulsory in primary schools from 2014, this will certainly not be enough on its own to redress the country’s language deficit.
The languages taught in schools do not necessarily match the ones business says it most needs, nor do they build on the existing linguistic diversity of many pupils. Added to which, as the report says, we need a cultural shift in attitudes within businesses, too. The British Academy says businesses underestimate their current and future needs and do not invest enough in the training and management of language skills. In the light of such enormous opportunities for growth if only SMEs could scale up their language skills, can the Minister say why the Government will not consider introducing financial incentives for such training as proposed by the British Chambers of Commerce? I acknowledge the wide range of support services available through UKTI should companies know about them and have the good sense to choose to access them. However, it seems to me that something more proactive and innovative is needed if our SMEs are to seize their fair share of global growth in a sustainable way and not just adopt a quick fix approach to the language deficit.
Lord Selsdon
My Lords, forgive me, I was just trying to work out how many members of the committee were speaking today. I know that they will all be the best informed and that those like me will have relatively little information or knowledge.
I am extraordinarily impressed by the change that has taken place, probably over the past 12 months, in the attitude of the UKTI and the public sector to the promotion and development of trade. I wonder why my noble friend Lord Green has decided to leave a ship that is not sinking. I pay tribute to him because of this change of attitude.
I started my life in industry in the asbestos industry, working in new products called plastics. I suddenly thought I was in the wrong business, tried to get another job and ended up doing market research. My two greatest clients were the Government of Japan, through JETRO, and the Government of India. For several years we looked at what they could sell abroad and at the marketing and never realised that India and Japan would be two of the biggest investors in the United Kingdom. We probably never dreamed that our automotive industry would be saved by Indian investment.
I want now to look a little into the balance of trade. We suffer from a major deficit on manufacturing and always have done. I declare my interest in that my great uncle Stafford Cripps was president of the Board of Trade and drew attention to those problems. Every time I have spoken here I have drawn attention to it. Does it matter that we have a deficit on manufacturing if we have a surplus somewhere else? We have to accept that the balance of payments deficit on manufacturing is going to continue for quite a long time. Whether it will be supported by a surplus from the financial institutions, which are under quite an aggressive attack at the moment, is another matter.
We are left with the initiatives that can be taken. I was on the British Overseas Trade Board, I chaired the Middle East trade committee—I was on all these things. I used to go to the DTI practically weekly. I could not understand why suddenly at a stroke one of the previous Governments got rid of the British Overseas Trade Board and all the advisory bodies related to the promotion and development of trade. Suddenly they were replaced by a lot of new advisers, many of whom did not necessarily know the country they were going to deal with. Hundreds of them were being appointed, but the Government forgot that in the days of the BOTB the area advisory groups had, free of charge for the Government, advisers who worked on the ground in all the countries. My own responsibilities lay particularly with the Middle East and with Africa. I was told, “My dear chap, you are young enough to be alive when something important happens, but it is going to take a long time”. Now when we look at our balance of payments, we do not seem to be worried.
Occasionally I get asked to start things. I started something recently and I went into the UKTI for the first time. The biggest problem was that it could not get a room to fit enough of us in. It was busy and humming and someone had the decency to think that I looked prosperous and tried to sell me the helicopter in the entrance. A new attitude has come out of all this that I find stimulating and far from worrying.
I look back to the small and medium-sized enterprises. I do not know why we call them SMEs; I just call them people. We want people who will take the initiative. The term entrepreneur used to be used. I used to use that term until I was told—the noble Baroness, Lady Coussins, could probably help—to try to translate it back into English. If you do that it becomes “undertaker” —someone who undertakes things. Translate that back into French and it becomes croque-mort, which is a different form of undertaker. The English language makes life fun. Here we have SMEs. Why do the Government want to have initials? Have you ever tried to pronounce UKTI in different languages? It is not possible. No one can understand what you are talking about. The same is true for SMEs; it is a girl’s name in one of the countries, I have forgotten which. Why have we suddenly dropped the word “trade”?
The small entrepreneurial business, as it may be called, was always the lifeblood of the United Kingdom historically. Someone would go off abroad, find an opportunity, come back and try to demonstrate it. He might even have bought himself a new briefcase to look more important or invented a nice name. I have always enjoyed and loved the sole trader. The balance of payments deficit on manufacturing now is desperate with every country, except for what we used to call the countries of the third world, which is now known as the emerging markets. They always used to be great markets for the United Kingdom. My grandfather when he was in trade—he was on the Board of Trade at one time—would trade with Mongolia, the West Indies and Latin America, which seem to have been rediscovered. Why did we suddenly change all these names? Why can we not go back to trade?
It is quite intriguing too when we ask for money. Most of the banks these days recognise that if they finance trade projects they get a very large fee, and if you are providing export credit you have the United Kingdom state guarantee and can make a 1.5% margin virtually risk free. These are the sorts of incentives that encourage the financial sector to look for trading opportunities.
When our original empire—if that is what it may be called—started, it was based on technology, engineering, building railways, building bridges and providing connections. Now we move into the strange new electronic world, which is perhaps beyond my own pay grade. Anyone starting a business now has to realise that they do not have to leave their office to be able to communicate worldwide. They do not necessarily have to travel. I keep saying to people, “Do not travel there. First, send an invitation asking them to come and see you”. An awful lot of people from all around the world want an invitation to come to London or to the United Kingdom. You find people who are looking for clients and invite them over here. They come on holidays. The relationships get built, and while we may criticise ourselves for being a multicultural society, if that is what it is, it is what we always were in the days of the British Empire when it developed and was built.
I end with a point not just about the size of our small country but about the influence that stems from the Commonwealth and others. It is a little bit of fun being treasurer of the House of Lords Yacht Club. We do not have much money. I sat down one day to look at where our influence lay. I have raised this in the House before. I looked at economic exclusion zones. There is a 200-nautical mile limit that goes around your own country. The region around the Commonwealth and our own territories accounts for 60% of the entire EEZs of the world. The French have another 15%. If we got together with the French, we would have 75% of the 200-mile limits. The resources and all the developments are there.
We are a maritime nation. We were entrepreneurs or “undertakers” and now we are small businesses, which are the ones that will grow. I so enjoy it when a man comes into my office to see me, I say, “What are you doing?”, and he says, “I have just started my business. I am moonlighting at the moment. I hope I can make it work so that I can leave my boring job in a rather big organisation”. The enthusiasm is there. I congratulate the Government on this change of attitude within UKTI, and I hope that it continues.
Baroness Cohen of Pimlico
My Lords, I would also like to thank the chairman of this committee, who has paid such graceful compliments to me and to the clerk. It must have been pretty discouraging for the chairman to have his treasured clerk and a senior member of the committee both flat on their backs sending him comments on the report from hospital on mobile phones. I commend him for staying steady through that.
I formally declare my interest as a director of the London Stock Exchange, a facilitator of equity for small and medium-sized companies and, no doubt any day now, a facilitator of raising equity for banks—several of them.
I should like to talk about one of the missing links in all this, which is the shortage of actual bank lending for small and medium-sized companies. The committee’s subtitle was Roads to Success: SME exports—Select Committee on Small and Medium Sized Enterprises. However, as a witness from one of the big banks observed, the companies best equipped to export were those that were well managed, profitable and solidly financed—qualities that you would want in any company, but even more so in a small company launching itself on the less predictable and more difficult field of exporting, particularly exporting outside the EU.
So far, so reasonable and I am sure that we can all agree about the need for well managed and well financed companies. But what part are the big commercial banks —RBS, Lloyds, HSBC and Barclays—playing in the financing of SMEs? Our report identified major discrepancies between the banks’ fair words about lending to SMEs and what the SMEs’ experience had been. I quote the report:
“Few SMEs had a kind word to say about banks”.
No, indeed, they noted that lending, even to SMEs with full order books, strong collateral and strong cash flow, had dried up. Onerous guarantees were being demanded, including that directors put their houses up as security, which is lazy banking.
Most of my colleagues on the committee and I were, on the whole, inclined to believe the SMEs’ account of the relationship. Our own experience as well as external facts support the SMEs’ views on the matter. Even the Secretary of State for Business, Innovation and Skills described the banks as having had a collective nervous breakdown in the financial crisis. If they had had several different nervous breakdowns it might have worked better, but they had exactly the same one. It involved reacting identically by cutting their costs—to be fair, in the only way that a bank can cut its costs quickly—by making savage redundancies, drawing in regional networks and sucking all the power back to the centre. That leaves authority and a great deal of regional expertise vested in people who do not know their customers and whose authority in many cases is limited to a lending power of something like £50,000, which does not get you very far.
It was also clear—to us, at least—that a good many managers were simply terrified to lend except on a rock-solid covenant. They are petrified of making the bank’s position worse. They wish only to do their best for head office and to follow its agenda of getting rid of any loan or customer viewed as even slightly doubtful, and of raising the prices being charged to less doubtful customers. UKTI, we began to observe, was beginning to perform a secondary and very useful role of wandering around finding bank financing for people. That is interesting, but not what it was set up to do.
The banks, of course, are not doing this for fun or all of their own volition. In the valedictions given to Stephen Hester, the retiring—I suppose we are calling it that—CEO of RBS, the Government’s agenda is clear. He was praised for cutting costs, for terminating less than solid lending and for getting more profit from his better lenders. That is commendable if you are, as he was, trying to save a bank and return it to profitability. However, it is absolutely not useful if you want to coax small and medium companies to grow and prosper.
In all this, as in other matters, all the big banks, including those that the taxpayer does not largely own, have been doing the same painfully pro-cyclical things, such as cutting down on regional staff and centralising and standardising their procedures to the point where it is doubtful that the Archangel Gabriel and staff would have got a loan, at least if they applied in Hull or in Liverpool, even with a personal guarantee.
Again, much of this has been at the Government’s behest. If you demand that very large amounts of regulatory capital be held against business lending, banks will seek activity where less capital is required, such as investment management, as UBS did, or safe-as-houses, low loan-to-value mortgages, which is where many banks are going.
The banks are not only swinging in line behind the Government’s and the regulator’s wishes but adding a few refinements of their own, such as seeking personal guarantees to support lending and charges on directors’ own houses. Nothing more inhibiting to enterprise could be managed and the worst of it is that they all do the same thing.
What we need is either a radical change sparked by the Government—who else?—or a new banking system. So far, the Government’s offer has consisted of exhortation, which is never useful in my experience, an embryo bank, which may well be useful but we do not know yet, and the Funding for Lending scheme. This fund would be fine if it is not also hypothecated on lending on housing. It is pretty clear that the bulk of this cash will inevitably go to mortgage lending. It is easy, can be secured on bricks and mortar and you get the equivalent of a personal guarantee with it because there is a person living in the bricks and mortar who really wants to hang on to it. I think an anxious bank manager struggling to do safe profitable lending for his employer would much prefer mortgage lending to business lending to SMEs; why would they not?
The signs of a new and more useful banking system—more innovative and differentiated—are beginning to appear but they are small and delicate. I hope that the business bank announced by the Government will be useful, but it is far too soon to tell. There are other hopeful but small and new organisations such as the Funding Circle and experiments in crowd funding. We also heard from Bibby Financial Services, which took an amazingly robust view of its ability to get good loans for its customers from some of the 600 foreign banks with branches in this country. Those are all useful, but none will secure enough lending for serious growth any time soon. For that, you need your country’s big commercial banks back in business, spreading out again into the regions and no longer terrorised by their recent history or some ill considered regulation.
Meanwhile, it is to be hoped that more equity funding will fill at least some of the gap. Very few companies get by without any equity base and in these hard times companies are looking to equity to fill some of the void left where bank lending should be. I commend a couple of government schemes—the Enterprise Investment Scheme and the small companies investment scheme. They enable high taxpayers to invest up to £100,000 per annum more or less free of tax and have been the foundation of a lot of start-up companies. Again, this is not the revolution, but it is a help.
That help is much needed. We heard, discouragingly, that other private sector sources of venture capital have slumped to the point where about 60% of venture capital raised last year came from government sources as opposed to about 10% from government sources in 2007. I would guess that we were no more than holding our own in raising private sector venture capital for privately held SMEs.
The equity story gets better as you approach the public markets. I am a director of the London Stock Exchange and, as such, responsible for the AIM market. If a company is big enough to get on to AIM, it typically increases its turnover by 37% and employment by 20% in the first year after admission to the market. There are other important advantages to do with visibility which make growth and exporting easier for SMEs. Wearyingly, it is also true that it is much easier to get a bank loan if you are a publicly quoted company.
Equity can never be the whole story. Entrepreneurs, the life-blood of the SMEs, are often very unwilling to give away as much equity as present-day conditions require. I suspect they are, like all of us, waiting for things to get better before they try to raise money. On present form, we could be waiting some time and that is a tragedy for the people we met in the regions and for many others who could expect to be cheerfully and gainfully employed. We need our big banks now, not cowering behind the barricades of the regulators in London. They all need to get out more.
Lord Teverson
My Lords, I briefly declare an interest as a director of three SMEs.
Every week when I come to this House and join your Lordships, I leave home and come to a different atmosphere, but until last year I had never been tempted to go speed-dating to fill up my time. However, last year I was, and I took a trip down the M4 to a speed-dating service in Bristol, organised by UKTI, as a member of one of the companies that I am associated with. I went to a hotel where there were some 40 advisors from different nations, right across the globe. I spoke to people from Austria, the Netherlands, Ethiopia and Argentina. There was a fantastic variety; some of them were Brits who were based in embassies, but many were foreign nationals based in our embassies—and it was really exciting. The noble Lord, Lord Selsdon, has mentioned some of these occasions. We spoke to around 10 of these advisors; it was very well organised, and we have followed some of those up. I will come back to that later.
I congratulate UKTI on that experience. The great thing about the Passport to Export programme was that it had a good balance to it, and it gave you opportunities as you went through it—not completely at the taxpayer’s expense. You had to contribute to it yourself, so you took some responsibility for the outcomes. You met other people in different sectors who had gone through those experiences before, so you learnt and found out about the export business. Information barriers and risks were explained and taken away, so you had a much better ease into that market. This is all essential for smaller companies and organisations.
At that time, I was also a member of a Local Enterprise Partnership in the south-west. Some research done on behalf of LEPs more broadly was very factual and pointed; in reality, the factors which determined whether an SME was a good exporter were whether it invested sufficiently in research and development, and whether its products and staff were knowledge-led. It helped if it was in a cluster of businesses in the area that thought in a similar way, and whether that cluster had connections to other growth areas in the globe. However, the key factor as to whether you were going to be good at exporting was, I regret to say, size. The larger you are, the more you are able to commit resources and be able to negotiate barriers to moving out into export markets. That is one of the things that, in terms of my work with the Local Enterprise Partnership, made me think about SMEs.
I am going to commit complete heresy in this forum. In some ways, SMEs have acquired a sainthood in British politics and beyond over the last 15 years. They are an incredibly important part of our economy, but most of them are risk-averse, lifestyle businesses; they deal only with local, not even national markets. I would accuse the so-called entrepreneurs—although we used to call them “capitalist pigs” when we were students in the 1970s—of not actually playing the role which their staff, their colleagues and employees deserve, which is to grow those businesses. There are huge numbers of exceptions in Cornwall, where I come from, and the noble Lord, Lord Cope, mentioned some fantastic examples of successful businesses that export and work worldwide, through the internet or whatever. I would disagree with the noble Lord, Lord Haskel, when he said that we should concern ourselves with those businesses that cannot get their heads around IT. If they cannot do that, they should either not be in business or should be written off as potential exporters. Let us concentrate on those entrepreneurs who really want to move forward, take sensible risks and give their employees the opportunity to develop their careers.
I come to the message that I want to put over this evening. We talk a lot about corporate business, which I was privileged to be a part of in the early part of my career, and SMEs, but we forget the mid-sized businesses and some of the medium-sized businesses at the top end of this category. Companies that have a turnover of £10 million to £100 million and have 50 to 500 staff account for only 1% of UK businesses but they have 20% of business turnover and 16% of employees. This says something about their efficiency and how they work. I congratulate the CBI, for which this is not natural territory in our minds, for bringing out a report called Future Champions around this area. Was this a clever invention? No. If we look to Germany or even to France, we see that this sector of business is the engine of their economies. The Mittelstand—and it sounds as if the committee went and saw some of this—is the engine of the German economy and is excellent at exporting. Those businesses tend to use local supply but export globally; they think globally, but act locally. They tend to have quality products, niche markets and highly skilled employees, which gives them a higher earning capacity. They tend to be more in the manufacturing area, which causes rebalancing. Most importantly, for people like me who come from the regions, they are far more geographically dispersed than large businesses and, perhaps, some small businesses as well. They also tend to allow their staff to have real career progression within the organisation. If things are difficult, they tend to have deeper pockets and financial substance.
France and Germany have learnt the importance of that sector in driving their economies forward, yet we hear almost nothing about it in the UK. The noble Lord, Lord Haskel, is absolutely right about KfW, the big bank which helps promote these, SMEs and green technology. I welcome the attempts of BIS to start that sort of process here as well. I ask the Government not to forget the middle-sized business community in the UK, which could be an excellent area of growth and export. SMEs are vital. The good news is that the company I went speed-dating with in Bristol will, next week, be recruiting its first person to concentrate on exports. I am pleased to say that she is a Spanish-speaking Brit, and that the company will be looking not just within the European mainland but to South America. Do not forget the middle-sized companies and let us make sure that we help the SMEs which want to move forward and take their staff with them, but let us leave the lifestyle ones to get on with life.
Lord Haskins
My Lords, I, too, congratulate our chairman on his tenacity and exuberance in guiding us through this extremely interesting exercise. I declare an interest as a director of a couple of small companies. I also chair one of the 39 LEPs that the Government have created, in one of the more difficult parts of the country.
My overall impressions of the experience we have gone through are that there are lots of success stories in the report. Clearly, there is no question about that but, at the same time, underlying it there is relatively poor overall performance by our SMEs, particularly when compared to many other countries. One country that we obviously looked at closely was Germany. In Germany, there is a strong commitment of business organisations towards the well-being of SMEs and a strong community feeling that SMEs matter and help each other. The noble Lord, Lord Heseltine, who I shall speak about later, said that he was in Mumbai recently and ran into no fewer than 150 people representing German commerce there. They were helping SMEs and larger companies to do business there.
The engagement of regional governments and regional banks has been referred to. It is very powerful, particularly in Bavaria but right across Germany. There is a supply chain made by large companies for small businesses. Seven days a week, a train leaves Munich and heads for Shanghai, over the trans-Siberian railway line. It is full of cars and components made by BMW’s small businesses. The understanding of the supply chain is great in Germany as well. The careful nourishment of SMEs generally came across. While it is certainly bureaucratic, it is effective. The Mittelstand miracle, which the noble Lord, Lord Teverson, has mentioned, was invented by Bismarck 140 years ago and is a huge driving force in the strength of the German economy. There is also a strong emphasis on localism, which I will come back to. I am in cahoots with the noble Lord, Lord Heseltine, on this agenda.
We can contrast that with Britain, where we have lots and lots of start-ups—that is not bad—but far too many failures at an early stage. That has been endemic for many years in this country because of a lack of training, engagement and understanding about what those businesses are taking upon themselves when they go into it. Sporadic government interventions are constantly changing, not just on this but right across the piece. Successive Governments have turned the course of events, which makes it difficult for businesses to follow them. There was the initiative that the noble Lord, Lord Heseltine, had with Business Links. Some of us had mixed feelings about them, but that idea has gone and something else has come in their place. The other element in our businesses is their inability to grow beyond employing two or three people. In Germany, that element is to be ambitious and grow to employ five, 10 or 20 people. That does not happen here.
I question the Government’s policy on exports, where there is a strong emphasis on the importance of making the BRICS countries a priority. That is fine for Rolls-Royce and the big companies, but is it realistic for most SMEs? They will have to tackle the tariffs and trade barriers that are there. They will have to tackle the political instability which we are seeing in Brazil, and may see in India and South Africa, and tackle the transactional complexities of dealing with those countries—never mind the corruption and bribery which exists in many of those countries, which people at least have to reckon with in doing business there, and never mind the distance or, particularly, the language, which is more acute in those countries than in Europe. There are also, of course, human rights issues.
We should contrast that with small businesses doing business within the European Union which, even if it is in the doldrums today, still shows that we have an inadequate share of that market. That is so right across the piece but particularly with SMEs. Small businesses do not have tariff problems or trade barriers to deal with there. They have one set of market regulations which, for the most part, work reasonably effectively. The rules within the EU are pretty tough on corruption, so you do not have to worry about that. There is now substantial growth in the eastern countries of the EU and an increasingly accessible infrastructure, where people can move goods around Europe with much greater ease than in the past.
Should not the EU be the ambitious target for any small business that is starting up? Is the EU yesterday’s news? I spent a day last week in Rotterdam, looking at its port, and I was humbled by the scale of the activity going on there and by the huge potential that still remains. I could take your Lordships to Antwerp, Hamburg or Amsterdam, all of which have thriving trade right on our doorstep. There is widespread dismay and disbelief among many small businesses about talk of full withdrawal from the European Union. A poll last week showed that 70% of small businesses, while they have their reservations, wanted to stay in the Union.
We found in our discussions of the Government’s support for SMEs that UKTI is well thought of, but not sufficiently widely recognised for what it is making available. Embassies are doing much better than they were—a lot better than 20 years ago. Rather than patronising business, they are beginning to think that businesses have something going for them. I suppose that they may be looking after their own careers by doing that, but it is better. However, too much attention is applied to larger businesses. It is too easy for civil servants and ambassadors to talk to the head noises in Rolls-Royce, which can look after itself. The attention should be directed more towards the smaller businesses. There is a need for more communication with small business. I certainly find this in the LEP, which has a job to improve the communication with small business about what is offered by the Government.
The noble Baroness, Lady Cohen, mentioned the finance issue. I will not say very much about it, except that it is a confusing picture. Lots of SMEs have told us that they are charged penal interest rates, that the security demanded of them is excessive and that the banks do not seem to want to do business. The banks, on the other hand, say, “Nobody is coming along to borrow money from us”. I think there is a bit of truth on both sides; not as many people want to borrow as we would like.
I have mentioned devolution. There is no question that the ideas of the noble Lord, Lord Heseltine, are widely supported by business. There is more local support for SMEs through the LEPs than anywhere else, and the LEPs are crucial in getting SMEs off the ground. It is certainly my main priority to have the relationship with the SMEs as the driver for the local economy. The banks also have to learn about devolution. We learnt in our studies that a local bank manager—at any rate, one in my area—is not allowed to authorise more than £50,000 to a small business. It otherwise has to go through the computer to the central system to make that judgment. Banks need to think about restoring the power and authority of local bank managers, to give them the discretion to make business judgments face to face with businesses, rather than relying on computers to do the job for them.
Finally, what can businesses do to help themselves in this? Time and again, we find the situation is that local authorities and businesses are saying, “What are the Government going to do for me?”. That is important, but what can businesses do for themselves? First, big businesses must look more to small businesses for innovation. That is where the innovation has come from in the past. Big business must recognise that and search out those businesses which are innovating and support them. Secondly, small businesses should collaborate much more with each other. We saw some excellent examples of collaboration in Wednesbury, which I should say is also promoted by UKTI, where high-tech small businesses in the aerospace industry that are trying to get into the American market were working together to establish a base in America. That is the only way you can do business in America, and it was working very successfully.
The small businesses that we saw being really successful had just got on with it. They had nothing to do with government. They did not even know where the Government were but they were getting on with it, mainly because they had a great idea which they believed in. They had the get up and go that is so necessary. Nothing can compare with the flair, innovation and leadership in achieving business success, whether the business is big or small. The Government must do all they can to support these policies and make sure that they do not inhibit them.
Lord Empey
My Lords, I thank the noble Lord, Lord Cope of Berkeley, for the courtesy and patience which he exhibited in great measure throughout the Select Committee’s work. It was the first opportunity that I have had to be on a Select Committee in your Lordships’ House and it was a thoroughly enjoyable experience. I thank the noble Lord, Lord Cope, for his consideration. We were also extremely well served by a very active and dedicated staff. As has been pointed out, due to the accidents that we seemed to attract, there was a sense of embattlement as we came towards the preparation of the report. Members of the committee and staff seemed to be dropping like flies. However, they all rallied round—even from hospital beds—to produce the report. That indicates their commitment. I would also point out that, as I am sure all noble Lords will know, nobody puts words into the mouth of the noble Lord, Lord Cope of Berkeley. What he says, he says for himself.
I should like to touch briefly on the finance from a slightly different point of view. As was said by the noble Lord, Lord Teverson, there are two sides to this story. I was recently invited to chair a meeting of a business forum in London. A representative of the Institute of Chartered Accountants in England and Wales was present and we looked at alternative sources of finance. In this country we are heavily dependent on bank finance, which accounts for about two-thirds. However, that is not the case in other countries, such as the United States. We now have things such as Funding Circle and peer-to-peer lending, and new opportunities are out there.
What struck me most on that occasion was a story relayed by the accountants. They had carried out a survey of SMEs, asking them how much preparation they did before putting a business case to their banker. The average answer was two days. I was shocked by that. The fact is that banks should not agree to all applications from SMEs, and in fact that is part of the reason we got into difficulties ourselves. I remember being in business and paying at one stage an interest rate of 22.5% on business loans. Can one imagine what would happen in this country if interest rates began to rise to any extent? We have been living in a fool’s paradise, believing that you can have money for next to nothing. It is not going to be like that for ever. SMEs must sharpen up their act. No matter who you are, putting a business case together in such a short space of time is totally unrealistic and, in fact, reckless.
As was mentioned by the noble Lord, Lord Cope, we were shocked by the statistics given to us by UK Export Finance. Of course, most of the work that it was doing when it came to see us in the summer of last year was for Rolls-Royce and BAE, which we fully understand. When we pressed the organisation, we discovered that at the time it was helping 17 SMEs. I know that since then it has appointed regional representatives, and it is widening its scope and trying to make its services more available. However, I would be very interested if the Minister could update us on how that process is going. Are the regional representatives settling down? Are they actually helping to deliver the growth that we all want?
The other area I want to mention is training. The noble Baroness, Lady Coussins, gave us a very interesting speech on language. The committee heard a lot about that, and I think we have lots of lessons to learn there. However, other qualifications are necessary, over and above language. I declare a non-pecuniary interest as a vice-president of the Institute of Export, a charity which was established in 1935. It is the only professional body in the United Kingdom offering recognised, formal qualifications in international trade. It seems to me that if you are going to drive a car, you get a lesson in how to drive. If you are going to become a mechanic, you learn and you serve and you become a mechanic. If you are going to export, why should it be any different? Why should you not learn the ropes? Why do you not get qualifications in it? Why do you not learn what is involved in international trade? Having that knowledge enables you to avoid many of the pitfalls. These qualifications are recognised by Ofqual, and they are not hugely expensive. There are short courses, and they can be done by distance learning.
It is essential to have that basic skill as taking on exports can be a very difficult business. People are afraid of not getting paid and they do not know the customs in a local area. As the noble Lord, Lord Cope, pointed out in his opening remarks, with the change in the population mix in this country, people came to the committee to offer their services, because they had connections in some of our future key markets. There are people living in this country who are dedicated to doing business and we are not actually using that expertise which is on our own doorstep. We need to ensure that people get these qualifications.
The whole business ethos and the culture in this country have been anti-business for a number of years. I know the Minister has tried very hard during his term of office to change people’s minds about that. At the end of the day, as was said by the noble Lord, Lord Selsdon, it is true that we have a huge trade deficit, but a country which is economically weak is weak from a defence point of view, is weak from an international point of view and is weak from an influence point of view. We need to get that message to our schools and get mums and dads to say, “Well, there could be career opportunities here”. I think it is a matter of drawing all those things together.
I would like the Minister to tell me what progress has been made with UK Export Finance, and what advice he and the Government would give on trying to promote the acquisition of suitable international trade qualifications. This would ensure that when people in SMEs knock on the door they have the expertise and they know what a customer is. That knowledge is somewhat lacking in this country. I have often felt that we have to readjust, because we should be an outward-looking nation. We can survive only if we can trade and move in and out, keeping our inlets and our outlets open. We will succeed only if that is ingrained in people at a much earlier stage throughout the education system.
Baroness Drake
My Lords, I, too, would like to take the opportunity to compliment the noble Lord, Lord Cope, on his admirable chairing of the committee and on the excellent support that we received from the staff.
Increasing the contribution of SMEs to export-led growth acquires a new imperative when one looks at the structural shift taking place in the UK economy. The 1.3 million increase in the business population, from 3.5 million in 2000 to 4.8 million in 2012, has been mainly driven by SMEs. Over that same period the number of large private sector enterprises decreased by 10.2%, falling from 7,200 to 6,500.
SMEs are acquiring an increasing importance in the UK economy and delivering the step increase in exports that we so badly need. Finance to exporting SMEs must be assured. It is beyond dispute that bank lending to businesses has fallen, but the causes of this decline are contested. The noble Lord, Lord Heseltine, said that there did not appear to be a definitive answer as to whether the decline is due to a lack of supply from banks or to limited demand from businesses. What the report did identify, as my noble friend Lady Cohen mentioned, was the extent of the complaints by SMEs and executives about the insufficiency of loans and other services from the banks on “reasonable terms”. The distinction between the finance available for loans and the terms under which it is available may in part explain why some banks, such as RBS, argue that supply is not the problem, while at the same time exporting SMEs frequently argue that it is insufficient supply on “reasonable terms” which is at fault. Contributing to the problem are bank lending practices such as setting punitive charges and interest rates; onerous guarantees; exclusion of certain overseas markets from loan approvals; and the exclusion of certain activities from loan approvals. The replacement of relationship banking, where loan applications are judged on their merits, with a centralised, formulaic approach to lending decisions, is also part of the problem.
A pervasive formulaic approach may be a consequence of banks’ need to strengthen their balance sheets, comply with tighter regulations and reduce their risks, but it has to be confronted and addressed if SMEs are to access the finances needed for exporting. A return of local bank managers is unlikely to improve the position unless they are also empowered to have the discretion to decide on loan applications.
On Funding for Lending, billions may be drawn down by participating banks but insufficient is getting through to SMEs. The report recommended that the Government should study how banks assess the credit risk of SME exporters and different overseas markets in some detail. The Government’s published response was disappointing. While it said that the new business bank is expected to work with relevant bodies to reduce the obstacles to accessing finance on reasonable terms, it went on to say:
“It is not thought that a further study at this time would be productive”.
It was pleasing, therefore, to see the recent announcement by the OFT that it is bringing forward its review of banking for SMEs. The proposed scope of the OFT review includes whether SMEs have access to services that meet their needs and represent good value and whether there are types of SME that face particular difficulties and, if so, why. I acknowledge that the industry is working towards a voluntary disclosure regime, but as the Parliamentary Commission on Banking Standards observed, increased disclosure of lending decisions by the banks is crucial to enable policy-makers to identify markets, communities and geographical areas currently not well served by the mainstream banking sector.
The report also notes the very small number of SMEs helped by UK Export Finance, but recognises that the Government have now started to put more emphasis on it helping SMEs export overseas. However, new products such as the bond support scheme and export working capital scheme, launched to meet the gaps in the support to exporters from private sector providers, are accessed, again, through the banks.
The Government may have reduced the amount of risk that the banks are required to accept on these new schemes, but if the UKEF is using the high street banks as its route to market, given current bank lending practices these schemes are unlikely to deliver the desired help to SMEs to export. This is a view shared by bodies such as Science, Engineering and Manufacturing Technologies Alliance and Trade & Export Finance Limited.
Similarly, British SMEs cannot apply directly to the European Investment Bank for loans, but must go through one of the participating banks, which are required to match European Investment Bank loans from their own funds. Again, there is the potential for bank lending practices to constrain SMEs’ access to finance. The European Investment Bank’s own reports show that British SMEs have borrowed relatively little compared with several major EU economies such as France and Spain.
It is welcome that in response to the report the Government have committed to providing updates on activity in 2014 and 2015. Will the Government commit to commenting specifically and in some detail on what progress has been made in reducing the obstacles to financing SME exports on reasonable terms and the extent of the increase in the support from UKEF and EIB to SMEs’ export contracts?
An objective of the new business bank is to support the development of diverse debt and equity finance markets for businesses and increased supply through new finance providers. It is true that private sources of venture capital have fallen in number in recent years, but investment provided by both private equity and venture capital still makes a significant contribution to exporting SMEs. In 2012, 90% of the companies invested in by British Venture Capital Association members were SMEs. It is important that UKTI provides advice to SMEs on all sources of finance.
As the economy recovers, there must be confidence that the supply of finance will meet future demand and that there will be sufficient provision of long-term capital for SMEs to sell overseas. In his Statement on Building the Business Bank, Vince Cable, Secretary of State for Business, Innovation and Skills observed:
“Economic analysis suggests that the following types of firms are particularly underserved for finance: SMEs of all sizes who seek finance to expand their business or to develop new products and services; SMEs who lack the collateral to take out a secured loan; SMEs at the smaller end of the SME scale; Young SMEs which have existed for less than five years”.—[Official Report, Commons, 21/3/13; col. 50WS.]
Those four categories add up to a significant proportion of SMEs which have the potential to export being underserved.
Lord Storey
My Lords, first, I convey the apologies of my colleague, the noble Baroness, Lady Kramer, who served on the committee and was intending to speak this evening, but she has been invited by Barclays Bank, no less, to have dinner with some senior directors. She thought that it would be a good opportunity perhaps to influence or change their views.
After the Second World War, the then Government urged businesses to either export or die. I suggest that this motto is as important today as it was 60 years ago. Indeed, the accelerating effects of globalisation, combined with increasing competition from the world’s emerging economies, have, if anything, increased this maxim’s resonance.
Here in the UK, we do not have as large a percentage of businesses exporting as do our neighbouring competitors such as Germany, France or Italy. If we could increase the number of exporting firms to the EU average, we would go a long way to reducing Britain’s trade deficit, a shortfall that we have shouldered almost every year since the end of the Second World War. Why is it that the French, the Italians and the Germans are able to export more than us?
It is imperative we ensure that we are doing all we can to encourage an export-led recovery. We therefore established this Select Committee on Small and Medium Sized Enterprises to see which steps could be taken. It was my first Select Committee and it was a privilege to sit on it. I pay tribute to the chairmanship of the noble Lord, Lord Cope, and the committee staff’s professionalism. It should also be mentioned that it was the suggestion of the noble Lord, Lord Popat, that this topic be looked at in depth.
After months of collecting oral and written evidence and visiting exporter “success stories”, our Roads to Success: SME Exports report was published this spring. If its recommendations are taken seriously, and if government agencies take action to ensure that SMEs know where to go for help, I suggest that we will see major improvements.
The committee rightly concentrated on the wider benefits of increasing SME exports, but of course exports are also invaluable to each individual company. It is crucial we get more firms exporting; it is essential that we encourage those that already do so to look to new and higher-growth markets.
I was taken with some work carried out by the University of Glasgow which looked at the benefits to their own business of those individual companies that exported. The most striking statistic they found is that businesses setting out on their export journey achieve on average a 34% boost to their company’s productivity; that is, a rise of over a third in their first export year. The university’s research also found that these exporting businesses were 12% more resilient to weather tough economic times and, finally, that such firms are also better at innovation.
When you export to a range of countries, you need to be aware of the different tastes, needs, fashions, cultures and, indeed, foibles of each market. The lessons learnt are so powerful that almost every firm that begins to export also witnesses an increase in its domestic sales. The result of these learning processes is that firms, having been exposed to the competitive world of international trade, spread best practice here in the UK.
Countries have four engines of growth: government spending, consumer spending, investment and trade. Government and consumer spending is not likely to rise significantly, so the importance of getting more firms both to export and to invest in their technologies, plants and equipment is the only way in which the UK can pursue the growth we so desperately need.
The Select Committee found that there is plenty of help out there for firms. UK Trade and Investment, as we have heard, is worthy of considerable note. As we also know, many businesses are members of trade associations, chambers of commerce and support organisations such as the Institute of Directors, the Confederation of British Industry and the Federation of Small Businesses, to name a few. All these organisations must pledge—and have pledged, I hope—to increase exporting. I very much hope to see UKTI and UK Export Finance blowing their trumpets even louder to promote the services that they can offer.
The UK currently exports half its goods and services to the other 26—soon to be 27—European Union states. This is good news, although it is largely to be expected in our quota-tariff and free-trade economic area. However, that 50% goes to a group of nations that together represent only 7% of the world's population and only 18% of the world's GDP. Furthermore, this group of nations is potentially shrinking, not growing. We need to seek out new markets wherever they are. We have to take advantage of wherever growth is emanating from. I was pleased to learn that, for the first time, UK exports to China averaged more than £1 billion a month between February and April. We must remain optimistic about our SME exporters, and those who can must help SMEs on their journey to further growth. The Roads to Success report will undoubtedly assist us in this important enterprise.
Lord Taylor of Warwick
My Lords, I thank the Select Committee and, of course, its advisers for this excellent report. I wish to focus mainly on paragraph 6, which concerns language and diversity. There is no doubt that exporting is vital to economic growth. A number of young people were sitting in the Gallery watching this debate. That reminded me of the tragedy of more than 1 million young people unemployed. For their sake alone, we need to increase growth, and that must come from increasing exports.
My noble friends Lord Cope and Lord Teverson and the noble Baroness, Lady Coussins, all mentioned the language problem, which we can no longer ignore. The National Centre for Languages has produced a report called Talking World Class. It asserts that a language gap leads to a trade gap. It criticises the lack of language skills that we have in this country. It was quite shocking to see the research produced by the European Commission that the UK has the lowest number of people able to speak other languages in a league table of 28 European countries. According to the report, 80% of export managers in the UK cannot communicate competently in another language.
In the year to March 2013, the annual export value from all regions in the UK fell, except in two regions: East Midlands and West Midlands. It cannot be a coincidence that, for example, UKTI East Midlands has been proactive in taking advantage of the diversity of its workforce. Its initiatives include developing the understanding of the business culture of the country which it visits on trade missions. It organises day-long language and culture sessions for people travelling overseas. It liaises with translators, interpreters and training providers. It identifies opportunities to use overseas students. There is an annual international communication masterclass, which is a day-long seminar, attracting about 100 delegates.
Understanding cultural and linguistic diversity, both domestically and overseas, is key if we are to increase trade and exports. There have been several reports in recent years demonstrating beyond doubt that diversity is good for business. It is not just about equal opportunities. Diversity produces new ideas, new markets and new customers. The Federation of Small Businesses, the Confederation of British Industry and the Institute for Small Business Association have produced ample evidence for this. As for immigration, immigrants are on average younger, more highly skilled and more likely to be of working age than their host counterparts. Black and ethnic minorities in Britain are now having a real impact on small and medium-size businesses. I give as an example my home city of Birmingham. Only last summer, Prince Charles presented a Jamaican bakery company, based in Birmingham, with the prestigious UK Small Business of the Year award. Indeed, Prince Charles was so keen to test the evidence that the company sent a few of its delicious pasties to Clarence House for, shall we say, closer scrutiny. The owner of that company had left Jamaica with his family in the 1960s and started a very small bakery in 1988. Now it has a factory employing 50 staff and supplying the five major supermarkets. We need to utilise the skills of men such as that. About 12 miles from Birmingham is Wolverhampton. There, another Jamaican started a medical technology company in 2004. Now it has 200 employees and has produced award-winning equipment such as a device to reduce the risk of deep vein thrombosis.
I should point out that I have no connection with either of the two companies but each is another success story. They were immigrants who came to Britain with nothing. Immigrants are coming from more countries than in the past, including Poland, China and India. In our business community there is potentially more access to different language skills and knowledge of different cultures when it comes to trade delegations representing Britain abroad. Through our universities, we have access to overseas students who can help us bridge the language gap that the noble Baroness, Lady Coussins, spoke about. We know that Mandarin is now very much the language of business and we have Mandarin speakers in our localities. We need to capitalise on their skills and experience.
Many in the small business community have the energy and ambition—the get up and go as the noble Lord, Lord Haskel, described it—but lack awareness of the help available to them. While I am pleased that the Department for Business and BBA have a national mentoring portal, Mentorsme.co.uk, there is evidence that the small business community is unaware of these kinds of facilities. I am very impressed by the Get Mentoring project where small business owners can get free access to experienced business people for advice. But the small business community is not aware of that and more needs to be done to publicise these excellent initiatives.
My next point may surprise noble Lords but, in my submission, faith groups can play an effective role in promoting small business both here and trading abroad. A new report, Faith in the Community, provided fresh insight into the role of churches and other faith groups, and the ways they can liaise with business. The report contains information from 150 local authorities which shared how church and other faith groups help them carry out many of their tasks, especially in liaising with local business. Many black and ethnic minority businessmen have their roots in the churches, and indeed in mosques and temples. Again, I urge the Minister to look at the faith groups and churches, because therein lies a tremendous reservoir of talent that it seems is being ignored.
There is one Government policy of great concern to the Caribbean business community: the air passenger duty. This tax is charged on every airline ticket from the United Kingdom. The problem is that it is based on a price-banding system related to the distance to a country’s capital city. That means it can be cheaper to fly to more distant locations in the United States than to destinations such as Jamaica or Barbados. The levy is set to rise each year by the rate of inflation, pricing many in the UK Caribbean community out of being able to travel to the region on business.
The Select Committee did not have a lot to say about diversity but the issue is crucial to Britain’s future economic growth. The Prime Minister set a target of doubling UK exports by 2020. Does the Minister feel we can attain that target? This is an excellent report but it has to be acted upon if the target is to be achieved.
Lord Mitchell
My Lords, I was a member of this Select Committee when it began its hearings. I was getting myself all fired up to contribute to a subject that means a great deal to me when the rug was pulled from under my feet. On my giddy elevation to the Front Bench, I was ordered to stand down from the committee. Of course, I had no option—the rules are the rules—but I was sad to leave.
That said, it is with great pleasure that I welcome the opportunity today to debate Roads to Success. What a tour de force it is: forensic, totally focused and clearly written. Throughout its pages the very clear fingerprints of its chair, the noble Lord, Lord Cope, are distinctly visible. From these Benches, I congratulate him and his colleagues on producing it. I have two reservations, which I would have pushed had I been on the committee. First, the digital revolution is barely addressed. Secondly, I am not convinced that it reaches out to the new, young entrepreneurs—those who dress in T-shirts and jeans, and are for ever plugged in to their music. That apart, I am much heartened by its contents.
I very much hope that the report will attract the attention it deserves within government but somehow I doubt it. The truth is that Select Committee reports produced by your Lordships’ House get scant attention in the corridors of Whitehall. I have had the honour to sit on several Select Committees. On each occasion, noble Lords are chosen to serve and have impeccable backgrounds, the witnesses are grilled and the clerks and advisers are of the highest calibre. The reports produced, just like this one, are outstanding—but what happens? They disappear into the bowels of the relevant department and eventually the Government produce their answer, just as they did for this report. It is always the same. It is obfuscatory, avoids the recommendations and sends the report back to Parliament with the clear intention of kicking it into the long grass. This is not an attack on the parties opposite. It also happened when we were in government. So often Ministers and their civil servants regard our Select Committee reports as a pain to be endured and they treat us accordingly. This is my second rant in your Lordships’ House today. Enough is enough—it is time to stop. This high horse will be ridden no more.
When I was in my 20s—light years ago—I remember an advertisement in Piccadilly Circus. The noble Lord referred to, “Export or die”. I remember, “Either exports go up or Britain goes down”. As I remember it, there was a little flashing Union Jack underneath it—nothing new there. Low exports and low productivity have been the bugbears of our post-war economic performance. Small businesses are critical to our economy; everybody is agreed on that. They employ 60% of our workforce and—a hugely important point—they are the route back into employment for many of our long-term unemployed.
Much of our time is spent looking for ways to support the UK’s small businesses; encouraging them to export is a good way of doing this. New research from the Enterprise Research Centre shows a clear correlation between exporting and growth in businesses of all sizes, and we have touched on that this evening. EU companies that export grow twice as fast as companies that do not, and internationally focused SMEs are three times more likely to introduce an innovative product. My view is that it is in the mindset of a management that is interested in new projects and developing in all areas, not just exporting.
Today, we rightly focus closely on the many important recommendations made in the report. However, we should also look at ways to encourage innovation in British companies, given this strong link between companies that innovate and those that export. The latest EU figures suggest that the UK is currently 32nd out 35 countries when it comes to innovative products and processes, and 25% of UK SMEs are innovative, compared with the EU average of 34%. Recent figures from the Big Innovation Centre, which works with government, higher education and industry, illustrates how the difficulties of getting finance stifle innovation.
More than one in three innovative firms looking for finance in the period 2010-12 received none of the credit that they wanted. There is no shortage of statistics to support the diagnosis that the lack of support from our financial institutions harms businesses in the UK. We know about this, it is discussed almost every day in your Lordships’ House and it is a big problem that we have in this country. The report shows that the three-month average rates of lending to small businesses have been negative since August 2011. Looking at the Bank of England figures, I also count only three individual months over that period when net lending to small businesses has been positive.
The lack of small business lending harms innovation and exports. We need a laser-like focus on improving access to credit for these companies. The Government’s expansion of Funding for Lending this April was a positive step, but it is clear that to resolve the market failure at the core of this issue, we need to be more radical and look at structural change. Many noble Lords will no doubt have shared my surprise on reading that between March 2011 and August 2012, UK enterprise finance helped 31 companies, of which 21 were SMEs. Noble Lords could be forgiven for thinking that a couple of zeroes had fallen off these numbers.
This cannot be enough. Will the Minister please tell us whether there are any plans to co-ordinate the activities of UK enterprise finance and the Business Bank? The case study within the report of Alderley plc, the engineering business that felt that it was being harmed by credit decisions being made in London rather than regionally, is compelling. It is a scenario that we often hear about and was mentioned by the noble Lord, Lord Young of Graffham, in your Lordships’ House yesterday. The end of relationship banking has harmed small businesses, which find that instead of local bank managers who understand them and can use judgment about whether they should have credit, decisions are now made on a centralised basis, which is often also computerised. Ticking the boxes is not the way to proceed.
I also agree with the committee’s recommendation that more attention should be paid to SMEs when the Government draw up trade agreements. The EU-US trade negotiations are critical and I would like the Minister to update the House on how these talks are proceeding. I am by any assessment a serial entrepreneur; my businesses were in IT services. To me, overseas activities were always crucial. Our customers were international, how could we provide a service if we were not international too?
Of course, you actually have to like abroad. You need a feeling for other people’s culture. My language skills are halting, but I forced myself to learn enough German to be able to stand up and make presentations in Frankfurt. Whether they understood me is another question, but they were too polite to say. Today, new technologies such as Google Translate are coming to the rescue, but nothing—nothing—replaces being with your customers and being able to talk to them.
I have to say that doing business in other countries is really good fun. It is testing, of course, but if you roll up your sleeves and are prepared to catch early planes and attempt to speak your customers’ languages, it really pays off. I have also found that taking just a little time to brush up on another country’s politics—what is the story of the day—and even talking about football works a treat.
I really enjoyed the speech of the noble Lord, Lord Teverson. I feel that I have a soulmate in him, although I have to say that when he started on the subject of speed dating, I began to keep my distance. I agree. There are many lifestyle companies out there, many of them are static and we must not confuse them with the small and medium-sized companies that are dedicated to growth.
I was disappointed that the report barely touched on the digital revolution. When I give speeches, I highlight how the world is changing and the speed of that change. If businessmen are not having sleepless nights about digital changes—if they believe that the digital revolution does not concern them and that it is just a passing phase—they are in for the chop. Ask Jessops, HMV or Blockbuster video—many more will follow them. Competitors in every country are obsessed by changes in the digital revolution, and we should be too.
My final point is about young entrepreneurs. If I were a young tech city entrepreneur, I doubt that UKTI would have much appeal to me. It is too uncool by half. Does UKTI have a branch in Shoreditch or on the Cambridge Science Park? That is where the action is. Its people need to take off their ties, get themselves personal iPads and drink skinny lattes, just like everyone else there. They need advisers in their 20s, not in their 50s.
In summary, this is an outstanding report. Despite my pessimism, I hope that the Government take serious note of its contents. One day soon, I hope that the lights in Piccadilly will read, “British exports up yet again”.
The Minister of State, Department for Business, Innovation and Skills & Foreign and Commonwealth Office (Lord Green of Hurstpierpoint)
My Lords, I begin where everyone else has by congratulating my noble friend Lord Cope on securing what I believe passionately to be an important debate on trade and investment relating to small and medium-sized businesses. My noble friend has long supported British business and British exports, as, of course, have all the committee members. He and his committee undertook the inquiry thoroughly and asked searching questions not only of my officials and of businesses and business support bodies but of me and my colleague and friend the Business and Enterprise Minister.
Of the 23 recommendations in the report, I think that I can say truthfully that we agree. We have essentially fully accepted all of them, with one or two exceptions where we may not agree with the specific recommendation but absolutely share the intent behind what is proposed. Above all, on recommendation 1, which concerns a report back next year and the year after, I am happy on behalf of the Government to endorse and accept that.
This is an important topic for us all. More than one noble Lord has called attention to past advertisements saying “We export or we die” or, “Exports go up or Britain sinks”. Briefly, I go back even further than that, prompted by the recent Diamond Jubilee of the Queen’s coronation, to remember that in 1953, the UK’s total exports were just £3.6 billion. Last year, they were £488 billion. More importantly than the nominal figures is that in 1953, the value of exports to UK GDP was about 10%; it has now risen to 30%, which reflects how Britain is participating more in an increasingly international economy. The bad news is that Germany’s percentage is more than 40%, so we may have come some way since the 1950s, but we still have some way to go.
A number of noble Lords have referred to the various targets and challenges that we have set ourselves: those of doubling trade exports by 2020, getting 100,000 new SMEs into international markets, again by 2020, and doubling the client base of UK trade in investment from 25,000 to 50,000 by 2015. We are well on track with the last of those. The client base of UKTI is growing rapidly. The target of doubling exports by 2020 is a challenge. Frankly, if we got somewhere near it we should feel extremely pleased. It would involve increasing exports as a share of GDP to over 40%, which is where, as I have just mentioned, the German economy now is. This is not a completely unfeasible challenge, but it is certainly a demanding one.
I assure the noble Lord, Lord Mitchell, that we shall take this report very seriously. I am not going to allow it to gather dust. There are a number of important suggestions in it. There is repeated reference in it, and in comments by noble Lords, to the awareness issue. UKTI gets good satisfaction ratings. They are not as good as they could be and could be better, but they are in the mid to high 70s. I would like to see them at around 90%. Dissatisfaction levels are low, at around 6% or 7%. This is clearly a case of “good but could get better”.
The level of awareness is not satisfactory. For UKTI this is in the mid 50s. For UKEF it is in the 20s. This is not good enough. It is a priority for me and the Government to ensure that we raise awareness of these important services that are available. In particular, as we speak we are running a pilot marketing programme in the north of England to raise awareness of UKTI and UKEF. I will be analysing carefully the results of that pilot when they are complete in the next few weeks. If we get encouraging figures, we will consider extending that advertising campaign to the rest of the country.
In the short amount of time available to me, I will try to cover a number of issues that have come up in your Lordships’ comments, especially language, intellectual property and the reference that my noble friend Lord Cope made to the Bribery Act at the start. I say to the noble Baroness, Lady Coussins, that I share her passion for languages. I am a linguist by origin. This was admittedly a long time ago, but I strongly believe that not only do we need to invest more in languages, but that investing in languages improves your English. To paraphrase Rudyard Kipling, what does he know of England who only England knows, or what does he know of English who only English knows?
This important area is quite complex. It is unrealistic to expect an SME, unless it has a Chinese speaker, to be able to gear itself up in Mandarin to the point where it can speak business Mandarin in pursuit of business opportunities in China. We must be realistic about what is achievable. We have recently updated a brochure on language management strategy. We will continue to work on it. I would like to write to the noble Baroness on some of the complexities of the language issue. There are some long-term issues about the teaching of language in schools, and noble Lords are aware that the Government have recently focused much more attention on this. That will take quite a long time to pay dividends. In the mean time—and I do not just mean in the mean time—we need to celebrate the fact that, because of the diversity in this country, we have a terrific language base on which to draw, in terms of skills that can be brought in for marketing, for example, with an appropriate language attached to it. I assure the House that we take the issue of languages seriously.
Finance is quite properly of concern to a number of noble Lords. The noble Baronesses, Lady Coussins and Lady Drake, made a detailed analysis of some of the issues that we face. Given my former career, I am perhaps better placed than many to reflect on the weaknesses of commercial and business banking in this country. From that experience and from my experience going round this country in the past two and a half years and meeting businesses of all shapes and sizes, there is indeed an issue. It is quite plain that there are circumstances where companies with legitimate financing requirements cannot get financing because the normal templates are being required and inadequate imagination is being applied to the topic.
What I think has happened over not just the past three or four years of the financial and economic crisis but over the past 20 years is that the skill base of business banking in high street banks has been deteriorating. This has happened partly because average career bankers with a reasonable dose of ambition have wanted to head either for the excitements of corporate and investment banking or for the sexy end of the retail banking market and did not see themselves spending the rest of their career in a relationship management role in, let us say, Rotherham. The central functions have responded by disempowering those relationship managers, so we have the result that the noble Baroness, Lady Coussins, commented on. If I have some good news, it is that all the CEOs with whom I have regular dialogue and the heads of commercial banking are focused on this and are determined to address the problem. I hold regular round tables with the banks under the auspices of the British Bankers’ Association. The general problem, I have described. In international trade, in particular, there is even more of a problem with the skill base. They are focused on that. The challenge is that it will simply take time to turn the supertankers.
In the mean time, we need to be doing two things—first, to ensure that as it gets going the business bank is able to challenge them on the way in which business lending is provided and, secondly, to encourage new challengers. There are some new challengers. There are a number of new challenger banks, and a number of noble Lords referred to the various other techniques for financing that are gaining some traction, although I do not believe that those other financing sources can ever be an adequate alternative to, or substitute for, a properly run business banking presence on our high streets. This is an important issue, and we will continue working at it.
Specifically with regard to UK export finance, I can report, first, that there is an awareness issue, to which I have already referred, and secondly, that new products are beginning to get more traction. Like noble Lords, I have been extremely disappointed by the take-up. I put it down to a considerable extent to lack of awareness. We have therefore put export finance advisers in every English region and in Scotland, Wales and Northern Ireland. We had one in place in each of those areas by the end of last year, and I have just authorised a doubling so that it will go from one to two in each of the regions, plus in each of the devolved Administrations. I have also started putting export finance advisers in key locations overseas. We have one in Singapore, we are going to have one in Dubai, and I have authorised the recruitment of further EFAs in other markets of importance to us around the world, in Brazil and in Africa, where I think we need one in the Francophone part and one in the Anglophone part, on the ground at that end, whose job is, first, to help incoming British companies, and secondly, and very importantly, to negotiate sponsor credit lines with the sponsors of big infrastructure projects around the world so that British companies can get access to finance as they seek to win business as part of those infrastructure projects. So we are on that case.
It is early days to tell what quantitative results this is going to have, but there is anecdotal evidence. The most recent was at lunchtime today when I was with the Suffolk Chamber of Commerce, which reported that the presence of the UKEF financial adviser is making quite a lot of difference to a number of its members. I hope that we will have more specific hard evidence when we report next year.
My noble friend Lord Cope raised the important issue of intellectual property. The British Government will continue to work hard at lobbying in international fora for better protection and recognition of intellectual property. As I think the House is aware, we have started putting intellectual property attachés in some of the key markets—China and Brazil—and will look at how that is working in the course of this year. We will consider expanding this coverage at the end of this year if it looks as though it is delivering value to British companies that are worried about theft of intellectual property as they go into those markets.
Finally, I assure the House that I take this report very seriously, as do the Government, and that this is a long-term commitment. If there is anything in public policy which needs to be treated with a sort of apolitical consistency over the years, this is it. As a number of noble Lords have mentioned, we have lived with a constant weak trade position in all of our working careers—I can safely say that. It has not got any better of late; again, one or two comments have been made about the first quarter, which was not good. We suffer from the headwinds from the eurozone. Roughly speaking, our exports are still growing quite nicely to the emerging markets, but they were down in the eurozone. We have a long way to go.
I find myself saying regularly to my ministerial colleagues, to my official colleagues, to the media and to anyone who will listen, that this is a marathon, not a sprint, and we have to stick at this as a national collective effort over at least the next 20 years. The good news is that we can do it. I mentioned that I travel round this country a great deal—I visit each English region and the three devolved Administrations at least twice a year. I have seen businesses from every sector, of every shape and size—some of them the mid-cap companies—and I see companies that are taking on the world. As the noble Lord, Lord Mitchell, said, it is fun to do that. If you are not the kind of person who finds other countries and cultures fun and interesting, you will never be a successful exporter. You find these people across the range of the sectors of our economy. This is not just about high-tech or manufacturing but about all sectors.
Finally—another finally—I say to the noble Lords, Lord Haskel and Lord Mitchell, that clearly the digital economy is becoming more important. We are obsessed with making sure that the support that we provide to small businesses takes into account the increasing importance of digital trading. That is partly about ensuring that they know how to use online trading and that they think about language in the design of their websites—all those kinds of things. It also involves participating in the negotiations within the European Union about the implementation of a digital single market. There are still too many barriers to cross-border digital commerce in the single market and we need to work hard at that.
On international trade negotiations, the noble Lord, Lord Mitchell, asked about the state of play on the US-EU negotiations. The truth is that we have only just started. Clearly, it is as important to SMEs as it is to the rest of the economy that we do our best to complete a successful free trade agreement with the US, as well as with Japan—another major country with which negotiations are under way. This will be a difficult and, I suspect, quite long haul, even though we are publicly committed to achieving heads of agreement by the end of next year if we possibly can. We all know that the prize is huge, and the prize for SMEs is very significant. We should never forget the linkage between that and the importance of realising a full single market within the European Union. If we are to complete a deal with the Americans, they will demand a deal that covers the full single market, so we have a job of work to do, not only to negotiate with the US but to see through the full implementation of the single market.
I close where I started, by thanking my noble friend Lord Cope and his committee for a report that will not gather dust. I am happy to commit the Government to giving a report on what we have done and on further progress in the course of next year.
Lord Cope of Berkeley
My Lords, it has been an interesting debate and I am grateful to all those who have taken part, both members of the committee and the others who have come and joined in and for the kind remarks about myself. I would also like to congratulate those who took part in the debate for very nearly sticking to the advisory time limits, which is more than you can say for the previous debate.
The noble Lord, Lord Mitchell, was concerned that the report might sink below the parapet. I know exactly what he means, but as the Minister has just been emphasising, this is an ad hoc committee which has, if I can put it this way, life after death. That is to say, we are promised a further update on these long-term matters. These are not matters which will be solved quickly. We are promised an update and we are promised further debates, next year and the year after. I am very grateful to the Minister for his positive approach to all our recommendations and, indeed, to his duties as a whole, and the way in which he is carrying them out. I do not want to go back over the ground we have been discussing today, but I thank everybody who took part in the committee and in this debate.
The Future of EU Enlargement
(10 years, 10 months ago)
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Lord Boswell of Aynho
To move that this House takes note of the Report of the European Union Committee on The Future of EU Enlargement (10th Report, Session 2012-13, HL Paper 129).
Lord Boswell of Aynho
This Motion invites the House to take note of the report of your Lordships’ European Union Committee, which I have the privilege of chairing, on the subject of the future of European Union enlargement. I am conscious that the comparatively late start to these proceedings may have led to some attenuation of the speakers list and, possibly, compression of the debate. Nevertheless, I am pleased that this debate is so timely, given the immediate accession of Croatia as the 28th member of the European Union; the first accession to the rotating presidency by Lithuania since its accession in 2004; and the imminence of the possibility of discussion about future accession and enlargement at the upcoming European Council later this week. This is a very timely occasion.
The European Union has a long history of enlargement. Our country was part of the first and what is still the largest wave of enlargement when we joined what was then known as the European Community at the same time as the Irish Republic and Denmark in 1973. Since then, there has been a steady stream of countries seeking to join the European Union. We are now about to embark on our seventh enlargement with Croatia. There are currently five candidate countries and three potential candidate countries, so the enlargement agenda shows no sign of halting.
Our report considered the process by which aspirant countries moved towards readiness for membership. In doing so, we revisited many of the questions asked in our previous 2006 report, The Further Enlargement of the EU: Threat or Opportunity?. With the benefit of the passage of time and the benefit of hindsight, we reflected on lessons learnt from the 2004 and 2007 enlargements.
I also express my gratitude to all the witnesses who gave evidence to the inquiry, particularly those from countries which have recently joined and those which are on track to join the Union now. It almost goes without saying that we drew immensely on the expertise of our staff in drawing up this report.
Enlargement is formally a reactive process. It is for individual countries to apply to become member states. However, the Union has always had an enlargement agenda, because enlargement is an integral lever for development and has been accepted as such both in the founding and successive treaties. The current agenda has two main drivers: the first, safeguarding stability and security within wider Europe; and the second, achieving economic prosperity and growth. I believe those two objectives to be intimately connected. Historically, enlargement has had a transformative power. I would evidence that by the political changes seen in recent years in what are now comparatively older member states such as Spain, Portugal and Greece. Furthermore, we should remember that the single market is of enormous benefit to all members—new ones and existing ones, too.
The euro area crisis and questions about the role and governance of the Union have led to enlargement slipping down the political agenda. It has been suggested that some countries, such as Germany and France, may have lost sight of its importance. The United Kingdom Government are to be commended for their commitment to enlargement, and we share the view of many of our witnesses that the momentum in this vital work must not be lost.
The Copenhagen criteria of the EU set out three key standards that a candidate country must meet to be eligible for membership: political, economic and the ability to take on the obligations of membership. Although these were devised in anticipation of central and eastern European enlargement, we were persuaded that they still represent the right starting points for any future enlargements. In acknowledging this, we were critical of the Union’s failure to apply the criteria rigorously in the cases of Romania and Bulgaria, which meant that on joining they were not at a point where they could meet the full obligations of membership. This, in turn, led to the creation of somewhat unsatisfactory post-accession instruments. The Copenhagen criteria are helpful and should not be weakened.
The road to accession for candidate countries is, rightly, not just the warm political one; it also involves significant legal, technical and administrative work. The first step of the official enlargement process is an application for membership. After granting official candidate status, the European Council must take a unanimous decision to open formal membership negotiations. A candidate country then conducts negotiations with Ministers and ambassadors of the Union Governments regarding the European Union’s body of secondary legislation—the so-called acquis communautaire. There are 35 chapters of the acquis, such as justice, freedom and security, judiciary and fundamental rights, and freedom of movement for workers. Necessary reforms must be implemented and demonstrated, and we support the rigorous approach to this that has recently been shown. The requirements made of countries have continued to grow and, while this is justified, the Union must take care to ensure that the burden of work it places on candidate countries is not insurmountable—criteria should be strictly necessary, taken in good faith, and should be consistently applied across the board.
I do not wish to dwell on events in any particular country, but I would say that experience shows that we have far greater influence over our near neighbours and candidate countries when it is clear that together, as a Union, we are serious about enlargement and serious about conditionality—that is, that real reforms are followed by concrete progress in the accession process and that there are also consequences when there is any regression. Yesterday, at a European conference in Dublin, we heard from Valentin Inzko, the high representative for Bosnia-Herzegovina, about the importance of developing in that country a political culture of tolerance and compromise. With his great experience, the high representative was very clear about the importance of that conditionality.
The Instrument for Pre-Accession Assistance seeks to provide financial support for aspirant countries’ reforms. We were disappointed to note the many instances of failure to convert funds from commitments to actual spending, and so we recommended that the next IPA should focus more on the strategic aims of the enlargement policy and the needs of candidate countries. Furthermore, a more rigorous approach must be taken to any backsliding over reform, with the Union being willing to slow or halt the enlargement process and turn off the funding tap. If I may express a personal view slightly beyond the remit of our report, I am increasingly attracted to the option of offering western Balkan countries in particular an opportunity to work together on what might be termed self-help projects to which an appropriate degree of challenge money could be made available by the Commission, with the countries themselves being the generators for this process.
The Union must learn some tough lessons regarding the resolution of issues between countries. The entry of Cyprus in 2004 without reconciliation or conclusion between its Greek and Turkish populations has led to a continuing entrenched dispute. That has diminished the Union’s leverage in encouraging both sides to reach a settlement. It is distressing and it is difficult to see the best way to handle disputes such as this. On the one hand, using Cyprus as an example again, resolving the dispute was rightly not a condition of joining the Union, otherwise Turkey would simply have gained a veto over its membership. On the other hand, without a resolution having been found, Turkey’s accession process has itself become more challenging. The Union must strive to find a way to keep disputes between countries from slowing down or halting the enlargement process altogether, while also encouraging practical solutions. There are a number of very substantial disputes that must be resolved before the accession of the current aspirant countries. I welcome the plan for normalisation of relations between Serbia and Kosovo, which has been agreed under the auspices of the High Representative and Member of this House, the noble Baroness, Lady Ashton of Upholland. This has opened the way for both Serbia and Kosovo to move forward along the road to eventual membership.
I have already touched on the political and economic advantages of enlargement. In spite of the economic crisis, the new member states from 2004 and 2007 have seen rapid economic growth after joining. Similarly, compliance with the requirements of accession means that political and, indeed, business landscapes are often changed for the better, with a healthier balance of power between domestic parties and an increased role for opposition parties being fairly common features in new member states.
The benefits of enlargement are also two-way between old and new member states: the Union is better equipped to deal with its neighbours, and existing member states see economic benefits from the expansion of the number of consumers in the single market. United Kingdom exports to central and eastern European countries almost trebled between 2001 and 2011, reaching close to £14 billion in 2011. I am sure other Members will want to speak in greater detail about the risks to certain policy areas represented by enlargement but I shall, for now, limit myself to suggesting that it should be possible to overcome such issues and they should not be seen to deter, let alone to act as a bar, to any future enlargement.
Debates about enlargement and the future of the Union more generally, often tend to focus on a perception that free movement of labour might prove a risk to domestic labour markets. We heard compelling evidence that this was not the case and that migrant workers had often filled gaps in the labour markets of older member states that were otherwise unfilled by nationals. However, it would be remiss not to acknowledge that there have been some negative impacts from the free movement of persons. For example, the relocation of businesses to exploit cheaper labour costs may have impacted on member states economically, and there is undoubtedly a risk of non-workers travelling to receive social security benefits. However, the free movement of workers is a treaty right and an important element of the European Union’s internal market. Member states need to communicate generally the many advantages to their populations and to work collectively to address any genuine concerns that remain within the existing policy frameworks and within those broad objectives.
Turning to the future of the enlargement process, it is right that the Union should have a rigorous process for the admission of candidate countries, not least to ensure that necessary reforms are introduced and entrenched. The eastern partnership countries must undertake significant reforms before they can be considered for candidacy, but equally their desire to be considered should not be forgotten in discussions about future enlargement. I hope that the eastern partnership summit to be held in Lithuania in November is helpful in this respect. We recognise that there is some reticence regarding future enlargement, and we recommend, frankly, that the Commission and national Governments together do a better job of explaining its benefits and warning of the costs of non-enlargement. It is not a cost-free exercise to remain with the status quo.
In conclusion, the Union has a long history of supporting enlargement. One could almost argue that it is within the DNA of the Union to promote enlargement. That is the process that we in the UK have long been associated with and from which we have benefited. Lessons must be learnt from recent experiences, but the current economic crisis and debates about the future role of the EU should not distract us from this important enlargement agenda. The future economic and political stability of Europe in many ways depends on it and it is an intimate part of that process. I beg to move.
Lord Wallace of Saltaire
I simply remind noble Lords that the advisory speaking time for this debate is eight minutes.
Lord Foulkes of Cumnock
My Lords, I am most grateful to the noble Lord, Lord Wallace of Saltaire, as always. I say to him and to others that as the minutes ticked by earlier this afternoon and this evening, I realised what a dedicated lot members of the European Union Select Committee are. I particularly congratulate the noble Lord, Lord Boswell. Before the noble Lord, Lord Roper, disappears, I would like to say how wonderfully the noble Lord, Lord Boswell, has taken over from the excellent work that the noble Lord, Lord Roper, did previously.
Earlier today, in the debate on Scottish separation, one of my colleagues said to me, “You are one of the usual suspects on Scottish separation. Why are you not taking part in this debate?”. Well, obviously, it was because I wanted even more to participate in this debate this evening. There is a connection. If the people of Scotland were unwise enough to vote for separation in September next year, Scotland would have to join the queue for accession as a new member. We deal with this in our report. We point out that it can take a very long time for everything to be agreed, even for a state which had been part of a member state previously.
I welcome the report’s support for enlargement. As the noble Lord, Lord Boswell, said, there are benefits to Britain in terms of our exports to central and eastern Europe which trebled in the decade between 2001 and 2011 and also in terms of the political benefits—the greater stability that we have in Europe as a result of the strengthening of the European Union. Conditionality has been so successful in putting leverage on the applicant countries to democratise, to ensure the rule of law in their countries and other improvements. That power of conditionality has been much more effective than any urging or other kind of pressure might have been.
However, the report expresses some concerns about the loss of momentum on enlargement. I share those concerns. After Croatia, no new countries are expected for a decade. That means a real halt in the process of enlargement that has been going on for some time and it will be disheartening for the applicants. I take in particular the case of Turkey. My own view is that recent events in Turkey have increased rather than decreased the need for Turkey to move towards EU membership. Whether it is any likelier or not is a different matter, but I certainly think that it would help. The Government promised to “re-energise” the accession process for Turkey. Can the Minister clarify what progress has been made in re-energising this process, particularly in making sure that the objections from Cyprus and France are dealt with in the discussions?
I have two caveats in relation to enlargement. The first, as we say in the report, is that there should not be a rush to agree to countries being allowed in as members without sorting out difficulties first. The noble Lord, Lord Boswell, mentioned Cyprus. That teaches us that border disputes must be resolved first. This is a message to Serbia in particular which I hope goes out loud and clear. It is a precondition of Serbia’s ultimate membership that the dispute over its claim to Kosovo is resolved. Bulgaria and Romania remind us that we should not rush to agree membership until all the acquis have been complied with. We should not expect that they can be sorted out afterwards.
My second caveat in relation to enlargement is a personal one, probably not shared by all—or any—of the other members of the Select Committee. Europe is not infinitely elastic on the eastern side. The northern and western boundaries are clearly defined by the oceans, the southern boundary is defined by the Mediterranean Sea, but the eastern boundary is not clear. I have personal reservations about countries self-defining themselves as European and then being accepted as long as they satisfy the acquis. We should not be straying into taking over—annexing, in effect—what are essentially Asian countries just because they want to classify themselves as European and be members of the European Union.
We then come to the question of differential membership: flexible geometry, two-tier, associate membership or however you would like to describe it. Our Prime Minister sometimes seems to hanker after some kind of associate membership for the United Kingdom but the Government’s response to our report, thankfully, rejects a permanent alternative to full membership. Perhaps, if I am not asking too much of her, the Minister could explain this apparent schizophrenia coming from the Government. Perhaps it is because she is in one party and the noble Lord, Lord Wallace, is in another or some such underlying effect. The noble Lord, Lord Wallace, tells me they are joined at the hip, I do not believe that.
Finally, because I want to keep well within my time, all of this assumes that we stay in the European Union. My clear, strong, unequivocal view is that we benefit greatly from European Union membership and that, as an important corollary, other countries benefit from the United Kingdom being a member of the European Union, which is not an unimportant matter. The isolationist, Little Englander argument of UKIP is exactly the same as the one used by the SNP trying to break up Britain. Exactly the same arguments are being used and they are equally wrong.
Of course the European Union needs reform, but we should not arrogantly believe that we are the only ones who see the faults in the European Union—in the Commission, in the structures, and other aspects of it. Other countries do as well. We should, however, seek reform from within, building alliances with those who share our views on the necessary reform. There will be different alliances with different countries on different issues. It takes work and time but it can, and should, be done. We should not be idly threatening to leave the Union if it does not do what we think is right.
This report, like the others from the European Union Select Committee, represents a very constructive part of the process of necessary reform within the European Union and I strongly endorse it.
Lord Teverson
My Lords, I start with the Arab spring, which I was discussing with some friends and colleagues here on the Terrace outside the River Restaurant. We were having a cream tea there—it is almost like a Cornish cream tea and it reminded me of home—and we got onto the Arab spring. I found myself getting into a political cliché by saying, “Yes, of course there are problems in Egypt, Tunisia and Libya, let alone some of the other areas, but democracy is never linear. Things can get worse and then get better”.
Then I thought, “Stop for a moment. Let us think of the biggest revolution we have had in the past 20 or 30 years”. Of course, that is the disintegration of the Soviet empire, when we had linear improvement in democracy, in market economy, market liberty and security. We had all of that as 10 or a dozen states that had been part of a repressive communist regime moved to liberal democracy as members of the European Union, and as members of NATO. That linear movement was one of the greatest effects of the European Union and one of the ways in which we can see that soft power —that leverage and conditionality to which the noble Lord, Lord Foulkes, referred—has worked. That is one of the greatest benefits from the European Union for world peace and prosperity, and that is definitely not an overstatement.
It is that benefit and the enlargement instrument that have shown how powerful the European Union can be. One of the great attributes of all UK Governments is that they have been a fundamental motor of that process and that wish to include states, rather than to put to the side or exclude them from the European Union and its predecessors. I certainly believe that process should be spread, if perhaps not everywhere. In fact, in researching for this debate, I noticed one thing which I had forgotten: that Morocco was rejected when an application was made, I think quite rightly. I believe that we should extend European Union membership and candidature, if not as far as possible, then certainly to the east. Perhaps I slightly differ in that from the noble Lord, Lord Foulkes. As long as the states meet all those criteria, we should extend it whether it is to Ukraine or Moldova and even to Belarus, if that could ever be the case, or Armenia. I agree that there may be certain issues in going slightly further east, but that should be our aim. All organisations, as we know, eventually start to move backwards if they are not moving forward.
As has already been said, one very important area that came out of this report is that ultimately there is no alternative to full membership. Those states would not be satisfied with it, nor would it work. There is the European Economic Area, the associate membership that Turkey has had and the neighbourhood policy for the south and east, none of which is sufficient to satisfy what we would want from European expansion.
I find I am very critical of how one area has been handled in the European Union. That is the way in which we have been very selective about the timing of candidate countries. When it comes to Turkey, its first application was made in 1987 and 12 years later, in 1999, Turkey became a candidate country. To date, we have opened 13 chapters and closed only one, so there is all that uncertainty. Turkey is a very important economy and candidate country, and Europe is mismanaging that process. Frankly, the worst case of all, which shows all the specific European divisions, is Macedonia. Its application was made in 2004 and its candidature was agreed in 2005 but the number of chapters opened—let alone closed—still stands at absolutely zero. That is utterly unacceptable. We know why this situation exists. It is again because of boundary disputes, particularly name disputes, between that country and an existing member state. We must make sure that we are far more consistent about that.
Two years ago I went to a conference in Brussels on enlargement, arranged by the then-Belgian presidency. I went with the noble Lords, Lord Harris and Lord Bowness, and the conference was very well attended. We debated enlargement fatigue, and that idea was of course rejected by the delegates. There was a great feeling that we should move forward with enlargement, particularly with the western Balkans. There was only one difficulty with that conference. No parliamentarian from Germany turned up, and not one from Spain. There might have been one from France, but none from Italy. It was an example of how for many of the larger nations, particularly those towards the west of Europe, the enlargement agenda had greatly receded. We need to stop that.
As we approach the anniversary of 1914, it is so obvious that I again risk a cliché by saying that the travails of Europe from 1914 through to 1989 started in the western Balkans. If there is a sacred mission for Europe, it is integrating the western Balkans into the European Union, under the right conditions. We could then offer security, freedom, a market economy and the type of atmosphere that we would want to live in, not only to the people living in the western Balkans but to Europe as a whole. As other noble Lords have said, it is an irony that although Britain is still foremost in asking for and promoting enlargement, we have started a feeling within the rest of Europe that Britain is itself heading for the exit. That is not just a paradox; it is potentially a contradiction in our policy. It threatens to dilute our ability to champion the cause of enlargement.
Two months ago I had the privilege of going to the Baltic states for the first time. In Estonia we met the Prime Minister and a number of other political people. One day we went to a town called Kuressaare, on the island of Saaremaa, which looks out across the Baltic. It was of course one of the areas that was formerly part of the Soviet Union, and the authorities were very careful to make sure that it was patrolled. There is a museum about the local Soviet commissars and everything else under the Soviet occupation. Yet Estonia is now one of the most vibrant liberal democracies. The economy is moving upward. The country is a member of the eurozone, and very successful. The country now wants more of Europe to be a part of Europe. We must ensure that that spreads, not only to the western Balkans, but at the right time and under the right conditions to the rest of eastern Europe as well.
Lord Hannay of Chiswick
My Lords, I speak as a habitual complainer about the dilatoriness of the scheduling of debates on the reports of this House’s Select Committee on the European Union, and indeed of other committees. However, it is only fair on this occasion to congratulate the usual channels on having arranged this debate promptly and in a particularly timely fashion, coming as it does when the EU is taking stock of its further enlargement policy.
The timeliness of the debate is wider than such rather ephemeral considerations. A combination of the distraction of the eurozone crisis, and a certain air of enlargement fatigue, has caused this issue to drift towards the margins of the policy debate about the future of the European Union, both in Brussels and elsewhere in Europe. Yet, as is shown by this report, the quality of which owes much to the skilful chairmanship of the noble Lord, Lord Boswell, the further enlargement of the EU is of significant importance to the future security and prosperity of the union, and to its prospects of playing a stabilising role in its immediate neighbourhood and beyond. We would be deluding ourselves if we thought that the process of definitively putting behind us the mayhem which engulfed the Balkans in the 1990s could be achieved without setting all the countries in that region on a sustainable path towards membership. We should equally be deluding ourselves if we thought that we could turn our backs on Turkey, the most vibrant economy in Europe and a rising regional influence, without serious negative consequences for ourselves. We should also be deluding ourselves if we believed that cold-shouldering the European aspirations of countries which emerged from the former Soviet Union to a shaky independence would not further Russia’s ambitions to create for itself a sphere of influence around its borders. Quite a lot is therefore at stake in the way the EU handles its further enlargement, and it cannot be said to be doing so very skilfully or very purposefully at the moment.
In addition to these general geopolitical considerations in favour of further enlargement, I want to focus on three specific issues: first, the need to avoid importing into the EU existing territorial disputes, either between future member states or between them and their neighbours; secondly, the need to guard against backsliding by new member states on their commitment to the Copenhagen criteria for membership after they have joined the club; and, thirdly, Turkey, where recent developments have been troubling for its friends even though they should not, I would contend, have shaken their fundamental support for Turkish accession.
With the benefit of hindsight, most people now recognise that the EU’s handling of the accession of Cyprus with the division of the island unresolved was, to use a diplomatic phrase, suboptimal. The report that we are debating said as much, and it has since been roundly denounced for it by both Greek and Turkish Cypriots—a symmetry of denunciation which in my own lengthy and fairly painful experience of trying to resolve the Cyprus problem normally means that you have got it about right. It is not hard to identify similar disputes in relation to the existing candidates and aspirants: Cyprus, again, in the context of Turkish accession; Serbia and Kosovo; Macedonia and Greece; Moldova and Transnistria; and a whole rash in the republics beyond the Caucasus. That does not make them any easier to resolve. In the case of Cyprus’s accession, one can see that the EU would in theory have done better to make settlement of the dispute a condition of accession. However, to have done that at a time when the leader of the Turkish Cypriots, the late Rauf Denktas, and the then Government of Turkey were making any attempts at compromise completely nugatory would have been to hand them a veto which they would not have hesitated to use. There are parallels with some of the future members. Each case will need to be treated on its own merits and the EU needs to address each in a timely and proactive fashion as it is doing, admirably in my view, in the case of Serbia and Kosovo. There is no magic solution, no template, for every case. What one can say is that some unilateral attempts at exercising pressure, such as Greece’s continuing blockage on even opening negotiations with Macedonia, are both counterproductive and deplorable. I entirely agree with the noble Lord, Lord Teverson, on that point.
There is also the problem of backsliding on the Copenhagen criteria and other values and responsibilities of membership. There is experience of that in the cases of Bulgaria, Hungary and Romania. It has become painfully evident that the EU is better placed to handle such problems before a country has joined the Union than it is afterwards, although some instruments are available even after accession, if extremely hard to apply. Again, as in the case of international disputes, there are no obvious, easy and universally applicable solutions, but it seems desirable to ensure that, before a country accedes, the basic values which justify its membership are firmly entrenched in that country’s laws and constitution, and that the machinery to uphold those values is in good working order. I rather doubt whether new dispositions for handling post-accession transgressions will prove either negotiable or operable.
Recent events in Turkey cannot have left any of Turkey’s friends untroubled. Even before the demonstrations in Istanbul, the repression of critical press comment had cast a dark shadow over the remarkable progress made in recent years. The peaceful demonstrations were, from the outset, met with the disproportionate use of force, and the Turkish Prime Minister’s rhetoric has been extremely divisive. That said, it is equally important to say what this is not; it is not a series of events in any way analogous to the uprisings in the Arab world against undemocratic dictators. Turkey is a working democracy, and it is for Turks, using their democratic institutions, to work out their solutions to the problems and protests that have emerged, while above all respecting the rights of citizens to peaceful protest and to express their views through a free press.
What role should outsiders play? They should certainly not, I would argue, block or suspend the already pretty stagnant process of Turkey’s EU accession negotiations. One thing comes clearly through the pages of the report that we are debating: the EU’s ability to influence candidate countries varies in proportion to the progress being made in the technical aspects of the accession negotiations. If that process moves along, long though it may be—and the process with Turkey has a long way to go—and if it is on a clear and sustainable path, the EU can exercise real conditionality and can hope to have real influence; if not, it cannot.
As a steady supporter of Turkish accession, I hope that the Government will maintain that case, while making it clear that Turkey’s eventual accession will require unquestioning and credible adherence to the Copenhagen criteria. In that context, the agreement reached in the Foreign Affairs Council yesterday to delay the opening of the next chapter of Turkey’s accession negotiations until the autumn, while perhaps better than some of the alternatives, merits no more than one cheer.
As we in this country debate our future in the European Union—and I welcome the Prime Minister’s recent statement that our future lies in the European Union—it is surely essential that we develop a positive reform agenda for the EU as a whole. Within that agenda, I would argue, the further enlargement of the EU should have a prominent place.
The Earl of Sandwich
My Lords, I thank my noble friend for his balanced introduction to the debate. It has been a pleasure to work on this report because it shows the European Commission at its very best. If we must have an EU referendum, surely the progressive enlargement of the European Union in the Balkans is one of the strongest arguments for a yes vote. The war in the former Yugoslavia is still a recent and bitter memory for the communities involved.
As the noble Lord, Lord Foulkes, said, it is undeniable that there has been greater stability in Europe since the Kosovo war ended with the KFOR-Serbia treaty of June 1999 and the EU in its various forms took over responsibility. Every new member of the EU has benefited economically from trade within the EU —even more recently while the older member states have suffered recession. This debate is timely, not because the UK is quietly marking its ruby anniversary in the EU but because in a few days, as we all know, Croatia will become the latest example of enlargement as the 28th member of the Union, following Bulgaria and Romania.
Perhaps we can now dispense with the phrase “enlargement fatigue”, since more candidate states and even eastern neighbours, such as Ukraine, are in the pipeline to the EU, as the noble Lord, Lord Teverson, said. Perhaps this is a moment for us to congratulate the Ukrainian tennis player, Sergiy Stakhovsky, for conquering the long-term Wimbledon champion this evening. Yet the road to enlargement in most cases will be painfully slow and beset with obstacles, and some may never make it. Indeed, I believe, in the case of Turkey, EU membership may not be an ideal solution.
Kosovo, one of the potential candidates, which seems to have the furthest to travel, nevertheless at times symbolises the EU’s determination to move forward. Perhaps that is because, as the noble Lords, Lord Foulkes and Lord Hannay, said, it does not want to make the Cyprus mistake again. Peace in Kosovo today is one of the cornerstones of EU foreign policy, stoutly defended by the EEAS through various policy channels. It is a major EU project. In fact, it is the largest recipient of EU investment per head anywhere in the world. Quite apart from security guarantees, there is a huge human and financial investment in Kosovo’s future as Europe’s youngest independent country. Yet, for their own reasons, Cyprus, Greece, Spain, Slovakia and Romania are still refusing to recognise it. Even some of its neighbours—as I will mention later—will not invite it to their regional meetings.
Much depends on Serbia. As a result of a carefully crafted diplomatic effort over the last two years, an important agreement was reached—as the noble Lord, Lord Boswell, mentioned—between Belgrade and Pristina in Brussels on 19 April. Indeed, an earlier agreement was announced by Commissioner Füle on the very day that the committee took evidence from him in Brussels. Just two more border points between Kosovo and Serbia had been established. I well remember the excitement in the Commission that yet another small but significant step had been achieved. Implementation followed in May. The noble Baroness, Lady Ashton, met Prime Ministers Dacic and Thaçi last Thursday and reported on Friday that the EEAS had reviewed the implementation plan and that there had been concrete progress and further agreements on justice, police and the forthcoming municipal elections. This is important detail and much is owed to the recent meeting of Serbia’s First Deputy Prime Minister, Aleksandar Vucic, with representatives of northern Kosovo Serbs in Belgrade. There, he commendably laid down the law to the four mayors and councillors.
The EU’s approach is nothing if not methodical and this seems to be achieving political results, which are remarkable when set against the violence of civil war only 15 years ago. Yet we know that, under the surface, the old rivalries are simmering. The worst forms of extortion and corruption can still be found as much within the KLF ex-combatants now in power in Kosovo as among the criminal mafia and the Serb no-go areas in the north. The EU is still, of course, backed by NATO in any emergencies such as shooting incidents in Mitrovica, but the key Copenhagen principles of the rule of law, human rights and democratic government are at stake.
On the rule of law, the EU has a long way to go and even, at times, appears to be losing the battle. The project known as EULEX, the biggest tool in the EU’s armoury, is failing to meet its objectives. The European Court of Auditors reported last October that its assistance had not been effective, as levels of organised crime and corruption in Kosovo remained high and the judiciary continued to suffer from political interference, inefficiency and a lack of transparency and enforcement. The court found that there had been no progress in establishing the rule of law in the north. That is a serious matter but the ECA report did not surprise the people of Kosovo, who for some time have watched the failure of the EU’s flagship project—which employs hundreds of judges, barristers, police and other officials. The UK has been one of the key investors, so can the Minister explain how this vital project has foundered? What action has been taken since to reform and rebuild the EULEX programme?
Beyond Kosovo and Serbia there have been many other concerns about justice and the rule of law in the region. The situation in Romania and Bulgaria has already been mentioned. Our report is another reminder that the co-operation and verification mechanism process used in those countries must come at the very beginning and not as an afterthought. That is also relevant, as has been said, to Kosovo and Serbia. Our report makes much of these processes and formulae such as the Copenhagen criteria. That reminds me that people working on EU issues must be careful not to use too much jargon or too many clever acronyms or we will be seen for what we are: an in-group with a temporary knowledge of EU institutions who speak a language only we can understand. Of course, I make a general point.
The committee also notes that the great fears expressed about the effects of enlargement on the Common Agricultural Policy turned out to be unnecessary. The proportion of agriculture in the EU has risen and is still rising with the accession of new members. The NFU and other witnesses have expressed concerns about lower standards of cultivation and flouting of health and safety, but these tendencies have not prevented a healthy trading partnership between old and new member states.
We must not forget that poverty persists in many areas of former Yugoslavia, including parts of Kosovo, where our DfID office has only recently closed, for a reason that I still cannot fathom. While Croatia is level with Hungary in terms of gross national income per head, at about $13,000, the average income in Albania, Kosovo, Bosnia and even Serbia is less than half that, below $6,000 per head. Through the EEAS and the Commission, the EU sometimes has to fill the combined roles of a teacher and a nanny on local government or regional co-operation, and I wonder whether it has the necessary skills.
Take the fiasco of the Ohrid summit this month, for example. It was a regional meeting, scheduled for 1 and 2 June in the Macedonian beauty spot. The summit was cancelled after Albania and Croatia announced that they would not attend because Kosovo had not received an invitation, which was in clear breach of the April agreement. There is no point in having agreements if they are not implemented. Like it or not, the EEAS has to be sure not only that the parties follow them to the letter but that the neighbours do as well. This may be a tall order in the Balkans, but it is the litmus paper of the success of enlargement.
The balance of competence review is coming soon, we hope, and it will confirm that we are on the whole getting satisfaction in Europe. I trust that this understanding continues well beyond the next election.
Lord Kilclooney
My Lords, I first congratulate the noble Lord, Lord Boswell, and the members of his European Union Committee on this excellent report, which clearly outlines the opportunities and challenges as nations apply to join the European Union as new members. As the noble Lord said, it is timely that this report be debated in this House: not simply because Croatia is likely to be confirmed as a new member this week, but also because there are ongoing issues of major importance at this time. For example, there is the European Union and United States trade agreement; CAP reform, which I hope may be confirmed this week, especially for Scotland and Northern Ireland, where agriculture is important; and the ongoing major issue of banking union within the EU.
I well remember that when I was a member of the European Parliament in Strasbourg, we regularly met the Prime Minister of the United Kingdom. One occasion always stuck in my head. The Prime Minister said: “You should encourage greater enlargement of the European Union, because the more countries that join, the more likely it is to collapse”. That was the understanding of what enlargement would mean in practice. There could be some truth in it. Croatia is now about to become a member and yesterday it was agreed to commence Serbia’s accession negotiations and an association agreement with Kosovo as well. Of course, all this is subject to the approval of the European Council, but enlargement is ongoing.
One of the conditions is that new members in the European Union should also accept the euro as their currency. The Chancellor in his Statement on the economy today said that the eurozone is in crisis. That phrase has been used by several contributors to this debate this evening. It is the case in Portugal, Spain, Greece, Greek Cyprus and the Republic of Ireland; you have only to look at the Financial Times today to see the leaked tapes about the banking situation in the Anglo-Irish Bank to realise that there are ongoing problems in the eurozone. There are increasing fears about Italy as well over the next six months. As recently as last week, a senior French Minister said that the worst in France is yet to come. So the question arises: should accession of new members to the European Union require compulsory membership of the eurozone? Why not provide them with the same opportunity as the United Kingdom to be a member of the European Union but not a member of the eurozone?
Turkey was mentioned in the report. I well remember the European Council meeting in Luxembourg. Perhaps Members of our House have forgotten the events of that lengthy session, which went on and on until one minute before midnight, when it came out with a compromise—the deadline was midnight. The compromise was that Croatia and Turkey could apply to join at the same time. That was then agreed by the European Council.
I come from the island of Ireland, and I recognise sectarianism when I see it. As a Member of the European Parliament, I recognised that France and Germany would not agree to 80 million Muslims coming into the European Union. I remain convinced that that is the underlying problem as Turkey tries to become a member of the European Union. As has been mentioned, Turkey has its problems. Democracy in any country is not simply rule by the majority, it also requires the consent of the minority, and that does not seem to apply in Turkey today. We have the decision yesterday to start further accession talks on Turkey, which has aroused opposition from Germany, France, Austria and Greek Cyprus. It seems difficult to foresee Turkey being able to join the European Union, and I say that as one who has been a friend of Turkey for 40 years. It may well be that Germany is right and that a special arrangement with Turkey is now the way forward.
There has also been reference to Cyprus. I am delighted to see that the committee has stated in its report that it was wrong to allow Greek Cyprus to join on its own. The decision to allow EU membership before a settlement was foolishness in the extreme, and many of us said so at the time. However, the application was supported by Her Majesty’s Government on the recommendation of its advisers on Cyprus. They should now all hang their heads in shame, and many of them are now publicly doing so. Only last week, I heard one who was involved in the discussions saying so.
Lord Hannay of Chiswick
I am most grateful to the noble Lord for allowing me to intervene to say that I am not hanging my head in shame. I explained the situation in my speech, which perhaps the noble Lord did not hear properly. I did not say, and the report does not say, that Cyprus should not have been admitted. It states that the European Union was not sufficiently zealous at ensuring that a solution was reached before.
Lord Kilclooney
I have to say that I heard the noble Lord’s speech and listened to it very carefully. I have to say that his opinion at the time of the accession of Cyprus was wrong and that some of those who agreed with him at the time now say that it was wrong and are apologising. I hope that, some day, he will do the same.
On Cyprus, reference has been made to Turkey’s role, but Turkey encouraged the Turkish Cypriots to vote for the Annan settlement—oh yes—and the Turkish Cypriots voted for the settlement in Cyprus. It was the Greek Cypriots who voted against the United Nations Annan plan for a settlement, so it is wrong to finger Turkey, as is suggested in the report; it was others who created the problem.
In foreign affairs and security, the EU has only France and the United Kingdom really to rely on, because they are members of the United Nations Security Council. The others will talk a lot but do very little. As enlargement proceeds, questions should also arise as to whether the EU should cease to have a role in foreign affairs and security.
In conclusion, clearly the European Union needs to revise existing treaties as it considers a revised relationship with the United Kingdom itself.
Baroness Hayter of Kentish Town
My Lords, today is quite special for me. It is the first time that I have spoken in your Lordships’ House on Europe, yet I am a child of that project, my life having followed the momentous moves that we have seen on the post-war continent. I was born to a member of the occupying forces in Germany in 1949. I worked in Brussels from 1 January 1973, the day on which we joined the Common Market. I have been involved in the EU as it went from six to nine to 12 to 15, and shortly it will be 28. Particularly on that other 9/11, 9 November 1989, I watched as the wall began to fall. Then I worked in the European Parliament as the enlarged Germany took its place in the then European Community.
The EU, for many of us, embedded post-war security and democracy, then went on to help Greece, Spain and Portugal shake off their pasts and enter the democratic family. As we have just been reminded, just days away we will similarly welcome Croatia. As the noble Baroness, Lady Ashton of Upholland, the EU’s High Representative, has said, Croatia’s membership is good for it, but also for the rest of the EU.
This is a timely debate. It enables us to pay tribute to those who helped bring this about and to note how this accession of Croatia reminds us of the journey that Europe has made and how far a country like Croatia has come towards a more peaceful and prosperous future. That is not to say that there are no lessons to be learnt. We also pay tribute to the excellent report that is typical of the analysis that your Lordships’ committee brings to its work under the leadership of the noble Lord, Lord Boswell, to which the noble Lord, Lord Hannay, has already paid tribute.
That analysis is much needed when attitudes to Europe are driven by emotion rather than rational calculation of our national interest and when the governing party engages in some meaningless posturing with the European Union (Referendum) Bill, as it will do in the debate in another place next week. Today we are talking not about pulling out, about a smaller Europe, but about EU enlargement, a proud achievement of the previous Government. When Labour came into office in 1997, Europe had dithered for eight years about enlargement after the fall of the Berlin Wall. There was talk of long delays, of eastern countries moving slowly towards membership, with perhaps two or three joining in five years and others perhaps never to join.
Labour took a bolder approach, helped by Lionel Jospin in France, Gerhard Schroeder in Germany and the enthusiastic Commission president, Romano Prodi. Even more, the 1999 Kosovo conflict was a wake-up call, demonstrating the risks that Europe was running post-Cold War. The division of Europe into two opposing blocs had disappeared, but we risked a return of ugly nationalism, ethnic cleansing and mass murder; a risk that the European Union was not prepared to tolerate. Just as, in earlier years, the EU had helped cement democracy in Spain, Portugal and Greece, so now it knew that enlargement could help the new emerging democracies gain independence and self-respect in a framework that guaranteed stability and the rule of law, while the single market and structural funds promoted economic development. Ten new democracies joined in a big bang in 2004, with Bulgaria and Romania set for membership in 2007.
To those who say that the EU can never change, this was the biggest transformation in its history. Did Europe get it absolutely right? The report offers some legitimate points of criticism, albeit in very diplomatic language. Some member states were not as ready as they might have been. There have been concerns about criminal gangs and the functioning of the Bulgarian state. There are allegations of systemic corruption in Romania. In several countries, the legislation for equality of treatment for the Roma has been honoured only in the breach. Some new members even show signs of regression to a darker past. There are concerns about the Government in Hungary. Constitutional changes have packed the courts and the central bank with government cronies, limited the ability of opposition parties to function and even curtailed freedom of the press and of religion. Tragically, anti-Semitism is again literally on the march within the boundaries of the Union.
However, we would not have solved these problems by keeping those countries out of the EU. Indeed, increasing their isolation and inhibiting economic development would have aggravated those very problems. But once countries are in, they must live up to the obligations of membership. There must be no backsliding, to use the words of the noble Lord, Lord Hannay. There is a suspicion around that the Government have pulled their punches in criticising the Hungarian Government because they see Hungary as an ally in their search for some sort of looser relationship with Europe. Shame on them if that is the case. There should be no loosening of the EU’s commitment to democracy and human rights. If breaches of these principles increase, action must be taken.
The EU can be a positive force for change in applicant states, both before and after entry, as has been made clear during the debate. The EU helped Slovakia on to a democratic path and secured fairer treatment of its Hungarian minorities. Croatia will join on 1 July, having accepted that the price of membership was to surrender suspected war criminals to international justice. It has made great steps in order to satisfy the criteria, to the benefit of its people. Serbia has shown flexibility on the Kosovo question, the incentive being the opening of membership negotiations, as described by the noble Lord, Lord Boswell. That is why enlargement should continue.
What about the argument that enlargement has led to more migrants than we can accommodate? Well, we underestimated the numbers who would come here after 2004, and there were adverse consequences for the wages of the low-skilled, and pressures on housing, but the answer is not to blame the Poles or other migrants or the policy of enlargement. It is to build more housing and to ensure that the minimum wage is enforced. It is exactly in order to prevent wage undercutting that Labour will try to get the posted workers directive revised because, I am sad to report, the Government are failing to tackle the exploitation of foreign workers, which leads to the undercutting of local workers. The Government are failing to enforce the national minimum wage. They have taken no action on agencies recruiting only from abroad and no action to extend the gangmasters licensing legislation. Furthermore, they have failed to champion the enormous contribution EU migrants make to our hospitality and healthcare sectors. Indeed, I sometimes think that our social care system would be near collapse without them, while had we implemented UKIP’s policy of EU withdrawal and sent eastern Europeans home, we would have to handle the return of elderly Britons who had retired to France, Portugal or Spain but who would no longer be entitled to live there.
We stand behind enlargement, as we stand behind our membership of the EU. It has achieved enormous good and it can, and I believe will, achieve far more.
The Senior Minister of State, Department for Communities and Local Government & Foreign and Commonwealth Office (Baroness Warsi)
My Lords, I thank the noble Lord, Lord Boswell, for introducing this important debate and for his and his committee’s role in bringing the important issue of EU enlargement under the spotlight in this inquiry. The report and this debate are timely. As many noble Lords mentioned, in just four days, Croatia will join the European Union as the 28th member state. It does so at a time of economic crisis amid debates about the future of the euro area and the Union itself, and as we seek to ensure that the enlargement process remains fit for purpose, having learnt the lessons from previous enlargements.
I welcome the cross-party support shown by this House towards EU enlargement. The Government believe that this support is justified. As the report under debate recognises, enlargement offers benefits to the UK, the EU and the candidate countries themselves. First, there are political benefits, as the power of enlargement drives reform. Secondly, there are economic benefits, as the benefits of political reform help create a larger and more prosperous single market. Thirdly, there is the benefit of security, as better-functioning states, integrated and at peace with their neighbours, reduce the space for organised crime and corruption, and help to spread peace and stability across the region. However, to ensure a credible enlargement policy, progress must be based on candidates meeting the proper standards—as set out in the Copenhagen criteria and the EU’s acquis—through firm, but fair, conditionality. The noble Baroness, Lady Hayter, highlighted some of these challenges. I can assure her of the Government’s commitment to these standards, and to the values of the Union.
Croatia’s accession demonstrates this clearly. Croatia will be the first western Balkan country that was involved in the conflicts of the 1990s to join the EU. That itself is evidence of the transformative power of the European Union. The end of six years of the toughest accession negotiations yet will be marked on 1 July; Croatia is joining the EU better prepared than any previous candidate. As Croatia’s Deputy Prime Minister has said, the reforms have,
“changed the country beyond all recognition”,
with Croatia the first country to negotiate under the new Chapter 23, which specifically addresses rule of law reforms. Our confidence that Croatia would be ready in full by 1 July was further enhanced by the introduction of pre-accession monitoring, when we agreed to close accession negotiations in June 2011.
The process of transformation will not stop when Croatia joins the EU. Membership provides the foundations for Croatia to continue to tackle domestic challenges; offers opportunities to harness the potential of the single market and to co-operate with member states in tackling cross-boundary challenges such as climate change and organised crime more effectively; and provides the tools to help Croatia return to sustainable, competitive growth through access to the world’s biggest single marketplace and to the EU’s structural and cohesion funds. Croatia’s success is important as a catalyst in the region, too. It provides the clearest example for its neighbours that political will and determination to push through reforms are absolutely necessary—but also that the EU also delivers its side of the bargain in return.
Embedding rule of law reforms in accession countries is fundamental to the success of enlargement. Rule of law reform has been central to Croatia’s progress, as the EU took on board the lessons learnt from the previous accession. The process continues to evolve. Under the “new approach”, Montenegro and all future candidate countries will address rule of law issues up front in their accession negotiations, which will maximise the time available for implementing and embedding reforms.
It is not just the political conditionality that is evolving. In the context of Europe’s economic challenges, the Council’s conclusions on the European Commission’s 2012 enlargement strategy flagged that enlargement must also deliver economic success, not least given the current requirement for new member states to join the euro area. This is also crucial to ensuring that EU membership remains a strong incentive for aspirant countries. The Government are committed to the principle that eventual membership is open to all European countries, so long as they meet the criteria as set out in the EU treaties. We share the view set out by the committee in its report that there are no viable alternatives to EU enlargement.
My noble friend Lord Teverson referred to other, looser associations for aspirant countries to have with the EU, such as the European Economic Area. However, I agree with him that the prospect of membership is often the only thing strong enough to overcome the powerful vested interests that too often stand against political and economic reforms. It is therefore vital that the EU both maintains momentum on the enlargement process and ensures that it delivers on its side of the bargain. We should not forget the opportunity costs of turning countries away from Europe.
The risk that candidates may tire of the struggle if rewards are not forthcoming is real, as the committee’s assessment notes. That is one reason why the UK has supported innovations in the enlargement approach, such as the new approach to rule of law issues. Ensuring that candidates can start to feel the benefits of their reforms early on can help reinforce the necessary political commitment. It is the responsibility of every member state to ensure that this momentum is sustained. Artificial pauses, which some call for to resist what they fear is an inexorable expansion, are misleading and damaging. They can damage the confidence of aspirants in the EU’s credibility and impact on the long-term benefits of EU enlargement. Such calls are also predicated on the misunderstanding that enlargement is inevitable: progress towards accession is based on candidates’ own merits, and is far from guaranteed. It is also important for the integrity and continued momentum of the enlargement process that bilateral issues are managed constructively and do not affect EU enlargement policy or any candidate’s accession negotiations. Ensuring the continued centrality of the spirit of good neighbourly relations is therefore vital. As long as the accession process remains adaptable to the conditions of each country, able to respond flexibly to new pressures and to learn from past mistakes, the process of negotiations should not be a barrier to individual countries’ progress.
The noble Lord, Lord Foulkes, and my noble friend Lord Teverson referred specifically to the Prime Minister’s view. The Prime Minister’s vision for a better Europe is central to our conditions-based approach to enlargement. We take strength from the EU’s expanding membership, which is essential in bringing creativity and expertise to the EU. In fact, further enlargement increases this diversity and creativity, but further enlargement does not simply mean more Europe.
The noble Lords, Lord Foulkes, Lord Hannay, and Lord Kilclooney, and my noble friend Lord Teverson raised the issue of Turkey. The Government continue to support strongly Turkey’s accession. In December, the UK worked hard with other pro-Turkey member states to secure enlargement conclusions endorsed by the European Council, which reaffirmed the EU’s commitment to an active and credible accession process. The Turkish Government welcomed these. The enlargement conclusions we secured in December 2012 were forward-looking and gave the Irish presidency and EU institutions a strong mandate to make real progress in 2013. We welcomed recent improvements in relations between France and Turkey and France’s decision to lift its block on Chapter 22 on regional policy. We are pleased that, despite last-minute German concerns, a deal was reached on Chapter 22 allowing a technical opening. I note the concerns of the noble Lord, Lord Hannay, but, like him, I believe, and the Government believe, that progress on the accession process is the best way to support Turkish reform. Now more than ever the EU needs to engage with Turkey. The recent protests serve to highlight the strategic imperative of EU support to Turkey’s accession process as a driver of domestic reform.
The noble Lord, Lord Foulkes, also raised the issue of Serbia’s recognition of Kosovo. I agree with the conclusions of the report that bilateral disputes should not play a role in the accession process. The pull of the EU has already delivered considerable progress in the normalisation of Serbia’s relationship with Kosovo. Part of the April dialogue agreement was a clear commitment from Serbia not to block or encourage others to block progress on Kosovo’s EU path.
My noble friend Lord Boswell also raised the issue of the IPA. The Government share fully the committee’s view of the importance of a strategically targeted instrument for pre-accession assistance. We have pressed strongly for a more results focused instrument closely linked to the objectives of the enlargement strategy for the period 2014 to 2020.
My noble friend Lord Boswell and the noble Lord, Lord Foulkes, also questioned whether enlargement was losing its momentum. The strategic benefits of enlargement for both current and future members will be realised only if the process is an economic and political success. To achieve this is likely to need time, with each country only moving forward as and when it is ready, once it has addressed its specific challenges. Clear results over time will enable us to communicate and demonstrate the ongoing benefits to EU citizens. The EU needs to facilitate enlargement, but the rate of progress needs to be determined by the aspirant countries themselves.
The noble Earl, Lord Sandwich, asked about Kosovo and specifically about the EU’s rule of law mission in Kosovo. The Government believe that this has a vital role to play in enabling Kosovo to meet EU standards in the rule of law. The mission has had several successes, including customs standards, integrated border management and the return of the remains of nearly 300 individuals missing since the war. The UK currently seconds around 37 staff to the mission.
The noble Lord, Lord Hannay, spoke of the impact of bilateral disputes. He mentioned Cyprus as a clear reminder of the need to seek ways to avoid the importation of bilateral disputes into the enlargement process. On this, the Government share the committee’s views fully. We will continue to work with the Commission and other member states to encourage an open and transparent approach to resolving disputes and to explore mechanisms to protect the momentum of the enlargement process.
EU enlargement remains as relevant today as it ever has been, notwithstanding the changing economic and political landscape in Europe. It is a vital tool for Europe in promoting democracy, encouraging freedoms and increasing the potential of the single market to the benefit of aspirant countries and existing members. The Government’s vision of a reformed EU is therefore not just compatible with but mutually supportive of a robust and successful enlargement policy that delivers increased diversity and a larger single market, ensuring that countries are fully prepared to contribute positively to a more effective EU upon their membership.
The next step in the process of reuniting Europe lies in tackling the remaining challenges of the western Balkans and reinvigorating Turkey’s accession process. Rule of law, migration and other challenging issues can and must be addressed, through rigorous conditionality, to deliver the foundations for secure and successful future member states, maintaining the credibility of enlargement as a lever for reform and ensuring that the benefits it promises can be realised.
Therefore, once again, I welcome the committee’s report. It is a reminder that, although there are challenges to be addressed, we remain unwavering in our support for further EU enlargement, that to sustain the momentum the EU needs constructive approaches from its member states, and that the EU and its member states need to better communicate the benefits of enlargement to people across the EU and to aspirant countries.
This Government will remain an active champion of further conditions-based EU enlargement. I therefore warmly welcome the European Select Committee’s support for the enlargement agenda. The thoroughness of the committee’s examination of these issues will continue to provide a valued contribution to our policy formulation.
Lord Boswell of Aynho
My Lords, at this late hour, it would perhaps suffice if I were to comment on the quality and absorbing nature of this debate, and on the remarkable staying power displayed by my colleagues on the Select Committee and others who have participated in it.
However, I think that I should take just a moment further than that to reflect on the fact that, while there are always differences of emphasis and occasionally of substance, generally there has been what I would describe—I include in this both Front Benches and the other contributions—as a steely consensus behind getting on with this job and a belief that it is possible, not in a spirit of recrimination or rehashing the past, to learn lessons and get on with the next stage of enlargement. That I find very encouraging.
It would be inappropriate to comment on each speech, but perhaps I may break from that and refer just for a moment to the noble Lord, Lord Teverson. He has made a distinguished contribution tonight but I should like, in particular, to reflect on the fact that he has recently left the chair of our External Affairs Sub-Committee, which he served with great distinction. That has in no sense been diminished tonight and we are very grateful for his contributions both tonight and on earlier occasions.
It is generally the case that, in this House at least, matters connected with the European Union are treated seriously, sensibly and constructively. I think that we have generally met those obligations. Equally, there is a sense of diffidence or restraint because we know that this is not an area in which the United Kingdom would expect to take unilateral action or where we should expect magic solutions immediately. We need to continue to work patiently with other member states and with our friends who see this agenda as important. I should perhaps have recorded that we need to continue what has been a very constructive dialogue with Commissioner Füle and his Cabinet and other members of the Commission who are also committed to these objectives. We need to keep the process very much at the forefront of our attention. I think that what we have done in our report—I add modestly—is at least to set the climate for doing that and to point to the opportunities and benefits of doing so.