House of Commons

Thursday 24th October 2013 Commons Chamber

Thursday 24 October 2013

The House met at half-past Nine o’clock

Prayers

Thursday 24th October 2013 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 24th October 2013 Commons Chamber

The Secretary of State was asked—

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

1. What steps he is taking to support small businesses.

[Nigel Adams (Selby and Ainsty) (Con)]

3. What steps he is taking to support small businesses. [R]

[Dr Julian Huppert (Cambridge) (LD)]

4. What steps he is taking to support small businesses.

[Mark Pawsey (Rugby) (Con)]

14. What steps he is taking to support small businesses.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

We are doing more than ever to support small business. More than 7,000 start-up loans have been drawn down since the scheme’s launch in September 2012. Over the past year, UK Trade & Investment has helped 31,800 businesses to export, the growth accelerator scheme has supported more than 9,000 small businesses, and the regional growth fund has helped a further 3,000.

[Rehman Chishti]

I am grateful to the Secretary of State for that answer. Will he clarify how many businesses have been backed by the Government’s start-up loan scheme, and are there any plans to extend it further?

[Vince Cable]

We estimate that something of the order of 7,000 start-up loans have been drawn down since the scheme’s launch in September 2012, a significant number of them in the hon. Gentleman’s constituency. To sustain it, we have made available an extra £34 million from September, to bring the total to £151 million.

[Nigel Adams]

Business creation is on the up and unemployment is down by almost 30% in Selby and Ainsty since the election. However, many small companies are struggling with crippling business rates. In some cases, rates are almost the cost of the rent they are paying. What can the Government do to encourage local councils to engage with small businesses to assist them with their rate costs?

[Vince Cable]

The hon. Gentleman is right that the trend is a positive one. Half a million small businesses currently get rate relief and a third of a million pay no rates at all. Under recent changes whereby local councils give discounts, as they are now encouraged to do, half of that will come from the Government.

[Dr Huppert]

Arthouse cinemas such as the Cambridge Arts Picturehouse are much smaller and completely different from massive chain multiplexes. Despite this, the Competition Commission wants to force the sale of the excellent Cambridge Arts Picturehouse. The Leader of the House said in response to a question I asked that

“there is no cause for the Competition Commission to seek to intervene”.—[Official Report, 10 October 2013; Vol. 568, c. 314.]

Will my right hon. Friend the Business Secretary talk to the Competition Commission and encourage it to work on real local monopolies and not this issue?

[Vince Cable]

As an avid cinema-goer and, indeed, someone who used to go to that cinema, I have some sympathy with my hon. Friend, but the process is this: the Competition Commission has come to a resolution and the next step has to be to go to the Competition Appeal Tribunal. I suggest to my hon. Friend that, since the Cambridge law faculty has some of the best minds in the country, including that of his predecessor, it may want to take on this issue on a pro bono basis.

[Mark Pawsey]

Having run a small business, I understand exactly the burden of regulation that small businesses have to deal with, and I know how pleased small businesses in Rugby are about the Prime Minister’s commitment to make this Government the first in history to cut the overall amount of regulation. Will the Secretary of State confirm that his Department will lead the efforts to cut burdens that hold back small businesses from growing and taking on more staff?

[Vince Cable]

We are totally committed to that task. Under the red tape challenge—the one in, two out system that my colleague the Minister of State, Department for Business, Innovation and Skills, the right hon. Member for Sevenoaks (Michael Fallon) is leading admirably—we estimate that we have probably already saved business about £1 billion a year, and there is a commitment to extend that process.

[Mr David Hanson (Delyn) (Lab)]

What discussions has the Secretary of State had with his Government colleagues about the impact of energy prices on small businesses? Does he support the Prime Minister’s call for a cut in green taxes? Does he support the call by my right hon. Friend the Member for Doncaster North (Edward Miliband) for a price freeze? Does he support Sir John Major’s call for a windfall tax? Or is he in favour of doing nothing at all?

[Vince Cable]

We have made it clear that doing nothing is not an option. We fully understand the implications of rising energy costs for business, particularly energy-intensive businesses. We have framed compensation arrangements and payments have already been made under the European Union emissions trading scheme, and state aid approval is now being sought for compensation for the carbon price floor for energy-intensive companies.

[David Simpson (Upper Bann) (DUP)]

What more can the Secretary of State do to encourage small businesses to apply for Government contracts?

[Vince Cable]

A great deal has been done at central Government level to ensure that we reach our target of 25% of Government contracts going to small and medium-sized enterprises. Considerable progress has been made in reducing the bureaucracy of pre-qualification questionnaires. The problem remains at the decentralised level—local government, hospitals and so on. Efforts will be made through legislation to simplify that process.

[Bill Esterson (Sefton Central) (Lab)]

The No. 1 issue for small businesses in my constituency is the high level of business rates. I urge the Secretary of State and his ministerial colleagues to support our proposal for a business rate cut, followed by a freeze.

[Vince Cable]

As I have said, there is an extensive programme of business rate relief, which extends to half a million companies. That is a very good programme, but there is an issue with how we will continue to pay for it, given the many other claims on Government spending.

[Paul Blomfield (Sheffield Central) (Lab)]

May I press the Secretary of State further on business rates? Does he not recognise that in his constituency, as in mine, businesses are raising the issue of the rising cost of business rates? Businesses in my constituency welcome the proposal to save them £450 by cutting and freezing business rates. Would that not be welcomed in his constituency?

[Vince Cable]

I am aware of this problem in the town centres of my constituency, and I am sure that it is a problem across the country. I repeat that there is an extensive programme of business rate relief. The Government have given local councils the freedom to offer discounts on business rates and we provide a 50:50 matching contribution.

[Toby Perkins (Chesterfield) (Lab)]

Labour is the party of small business—[Laughter.] Conservative Members may laugh, but their party believes that a business that has 300 members of staff is not that large. That shows how out of touch they are. Some 99% of businesses are smaller than that.

Under this Government, 1.5 million businesses have seen business rates rise by an average of £2,000. Our plan to shelve the Government’s 1% corporation tax cut in 2015 and direct all that money towards reducing business rates has won support among organisations from the Federation of Small Businesses to the British Retail Consortium. Does the Secretary of State not realise that many businesses are being crippled by business rates? Why does he not just follow our lead and end the business rate nightmare now?

[Vince Cable]

The hon. Gentleman seems to have forgotten the record of the last Government. I distinctly remember that in one of the last pieces of legislation that I dealt with in the previous Parliament, the Government started to impose business rates on empty property. That was a few months before the collapse in the commercial property market.

[Mr Philip Hollobone (Kettering) (Con)]

2. How many and what proportion of employees of Royal Mail opted out of the allocation of free shares.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Of the approximately 150,000 employees who were eligible for free employee shares, only 372 opted out of the scheme. Therefore, 99.75% of employees have accepted the shares that we offered them.

[Mr Hollobone]

Is not the number of posties who have opted out of the scheme remarkably low? Despite the threats of industrial action and union militancy, is it not clear that the vast majority of Royal Mail employees have accepted the invitation from Her Majesty’s Government to take part in the biggest employee share scheme of any major privatisation?

[Vince Cable]

Yes, it is a very positive story. The engagement of almost every employee of Royal Mail is extremely encouraging. I seem to remember that under the last Labour Government we lost in the order of 2 million working days through industrial action in every single year. This is a big change for the better.

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

May I remind the Secretary of State that before this privatisation every one of my constituents had a share in Royal Mail? It has been revealed that only a tiny number of people in most constituencies now have any shares at all and that the Prime Minister’s hedge fund friends own a lot of them.

[Vince Cable]

On the contrary, the share register is dominated by large long-term institutional investors, most of whom hold the savings of millions of our citizens.

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

This afternoon, I am due to meet for lunch that great Welsh export and one of the world’s best rugby players, George North. As the Secretary of State knows, George North was bought by Northampton from the mighty Scarlets at a very reasonable price during the summer. Does he think that the hedge funds feel the same as Northampton Saints, because they have acquired the Royal Mail crown jewels at a cut price?

[Vince Cable]

No; in fact, the offer was framed in such a way as to ensure that the shares were acquired predominantly by long-term institutional investors. A few hedge funds are involved and, indeed, some hedge funds take a long-term view.

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

Many small businesses and consumers across the country rely on local delivery offices such as the one in Feltham to pick up parcels and important letters. Will the Secretary of State confirm that there is nothing to prevent Royal Mail from selling off its local properties across the country and moving them to out-of-town locations that will be far more difficult to reach?

[Vince Cable]

I think I know the sorting office that the hon. Lady is talking about, because it is the one that serves my constituency. It was rebuilt and re-equipped three years ago, I believe, so it is wildly improbable that the Royal Mail will now want to sell it.

[Mr Robert Buckland (South Swindon) (Con)]

5. What steps he is taking to improve adults’ basic skills.

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is our priority that all adults throughout England have the English and maths that they need to build successful careers and support their families. We have put English and maths at the heart of our schools reforms and fully fund basic English and maths courses for adults who lack those skills.

[Mr Buckland]

I am grateful to my hon. Friend. Will he join me in congratulating Swindon organisations such as Uplands Educational Trust and Enterprise Works that are providing training and support opportunities to adults with disabilities? What plans does he have to ensure that that provision can be enhanced and increased?

[Matthew Hancock]

I am delighted to hear about creative enterprises such as Enterprise Works and Uplands Educational Trust in Swindon. I know that for many people with disabilities, school or adult education is a rewarding experience that helps them gain life skills. My hon. Friend is a passionate and effective champion of that, and I look forward to talking to him in more detail about those enterprises and others to ensure that we support disabled people as much as possible.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

I know that the Minister will be as concerned as I am that unemployment among young adults is still more than 1 million, and that the number of apprenticeships among adults under the age of 19 is now below the level in 2010. Can he assure the House that in the next set of figures the number of apprentices under the age of 19 will increase? While he is at it, will he explain why he voted against Labour’s plans to use the power of public procurement to increase precisely those vitally needed apprenticeships?

[Matthew Hancock]

Of course we do use public procurement to increase the number of apprenticeships, not least in Crossrail, which is the largest public procurement and construction project in Europe at the moment. It is true that we had to take action to remove some low-quality provision in the 16-to-19 space when we introduced rules to ensure that every apprenticeship was a job, which it had not previously been. I would have thought that the right hon. Gentleman would welcome the improvement in quality. We also have a programme in hand to increase the numbers. Participation in apprenticeships is at the highest level ever, which I would have thought all parties would be able to support.

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

Young adults in north Northumberland who have left school without the basic skills to which the Minister referred do not have ready access to further education, because there are no college facilities within a reasonable distance of them. Will he work with potential providers to ensure that the gap is filled?

[Matthew Hancock]

I have visited Northumberland college, which serves my right hon. Friend’s constituency, and it is an impressive institution. Of course, it is important to ensure that adult skills are available throughout our country, and as the recent OECD study showed, spreading English and maths skills is vital to ensuring not only that we can improve our competitiveness as a country but, most importantly, that we can allow everybody to participate. Improving technologies in teaching will help, but we must ensure that there is access to basic skills throughout the country.

[David Mowat (Warrington South) (Con)]

6. What projects will be eligible for funding from the Green Investment Bank.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

The UK Green Investment Bank has a total of £3.8 billion of funding to finance green projects in sectors within its approved remit, and to date it has committed £714 million, including for waste recycling facilities, energy from waste plant, offshore wind farms and energy efficiency projects.

[David Mowat]

I thank the Secretary of State. It is impressive how quickly the bank has got up and running. However, the scope envisaged during the Committee stage of the Enterprise and Regulatory Reform Bill, and indeed in the Bill’s green purpose, included low-carbon industries such as the nuclear supply chain. I understand that that did not get EU state aid clearance. Are we going to appeal against that so that we can go back to the original mandate?

[Vince Cable]

The hon. Gentleman is right that European state aid restrictions mean that the sectors involved are narrowly defined, and I understand his concern for the nuclear industry supply chain. However, following the announcement of the new reactor this week, and the commitment by the companies involved to provide more than 50% of procurement to British companies, the nuclear supply chain has a really excellent future anyway.

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

The UK Green Investment Bank has indeed been a success so far and part of its success is in bringing in co-investors from the private sector for projects that it supports. Although I do not expect the Secretary of State to admit this, he will know that the Prime Minister’s announcement yesterday of a review of green taxes has already thrown up uncertainty about long-term investment in the green economy. Does the Secretary of State recognise that if the Government are prepared to give long-term price guarantees to new nuclear, they should also give long-term security to the whole green economy?

[Vince Cable]

I thank the hon. Gentleman for his positive comments. He is absolutely right: for every £1 the UK Green Investment Bank puts in, something in the order of £4 of private funding goes in parallel with it. I agree that if we are going to get long-term investment in renewable energy there has to be stability in policy.

[Robert Halfon (Harlow) (Con)]

7. What changes he is planning to make to the national minimum wage.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

I am asking the Low Pay Commission to consider what conditions would be needed to allow the minimum wage to rise in the future by more than current conditions allow and without damaging employment.

[Robert Halfon]

As the Government are supporting hard-working people, does my right hon. Friend agree that we should help lower earners more by raising the minimum wage—by adding regional minimum wage top-ups, increasing the threshold for national insurance or taking people who get the minimum wage out of tax altogether?

[Vince Cable]

I commend the hon. Gentleman for the work he has done on low pay. Indeed, I think he is a member of the Prospect union and has campaigned for the work force in his constituency. I think that the best way forward is the one that we have chosen: lifting the personal allowance, which has so far taken 2.7 million people out of tax. As a consequence, almost 40% of adult minimum wage workers have seen real increases in their take-home pay since 2010.

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

8. What steps he is taking to increase the number of students from Liverpool who go to university.

[The Minister for Universities and Science (Mr David Willetts)]

We have placed increased responsibilities on universities to widen access. Universities and colleges plan to spend more than £700 million a year by 2017 on broadening access, and our highly successful student finance tour is running again this year, providing students and parents with information about the student finance available.

[Steve Rotheram]

The Minister will be aware that we face a difficult task in attracting people from deprived areas in Liverpool to universities and that we also face a challenge in retaining students who have graduated from higher education institutions. What steps does he plan to take to make it more attractive for graduates to stay in the city of their learning?

[Mr Willetts]

We are seeing an increase in the percentage of people from deprived areas who are applying to university and last year saw a national record overall. The figures in the Liverpool local authority area also show continuing increases in the percentage of people from poorer backgrounds applying to go to university. Of course, one of the great attractions of having a leading university in the city is that many graduates then stay.

[Several hon. Members]

rose—

[Mr Speaker]

The question is purely on the subject of students from Liverpool, not elsewhere in the north-west. If the question is about Liverpool, it is in order. If it is not about Liverpool, it is out of order.

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

Will the Minister join me in welcoming the fact that 16% of students from Liverpool go on to the top Russell Group universities, making it one of the top 10 local authorities in the country?

[Mr Willetts]

I absolutely agree with my hon. Friend and congratulate him on his commitment, particularly to education as it affects Liverpool.

[Mr Speaker]

I call Mr Simon Hughes, from the distant territory of Southwark and Bermondsey.

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

When I visited Liverpool to do some work for the Government on access to education, I was clear that one thing that students there wanted was the opportunity for scholarships to help with living costs. Will the Minister update us on the roll-out of the scholarship programme for young people from deprived backgrounds in Liverpool and elsewhere?

[Mr Willetts]

We have been able to help people from deprived areas in Liverpool and across the country through the fact that the combination of the value of the maintenance grant and the maintenance loan is higher now for people from poorer backgrounds applying to university than it ever was before.

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

9. What assessment he has made of the effect on postal services of the privatisation of Royal Mail.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The universal postal service is protected under the Postal Services Act 2011. The service is unaffected by the sale of Royal Mail and can be changed only with the agreement of Parliament.

[Karl Turner]

Does the Minister share my concern that following the fire sale of Royal Mail, private hedge fund shareholders will no longer be prepared to fund the not-for-profit universal service obligation?

[Jo Swinson]

The hon. Gentleman should be aware that that is not an option for Royal Mail, which remains the universal service obligation provider, and it is the duty of Ofcom as regulator to ensure that it complies with that obligation. If any future changes are to be made, it is up to Parliament to agree to it, and I do not see that happening. In fact, we go beyond minimum EU requirements in having a six-day-a-week universal service delivery.

[Ian Swales (Redcar) (LD)]

Does the Minister share my regret at some of the scare stories that were put round by campaigners against privatisation, and will she confirm that the Ministry of Defence pays for Royal Mail post overseas to forces, not Royal Mail?

[Jo Swinson]

My hon. Friend is quite right to say that it is unhelpful when scare stories are put out. For example, free services for the blind are included in the universal obligation and will continue. As he rightly says, free mail for the armed forces is funded separately by the Ministry of Defence, which will continue with that. There is no need for people to be scared by those kinds of stories, which were unfortunately put out by some critics of what is happening.

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

The Minister needs to talk to her colleague, the Minister for Skills and Enterprise, the hon. Member for West Suffolk (Matthew Hancock), as well as her hon. Friend the Member for Redcar (Ian Swales). When I raised with the Minister for Skills and Enterprise the issue of the USO being reduced from six to five days, he said at the time that that would need primary legislation on the Floor of the House. He later wrote to inform me that it would need only a statutory instrument to be passed upstairs for that to change. Would the Minister like to correct the record on behalf of her colleague?

[Jo Swinson]

The Postal Services Act 2011, which the House voted for, puts in place a universal service obligation of six days a week. It is therefore something over which Parliament has control. I do not know whether the hon. Gentleman is suggesting that were there to be a Labour Government again, they would in some way threaten that universal service, but I assure the House that the Government are certain that the universal service obligation should stay as it is.

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

What steps is the Minister taking to ensure that rural communities continue to be served well by the postal service, post privatisation?

[Jo Swinson]

The universal service is particularly valuable to rural areas, where it can be a lifeline. That is why it is important for it to be entrenched in the Postal Services Act 2011. For other postal services such as access to posting parcels and so on, the Government have promised to ensure that we maintain the network of more than 11,500 post offices. That is in stark contrast to the closure of thousands of post offices across the country by the previous Government, including in rural areas. We are ensuring that people across the country have good access to postal services.

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

10. What representations he has received from manufacturers on the case for continued UK membership of the EU with regard to their business and investment plans.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Ministers and the Department frequently receive representations from manufacturers, and others, in support of continued UK membership of the European Union and the single market. A recent example is the report by the Engineering Employers Federation, “Manufacturing: Our future in Europe”.

[Jonathan Reynolds]

Manufacturing is vital to my constituency, the country, and to increasing exports and getting our economy back on stronger ground. Does the Secretary of State agree that the constant doubts cast over our relationship with the EU by Members of his Government are harmful to our manufacturing industry, which wants certainty so that we can invest and grow for the future?

[Vince Cable]

I agree that there should not be any doubt about our continued membership, but evidence suggests that so far that has not done any harm. Britain remains very much the No. 1 country in Europe for inward investment, which last year rose by 22%, despite falling globally by 18%.

[Philip Davies (Shipley) (Con)]

Is it true that what businesses want in relation to the EU is free trade? Given that we have a £45 billion a year trade deficit with the EU, is it not perfectly obvious that whether we remain in or out, we will keep free trade? Does the Secretary of State seriously believe that BMW, Mercedes and such companies will say, “Well, it’s the principle that’s important. We don’t want to export to the UK anymore”?

[Vince Cable]

The car companies the hon. Gentleman has cited, and indeed others, particularly the Japanese, have made it clear that they expect Britain to remain in the single market, and they attach enormous importance to being able to frame its rules.

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

The Secretary of State knows the vital role Nissan plays in the north-east economy, but do not recent comments from Nissan on the importance of our ongoing membership of the EU, and the potential impact of any tariffs if we are not in the EU, underline the risk and uncertainty the Government’s policy is creating?

[Vince Cable]

Nissan has been very clear on the subject—on its behalf, the Japanese Government have made exactly the same point that they do not want the re-imposition of tariffs. However, there is no evidence so far that our policy is discouraging Nissan. Its investment in the UK continues at a high level. I continue to welcome that.

[Mr Peter Bone (Wellingborough) (Con)]

Is the House seriously going to believe that the Secretary of State believes that, if this country were not in the EU, we would not have a free trade agreement with it? Does he expect the House to believe him?

[Vince Cable]

I know the hon. Gentleman’s position, but that is the not the issue. The issue is certainty. There is a lot of risk in the business world. Reopening the matter creates massive uncertainty for employers and makes it even more difficult for them to invest.

[Mr Iain Wright (Hartlepool) (Lab)]

The Secretary of State has referred to the publication from EEF, the manufacturers organisation. The report states that 85% of EEF members said that membership of and staying in the EU is good for their businesses. My hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) mentioned the comments of the chief operating officer of Nissan, who has said that the threat of import tariffs between the UK and the rest of Europe in the event of an exit could be an “obstacle” to further investment by the company in this country. Who has more influence over Britain’s manufacturing policy: Britain’s manufacturers or the United Kingdom Independence party?

[Vince Cable]

It is fair to say that our manufacturing companies have a great deal more influence and we agree with them. I would add one point: it is not just about manufacturing. A recent survey by CityUK suggested that 60% of banks in London are here because we are part of the single market.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

11. What plans he has to publish the Government’s planned register of companies’ beneficial ownership.

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

The UK has committed to implement a central registry of company beneficial ownership information, accessible to law enforcement and tax authorities. We recognise the potential benefits of making the information available publicly and have consulted on that. That consultation closed in September and we are now analysing the responses. We will issue a Government response in due course.

[Emily Thornberry]

The Prime Minister has expressed his personal support for a public register and is supported in that by four former Labour Home Secretaries, the British Bankers Association and anti-corruption non-governmental organisations, but, as my mum used to say, fine words butter no parsnips. Will he take the opportunity of the open government partnership summit, which I understand will happen later this month, to confirm that the Government will have an open and public register of beneficial ownership of companies?

[Jo Swinson]

The hon. Lady is right to mention that the Prime Minister has shown a great deal of leadership on that, not least at the G8 summit in June, where he also said that he has a huge amount of sympathy with the idea of making that information fully public. I am sure she will appreciate that we are analysing around 300 responses to the consultation. I am certain that more information will be forthcoming to the House and beyond as we set out what we plan to do to introduce a register of beneficial ownership, which we have committed to do within this Parliament.

[Duncan Hames (Chippenham) (LD)]

12. What initiatives local enterprise partnerships are taking to support small businesses.

[The Minister for Skills and Enterprise (Matthew Hancock)]

The Government believe that local businesses are best placed to make the case on their needs. Local enterprise partnerships have consulted with small businesses to develop their strategic economic plans, which will help to give them access to the local growth fund and support skills, housing and infrastructure.

[Duncan Hames]

I thank the Minister for that reply and, while I am at it, for his support for investment in the further education college estate. Does he agree that, whether through the regional growth fund, Europe, city deals or local enterprise partnerships and the single local growth fund, supporting initiatives that help small businesses to grow and provide more jobs is critical?

[Matthew Hancock]

The Government are a passionate supporter of small businesses. The fact that 4.9 million businesses exist—a record number—is partly a response to the improvement in the environment for small businesses, supported by LEPs and the skills system, which we have done so much to put in place.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

Our LEP around the Humber is supporting and wants investment by Siemens in Hull. Further to the question from my hon. Friend the Member for Warrington South (David Mowat), will the Department do everything possible to talk to the EU about changing the rules that restrict the ability of the Green Investment Bank to invest in great projects such as that with Siemens, which are so important to our area?

[Matthew Hancock]

Yes, of course. I thoroughly enjoyed my visit to my hon. Friend’s constituency. Many people raised the issue of Siemens, which would invest not only in the UK, but, through the supply chain, in many small businesses. I will look in detail at what he says.

[George Freeman (Mid Norfolk) (Con)]

May I congratulate the Government on the great news that 102,000 new businesses were created last year, bringing the total to an all-time record of 4.9 million? Does the Minister agree that many first-time entrepreneurs and start-ups find that compliance with a whole raft of Government red tape, often designed in Europe and gold-plated in Whitehall, is a genuine barrier? Will he meet me and representatives of entrepreneurial start-up companies to see what we might do to ease the burden on start-ups in particular?

[Matthew Hancock]

I am always delighted to meet my hon. Friend, so I would love to do that. We are always looking at how to ease the burden further. We have reduced the burden on business enormously. The one in, two out rules are in place and are working, but there is always more to do.

[Mr David Heath (Somerton and Frome) (LD)]

Is the Minister aware of the huge disparity in the attitude of local enterprise partnerships to rural areas? Some are fully engaged and interested, but others appear to think that rural Britain is simply the inconvenient gaps between cities. Will he disabuse them of that notion?

[Matthew Hancock]

I certainly will. Local enterprise partnerships are led by local businesses and, in large part, respond extremely effectively to the needs of local businesses. In some areas of the country, they are almost wholly reflective of the rural economy—that is true of East Anglia, which is largely rural. I take on board the point that that does not always happen everywhere, and I will ensure that it does.

[Clive Efford (Eltham) (Lab)]

13. What assessment he has made of the value for money for the public purse of the recent sale of shares in Royal Mail.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

Our overarching objective is to put Royal Mail in a position to be able to deliver the universal service on a long-term and sustainable basis. When considering value for money, we will assess the sale proceeds together with the long-term value of the taxpayers’ retained stake in the business and the reduced risk to the taxpayer of a stable company with access to private sources of capital.

[Clive Efford]

The shares were sold at £3.30 each and this morning they are selling at £5.32. Does the Minister agree that the taxpayer got a raw deal in the share sale, and does he accept full responsibility?

[Michael Fallon]

It is not unusual to see some share price volatility in the immediate aftermath of a sale. Let us be clear: this sale was popular, oversubscribed and successful. When the Labour Government tried to sell Royal Mail, they failed.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

Will the Minister tell us how much money was paid to Lazard for so comprehensively undervaluing Royal Mail?

[Michael Fallon]

The fees paid to the Government’s advisers will be disclosed in the normal way to the National Audit Office, which is of course looking at this sale as they looked at the Northern Rock sale, but they compare favourably to the fees paid to advisers by the Labour Government in the sale of QinetiQ 10 years ago, when 10 senior managers were allowed to walk away with £107 million and no shares were sold to the public.

[Ian Murray (Edinburgh South) (Lab)]

The Minister claimed that value for money for the taxpayer was central to the Government’s fire sale strategy for the national institution that is Royal Mail. Given that many investment banks valued the company at £1.7 billion more than the sale price, that the sale was oversubscribed 20 times over and that the share price has steadily risen to more than 60% of its initial value, why did the Minister reject raising the price range when he knew the offer was oversubscribed? Does the Minister agree with the Secretary of State that the loss of more than £750 million to the taxpayer is froth and ill-informed?

[Michael Fallon]

It is far too early to judge the long-term performance of the Royal Mail share price. With any initial public offering there will be volatility in the price and it is too early to make a judgment. As far as the banks are concerned, a whole number of banks were consulted on the value of Royal Mail. The value established was, I think, around the mid-point of the range of the advice we received.

[Peter Aldous (Waveney) (Con)]

15. What steps his Department is taking to promote regional growth.

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

The Government believe that local businesses and civic leaders are best placed to understand what drives growth in their area. Resources available to local enterprise partnerships have been increased to at least £20 billion until 2020-21, and LEPs will be able to access funding and powers to support growth through local growth deals. Furthermore, the regional growth fund is projected to deliver more than 500,000 private sector jobs, leveraging in more than £14 billion of private sector investment.

[Peter Aldous]

The Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), and I, along with 12 other colleagues from Suffolk and Norfolk, wrote to the Minister earlier this week emphasising the advantages for promoting growth that assisted area status for Lowestoft and Great Yarmouth will bring to the two counties. Will my right hon. Friend give full consideration to the strong and compelling bid submitted by the New Anglia local enterprise partnership?

[Michael Fallon]

I certainly undertake to do that. I have seen my hon. Friend’s letter, signed by several colleagues, and I have also written this week to all Members setting out the benefits of assisted area status and explaining the process and timetable for revising the map for the period 2014-2020.

[Caroline Lucas (Brighton, Pavilion) (Green)]

16. What steps he is taking to promote provision of apprenticeships.

[The Minister for Skills and Enterprise (Matthew Hancock)]

There were almost 860,000 people undertaking an apprenticeship last year; that is more than ever before. We have raised standards, introduced higher apprenticeships, made it easier for employers to engage and created the £1,500 apprenticeship grant to encourage more employers to recruit an apprentice for the first time.

[Caroline Lucas]

Will the Minister’s Department do even more—a bit of ambition here—to help young people in my constituency taking part in schemes run by City College and organisations such as Proactive and make it his policy that suppliers winning public contracts worth more than £1 million should be required to offer apprenticeship opportunities on those contracts?

[Matthew Hancock]

I would be delighted to work with the hon. Lady to promote apprenticeships in Brighton. I might point out that in her constituency the number of apprenticeship starts has doubled since 2010. We have taken action to ensure that quality is improved as well, but the more we can do to improve and widen the opportunities for people to go into apprenticeships the better.

[Peter Luff (Mid Worcestershire) (Con)]

The scandalously low number of women in engineering apprenticeships is a missed opportunity for young women themselves, engineering employers and the wider economy. Does the Minister share my concern about the continuing and powerful evidence of gender stereotyping in schools, particularly co-educational schools, and the low number of engineering companies taking action to improve work force diversity, revealed by the Institute of Engineering and Technology only this week?

[Matthew Hancock]

Absolutely. I pay tribute to the work of my hon. Friend on this subject and look forward to following his leadership in driving up the number of women in engineering apprenticeships.

[Kerry McCarthy (Bristol East) (Lab)]

17. What assessment he has made of the potential effect on UK artists and creators of introducing a private copying exception without compensation.

[The Minister for Universities and Science (Mr David Willetts)]

This change will allow people to make personal copies of content they have bought. For example, it will allow an individual to copy their CDs on to an iPad. Many people already do this without realising it is illegal under copyright law. Most people think it is reasonable and should not be prevented by copyright. The Government agree and our new law will recognise this. This change will not allow people to obtain copies unlawfully, and British creators will continue to be rewarded when people buy copies of their works.

[Kerry McCarthy]

So far, the 22 EU member states that have introduced private copying exceptions have all introduced corresponding levy schemes on MP3 players and other copying devices to compensate artists for the loss of income. Why will the UK not do the same?

[Mr Willetts]

The reason is very simple: those European countries have introduced far wider exemptions than we are proposing. Many of them allow content borrowed from friends, families and libraries to be shared very widely. That damages creators, so they need to provide compensation, but our proposal is carefully targeted to protect what happens, as we all know, in almost every family in the country without doing damage to creators.

[Chris Bryant (Rhondda) (Lab)]

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

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

My Department plays a key role in supporting the rebalancing of the economy through business to deliver growth, while increasing skills and learning.

[Chris Bryant]

One of the biggest difficulties for all businesses in the country, whether a small retail outlet or a major manufacturer, is the cost of energy. The Secretary of State is a bit of a leftie. [Laughter.] I say that as a compliment, obviously, and he seems to be taking it that way, although the gentleman with the jumper on, the Minister for Skills and Enterprise, who is protecting everybody from the cold over there, seems to disagree. Does the Secretary of State agree with the Prime Minister, with the former Prime Minister or with us about what we should do about energy prices?

[Vince Cable]

I do not think that either the Leader of the Opposition or the former Prime Minister has quite got it right, but I have stressed that, for industry, which is our concern in this Department, the way forward is to ensure that energy-intensive industries are properly compensated and enabled to compete on a level playing field, and we are pursuing that.

[Sir Bob Russell (Colchester) (LD)]

T2. Can the Minister give the House a progress report on how the Government are dealing with the scourge of the payday loan companies?

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jo Swinson)]

I thank my hon. Friend for that question. He rightly highlights the fact that there have been significant problems in the payday lending industry; thankfully, significant action is also being taken to match that. Twenty-five payday lenders have left the market since March as a result of strong action by the Office of Fair Trading, with the Competition Commission undertaking an investigation, and earlier this month the Financial Conduct Authority published a suite of new proposed rules, which will limit roll-overs, cap the number of times that a lender can use a continuous payment authority and introduce strict new rules on advertising to ensure that people do not get ripped off.

[Mr Chuka Umunna (Streatham) (Lab)]

The Secretary of State has said that growth must be better balanced and less reliant on rising house prices, but this week he has warned of dangerous and unsustainable house prices in London and extreme problems of affordability across the country on his Government’s watch. Does he therefore not agree that it would make sense to review how the second part of his Government’s Help to Buy scheme operates now, as opposed to in a year’s time, given the attendant risks posed to more balanced growth?

[Vince Cable]

I am delighted to see that the hon. Gentleman has progressed beyond his recent role as a share tipster and is now returning to more important and central concerns. The central point is that the growth we are experiencing is balanced. We are now beginning to see serious growth in manufacturing and the construction sector, and the next big step will be to see improvements in investment. As far as the housing market is concerned, the Chancellor has acknowledged that the Bank of England needs to watch the process very carefully.

[Mr Umunna]

But the right hon. Gentleman promised an export and investment-led recovery, yet as growth returned over the summer, exports fell, and the Office for National Statistics says that growth has been concentrated in household expenditure, rather than investment, which is £2 billion lower than it was a year ago. We all know that he is a keen dancer. In failing to prevail over the Treasury, is not the risk that, rather than marching to the tune of the makers, he is dancing to the Chancellor’s new song of house inflation?

[Vince Cable]

I am sure the hon. Gentleman would agree that there is no harm in the trend we are observing, which is that consumers are now more confident and are therefore spending and generating demand—I think we have both agreed over the last three years that the generation of demand is a key part of recovery. As far as exports are concerned, there is rapid growth in British exports to the big emerging markets, such as Russia, China, India and Brazil—indeed, I am going to Russia next week to pursue this course.

[Christopher Pincher (Tamworth) (Con)]

T3. Tamworth borough council is doing its bit to back small business Saturday by promoting “created in Tamworth” and offering free market stalls to business people and free parking to customers. Do the Government agree that local authorities have a hugely important role in helping rather than hindering small business growth, not least by offering more free parking?

[The Minister for Skills and Enterprise (Matthew Hancock)]

We in Government are huge and enthusiastic supporters of small business Saturday, which has cross-party support. I encourage local authorities of all political persuasions to follow the lead of Tamworth and introduce policies that can help to support small businesses across the board, and especially on Saturday 7 December, small business Saturday.

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

T5. I was disappointed by the Minister’s response to the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) earlier and surprised at his lack of basic geography, so I am going to give him another opportunity. I understand that we are all just “the desolate north-east” to Government Members, but I remind the Minister that Northumberland college is indeed in south-east Northumberland and up to 50 miles away from parts of north Northumberland. Once again, what will the Minister do to meet the basic needs of young people in north Northumberland?

[Matthew Hancock]

I know the geography well, not least because I have visited Northumberland college in the last few months—[Interruption.] Hold on. Transport issues are important. If the hon. Lady is saying that we need to ensure that we get basic skills provision into all areas, including rural areas, I entirely agree with her, but if she is saying that the best thing to do is to ignore large rural areas, I disagree. I would have thought that we could work together on this sort of thing.

[Jessica Lee (Erewash) (Con)]

T4. Will my hon. Friend join me in congratulating engineering and manufacturing firms in Erewash, including F. C. Laser and TecQuipment, which are continuing to grow and to recruit apprentices? In addition, F. C. Laser has recently won the D2N2 award for the most promising business in 2013, proving that the entrepreneurial spirit is alive and well in Erewash and creating many jobs.

[Matthew Hancock]

I commend my hon. Friend’s work in supporting small businesses and jobs in Erewash, through supporting enterprise. This is all about ensuring that companies can start up and grow and that they can employ people as easily as possible. I hope that our employment allowance, which comes in next April and which will give every company that employs people a £2,000 tax break, will help to take that a step further.

[Caroline Lucas (Brighton, Pavilion) (Green)]

T6. Small businesses in my constituency have been flagging up the importance of local enterprise partnerships focusing more on skills training and apprenticeships, and on the fact that that could be better promoted if all LEP boards included at least one specialist education representative. What does the Minister think of that idea, and will he consider making it a prerequisite for LEPs receiving Government funding?

[Matthew Hancock]

Unusually, I agree with both the suggestions that the hon. Lady has made. I look forward to working with her to support skills and small businesses through the LEP in Brighton.

[Mr Marcus Jones (Nuneaton) (Con)]

T7. Manufacturing in the midlands is going through a renaissance, but the challenge is to create the skills necessary to meet future needs. Will the Minister join me in welcoming Tomorrow’s Engineers week, and tell the House what more can be done to enthuse young people, particularly young women, about engineering?

[Matthew Hancock]

Yes, I am an enthusiastic supporter of Tomorrow’s Engineers, and the Government are backing that project in every way that we can. Tomorrow’s Engineers is about demonstrating that engineering is part of the future of our economy, and that it is an exciting career for someone to get into, whether they are a man or a woman. It is where the future of our economy is going, and providing the necessary skills is a vital part of what we are doing.

[Julie Hilling (Bolton West) (Lab)]

The Secretary of State has spoken proudly about the new businesses that have started up, but can he tell us how many businesses closed last year, and how many jobs were lost as a result of those closures?

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

I shall be happy to write to the hon. Lady with the number of deregistrations, but overall there are more businesses being created than are being closed. We have, I think, 400,000 more new businesses than we started with two and half years ago.

[Fiona Bruce (Congleton) (Con)]

T8. What steps are the Government taking to address skills gaps, create jobs and increase productivity by improving the information given in schools about vocational job opportunities, particularly local ones?

[Matthew Hancock]

We are making the skills system more rigorous and responsive to need, but schools have a duty to secure careers advice. I want that advice to be inspirational and impartial, and to include more mentoring, especially from people who have real jobs, so that we can help each child to reach their potential.

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

Last week, I attended the Hounslow enterprise showcase, organised by Dawn Edwards and Isabel King from the Real Business Club, which was run with the support of the local jobcentre and Hounslow chamber of commerce. I spoke to three women from my constituency who were looking for advice on how to start or grow their businesses. Does the Secretary of State think that we need to do more to support women-led businesses, particularly as research shows that the UK has a higher gender gap in entrepreneurship than many of the OECD countries?

[Vince Cable]

Yes, we acknowledge the importance of women in business. Indeed, one of the initiatives that we are leading involves ensuring that women are properly represented on the boards of our leading companies, thereby creating role models for people starting their own companies. I agree that there is a gender gap and I agree that we need to do a lot more about it.

[Mr Mark Prisk (Hertford and Stortford) (Con)]

In the past three years, the UK car industry has gone from strength to strength, but there is always more to do. Will the Secretary of State tell the House what further work is planned, in conjunction with the Automotive Council, particularly with regard to new engine and powertrain technologies?

[Michael Fallon]

Let me first pay tribute to my hon. Friend, who had responsibility for this industry in the Department for three years. The automotive strategy, published earlier this summer, included a focus on the new automotive investment organisation to attract more suppliers into the UK, work to tackle the skills base by recruiting nearly 2,000 additional graduates into engineering, and further work to strengthen the supply chain throughout the industry.

[Paul Blomfield (Sheffield Central) (Lab)]

The Secretary of State will know that there is serious concern among our universities about many of the provisions of the Immigration Bill and their impact on international student recruitment. What discussions has he had with universities on the issue and what representations has he made to the Home Office?

[The Minister for Universities and Science (Mr David Willetts)]

What we are seeing is a continuing increase in the number of overseas students applying to come to study in Britain. We all make it clear whenever we visit overseas markets that there is no cap on the number of legitimate overseas students coming to Britain; they are very warmly welcome.

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

I understand that in 2014-15 the local LEP is going to have a sizeable budget to distribute for infrastructure. Will the relevant Minister explain how we can access that budget and what the criteria will be?

[Michael Fallon]

Local enterprise partnerships have been invited to submit their growth plans not simply for the first year of devolved budgets, which is 2015-16, but for the expenditure of structural funds—both regional funds and social funds—from July next year for the next seven-year period. We will examine each of the local growth funds and work with individual LEPs on particular growth deals to suit each area.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

What assessment has the Secretary of State made of the impact of the funding for lending scheme on investment in small businesses?

[Vince Cable]

The funding for lending scheme has had a very significant impact on the mortgage market. It has had a much lesser impact on small business, but it has recently been adapted, and I believe it has been used by some of the new competitor banks such as the Aldermore. We certainly welcome that.

[Iain Stewart (Milton Keynes South) (Con)]

Yesterday evening, I had the pleasure of attending the formal launch of the transport systems catapult, which is going to be based in Milton Keynes. Does my right hon. Friend agree that this will be an important innovation to reaffirm the UK’s leading role in transport technology development?

[Mr Willetts]

This is a very important event—investment in our transport infrastructure to make it smart and innovative. It is backed with £50 billion of BIS money, with support from the Department for Transport—and, most importantly, with substantial business support as well.

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

The Secretary of State will be aware of my concern about the legal requirements when a company goes into administration. Will he look at making it a mandatory requirement for administrators to prioritise the wider social consequences of the sale of a company rather than allowing asset strippers to destroy jobs and local communities?

[Jo Swinson]

The hon. Gentleman rightly outlines the devastating impact on communities that can happen when companies go into administration. Those involved in dealing with the administration of a company have a variety of different issues to prioritise. We are making sure that the problem is looked at in a range of ways. We are simplifying insolvency processes and considering some of the issues rightly raised by Members—about pre-packs, for example, with an ongoing review. We are looking at fees, too, which have sometimes meant that people cannot get as much of their money back as they should in these unfortunate circumstances. The Government are taking forward all those issues.

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

This week marks the 50th anniversary of the groundbreaking Robbins report. Will the Minister for Universities and Science confirm that this Conservative-led Government will continue the spirit of Robbins and ensure that higher education is open to all?

[Mr Willetts]

My hon. Friend is absolutely right; indeed, today is the day, 50 years ago, when the then Conservative Government accepted the Robbins report. We are marking the 50th anniversary with more funding going into universities, with more students and with more applications from students from disadvantaged backgrounds than ever before, so we can be proud of our record on higher education.

[Kerry McCarthy (Bristol East) (Lab)]

A report published today by the 1994 Group of universities shows that, although the overall figures for post-graduate study in the United Kingdom look healthy, that is mainly due to a 90% increase in the number of overseas students. What are the Government doing to support British post-graduate students?

[Mr Willetts]

That is an issue, which is why the Higher Education Funding Council for England has provided an extra £25 million of support for next year’s post-graduate students. We will increase that amount to £75 million for the following year, because we do not wish to see people who could benefit from post-graduate education missing out.

[Ian Swales (Redcar) (LD)]

As the chemical industry is Britain’s leading exporter, I warmly welcome this week’s launch of the chemicals growth partnership. Will the partnership convene specially to discuss the issues presented by Grangemouth?

[Michael Fallon]

Despite the serious news about Grangemouth, the sector as a whole remains optimistic about, in particular, the potential for future growth. The launch this week focused on energy costs, innovation and supply-chain development, and the partnership has published an action plan, which I know my hon. Friend has seen.

Business of the House

Thursday 24th October 2013 Commons Chamber

10:30

[Ms Angela Eagle (Wallasey) (Lab)]

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

[The Deputy Leader of the House of Commons (Tom Brake)]

My right hon. Friend the Leader of the House is sorry to be absent again this week. He is recovering well at home following his back operation last week, and is confident that he will be in his place and carrying out his duties in the House next week.

The business for next week will be as follows.

Monday 28 October—I expect my right hon. Friend the Prime Minister to update the House following the European Council. That will be followed by the Second Reading of the Local Audit and Accountability Bill [Lords], which will be followed by a motion to approve an instruction relating to the Local Audit and Accountability Bill [Lords].

Tuesday 29 October—Remaining stages of the Pensions Bill, followed by a motion to approve a European document relating to reform of Eurojust and the European Public Prosecutor’s Office, followed by a motion to approve a Ways and Means resolution relating to the Citizenship (Armed Forces) Bill.

Wednesday 30 October—Opposition Day (9th allotted day). There will be a debate on education, followed by a debate on the future of the probation service. Both debates will arise on an Opposition motion.

Thursday 31 October—Remaining stages of the High Speed Rail (Preparation) Bill.

Friday 1 November—Private Members’ Bills.

The provisional business for the week commencing 4 November will include the following.

Monday 4 November—Second Reading of the National Insurance Contributions Bill.

Tuesday 5 November—Second Reading of the Gambling (Licensing and Advertising) Bill, followed by business to be nominated by the Backbench Business Committee.

Wednesday 6 November—Opposition Day (10th allotted day). There will be a debate on an Opposition motion; subject to be announced.

Thursday 7 November—Business to be nominated by the Backbench Business Committee, followed by a general debate relating to the commemoration of the first world war.

Friday 8 November—Private Members’ Bills.

Colleagues will also wish to know that, subject to the progress of business, the House will adjourn on the following dates during 2014.

The House will rise for the February recess at close of play on Thursday 13 February, and will return on Monday 24 February.



The House will rise for the Easter recess at close of play on Thursday 10 April, and will return on Monday 28 April.

The House will not sit on Monday 5 May.

The House will rise for the Whitsun recess on Thursday 22 May, and will return on Monday 2 June.

The House will rise for the summer recess on Tuesday 22 July, and will return on Monday 1 September.

The House will rise for the conference recess on Friday 12 September, subject to its agreeing future sitting dates for private Members’ Bills, and will return on Monday 13 October.

The House will rise for the November recess on Tuesday 11 November, and will return on Monday 17 November.

The House will rise for the Christmas recess on Thursday 18 December, and return on Monday 5 November 2015. [Laughter.] I mean Monday 5 January 2015.

[Ms Eagle]

I thought for a minute there that time had reversed and was going backwards, but the Deputy Leader of the House has put us straight. May I again pass on my best wishes for the speedy recovery of the Leader of the House? We hope to see him back in his place next week—no discourtesy is intended to the Deputy Leader of the House, who has filled in entirely, as we would have expected him to, with great aplomb.

May I thank the Deputy Leader of the House for giving us next week’s business and also next year’s recess dates, especially around the conference recess? I understand why the Scottish referendum has disrupted the usual arrangements but it does seem a bit strange that we have had to make changes to accommodate the 2014 Liberal Democrats conference. At the rate they are losing members, next year they could hold it in a telephone box over the weekend.

This business statement once again shows we are kicking our legislative heels in the Commons while the other place is yet again stuffed full of legislation. The Government still have to find time for us to discuss the Offender Rehabilitation Bill even though it completed its Lords stages months ago. It has now taken Labour to announce an Opposition day debate for the Government’s underhand privatisation of the probation service to be discussed at all. This is now the third time I have had to ask: can the Deputy Leader of the House confirm when this Bill will return to the Commons?

The Chancellor’s inadequate Financial Services (Banking Reform) Bill has been substantially changed by last-minute amendments in the Lords, making it a very different and much longer Bill from the one we debated here originally. Given the importance of banking regulation to everybody’s living standards, will the Deputy Leader of the House now give us an assurance that sufficient time will be allocated to debate what will be essentially a very different piece of legislation when it finally returns to this place?

In the last two weeks, three of the big six energy firms have announced price rises of around 10%. To stand up to this abuse of market power, Labour will freeze prices until 2017, but the Government’s energy policy is in chaos. In opposition, the Prime Minister hugged huskies and pretended to be green, and only last year he was boasting that his green levies were bigger than ours, but last week his Back-Bench climate change deniers were agitating to abolish them, reducing bills by hitting the poorest hardest and abandoning energy efficiency altogether, and yesterday, in a blind panic, the Prime Minister announced that he had given in to them. The Deputy Prime Minister looked like he had swallowed a wasp, and Lib Dem spinners dismissed it as a “panicky U-turn” which will not be allowed to “dictate Government policy.” So I think we now know what the new Tory policy is, but can the Deputy Leader of the House tell us what the Government’s policy is?

Two weeks ago, the Prime Minister said we were living in

“some sort of Marxist universe” —[Official Report, 9 October 2013; Vol. 568, c. 152.]

for suggesting a 20-month energy price freeze, and he said it was not possible to intervene in a market to set prices. This week, his Government signed a nuclear deal with the Chinese which sets prices not for 20 months, but for 35 years. On Tuesday Sir John Major announced his conversion to a windfall energy tax and worried about the silent have-nots who have to choose between heating and eating this winter. Meanwhile, No. 10’s advice to those who are cold was to wear a jumper. It speaks volumes when the Tory ex-Prime Minister responsible for the creation of the big six energy companies sounds more in touch than the current Prime Minister. So will the Deputy Leader of the House arrange for an urgent statement to clarify Government policy on energy, and can we have a statement from the Prime Minister on whether he thinks Sir John Major is living in a Marxist universe too?

The Conservative party in the 1992 Parliament is remembered for being one of the most disloyal in its history, but I have been looking at the numbers and it turns out that the current crop of Government MPs are three times worse than they were then, and I think the Patronage Secretary’s expression says it all, because he has to deal with them. It sounds like the Prime Minister needs to listen to his predecessor not only on energy prices, but also on how to control his rebellious Back Benchers. While Sir John told them to put up or shut up, the current Prime Minister just caves in.

We know that for 39 out of the 40 months since the election prices have grown faster than wages. Will the Deputy Leader of the House now admit what we all know: that it was the Chancellor’s city bonus tax dodge that accounted for the surge in earnings in that one isolated month? So while living standards are falling bonuses are soaring, and the Chancellor creates a bonus tax loophole for his mates. Will the Leader of the House therefore arrange for a statement from the Chancellor about why he prioritises his millionaire friends over tackling our cost of living crisis?

Last week, I asked the Deputy Leader of the House why he is campaigning against the closure of his local hospital, despite being in the Government responsible for it. Today, the Deputy Prime Minister will criticise the free schools policy, despite being in the Government responsible for it. I know that it was the final of “The Great British Bake Off” this week, but when will the Liberal Democrats realise that they cannot have their cake and eat it?

[Tom Brake]

Last week, the shadow Leader of the House asked what I am thinking when I am sitting alongside the Leader of the House. I must ask her today what the hon. Member for Penistone and Stocksbridge (Angela Smith) might be thinking as she sits alongside the shadow Leader of the House—she may be wondering whether it is vanity that has prevented the shadow Leader of the House from letting the hon. Lady who shadows me speak in questions, or perhaps the shadow Leader of the House was worried that her hon. Friend might outshine her at the Dispatch Box.

I am pleased that the shadow Leader of the House referred to the 2014 Liberal Democrat conference. I recommend that she attends, because I am sure that she would welcome the very open policy debates we have. She alleged that the Government were kicking their heels on legislation. As I read out, we are to debate pensions, high-speed rail and national insurance contributions—if she thinks those are minor issues, she needs to think again. She referred to the Offender Rehabilitation Bill and of course there will be an opportunity for it to be debated on the Opposition day she has provided. I reassure her that the Bill will be brought forward as soon as possible: as soon as parliamentary time allows.

The shadow Leader of the House referred again to Labour’s price freeze con. We all know that bills would go up before it, that the Leader of the Opposition has said that he could not guarantee things during the freeze if global prices went up and that the prices would go up afterwards. So we all know where that would lead. We had the nuclear statement at the beginning of the week, and I hope that she would have welcomed the fact that, finally, we are getting some investment in our energy industry. She may not be aware that over the next 10 to 15 years about 60% of our energy generation is going to be switched off as plants come to their end, so there was a need for the Government to take urgent action to address that. I would have thought that she would have welcomed that action.

Clearly we want to help families with the cost of living. The Government have introduced a number of measures that will do that: 25 million basic rate taxpayers are going to be £700 better off next year; we have capped rail fare rises; 3 million people will be taken out of paying income tax altogether; we stopped the 13p fuel duty rise that would have occurred under Labour; and we have capped the council tax. So this Government have a very proud record of tackling cost of living issues.

Finally, I would like to thank the shadow Leader of the House for again giving me the chance to mention at the Dispatch Box the save St Helier hospital campaign, which I am leading.

[Sir Greg Knight (East Yorkshire) (Con)]

May we have a debate on making better use of natural resources, particularly daylight? Is the Deputy Leader of the House aware that this weekend we are to undertake the flawed ritual of putting our clocks back by one hour, thereby plunging the UK into darkness by mid-afternoon? May we have the opportunity to examine the case for changing to British summer time and double summer time—putting our clocks forward an hour? That would make the afternoons lighter, it would reduce the number of road accidents and it would boost tourism.

[Tom Brake]

Clearly, we are all in favour of making better use of daylight. I know that the House has considered the issue on a number of occasions, and I am well aware of the arguments that my right hon. Friend is putting forward about the benefit that would be derived, particularly for the tourism industry and road safety. He may wish to consider raising the matter in a Westminster Hall Adjournment debate.

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

Would the acting Leader of the House agree that if we had a debate in the Chamber on the orchestrated campaign of intimidation against The Guardian, that would be an opportunity for some of us to point out that if it had not been for the Snowden disclosures, the monitoring of the German Chancellor’s mobile phone by US intelligence would not have been known? Surely the message about Snowden should be, “Let’s have more disclosures.” What The Guardian is publishing is undoubtedly in the national interest.

[Tom Brake]

Clearly, I do not agree that there is an orchestrated campaign against The Guardian. Clearly, there is a need for the issues of public interest that The Guardian wants to highlight to be balanced with the security implications of any material it puts into the public domain.

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

During the summer recess, I met Stuart Wyatt, a constituent who suffers from multiple sclerosis. He told me that he and many others would like to use cannabis for medical reasons. Although I do not think that we should legalise cannabis at all, I do recognise that the pain of some who suffer from MS and other neurological conditions could be relieved by it. May we have a statement from the Secretary of State for Health on the role of cannabis in relieving pain and how it could be given on prescription?

[Tom Brake]

I thank my hon. Friend for that question, which he has put in measured terms. I understand why he has put it on behalf of his constituent. He may be aware of Sativex, a cannabis-derived mouth spray licensed in the UK in 2010 as an additional treatment for moderate to severe spasticity in multiple sclerosis. He may also be aware that the National Institute for Health and Care Excellence is updating its clinical guideline on the management of MS in primary and secondary care. Sativex is one of the new interventions that NICE has identified for inclusion in its updated guidelines, which it expects to publish in October 2014.

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

May I support the call made by the shadow Leader of the House for a debate on energy, so that the Government can clarify whether they are in favour of the warm homes programme, the renewable energy programme, Labour’s cap or John Major’s windfall tax? Those points need to be clarified. May we have that debate?

[Tom Brake]

Obviously, the Labour party has Opposition days that it could use to secure such a debate. Earlier there was a statement about the nuclear industry and in the course of a number of exchanges, including Prime Minister’s questions and Business, Innovation and Skills questions earlier today, we have made clear the Government’s position on energy and why we do not believe that what the Leader of the Opposition proposes is a sensible or feasible approach.

[Mr Mark Williams (Ceredigion) (LD)]

It is a year since Paul Silk made recommendations for further fiscal devolution to the National Assembly for Wales. Why are we still waiting for the Government’s response to those recommendations? May we have a statement about the Government’s intentions and, better still, legislation?

[Tom Brake]

I know why my hon. Friend is pursuing the matter vigorously; it is clearly of great interest to him and his constituents. The matter is still under discussion in Government. The most sensible thing for me to do is ensure that we write to him setting out the current position.

[Mr John Spellar (Warley) (Lab)]

On 26 May 2011, the then Health Secretary, whom we wish a speedy recovery, wrote to me about a decision by West Midlands strategic health authority to reduce nurse training. He replied that it believed that

“a reduction in commissions is necessary to avoid a significant oversupply in the nursing workforce.”

Last week it was revealed by Nursing Times that a massive one in three hospitals is going abroad actively to recruit new nurses. May we have an early statement so that the new Health Secretary can override his incompetent bureaucrats and expand nurse training opportunities for our desperate and deserving youngsters?

[Tom Brake]

I thank the right hon. Gentleman for that question, and I will certainly draw the matter to the attention of the Leader of the House when he returns, as he may want to consider it further. The right hon. Gentleman will be aware that the Government have provided an extra £12.7 billion of investment in the NHS. He may also be aware that 4,000 more clinical staff have gone into the NHS and that there are 23,000 fewer administrative staff. Specifically on the west midlands, however, I will ensure that the Health Secretary responds to him.

[John Glen (Salisbury) (Con)]

Last Saturday presidential elections were once again postponed in the Maldives when President Waheed and his puppet interim Government of the previous elected President refused to step aside. Will the Deputy Leader of the House make time for a debate so that MPs on both sides of the House can voice their support for free and fair elections in that country?

[Tom Brake]

The annulment of the first round of Maldivian elections held on 7 September, and the continued delay in holding new elections, are of concern to the Government and to the Foreign Secretary, as he made clear in a statement last week. It is important that elections take place to a timing specified by the Maldives elections commission and in accordance with the Maldives constitution. Ministers and officials are in touch with candidates and are strongly encouraging them to engage in a process that will deliver inclusive, free and fair elections, and a smooth transition of power. My hon. Friend may be aware that we have Foreign and Commonwealth Office questions on Tuesday when he could raise the matter again.

[Kelvin Hopkins (Luton North) (Lab)]

Britain has an enormous and ongoing trade deficit with the rest of the European Union, including a goods deficit of more than £1 billion a week, mainly with Germany. That is equivalent to 1 million exported jobs. The situation is conclusive evidence of a substantially misaligned exchange rate, so will the Deputy Leader of the House make Government time available for a full debate on the exchange rate?

[Tom Brake]

I am afraid that I cannot provide the hon. Gentleman with an opportunity to discuss that in Government time, but he might want to make representations to his party’s leadership about whether it could be the subject of an Opposition day debate. I know that he has strong views on the European Union, and I wonder whether he feels that coming out of the EU would help or hinder the trade deficit.

[Steve Baker (Wycombe) (Con)]

In January 2012, my right hon. Friend the Prime Minister made a wonderful speech about how to reconstruct an inclusive, just and popular capitalism. He called for a new co-operatives Bill, but that has not yet appeared. I cannot imagine that the Liberal Democrats are opposing it, but I cannot think of any other explanation, as the Secretary of State for Education and Cabinet Office Ministers have supported such a Bill. Will the Deputy Leader of the House see to it that time is provided to bring forward that important new Bill on co-operatives?

[Tom Brake]

I do not know whether the hon. Gentleman had an opportunity to raise that issue during today’s Business, Innovation and Skills questions, as that would have been a good opportunity to flag it up. However, I will ensure that he gets a written response to his very specific question.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

My constituents are getting angry and frustrated about the rocketing cost of High Speed 2. At a time when we are expecting winter weather and more flooding, may we have a statement from the Secretary of State for Transport on what he is doing to ensure that the line between Penzance and London is resilient in the face of floods and can be kept open beyond Exeter?

[Tom Brake]

I assure the hon. Lady that the cost controls around HS2 are very firm. This substantial and important project is going to provide the biggest boost to our rail network since the Victorian era. On the specific issue about her locality, the Government have set aside substantial investment to ensure that other projects around the country are delivered. She may wish to raise the matter at Transport questions on 7 November.

[Mr Robert Buckland (South Swindon) (Con)]

Could time be found for a debate on human rights in Russia, given that tomorrow marks the 10th anniversary of the imprisonment of Amnesty prisoner of conscience Mikhail Khodorkovsky, who was imprisoned in a gulag in the Arctic circle for having the temerity to disagree with the President?

[Tom Brake]

The hon. Gentleman may be aware that the Minister for Europe issued a statement marking the 10-year anniversary of Mikhail Khodorkovsky’s arrest and met his son on 10 October to discuss the situation. The Government have significant concerns about the processes used to convict Khodorkovsky and continue to call for him to be released on schedule next August. The promotion and protection of human rights is a key priority in our bilateral relationship with Russia and we regularly raise it at all levels.

It may be appropriate to add that, since I announced the business statement, I have been informed of further business. On Thursday 31 October, there will be a debate in Westminster Hall on the oversight of the intelligence and security services.

[Keith Vaz (Leicester East) (Lab)]

The Foreign Secretary is very good at updating the House about the situation in the middle east. Yesterday, 300 al-Qaeda-affiliated prisoners organised an attempted break-out from the main prison in Sana’a in Yemen. When can we have a statement on what assistance we are giving to the Yemeni Government?

[Tom Brake]

I thank the right hon. Gentleman for that pertinent and timely question. I cannot guarantee that there will be time for a debate or a statement, but I will ensure that the Foreign Secretary hears his concerns and responds directly to him. He will also have an opportunity to raise the issue directly with the Foreign Secretary during Question Time next Tuesday.

[Andrew Griffiths (Burton) (Con)]

May we have a debate on charging by general practitioners? Vulnerable people in my constituency are being charged up to £130 by their GPs to provide medical information that is needed for Atos assessments. That is money they can sorely afford to spend and this important issue is affecting some of the most vulnerable in society, so may we please debate it?

[Tom Brake]

Clearly that is a significant issue that I am sure presents a real financial challenge to some people. I would like to think that GPs would be careful about levying such charges when it is clear that the person might not be able to afford them.

[Clive Efford (Eltham) (Lab)]

May I challenge the Deputy Leader of the House to come back to the House some time in the near future and explain exactly how the Government are devising policy? Yesterday’s announcement by the Prime Minister on green measures and fuel prices caught everyone unawares. Today the Deputy Minister is making a speech about education and suggesting that we should regulate with regard to qualified teachers in our schools, but only last week the Minister for Schools signed off on cuts that could deregulate the oversight of qualified teachers. The Government’s approach, and not least that of the Liberal Democrats, seems to be inconsistent, so could we have an explanation of exactly what is going on?

[Tom Brake]

I will give the hon. Gentleman an explanation immediately. The Deputy Prime Minister has said that parents want and expect their children to be taught a core body of knowledge by good, qualified teachers or teachers seeking qualification—the quality of their teaching is checked by Ofsted—and to get a healthy meal every day. The Government believe that every child should have access to a good choice of excellent local schools. The hon. Gentleman may know that three quarters of free schools provide good or outstanding education, compared with just 64% in the public sector.

[Stuart Andrew (Pudsey) (Con)]

I recently met my constituent Angela Lavelle, who suffered from breast cancer. She told me how chemotherapy affects eyesight, leading to a greater risk of cataracts, and the teeth, leading to problems of rapid decay, which results in the need for more frequent check-ups. Unless patients are in receipt of benefits or on a low income, they have to meet those extra costs. May we have a debate to discuss what help we can give these cancer sufferers?

[Tom Brake]

I am sure the hon. Gentleman and everyone in the House will welcome the extra funding the Government have put into cancer treatment. I will ensure that the Health Secretary responds to him on the specific issue of the extra costs that his constituent has to meet.

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

On energy prices, may we have a debate or a statement in which we may raise the concerns of households that are off the gas grid and heavily dependant on home heating oil? That is a particular problem in rural areas and regions such as Northern Ireland, where 70% of households are dependent on home heating oil. The costs are extremely high and people are suffering in fuel poverty. Such a debate or statement would allow us to explore the help that is available for those households.

[Tom Brake]

I thank the right hon. Gentleman for highlighting the significant issue of the additional fuel costs that are faced by those who are off the grid. Although I cannot assure him that there will be an opportunity to debate the matter, I will ensure that what he has said is passed on to the Secretary of State for Energy and Climate Change so that my right hon. Friend can set out how we are helping those who are in the most difficult financial position of all.

[Mark Pritchard (The Wrekin) (Con)]

May we have a debate on reforming the Official Secrets Act? Breaches of the Act over the past decade in the Royal Navy and the Secret Intelligence Service have attracted only light custodial sentences. Is it not about time the Act was reformed to ensure that there is sufficient deterrent against treason in this country?

[Tom Brake]

I am not aware of any opportunities that there will be to raise that matter shortly, but the hon. Gentleman could apply for an Adjournment debate on the subject. If he feels that there is cross-party concern about the issue, he could also seek a debate from the Backbench Business Committee.

[David Wright (Telford) (Lab)]

May we have a comprehensive statement to the House about the health service in Shropshire? There is a debate about A and E services between Telford and Shrewsbury, which nobody in the county wants, and there is an emerging crisis in the ambulance service, particularly with regard to response times. May we have a comprehensive statement from the Government about those health services, because they are very important to people in Shropshire and particularly to those in Telford and Wrekin?

[Tom Brake]

The hon. Gentleman is right to highlight his concerns about his local health service. He mentioned A and E and the ambulance service, and I am sure that he will welcome the fact that the Government are investing £250 million in each of the next two years to support those A and E departments that are under the most pressure. He may also welcome the fact that, for the first time, the Government have put in place measures to examine waiting times. I will ensure that a response is sent to him about the specific issues that he has raised about the health service in Shropshire.

[Mr Ian Liddell-Grainger (Bridgwater and West Somerset) (Con)]

Last week, when I gently asked the Deputy Leader of the House about the forthcoming announcement on nuclear, he said that I would have to wait for the announcement. The announcement has now been made, so I will ask my question again. Bridgwater college is training the top engineers who will be needed to fulfil our promises not only, as somebody put it, to the Chinese and the French, but to the United Kingdom. Sedgemoor district council in my constituency must have a major part of the inward investment that the country needs to ensure that the supply chain for this enormous project is fulfilled. May we have time to discuss training, skills and inward investment for the United Kingdom in relation to the biggest infrastructure project that we have seen for a generation?

[Tom Brake]

The UK is determined to become a low-carbon economy, which is why our energy policy requires a mix of renewable, clean coal, gas and nuclear energy. As a result of the announcement on Monday, I am sure that the Government will want to work with employers and training providers to ensure that UK plc derives the maximum possible benefit. We believe that the nuclear industry is cost-competitive with other generation technologies. However, as the hon. Gentleman identified, we must ensure that we derive the maximum benefit from the project so that we can use those skills as the industry develops around the world.

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

On 18 April, I raised the issue of a fake internet jobs scam that was exposed by BBC Radio Humberside. Today, Radio Humberside has reported on another racket in which jobseekers are tricked into calling an expensive 070 phone number and completing a long questionnaire for a fake company called SB Millers, which is run by Sean Dixon of 33 Epsom road in London. Please may we have a debate on how we can stop these rackets that exploit desperate people who are looking for work and prosecute the criminals behind them?

[Tom Brake]

The hon. Lady rightly highlights that problem in the Chamber today and I hope that it will receive publicity to ensure that people are more widely aware of that scam. I am sure that she has raised the matter with her local trading standards officers to see what action they can take. Thanks to her, we are all aware of the potential problem, and I am sure we will all want to keep an eye out to ensure that our constituents are not affected in the way that hers have been.

[Mr Peter Bone (Wellingborough) (Con)]

There has been an outrageous slur from the Opposition that Liberal Democrat Ministers are not supporting the Prime Minister. If we closed our eyes today, we could hear the Deputy Leader of the House sounding exactly like a Tory Minister. Just to ensure that there is no doubt, will he arrange for the Deputy Prime Minister to make a statement next week that he fully supports the Prime Minister’s desire to roll back green energy regulations?

[Tom Brake]

I am not sure whether the hon. Gentleman had an opportunity to listen to the Deputy Prime Minister on LBC, but he might have found clarification on that point. Perhaps Mrs Bone had an opportunity to listen to that interview and will be able to report back to him. The coalition Government have made it clear that we are committed to being the greenest Government ever, and we will not do that at the expense of the environment or of jobs in the emerging industries. At the same time, however, we are aware of the pressures that people face due to their energy bills. That is why we have legislated, for instance, to ensure that people are offered the lowest tariff, and it is why we have measures in place to address the winter peak in fuel costs, with £135 available to 2 million people.

[Wayne David (Caerphilly) (Lab)]

As the Deputy Leader of the House has demonstrated, creative inventiveness has its place in parliamentary debate, but there is a time and place for everything, and it can be taken too far. In light of that, will it be possible to have a debate on the errors—inadvertent, of course—the misrepresentations, inadvertent, and the all-too-frequent inaccuracies, inadvertent, of the Prime Minister in his attempts to answer PMQs?

[Tom Brake]

I am sorry to disappoint the hon. Gentleman, but there is clearly not such an opportunity beyond the Prime Minister’s weekly attendance at the Dispatch Box, when he puts across the Government’s position on matters of all natures forcefully and effectively. Of course, the Prime Minister is a more regular attendee at the House to make oral statements than his predecessor.

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

May we have a debate on how we can continue to build on the legacy of the amazing London 2012? This Saturday, the next major international sporting tournament in this country, the rugby league world cup, will begin with Australia against England and Wales against Italy. Will the Government give it their full support? As a London MP, will the Deputy Leader of the House be going to the semi-final double header at Wembley on 23 November?

[Tom Brake]

I am not sure whether my hon. Friend was offering me tickets for the game on the 23rd; if so, we can discuss it later. He is right about the rugby league world cup, which could well be the best attended ever. He is also right to highlight the importance of sport, which can tackle some of the health issues that we face and may be used to work with young people to help to build their leadership and team skills, as it is by Cricket for Change, an organisation in my constituency.

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

Does the Deputy Leader of the House agree that Parliament and the parliamentary estate should be open to people of all backgrounds and to all our constituents, and that that should not depend on how wealthy or influential they are? Is he aware that the proposed massive increase in the cost of using rooms in the House and on the parliamentary estate will put many charities, third sector groups and small organisations off coming here to hold events? May we have an early debate on the chaotic management and running of this place?

[Tom Brake]

I thank the hon. Gentleman for that question and I think that he is sufficiently experienced to know that that is perhaps not a matter on which I can respond. We can both agree that we want the parliamentary estate to be as open as possible to anybody, but he will also be aware that at the same time Parliament is under a lot of pressure to ensure that it covers its costs. The commercial implications of such matters must therefore also be considered.

[Martin Vickers (Cleethorpes) (Con)]

Last Saturday night and into Sunday morning, I went out on patrol with Humberside police officers, the excellent police and crime commissioner for Humberside, Matthew Grove, and the magnificent street angels into the streets of Cleethorpes to view the night-time economy. It became evident that a review of the current licensing laws is necessary. Will the Deputy Leader of the House find Government time for a debate on such matters?

[Tom Brake]

I am afraid that I am not in a position to announce time for such a debate. The hon. Gentleman might want to try to secure an Adjournment debate. I am sure that colleagues on both sides of the House will have strong views about their own nightlife and the impact of licensing laws on it. He rightly highlighted the work done by the street angels on his patch, and I want to take this opportunity to congratulate the street pastors in Sutton, who play a similar role.

[Julie Hilling (Bolton West) (Lab)]

Tomorrow is wear it pink day in aid of the Breast Cancer Campaign. LivinginBL, one of the excellent local newspapers in Bolton West, is organising many activities to raise money and awareness. Will the Deputy Leader of the House join me and many thousands of people throughout the country and wear it pink tomorrow?

[Tom Brake]

I hope to be able to help the hon. Lady. When I go home this evening, I will have to check what pink items there are in my wardrobe, and subject to there being a suitable pink tie, pink shirt or, indeed, pink wig, I might well be able to join her tomorrow. It is a fantastic campaign and I am sure that many MPs will have taken advantage of the photo opportunity provided, wearing pink glasses, pink wigs or other pink items. It is an effective way of drawing attention to an effective campaign.

[Julian Sturdy (York Outer) (Con)]

In the light of a recent conviction in my constituency for the mistreatment of horses, and alongside the Welsh Assembly’s recent proposals on the issue, may we have a debate on tackling fly grazing and the abandonment of horses, which sadly happen all too often in my constituency and across England and Wales?

[Tom Brake]

I thank the hon. Gentleman for that question. He will be aware that that is an issue not just in rural areas but in urban and suburban areas such as mine, where horses are often left on local playing fields. I am afraid that I cannot provide any time immediately for that matter to be debated and I will have to refer him to the opportunities provided in Westminster Hall. If there is a greater appetite for such a debate, he could perhaps refer the matter to the Backbench Business Committee through cross-party representation.

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

May we have a debate or statement on the Government’s discretionary housing payment policy? Since April, 1,307 households across the public and private rental sectors have applied to Redcar and Cleveland borough council for the discretionary housing payment. Only 358 households have been awarded it, not because eligibility criteria have not been met but because the fund is exhausted, which means that nearly three quarters of households will not receive anything. May we have a statement or debate on the policy, as families in my constituency are in dire straits as a result of this Government’s bedroom tax and other cost-of-living measures?

[Tom Brake]

The hon. Gentleman will be aware that in response to concerns expressed by local authorities the Government made additional moneys available for the discretionary housing payment. I am sorry that on his patch the funds are, he says, exhausted, but I am aware that a number of other local authorities did not fully access the money made available to them. He will understand the reasons why the Government have proceeded with the changes to the spare room subsidy, and if he has concerns about the policy, we need to hear whether the Labour party would provide additional funding or simply deliver the same as the Government’s programme.

[Philip Davies (Shipley) (Con)]

We recently had the intolerable situation where a triple killer, who murdered his last victim while he was on the run from prison, was not given a whole-life tariff by the judge, because the judge said that that would breach a European Court of Human Rights ruling. I know the Deputy Leader of the House is on the wishy-washy wing of the coalition Government—quite a crowded wing—but will he arrange for a debate and a vote in this House, so that the House can make it clear that we expect judges to impose whole-life tariffs where they see fit, and ignore the views of the pseudo-sham judges at the European Court of Human Rights?

[Tom Brake]

I thank my hon. Friend for that, but I do not think I would describe myself as wishy-washy in any shape or form. I hope he will acknowledge that there is separation on this issue, and that Members of Parliament and the Government generally should be a little reluctant to interfere in decisions taken by judges.

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

In contrast to the previous question, will the Deputy Leader of the House allow a debate on the state of prisons in England? He is probably aware that many inmates have completed their tariffs but cannot be released until they complete an offender behaviour programme, but waiting lists are currently more than five years long. Does he agree that it makes no economic or moral sense to keep people locked up who are eligible for release and incarcerated only because of a paucity of suitable courses?

[Tom Brake]

I thank the hon. Gentleman for that sensible question and for highlighting the state of prisons in England. That matter was raised during questions last week, and the Government rightly set out that the priority is safety and security in prisons. I agree, however, that if there are people who are in a position to be released but have no access to an offender behaviour programme, the matter needs to be addressed. I will ensure that the Ministry of Justice writes to the hon. Gentleman on that subject.

[George Freeman (Mid Norfolk) (Con)]

One in six men in the country, and in this Chamber, will be diagnosed with prostate cancer during their lives—it is the single biggest killer of middle-aged men. With November looming, will the Deputy Leader of the House join me in expressing support for the Movember campaign? Movember was started by two patients, and has now raised more than £200 million and become the world’s biggest charity in the field. Will the Deputy Leader of the House signal his support and consider becoming a fellow Mo Bro, and can we have a debate in the House on the importance of male health awareness and the involvement of patients in research?

[Tom Brake]

The hon. Gentleman may be alarmed to hear that I took part in Movember three years ago, but the general view of my trucker-style moustache was that it was best never seen again, and I am afraid that this year I will not be participating. I do not know whether the hon. Gentleman intends to sport a dramatic moustache—a Mexican moustache perhaps—during November, but I agree that Movember is a fantastic campaign that has caught people’s imagination. Men are not very comfortable talking about prostate cancer and their health in general, and the campaign has highlighted an issue that men of my age—and the hon. Gentleman’s age—need to be aware of and concerned about.

[Robert Halfon (Harlow) (Con)]

May we have a debate on reducing VAT on energy bills? Every 1% reduction in VAT means £300 million saved for hard-pressed householders. Will my right hon. Friend lobby the Prime Minister to ensure that regaining control of our VAT rates is the No. 1 part of renegotiation on our relationship with the European Union?

[Tom Brake]

I am sure my hon. Friend is aware that under the EU directive covering VAT it would not currently be possible for VAT on gas and electricity supplies to be reduced below 5%. We know that rising energy prices are hitting many households hard at a difficult time, which is why in response to an earlier question I set out exactly what the Government are doing about the issue. The Government’s view is that the best way to keep everyone’s bills down is to help people save energy, and to ensure there are fair tariffs and to encourage competition, which is exactly what they are doing. If the Government were to pursue the approach that the hon. Gentleman suggests, they would also have to say where the extra money would come from to make up for the loss in VAT.

[Mark Pawsey (Rugby) (Con)]

Has the Deputy Leader of the House seen the recent European Parliament ruling on e-cigarettes, which determines that an e-cigarette is not—I repeat not—a medicinal product? Given that the Government remain committed to increasing regulation in the UK, may we have a Department of Health statement on what action it will take to enable smokers who are looking to reduce their dependency on tobacco to continue to use e-cigarettes?

[Tom Brake]

The hon. Gentleman is right to ask the Government to set out our position. We were disappointed that the European Commission’s proposal to regulate products including e-cigarettes as medicines was not supported by the European Parliament. The Government believe they need to be regulated as medicines. As he is aware, in the meantime licensed nicotine replacement therapies are available to help to reduce the harm of smoking to smokers and those around them, as recommended by the National Institute for Health and Care Excellence.

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

The Care Quality Commission has raised concerns about maternity services in my local Medway hospital. May we have an urgent statement from the Secretary of State for Health on Government policy on maternity services and what is being done to get more midwives into our hospitals?

[Tom Brake]

I thank the hon. Gentleman for flagging up his concerns about his local hospital in Medway. He will be aware that the Government are taking action on midwives. He might also be aware that there is a record number of midwives in training. There will be 1,300 or so additional qualified midwives by the middle of this academic year in comparison with the beginning of the Parliament.

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

Earlier this month, the OECD published a report showing that young adults in England have among the lowest results in the industrialised world in international literacy and numeracy tests. The report showed that this is the only country in the survey in which results are going backwards, with higher numbers in the elder cohort than in the younger cohort. May we therefore have a debate on standards in schools, focusing on why such a high proportion of academies and free schools are classed as outstanding?

[Tom Brake]

Like the hon. Gentleman, I was quite depressed at what the report said on the progress young people are making. Clearly, literacy and numeracy are the foundations on which all further achievement in education depend, and are critical for work and everyday life. We need to do more work to raise the quality of English and maths throughout the country. Our reforms to schools and further education will improve the quality of the teaching work force, reward the best providers and ensure that learners are stretched to achieve the best they can. He might have heard the Minister for Schools set out in his statement last week exactly what we are doing to ensure that standards in all schools are improved.

[Mr Philip Hollobone (Kettering) (Con)]

Like most of my constituents in Kettering, I believe that if a foreign national commits a crime they should be sent back to their country of origin and banned from re-entering the UK. That very sensible policy platform is outlined in my Foreign National Offenders (Exclusion from the United Kingdom) Bill, which is scheduled for debate tomorrow. Are the Deputy Leader of the House and Her Majesty’s Government inclined to support that sensible policy?

[Tom Brake]

I am aware of the hon. Gentleman’s Bill and his concern about foreign nationals who commit crimes. We will listen to the debate on his Bill, but I cannot reassure him today from the Dispatch Box that the Government will support it.

[Mr Speaker]

I call finally Mr Christopher Pincher.

[Christopher Pincher (Tamworth) (Con)]

Thank you, Mr Speaker. I know my place; regrettably, you appear to know it, too. Be that as it may, may we have a debate on entrepreneurship? Tomorrow, I am meeting Tom Robinson, who at the age of 22 is one of Tamworth’s youngest entrepreneurs. He began by selling T-shirts from a market stall and is graduating to selling them from his first shop in the town centre. A debate would allow hon. Members to discuss what help we give and what more help we could give to young entrepreneurs such as Tom to help them to get their businesses off the ground.

[Tom Brake]

Clearly, we left the best question till last. I congratulate the hon. Gentleman’s constituent, Tom Robinson, on the effective entrepreneurship he is deploying to promote his business. From small things grow much larger businesses. The Government are clearly committed to helping entrepreneurs. We have made significant funds available—loans-wise—to young people who are setting up businesses. We are growing jobs in the private sector and have the largest number of businesses registered, and business confidence, construction, manufacturing and exports are all up. We are beginning to see the economy as a whole moving in the right direction.

Points of Order

Thursday 24th October 2013 Commons Chamber

11:25

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

On a point of order, Mr Speaker. I would like to raise the issue of access to the House at busy times. Even on a day like today, when we are about to debate interest rate swap derivatives, there is a lot of interest among angry constituents. Have you noticed that recently the queues to get into the House for meetings with Members of Parliament have sometimes been an hour and a half to two hours long? That is new. Will you get someone to look into why these queues are so long? I am told it is not a matter of security, but something else. The House should be more accessible.

[Mr Speaker]

I certainly shall, and I shall revert to the hon. Gentleman and, as necessary, to the House. I am not sure with what frequency queues are lasting that long, but if it is a regular phenomenon as opposed to an exceptional one that is very unsatisfactory. The hon. Gentleman is nodding to suggest that it is a regular phenomenon. If that is so, it is disturbing. I will look into it and I will come to back to him and, if necessary, to the House.

[Ian Murray (Edinburgh South) (Lab)]

On a point of order, Mr Speaker. Newspaper reports today say that the New Zealand Government have agreed to reduce their universal service obligation for post from six days to three, following heavy lobbying from New Zealand Post on the unsustainability of the USO. The Minister with responsibility for Royal Mail told the House in Business, Innovation and Skills questions last month that changing the USO in this country required primary legislation. That was later changed in a letter to my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), but the Under-Secretary of State for Business, Innovation and Skills, the hon. Member for East Dunbartonshire (Jo Swinson) refused to correct the record during BIS questions this month. Is there any mechanism by which we may have the Minister clarify the position in the House on how the USO can be changed?

[Mr Speaker]

I cannot say that I am familiar with the minutiae of public policy in New Zealand; nor is that a matter properly for the Chair. Ministers, in common with all other Members, are responsible for the accuracy of the statements they make to the House. If a Member thinks that an error has been made, there are opportunities outside the Chamber and through the Order Paper to pursue such a matter. Meanwhile, the Government Chief Whip and other members of the Government are on the Treasury Bench and I trust they will have heard the hon. Gentleman’s point of order.

Backbench Business

Thursday 24th October 2013 Commons Chamber

Interest Rate Swap Derivatives

Thursday 24th October 2013 Commons Chamber

11:27

[Guto Bebb (Aberconwy) (Con)]

I beg to move,

That this House considers the lack of progress made by banks and the Financial Conduct Authority on the redress scheme adopted as a result of the mis-selling of complex interest rate derivatives to small and medium businesses to be unacceptable; and notes that this lack of progress is costly and has caused further undue distress to the businesses involved.

I am surprised to be back here 15 months after the first debate on this important issue. I appreciate the Backbench Business Committee—the Chair is in her place—once again offering time to debate it. The first debate made a significant difference. Prior to that debate, the Financial Conduct Authority and the banking sector were refusing to acknowledge that there was an issue that needed to be dealt with. A few days after the first debate, that changed and a pilot scheme was announced.

Members who have followed this issue carefully are aware that the pilot scheme found that approximately 91% of cases investigated between July 2012 and January 2013 had a technical mis-selling, so the process has highlighted the mis-selling of these products. The House should take some comfort in knowing that securing the second debate has also resulted in a significant concession from the banking sector. Members of the all-party group on interest rate mis-selling have argued long and hard that the redress scheme had a central flaw, which is that the technical redress for the mis-selling of interest rate swap derivatives and the consequential losses were linked within the redress scheme. That gave the banks in question a significant advantage, because small businesses facing heavy cash-flow problems were inclined perhaps, under the scheme as it stood, to accept an offer of technical redress without fighting hard over consequential losses, simply because they were desperate for the cash.

As a result of the announcement of this debate last week, HSBC said on Tuesday that it was separating the technical redress from the consequential losses, and other banks have followed. My first call today, therefore, is for the rest of the banks involved in the redress scheme to follow HSBC’s and RBS’s lead. It is several months too late, perhaps, but it is the right decision, and we want to see the other banks following.

[Mark Tami (Alyn and Deeside) (Lab)]

Does the hon. Gentleman agree that the FCA is still dragging its feet and that this has gone on for far too long? I am helping Ged Fitzpatrick, who has a care home in north Wales and who recently suffered a heart attack. I am sure that that had something to do with the stress of this process, which has gone on for far too long.

[Guto Bebb]

Bully-Banks surveyed its members and found that the health impact on them had been significant. I accept that the FCA still has ground to make up, but despite its stating in September that linking both payments was the right thing to do, I am pleased that yesterday it welcomed the decision to separate them. I would rather see a sinner repent, even late in the day, than no changes whatsoever.

[Mr Jack Straw (Blackburn) (Lab)]

I wish to express my gratitude to the hon. Gentleman for his leadership on this issue. Hon. Members on both sides of the House are very grateful. Like so many colleagues, I have a firm in my constituency—it does not want to be named—that has been in this situation. I was able to get the redress payment paid and was about to get compensation in hand, when the FCA intervened to say, “Oh well, the 8% simple interest paid for the redress payment is sufficient compensation for the consequential losses.” Does he accept what must be blindingly obvious—that no bank seeking redress for a loss that it had unfairly suffered and then seeking compensation for consequential losses would dream of ever seeing the two rolled up together? What is sauce for the goose must be sauce for the gander.

[Mr Speaker]

We all look forward to the publication of the right hon. Gentleman’s thesis on this subject, but in fact I think we have just heard it.

[Guto Bebb]

I accept the right hon. Gentleman’s point. This is clearly an important step forward, however, and we should take comfort from the fact that this place can influence the behaviour of the banking sector. I will be discussing consequential losses later in my speech.

It is fair to say that the 91% finding in the pilot scheme has been replicated in the work done within the redress scheme. The figures released by the FCA in August and September on the individual performance of banks—something for which the all-party group called—have clearly shown that 93% of cases in the redress scheme involved actual mis-selling. So again we have proved that there is an issue that needs to be dealt with.

[Mr Graham Stuart (Beverley and Holderness) (Con)]

I echo the praise from the right hon. Member for Blackburn (Mr Straw) for my hon. Friend. Does he have sympathy, as I do, for companies with more than 50 employees that are not financially sophisticated and which were mis-sold these products, often as a condition of loans to do business, but which now find themselves described as the sort of people who should have been able to see through the sophistry and misrepresentation of the salesmen of these products?

[Guto Bebb]

My hon. Friend mentions the sophistication test, and I will be coming to that; it is indeed something that concerns me and the all-party group.

We have found consistently that banks are admitting a mis-sale in about 93% of cases. Had we found, in the consumer mortgage market, that 93% of mortgages had been mis-sold, would we have allowed nine months to pass between those findings and the situation we now face? We have to ask the question: is it right that these businesses should be treated differently because they are small businesses, when we have found that there has clearly been mis-selling?

[Steve Brine (Winchester) (Con)]

I have many constituents, some of whom are outside this place today, whose businesses are in limbo while they wait for this interminable delay to be sorted. They are unable to press on and employ the people they want to, to grow their businesses, pay their taxes and help to grow the economy, which is what we all need to happen. That is the bigger point in this debate: the impact on the wider economy.

[Guto Bebb]

My hon. Friend makes an important point, which those on the Front Bench need to take seriously. These businesses have been unable to invest because they simply do not know whether they are financially feasible. Time and again, I have heard stories of people with investment plans who, rather than implementing them and growing their businesses, have been closing elements of their businesses, making staff redundant and just trying to survive.

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

The hon. Gentleman mentioned the situation facing small businesses. Does he agree that some small companies are afraid to challenge their banks because their loans could be cancelled?

[Guto Bebb]

That concern has certainly been raised, but I keep receiving assurances from the banks that that is not the case. I want to take those assurances at face value and would still recommend that anybody who has been sold one of these products should undoubtedly go and talk to their banks. If the banks are unsympathetic, they should come and talk to their MPs, because we can and should intervene.

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

Will my hon. Friend give way?

[Guto Bebb]

I will take one quick intervention, but then I will have to make some progress.

[Stephen Mosley]

Is it not the case that some customers do not know that they have been sold swap agreements? Some people have been sold hidden swaps and do not know about it. Does my hon. Friend not think that the banks have a duty to inform customers themselves if they sign people up to such agreements?

[Guto Bebb]

I am grateful for that intervention. I will come to hidden swaps later—“embedded swaps” is the technical term; “hidden swaps” is a fairer way of describing them—because they are a big issue and we need to address them.

The setting up of the redress scheme was the reason why we called this debate. It has taken months to reach an agreement to ensure consistency across the 11 banks involved. Originally we were told that Christmas was the deadline for completion. However, at this point in time there are 30,000 businesses in the cohort—I think that that figure is an underestimate, because of embedded swaps, for example, and the way the sophistication test works—so frankly the Christmas target will not be met.

[Kelvin Hopkins (Luton North) (Lab)]

rose—

[Guto Bebb]

Before I take any further interventions, it is worth making this point. I was recently involved in a mediation meeting with one of the banks and one customer, whom I cannot name, even with parliamentary privilege, apparently. The bank in question made it clear that it could not promise a date for paying redress before 2015. As such, although the intention of achieving consistency is correct, we have to put pressure on the FCA to ensure that we move at a faster pace.

One of the big frustrations felt by the businesses affected and the APPG is that since the pilot scheme was completed, the banks involved have spent upwards of £300 million on the administration of the scheme and recruited up to 3,000 people to deal with it, yet by the end of September only 32 businesses had been offered redress, to the total value of £2 million. I understand the complexity of getting this right, but it is simply not good enough for the banks to be spending that much money and for the businesses that need redress not to be getting it.

[Mr Mark Prisk (Hertford and Stortford) (Con)]

I am grateful to my hon. Friend for giving way; he is doing a fantastic job. It is becoming clear to businesses in my constituency that, in the absence of any penalty after the current agreement—which, of course, is voluntary—the banks are just playing for time.

[Guto Bebb]

That is an important point—that the banks are possibly playing for time—which I think will be touched on in other speeches in this debate. As for the ability of businesses to try to get compensation through litigation, it is important that they take action to protect their positions. The redress scheme is a step forward. It is not working perfectly, but I would still advise businesses to protect their position from a legal point of view.

[Mr David Heath (Somerton and Frome) (LD)]

Will the hon. Gentleman give way?

[Guto Bebb]

I will take a final intervention for the time being.

[Mr Heath]

I thank the hon. Gentleman for giving way and for his work. He said earlier that he could not name his constituents or the bank involved, but I will certainly name Chris and Angela Hays, whom I am trying to help, and the Royal Bank of Scotland. Is it not the case that we have seen a double whammy? We have seen a big bank using a scam on its customers and then using every device to prevaricate and procrastinate to avoid paying the money that those businesses need to survive.

[Hon. Members]

Hear, hear.

[Guto Bebb]

Hon. Members have made their feelings about that intervention very clear; we all share that frustration.

The FCA and the banks have made it clear that the suspension of swap payments is a concession that has been offered, but as yet only 1,000 businesses have been offered the opportunity to suspend payments. A key message that this debate needs to send out is that if a business wants to request a suspension, it has to be in financial distress. Some banks are stating that a business requesting a suspension is admitting to being distressed and therefore needs to go into special measures. Any small business would be loth to find itself dependent on a team of specialists from its bank’s restructuring department. We need to ensure that a suspension of payment can be offered without the need for a business to go into special measures with its bank.

The delays are the reason that we called this debate, but I also want to highlight other concerns that have been expressed about the redress scheme. I have touched on some of them in response to interventions. A key issue is the sophistication test. I acknowledge the need for such a test. Huge businesses can derive benefits from these products, and they will have the sophistication and expertise to understand what they are being sold. However, there is concern about the decision to introduce a sophistication test as part of the redress scheme.

Anyone who takes out a swap in excess of £10 million will be excluded from the scheme because they will be deemed to be sophisticated. The FCA has found that a key aspect of mis-selling involves banks over-hedging loans taken out by businesses. In other words, a business might have a loan facility of £5 million but a hedge in excess of £10 million. In such a situation, the fact that the bank was guilty of mis-selling would provide it with protection within the redress scheme. That is unacceptable. We need a greater degree of flexibility on the issue of sophistication.

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

Would my hon. Friend also accept that the banks have made these processes unduly complex, which has resulted in delays in addressing the issues? In the case of one company in my constituency, it has taken the bank 16 months just to recognise the fact that the company was unsophisticated, to use my hon. Friend’s language. That is clearly unacceptable.

[Guto Bebb]

I agree that 16 months is a very long time. Even when cases are accepted into the redress scheme, they seem to be taking a long time. The banks would argue that businesses need to engage with them, but I believe we still need to look carefully at this matter. The sophistication test should be more flexible, and the discrepancies that I have described need to be acknowledged.

Another discrepancy involves the asset value. A business could be excluded from the scheme because of the asset value that it holds. In effect, it could be argued that a business that had been lucky enough to invest in property at the right time should be excluded from the redress scheme because of that piece of luck. If the asset value had increased to a certain level, that could result in the company being excluded from the scheme.

There is also a lack of consistency. In some cases, the banks are ignoring the sophistication test because they believe that a customer would fail it and therefore be eligible for the redress scheme. Instead, they are moving the customer straight into the assessment of redress. If they can ignore the sophistication test in some cases, where is the consistency? A member of the all-party parliamentary group argued strongly on behalf of a constituent who had a £12 million swap and, lo and behold, the constituent was subsequently allowed to become part of the redress scheme. That was an excellent result for that business, but again, where is the consistency? The FCA needs to look carefully at the sophistication test.

My final point on the sophistication test is that, if a business spends six months waiting to be assessed, those six months will be lost in regard to the statute of limitations for taking legal action. The FCA needs to recognise that, because it is potentially dangerous for the businesses concerned.

A further concern relates to the alternative products on offer. It has been said time and again that if these complex products are unsuitable, it cannot be right to introduce a redress scheme in which a swap can be substituted by a slightly less complicated swap. It is also important to note that a business will be offered an alternative product only if it has failed the sophistication test—that is, if it has been deemed to be unsophisticated. I find it difficult to understand how any alternative product other than a cap could possibly be suitable.

Another reason why the cap is the obvious alternative product is that if businesses had been told clearly of the cost of the products they were taking on board back in 2006-07, they would have seen that a cap would have offered them significantly better value for money. Why was the cap not offered? Probably because of the financial imperative of the banks to sell something more complex and more rewarding. It is thus important to highlight the fact that having a complex derivative rather than a cap as alternative product is a real concern. If businesses have been classified as unsophisticated, that issue should be recognised and we should try to ensure that we provide a cap as the only acceptable alternative product.

[Richard Fuller (Bedford) (Con)]

My hon. Friend mentions the omission of information from the sales process; does he also accept that the information needed was introduced late and that only opinions were offered? What was really going on was a sophisticated sales process to dupe people who may have been financially unsophisticated for the financial benefit of the banks. Does he believe that that should mean that the people in charge of that process should face criminal sanction, not just financial redress for their customers?

[Guto Bebb]

That is certainly a call that some of the organisations campaigning on this issue have made, and I am sure that other hon. Members and members of the all-party group will expand on that theme in their speeches.

We thus need to look carefully at the alternative product issues. It is fair to argue that businesses might have been looking for interest rate protection, but it is difficult to argue that they would have been tempted by an expensive product in 2006-07, when a cap offered such good value for money at that time. I am unpersuaded of the arguments for a complex derivative.

[Richard Benyon (Newbury) (Con)]

rose—

[Guto Bebb]

I will take my hon. Friend’s intervention, but this will be the last because I am conscious of the time.

[Richard Benyon]

I am grateful to my hon. Friend. Many of these products were sold on the basis of a projection for interest rates to go up. There is a slam dunk case against some of these companies for showing a graph of projected interest rate rises when, of course, the opposite happened. Surely that should be a factor when it comes to whether or not firms’ were sophisticated about the product that was eventually sold.

[Guto Bebb]

I could not agree more with my hon. Friend. The expectations back in 2007 were that interest rates would go down, yet there were numerous examples of bank sales teams informing businesses that they needed to protect themselves against a rising interest rate scenario—contrary to the information that the banks themselves had.

Another key call is why there is no appeal process within the redress scheme. There would be much more confidence in that scheme if there were an appeals process. I understand that the Financial Ombudsman Service offered to provide an appeals service, but the offer was rejected by the FCA. It would give some comfort without complicating issues too much if, for example, assessors working for one bank in the redress scheme were able to provide an appeals process for another bank in it. That may not be perfect, but it would help to avoid over-complicating what is already a complicated redress process and it would give businesses the confidence that there is an appeal process and that they can turn to somebody else to argue their case. We should be very concerned about having a redress scheme without any appeal process, as it goes against the principle of natural justice, while opening up the door to litigation, when the whole point of the redress scheme was supposed to be to avoid litigation.

Embedded or hidden swaps, which are currently excluded from the redress scheme, are another key issue to highlight and a matter of huge concern. If we think about it, a hidden swap is quite possibly worse because businesses were not even aware that they were also taking out with their fixed-rate loan an interest rate derivative product. The American author, James Riley once said:

“If it walks like a duck, and swims like a duck and quacks like a duck, then it must be a duck.”

The same point needs to be made about these hedging products. If the impact of an embedded swap is the same as the impact of a separate hedging product taken out with it, it is difficult to argue that the small businesses that were sold those products should be excluded because of a technicality relating to whether they are subject to the FCA regulations. I ask the Minister to respond on that specific issue.

A publican from Aberystwyth, Mansel Beechey, was sold one of these embedded products. I know Mansel very well because when I was a student in Aberystwyth, I was financially illiterate and used to cash cheques in the pub. I used to do that on a Wednesday evening and pay 50p for the privilege. On a Saturday evening, I would want to cash a cheque again, and Mansel would say, “Well, make it one for £30, and I will give you back what you gave me on Wednesday, only charging you the 50p once.” Mansel Beechey thus showed me more respect and consideration, in behaving properly towards me, than the bank that sold him the hidden swap showed to him. That business had been built up over a long period. If Mansel Beechey could show to me a degree of responsibility that had not been shown to him, there is clearly something wrong with our banking sector.

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

Will the hon. Gentleman give way?

[Guto Bebb]

I am afraid that I cannot take another intervention.

The issue of hidden swaps is important and needs to be addressed. We need to know why businesses to which they were mis-sold have been excluded from the redress scheme. Thousands of businesses have been mis-sold these products, banks have admitted that the products were mis-sold, and yet the redress scheme is not, as yet, performing as it should. I am not looking for a new scheme, but I am looking for changes, and much greater speed, in the scheme that we currently have; and I think that we need to address some of the exclusions, which are clearly unfair.

I became involved in this issue when a constituent of mine, Mr Colin Jones, came to see me. He claimed that he had been sold a complex product and that, as a result, his business had gone under. The last news I heard of Mr Jones was that he was homeless and living with his mother. He has lost absolutely everything, and because his business was a limited company, it is highly unlikely that even if the redress scheme highlights the fact that he was mis-sold the product and is in need of compensation, he will not benefit from that compensation personally. I think it wholly wrong for someone to lose his business not because he was a poor business man, not because he made a mistake, but because he was taken advantage of by his bank. Having listened to the trade calls, I am quite happy to say that publicly.

I am delighted to note the interest in the issue that is being expressed in the Chamber today, because I believe that businesses all over the country are looking to us to give a lead. I hope that the FCA and the banks will listen to what is being said, and I sincerely hope that the redress scheme will start to perform in the way in which it was expected to perform in January, rather than in the slow and bureaucratic way in which it has performed so far.

[Several hon. Members]

rose—

[Mr Speaker]

Order. More than 20 Members are seeking to catch my eye. We have also to hear, very properly, from the Minister and the shadow Minister, and I envisage the debate finishing at approximately 2.30 pm, at which point we shall need to move to the next debate. In recognition of all those considerations, I am imposing a limit of six minutes on Back-Bench speeches, with immediate effect.

11:52

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

It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb), and it was a pleasure to see him before the Backbench Business Committee again, although we had hoped that the position would be resolved on the first occasion when he appeared before us. It was also a pleasure—here I echo the sentiments of other Members—to be a member of his all-party parliamentary group on interest rate mis-selling. The group has demonstrated the power and effectiveness that all-party parliamentary groups can display when they are organised around a single issue, particularly when the issue is an injustice of this kind. The Committee was delighted to be able to schedule today’s debate, and I hope that we shall have as much effect today as we did all those months ago.

I want to focus on just a couple of issues raised by the hon. Member for Aberconwy—in particular, the idea of a moratorium, but also the terrible way in which this issue has been allowed to drag on and on. It is not just the banks that are involved; the Treasury is involved as well, and we should also consider the role of the Financial Conduct Authority. When, many months ago, members of the FCA appeared before the all-party parliamentary group, many of us were unimpressed by their lack of a sense of urgency. Everyone recognised that they wanted the redress scheme to be drawn up properly, but they certainly did not show the sense of urgency that they had shown when signing people up to the mis-sold schemes when it came to the question of redress.

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

I do not know whether the hon. Lady has experienced the problem experienced by certain other Members. When the hon. Member for Harrogate and Knaresborough (Andrew Jones) and I wrote to the Financial Standards Authority about a shared case, the FSA replied that it did not deal with individual cases. We then wrote to the Minister, who told us to raise the matter with the FSA. We are going around in circles. Do we not need a different body—possibly even the National Crime Agency—to get a grip on the issue?

[Natascha Engel]

That is a very good point. We have had any number of cases where they have been passed from pillar to post. One of the terrible aspects of all this is that the individuals affected do not know where they can go to get justice, and they certainly do not have very much time to do that, because their businesses are going bust while they are waiting for justice.

[Kelvin Hopkins]

This very morning I have been speaking to a constituent who has been driven to the edge of bankruptcy by what the banks have done, and I have helped him to some extent. My hon. Friend is making a point about the lack of force behind the action that has been taken so far. Is there not a case for strong Government action now and, indeed, as the hon. Member for Bedford (Richard Fuller) mentioned, for criminal sanctions?

[Natascha Engel]

Indeed, and I am going to finish on both those points.

One way to make sure the banks cannot drag their feet in the way that they have is to impose a moratorium on the payments. That would really focus their minds. If the money is not coming in, I am sure they would try to settle this matter once and for all much more quickly. The number of suspensions of payments—and only in those cases where people are suffering significant hardship—is an absolute scandal. The fact that 30,000 businesses or individuals are waiting for some kind of redress and only 32 have had redress is also an absolute scandal. Something must be done.

[Clive Efford (Eltham) (Lab)]

My constituency also has a business that has been affected by this. When we wrote to the Financial Conduct Authority, the response was really an apology for the banks, as though this is just some sort of error that has been made. Does that not underline the fact that there has been a lack of urgency by the regulators, on whom we rely to act on behalf of our constituents when they are wronged in this way? We need more urgency from the regulators; they must get on with their job.

[Natascha Engel]

That is right and this whole scandal has shown how it has been possible to pass the blame between banks, the FCA and the Treasury, and nobody will take any responsibility for what has been an absolute scandal.

I have seen this in my casework. Mr and Mrs Chadwick buy and sell homes and their business has been very successful. These small and medium-sized companies are not just viable; they are successful. It is only because of this mis-selling scandal that they are going bust. I cannot understand the logic of this: what interest does a bank have in a business going bust and losing all its money? The logic of that is beyond me.

I am also concerned about banks that have taxpayer funding, such as RBS, which has a lot of these cases. We must look much more carefully at the link between the regulator, the banks and the Treasury.

I agree that proper criminal penalties must be imposed on those banks, individuals and organisations that have been proven to have been part of this injustice, and I also agree with the call for a moratorium.

[Steve Brine]

The issue of suspensions and the length of time this has all taken was raised with me at a business breakfast in Winchester last week. This has generated so much anger. While it was understandable that there were no suspensions while things were supposed to be done on a shorter time scale, it has now taken 16 months in some cases. That is why it is causing real hardship and anger, and I hope that point comes across loud and clear to the FCA, which I know is listening to every single word this morning.

[Natascha Engel]

I could not agree more. I do not know whether other Members have received a letter from Barclays today outlining, in not very easy-to-understand English, what it is doing and proudly proclaiming how “tightly controlled” and “heavily scrutinised” the review is

“whereby all the banks involved are required to develop a detailed methodology for agreement”,

blah, blah, blah. It goes on and on and on. If this is phrased in anything like the same way as the products individuals were sold, I am not surprised they did not understand what was going on.

[Mark Tami]

My hon. Friend talks about sanctions. A lot of these people were tricked at the last minute, whereby they were about to sign the loan and this clause was put in. They were told, “Oh no, it is an added safety for you.” Nothing was explained the other way and these people are now paying the price, but the real people who should pay the price are the banks that tricked them in the first place.

[Natascha Engel]

Not only was this a trick, but some individuals were not able to take loans unless they bought these products—that was the real scandal. The other tragedy has been: the many individuals who have taken their lives; those whose lives have been ruined; those whose marriages have broken up; and those individuals whose businesses have gone bust. What happens to them under any redress scheme? Those are the sorts of individuals that Bully-Banks has done a very big job to support, and I hope that today’s debate will mean that if the FCA is listening and if the banks are listening, they will do something about these people, and quickly.

12:00

[Mark Garnier (Wyre Forest) (Con)]

May I start by adding my congratulations to my hon. Friend the Member for Aberconwy (Guto Bebb), who has not only been brave in what he has done on this matter, but has shown outstanding leadership in a technical, complex issue?

I wish to develop a couple of points, the first of which has started to resolve itself. I am talking about the big question of the linking of consequential loss to the technical redress. Clearly, the technical redress is people’s money—that is an agreed thing, and it is only right that it should be paid as soon as possible. The consequential loss was always a separate issue, and to have linked it was completely the wrong thing to have done. HSBC has broken ranks and RBS is following suit, and Martin Wheatley is now coming on board, saying that there should be no conditionality between the technical redress and the consequential losses claims. That is a good thing; it is excellent progress, and we can thank my hon. Friend for his work on that.

[Peter Luff (Mid Worcestershire) (Con)]

May I add my thanks to my hon. Friend the Member for Wyre Forest (Mark Garnier) for the leadership that he, too, is showing on this issue? Is it his experience, as a fellow Worcestershire MP, that this scandal, although apparently technical, is affecting well run, long-established and deeply respected real businesses across a wide range of sectors, and that the delay is going to kill businesses that our constituents value very deeply indeed?

[Mark Garnier]

My hon. Friend is absolutely right in what he says. The banks made an incredibly cynical effort to persuade people to enter into these contracts where, in many instances, they should not have done so. Sometimes it was the right thing to do, and I think that many businesses will agree that they just got it wrong, but we need to look after the smaller businesses that were simply mis-sold these products.

[Mark Lazarowicz]

Do not the banks, or at least some of them, also have to be much more proactive in identifying the people who been the business victims of this practice? As we all know, whenever we have a debate such as this, more people come forward who were frightened to come forward before or who did not even realise that they were victims of these schemes. It is up to the banks to be much more proactive in identifying the cases and then trying to resolve them.

[Mark Garnier]

That is absolutely right. Part of the problem, however, is that the banks have an incentive not to get in touch with people, for obvious reasons. That relates to the second point I wish to develop. It is a technical point, but it is incredibly important in terms of why it is incentivising banks to delay technical redress for as long as they can, and it has implications for the financial stability of the banks.

We should not think of these things as stand-alone products, but should recognise them for what they are. They are not stand-alone products; there is another side of this trade. They are swaps for a reason, and it is important to understand what a swap is. Any one of our victims will have been persuaded to take out a contract with the bank that has the beneficial effect of capping interest rate payments at a certain level. That is a virtuous thing and we are all familiar with the financial planning behind the thought process, through things such as fixed-rate mortgages. But these are not fixed-rate mortgages; they are stand-alone products that relate to a loan, but are not part of that loan. Importantly, many people have paid off the loan but still have the outstanding liability on the swap. The quid pro quo of having a fixed cap on interest payments is the collar that has caused so many problems for our victims, whereby they have to pay a relatively high rate of interest in today’s terms. What is not fully understood is that this is not a simple contract with the bank, as it first appears. The bank is not taking a naked bet with its customers that, in the environment of falling interest rates, it has won. It is not receiving as profit the penalty in the increased premiums being paid in interest rates by the victim, because for a swap to actually be a swap, there is a matching trade with a third party on the other side. What the banks receive in higher interest rate payments they are paying to an opposing and third-party counterpart on the other side.

I shall now go into a bit more detail. Businesses may want to make sure that they do not pay too high an interest rate; that is why they are persuaded, rightly or wrongly, to take the swaps. However, an organisation such as a pension fund needs to guarantee its income should a severe drop in interest rates, such as we have seen, occur. It would want to take a position opposite that of the businesses, which are the victims.

The pension fund will forgo a rise in rates while winning the guaranteed floor rate that it will receive. For a business to have a rate cap at, say, 7%, it will guarantee to pay no less than 5%. For a pension fund to be guaranteed to receive a minimum payment of 5%, it would agree to receive no more than 7%. In that way, the business’s and pension fund’s interests are perfectly aligned in opposition.

As both the pension fund and business are clients of the bank, the bank does two simultaneous trades—one with the business, to cap and collar the rate payments, and the other with the pension fund, to collar and cap the interest rate receipts. The bank makes a small margin, but essentially its liability, if everything stands up, is perfectly and oppositely aligned. That is the symmetry of liability and the basis of the swap market.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

I thank my hon. Friend for his understandable explanation of the product. I will be honest—I am new to this issue, which constituents have brought to my attention. Is it possible to explain the issue to an individual in a phone call lasting one minute and 20 seconds? That, apparently, constitutes the contract between the bank and the client.

[Mark Garnier]

I will try to explain the issue as simply as I can now.

Imagine a second-hand-car dealer. He may buy a dodgy motor on his own books and try to make as big a turn as he can, but he risks not getting his money back. Now imagine a car dealer with a valuable vintage car who aligns a seller and buyer at exactly the same time. He takes a turn with no risk at all, and that is how a swap behaves. Now imagine that, having lined up that trade, he takes the money from the buyer, so has a contractual agreement with them, and agrees a sale with the seller. However, on the way to deliver the car, he writes it off in a crash and is not insured. He still has liabilities on both sides—he still has to deliver a car to the buyer and has to pay the seller. That is the mess that the banks are in. They have caused themselves a massive car crash and have to look after the other side of the trade.

We are fully aware of the losses to the banks on the financial redress scheme—plus, obviously, the consequential loss scheme as well. We have heard about how much has been put aside, and there will be debate about whether that is the right amount or not. However, we have heard nothing yet about the value of the liability on the other side of the swap—the liability to institutions, most likely to be pension funds, that still needs to be honoured. That has implications for the stability of the banks and shows why it is important for banks to keep the redress scheme running for as long as possible.

[Richard Fuller]

rose—

[Mark Garnier]

I see that my hon. Friend wants to intervene, but may I develop my point?

The financial redress scheme has a specific value, based on a number of factors—including, crucially, interest rates and time. Similarly, time to run is a key component of the value of the other side of the swap. With interest rates so low, the longer the time to run, the higher its value to the customer and the higher the liability to the bank. As a result, we get a built in incentive for the banks to delay settlement for as long as possible. With each day that goes by, the liability on the other side of the swap is reducing.

Harry Wilson, of The Daily Telegraph, has put in freedom of information requests to the Financial Conduct Authority to find out exactly what the loss on the other side of the trade will be. Amazingly, nobody seems to have the answer. It seems inconceivable that the banks would not have the information. Any derivatives trading room team, especially on a swaps desk, will have detailed information on the extent of the liabilities; they have to know that. Even if the swaps team does not, the risk or treasury department should know it—loads of people should know it. It is extraordinary that nobody is coming forward with the information.

The issue has been dragging on for far too long. Too many businesses have failed as a result of it and it is likely that too many more have fallen into that twilight zone of bad forbearance by banks, which sometimes keep otherwise dead institutions alive simply because it is in their interests.

I spent the best part of the last year on the Banking Commission considering the matter. It is worth noting that this crisis happened before the Banking Commission, the financial crisis and the rest of it. However, today the banks have to prove that they have moved on, that they should now be allowed to come into polite society and will do the right thing by the consumer.

12:09

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

I pay tribute to the hon. Member for Aberconwy (Guto Bebb) and all the supporters of this debate on raising an important issue. I also pay tribute to my Treasury Committee colleague, the hon. Member for Wyre Forest (Mark Garnier) for his detailed explanation of a complex aspect of this subject that probably not everyone understands.

This is the latest in a series of issues that has corroded, damaged and sometimes destroyed trust between banks and their customers following the payment protection insurance scandal. We should pause and consider a couple of features of the PPI scandal. It was characterised, first, by a refusal to admit that there was a problem; secondly, by a refusal to take responsibility for that problem; and finally, by a huge bill for the banks because it had taken too long to face up to those things. I wonder whether any of those lessons have really been learned given the way that this issue is being dealt with.

Like the hon. Member for Wyre Forest, I spent much of the past year serving on the Parliamentary Commission on Banking Standards chaired by the hon. Member for Chichester (Mr Tyrie), where we looked into the standards and culture of the banks more widely. We found a sales culture, backed by the bonus systems, going right down to branch level. The banks pushed products like this, often allied with a product that the customer wanted, namely a loan, yet sometimes the customer was not even aware that a product was being sold to them or, if they were, whether it was a voluntary agreement or something they had to accept as a condition of the loan.

[Stephen Lloyd (Eastbourne) (LD)]

The right hon. Gentleman has hit on something really important, which is that the banks’ whole modus operandi was to sell products that individuals wanted and slip in the interest rate swaps underneath. I am glad that he has reminded us of that. Does he agree that it is important for these businesses to know that it has been agreed on the Floor of the House, and it is recorded in Hansard, that they will be offered compensation that aims to put them back in the position in which they would have been if there had not been a mis-sale, plus interest rates of about 8% a year?

[Mr McFadden]

I do agree, but there is also the question of who gets that redress and who does not.

Underneath this sales culture, we found that instead of a culture of a duty of care to the customer there was—characterised by the combining of products, often a simple product with a complex one—a culture of “buyer beware” that put the responsibility for fully understanding and being aware of all this in the customer’s lap, with, in many cases, the bank showing a lack of responsibility.

[Mr Straw]

I entirely endorse what my right hon. Friend has said. Does he accept that what made the banks’ behaviour even less acceptable is that such was the complexity of the swap products that often—and to my certain knowledge in a case that I have dealt with—the person providing the loan from the bank had no proper understanding of how the hedge product was going to work?

[Mr McFadden]

That is a really important point. Having heard the speech by the hon. Member for Wyre Forest, I wonder how many of the people selling these products would have been in a position to explain the consequences to their customers. I think we know the answer.

Products were being sold, allied to another product, that may or may not have been suitable for the person buying them. The customer may or may not have fully understood what they were buying, but they were left fully with the consequences of having bought it, to the extent that we had the situations highlighted in this debate whereby the banks pursued customers to such a degree that they were put out of business. We should recognise that hedging is not always wrong, and trying to insure against risks is not always wrong, but a degree of understanding is important. People have to understand what they are buying and the product has to be suitable for them. When the lifetime of the hedging product is completely different from that of the loan, there is a serious problem about that product’s suitability.

This issue provides a really important test of the standards and culture in the banks after everything that has happened. They have to show whether they have learned the lessons of previous mis-selling scandals or whether there has been a repeat of the pattern of behaviour that we saw before in which there was first a refusal to face up to responsibility. That was followed by increasing anger among the customer base and the destruction of trust, followed by a redress scheme that might have ended up being more expensive than the one that might have been put in place earlier.

This is also a test of the FCA. We are in the early stages of a new regulatory system, as the FCA has been in existence for only about six months. The system of redress that it has proposed is an important test of whether it is going to be able to do its job in restoring trust between banks and consumers in the face of sometimes increasingly complex financial products;

[Mr Heath]

The right hon. Gentleman is absolutely right to say that restoring trust between customers and banks is a crucial element. Businesses must not only get redress for what they have lost but be put back into the position that they would have been in and that includes the relationship with the bank, credit lines, and everything else that makes small businesses work.

[Mr McFadden]

The hon. Gentleman makes a good point. Culturally, we should be trying to get to a situation in which the banks have a duty of care to their customers instead of marketing and developing products that are driven by a sales and bonus culture that, in effect, says “Buyer beware” and puts all the onus on to the customer.

The proposed system of redress is based heavily on the sophistication test. That leaves a lot to be desired, because unless it is very carefully designed it cannot take account of the wide variety of types of business. Size and sophistication are not the same thing. It cannot take account of the wide variety of circumstances in which these products were sold or the wide variety of difficulties that businesses find themselves in.

Previous mis-selling scandals have been characterised by years of unnecessary delay that have caused incredible grief to those subject to them. If there is one further lesson that should be learned about interest rate swaps, it is that this process should not drag on for years. We need a system of redress that learns the lessons of the past and is implemented as quickly as possible.

12:17

[Steve Baker (Wycombe) (Con)]

I, too, pay tribute to my hon. Friend the Member for Aberconwy (Guto Bebb), who has led this cause absolutely heroically. I am sure that Members across the House will wish to join me in saying to my hon. Friend the Member for Wyre Forest (Mark Garnier) that I wish I could say that he had anticipated my remarks. I feel sure that his speech will stand as a landmark in terms of making this debate and these products easy to understand.

The system of money and bank credit ought to be the lifeblood of a free economy and a prosperous society, but as we have heard in this debate, and from across our constituencies, the banking system is not the servant of a free economy but has become its master, and a tyrannical master at that. Businesses in our constituencies such as Stewart Linford, furniture makers in High Wycombe, have found themselves treated utterly appallingly.

I hope that my hon. Friend the Financial Secretary will not stay his hand when he criticises the financial system for what it has done. Too often, Government Members treat the banking system gently as if to criticise it were to criticise a free-market system. It is not a free-market system. It is heavily regulated, heavily directed by the state, and awash with implicit and explicit guarantees that produce moral hazard and perverse incentives. Apart from anything else, interest rates have been unexpectedly low because of the interventions of central banks. When Andy Haldane, the executive director of financial stability at the Bank of England, went before the Treasury Committee and explained that the bond market bubble was the biggest threat to financial stability, he clearly stated that the Bank had deliberately inflated it. The fact is that the system of money and banking is state directed.

[Stephen Lloyd]

Given the behaviour of some of the banks, does my hon. Friend agree that the Financial Secretary and the Government should consider adding a further penalty if repayments are not made within a certain time frame?

[Steve Baker]

I am grateful to the hon. Gentleman for his intervention. I want to make the case that I think that, in this regard, the banking system may have crossed from mis-selling into fraud.

This morning I was shown a transaction by its author that was part of a system in which a bailed-out bank hid losses of £1 billion on a £10 billion loan portfolio. It was done lawfully and it was enabled by the accounting standard of the international financial reporting standards. The way in which the IFRS accounting standard treats derivatives allows people to up-front unrealised cash flows as profit and then pay bonuses out of them. That is probably why so many of these products have been sold.

The right hon. Member for Wolverhampton South East (Mr McFadden) spoke eloquently about the bonus system and the incentives it creates. The Government should look extremely carefully at what has been done with regard to the use of IFRS accounting, the incentives it creates and what that means for people who sell products and take bonuses. They should also look at whether the IFRS complies with UK company law.

[Richard Fuller]

My hon. Friend is a defender of a system of true free-market principles. He has identified the twin problem mentioned by my hon. Friend the Member for Wyre Forest, which is that, in addition to the unfunded liability cause, we have now booked the profits and paid the bankers for going through the process that duped the people. Those involved should face criminal sanction.

[Steve Baker]

My hon. Friend makes an interesting point. I want to live in a free society with a free and commercially successful banking system, but we have to ask ourselves whether the current system has incentivised behaviour that is fraudulent under the law as it stands. The last thing we must do is allow ourselves, in a frenzy of condemnation, to start criticising a system on which our civilisation depends, when that criticism is unjustified. We should be looking at the law as it stands and checking—carefully investigating—whether individuals have broken the law. I am particularly concerned about IFRS. I do not think it complies with UK company law and think it has incentivised behaviour that is probably fraudulent.

Banking ought to be simple. It ought to be about connecting depositors with those who wish to borrow in order to invest for productive purposes, such as buying a house or even going on holiday, but predominantly it should be about investing to create real resources and real wealth, and to increase productive capacity and the balance of capital invested per head, so that real wages increase and the cost of living goes down. Instead, we have ended up with a system in which poor state intervention from one end to the other has created so much moral hazard and so many perverse incentives that it has become abundantly clear that a small number of individuals—far fewer than 1% of the population—have captured the state in order to turn implicit and explicit taxpayer guarantees, or bail-out funds, into personal remuneration. It is a disgrace.

The banking system needs to be made honest, and quickly, and part of that is a system of compensation for people who have been treated extremely badly.

12:23

[Nia Griffith (Llanelli) (Lab)]

Thank you, Madam Deputy Speaker, for allowing me the opportunity to speak in this very important debate. I congratulate the hon. Member for Aberconwy (Guto Bebb) on the work he has done over the years and on bringing the matter to the House’s attention through this debate.

This issue affected successful businesses that were trying to expand and help create more jobs in the local economy. Some of the businesses that have visited me were successful and had excellent plans for expansion. The really sad thing is that during their negotiations to change or expand their loans, it was often the case, as my hon. Friend the Member for Alyn and Deeside (Mark Tami) has said, that they were told right at the very last minute that, unless they accepted this clause, the whole thing would be shelved and they would lose all the transactions and work they were about to undertake. That was significant for them, because it meant having to say yes or no to a very important loan.

I think that such businesses are intrinsically fearful of going to the banks, which is a real problem. The terms and conditions for small businesses have changed so much over the past few years that they are fearful that, if they explain their difficulties to a bank, they will suddenly be told that their terms and conditions for a loan will be changed again. That is a real disincentive. The key thing to remember is that these are people who genuinely are trying to do the right thing, but who are fearful—perhaps ashamed—because they did not know exactly what was going on in the first place, even though, as my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) has said, the people who sold them the scheme were incentivised to do so in an underhand way. Often they would not make it at all clear to the businesses exactly what they were entering into. We need to redouble our efforts and look in particular at why there are so many delays, because every delay means businesses raking up yet more debt.

[Mr McFadden]

On the sales culture, what does my hon. Friend have to say about the evidence that the Parliamentary Commission on Banking Standards received from the trade unions representing bank staff that said that, sometimes, if branch staff did not meet their sales targets, they would be taken aside, given special management and pressurised to sell more products over the next month or two in order to meet the targets on which their bonuses were based?

[Nia Griffith]

My right hon. Friend makes a valid point. I have met people who were put in that situation and who ended up leaving the bank because they found it so difficult and uncomfortable working in that sort of culture. That does not help small businesses, which want a decent banking system from which they can get decent advice and the loans they need.

The worry is that the Financial Conduct Authority and the banks are not doing things as speedily as they might and that there will be a distinct delay. We are all aware that the agreement was that an independent reviewer would look at each case and that that process would be overseen by the FSA. My hon. Friends the Members for Nottingham East (Chris Leslie) and for Chesterfield (Toby Perkins) wrote to the Chancellor over a year ago outlining what we wanted to happen. When the Financial Secretary sums up, will he tell us what progress has been made?

We want a clear message that there will be no adverse effect for people if they tell their bank that they think they may have been victims of this particular mis-selling. We also want a moratorium on the foreclosure of affected businesses by their banks. People are really worried that, if they start looking at the issue in detail and open the box, they might be forced to reschedule their loans in an unmanageable way and that they eventually might be foreclosed on by their banks. The Chancellor and the Business Secretary need to send a much stronger message to the FCA about how we want the banks to work.

As many Members have said, we want the quickest resolution possible, but time limits also need to be looked at. The problem is that businesses that signed up to these agreements back in 2006 and 2007 are now reaching the six-year limit, and they will find themselves in considerable difficulties if they do not get redress through the scheme and end up going to court. We need to look at the way in which complaints are handled and the time limit that is being allowed. Perhaps there could be movement on that issue.

In summary, this issue needs urgent attention. We need a much speedier resolution and people need to be treated properly and courteously by their banks. They should not have to be fearful of loans being rescheduled or of being thrown out of the frying pan into the fire, which is their real worry. Speed is of the essence, because these businesses provide jobs in our communities and if they go under, it could mean not one lost job, but many job losses. I urge the Financial Secretary to say what more the Government can do to put pressure on the FCA and the banks to ensure a speedy resolution.

12:29

[Mr Mark Williams (Ceredigion) (LD)]

It is a privilege to follow the hon. Member for Llanelli (Nia Griffith). Like many hon. Members, I pay tribute to my hon. Friend the Member for Aberconwy (Guto Bebb), who has shown immense leadership and tenacity on this case—not just in this debate, but more generally.

If any of us had thought that the constituency surgery meetings that we have held on this issue were unique, the turnout for the debate has illustrated the enormity of the problem. We should repeat, repeat and repeat again the point made by the hon. Member for North East Derbyshire (Natascha Engel): of the 30,000 cases, only 32 have been redressed.

I was going to talk about the inadequacies of the redress scheme, welcome though was its initiation and the progress that has been made, but time will limit what I can say about that. However, I will talk later about the fundamental omission of tailored business loans, which was alluded to by my hon. Friend the Member for Aberconwy.

My hon. Friend mentioned a constituent of mine, Mr Mansel Beechey of the Llew Du hostelry in Aberystwyth. I think that my hon. Friend has spent a bit more time in that particular pub than I have over the years. Mansel Beechey and many small business owners like him have been the backbone of the Ceredigion economy, but there have been times when I have thought that we were being targeted. The number of tourism and agricultural businesses that have come to me about these issues has been frightening. Bully-Banks helped us by putting an advert in the local newspaper about the scandal and many more cases came to light.

[Roger Williams (Brecon and Radnorshire) (LD)]

Does my hon. Friend share my concern that there are yet more small businesses out there who are ashamed to come forward and say that they have entered into such products because they think that it is their fault, rather than that of the banks?

[Mr Mark Williams]

We need to knock that on the head immediately, because there has been a concerted effort by the banks to target certain businesses. There is no need for people to be ashamed, and my hon. Friend is right that many more cases are coming to light.

Huw and Jackie Roberts of Minhafan Estates, a property development business in Aberystwyth, are in the midst of the review. They went through the “fact find” interview stage of the review six months ago and are still waiting to hear from the bank or the FCA.

I want to talk about the inadequacy and even dishonesty of the subject access requests. A sheep farmer who came to see me obtained his subject access request from Barclays, but it included presentation documents that he was alleged to have been shown at the time of sale, which he had never seen before. History can be rewritten. The fear is that, in some of these cases, history is being rewritten by the banks.

Why is the FCA advising customers that the scheme

“can deliver fair and reasonable redress without them needing to hire lawyers”?

Many of my constituents are on the brink and cannot afford to hire a lawyer, but why is the FCA saying that?

Like my hon. Friend the Member for Aberconwy, I want to talk about alternative products. What is wrong with this form of so-called redress is that the banks get to propose what would have happened if they had behaved better. Despite the banks admitting that they have breached regulatory requirements, they are being given a second chance through the promotion of alternative products, so they have a second bite of the proverbial cherry.

Yesterday, my hon. Friend the Member for Aberconwy said that the cost of the review was £200 million, and he then told us that it had gone up to £450 million. Despite it costing £450 million to set up the review, only £2 million has been paid out in redress.

[Nia Griffith]

Does the hon. Gentleman agree that, in certain agricultural communities, there is a huge capital intensive cost, which takes a long time to repay? That is a particular problem for some of our constituents.

[Mr Williams]

That is a particular problem. The hon. Lady does not need to be reminded how perilous the farming industry is these days; some businesses barely have the capacity to survive.

People who have been sold tailored business loans have no protection because of a mere technicality. They have no guarantee of fair treatment from the banks. Most of my constituents who have been affected by hedge mis-selling have been sold TBLs, although I hesitate to say that they were sold them, because some of them were not aware that they were being sold them. Most of my constituents who are affected are out in the cold, so I return to the question that I have asked Treasury Ministers and the FCA, although I have received inadequate responses. I question how the FCA decides to interpret its principle-based regulation. I am talking specifically about TBLs from the Clydesdale and Yorkshire banks.

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

My hon. Friend is making a powerful case and I concur with what he says about tailored business loans. One of my constituents, who is here in the Gallery, has been affected on a large scale and is paying £33,000 per month as a consequence of swaps. He needs to be brought into the scheme. In addition, he has a tailored business loan, and I concur that those need to be brought into the framework urgently.

[Mr Williams]

I concur with my hon. Friend. Many of us have cases like the one that she raises that suggest that TBLs need to be brought into this review or another review of some kind.

The FSA famously stated in “Interest Rate Hedging Products—Pilot Findings” that

“poor disclosure of break costs”

was one of

“the most significant issues in assessing the compliance of a sale”.

How is it possible that poor disclosure of break costs can constitute a mis-sale when the customer is buying a stand-alone product, with all that that implies, and yet there is no mis-sale if the bank buys the interest rate swap allowance, conceals it from the customer and then holds the customer liable for its terms and conditions? That is unjust nonsense. If a feature is worthy of regulation when it is contained in one product, why is it not worthy of regulation when it is contained and concealed in another product?

[Martin Horwood (Cheltenham) (LD)]

My hon. Friend is right to highlight break costs, which have been a serious issue for some of my constituents. Is he aware of court evidence given by a former bank employee who said:

“When pitching to a customer the most the…Sales Team would try to say on the subject was that there could be break costs if the swap is broken early. Providing the customer didn’t ask, we never went into any detail as to the likely level of these costs.”

Does not that underline how much of this debate is not about complexity or understanding, but about straightforward mis-selling?

[Mr Williams]

That goes to the heart of the argument. The banks and the ironically named relationship managers were trusted by our constituents, and that trust has been breached.

I have asked the FCA for its legal advice that supports the view that it should not regulate fixed-rate commercial loans. The response stated that it is not normal for the FCA to disclose its legal advice because, by so doing, it could be said to have waived its legal privilege more generally, making it difficult to resist broader disclosure, and thereby setting a precedent that would make it harder for it to resist disclosure in other cases. I am sure that that is crystal clear to everyone in the House—so much for the commitment to transparency.

The interest rate swap scandal has cost many businesses dear. I recently drove down one of the approach roads to Aberystwyth, the largest town in my constituency, to see another boarded up shop. That shop was not boarded up three weeks ago; it is boarded up now because of the issues that we are discussing. Many people had no concept of the product that they were pressured to buy. That applies as much to embedded swaps as to stand-alone products. I implore the Minister to reflect and to put pressure on the FCA to consider tailored business loans as part of the review. They are an enormous problem.

12:38

[Ian Murray (Edinburgh South) (Lab)]

It is a great pleasure to follow the hon. Member for Ceredigion (Mr Williams). The cross-party consensus in the Chamber shows how important this issue is, and it has to be dealt with as quickly as possible.

May I add my congratulations to the hon. Member for Aberconwy (Guto Bebb) on securing this debate? I would have been delighted with his custom in my previous life as a publican. He mentioned a £30 cheque for two nights out, but that must have been at least 15 or 20 years ago if he was a student—[Interruption.] I am sorry; 25 or 30 years ago. Those must have been some parties if he was cashing £30 cheques for a night out so long ago.

We have to put this debate in context. There have been many financial scandals—not only since 2008, but even before that. This is the latest scandal in the financial services sector. We had the payment protection insurance mis-selling scandal, the manipulation of LIBOR rates by banking institutions, which has been highlighted today, and the global financial meltdown, which was caused partly by financial institutions gambling on the financial market with other people’s money. Now we have the mis-selling of interest rate swaps. It is right for the FCA to look into that, but hon. Members have rightly made the criticism that not enough is happening. The hon. Member for Ceredigion was right to highlight the fact that only 32 of the 30,000 cases have been dealt with so far.

Interest rate swaps are hugely complicated. I had a briefing from an expert on them about eight months ago, and the complex nature of how they are put together makes them impossible to understand. He was an expert, but he found it difficult to explain some of the more complex points about them.

It is worth highlighting that the banks were able to cancel the instruments in question when interest rates were going down, but the customer was unable to cancel them when interest rates were rising. Not only were sellers incentivised to sell them without much knowledge, but the financial institutions made the vast majority of the money out of them on day one, when they were sold. They sold them to the customer and made money out of the derivative part of the product, and then sold them on to a third party, who subsequently sold them on to other parties further down the tree.

[Mike Thornton (Eastleigh) (LD)]

Does the hon. Gentleman agree that one reason for the appalling mess was the unfair and incredibly pressurised target culture that senior managers at banks imposed on their staff, to the extent that people had to use unethical means to keep their job? I have particular experience of that culture.

[Ian Murray]

I am grateful for that intervention, because not only the FCA but the Government have to change the culture in the banking sector. My right hon. Friend the Member for Wolverhampton South East (Mr McFadden), who was part of the Parliamentary Commission on Banking Standards, has talked about the culture in banks and the pressure to sell complicated products. If a customer buys a product that is not properly explained, that is surely mis-selling and there should be redress.

Customers have been unable to seek redress, or to negotiate with their bank, because the banks were able to sell on the products at great profit on day one. The relationship between the customer and the bank therefore broke down, because when a customer wanted to renegotiate the contract, they were told that they would have to compensate the bank for not only the interest rate lost, but the proportion of profit that it had gained by selling the product on to a third party. The break costs were impossibly high for many people even to contemplate buying their way out of swap products. That breakdown in the relationship has got us to the position we are in today.

Many constituents have come to see me about the matter, such as Mr Dixon, who has highlighted today’s debate and the all-party group that has been set up to examine the matter. One customer of the Clydesdale Bank who contacted me after he had been mis-sold a product was in the process of losing his house. My hon. Friend the Member for North East Derbyshire (Natascha Engel) was right to talk about the impact on not just businesses, but people’s lives. There are life and death issues in some instances, because some business owners have lost their homes, livelihoods and businesses.

There has not been a proper response from banks—not just to their customers, but to Members of Parliament. I have written to banks to see whether they can assist customers in dealing with mis-selling, but I have been batted away. There has been some table tennis between the FCA, the Government, the Financial Ombudsman Service and the banks about who should take responsibility, and I hope that the Financial Secretary will put it firmly on record that the FCA should deal with the matter. It should be the point of contact for businesses, Members and banks.

Members have talked about whether the selling culture of banks made the problem worse, which I believe it did. The mis-selling also went against the policy of treating customers fairly, which most of our banks have trotted out. When customers go to meet their business development manager or anyone else in the banking sector, they are told that their problems will be dealt with and that everything possible will be done to resolve them. However, in many of the cases that my constituents have brought to me, they have not been able to seek proper redress through that relationship, and that is why we have ended up in this situation.

The House should take a stand and say that the scandal was completely and utterly unacceptable. We should encourage the banks and the FCA to resolve the problems as quickly as possible to ensure that small businesses affected by the mis-selling scandal can have redress and a proper appeals process, so that we can get them back on their feet. If small businesses are falling because of a mis-selling scandal, it is up to the House to take a stand to support them.

12:45

[Mr Robert Syms (Poole) (Con)]

I, too, pay tribute to my hon. Friend the Member for Aberconwy (Guto Bebb) for his leadership of the all-party group on interest rate swap mis-selling. The issue is important for all Members, which is why the Chamber is so full.

We all know of a number of cases in which people were switching banks or wanted loans for a project, and one of the last products slid across the table to them was an interest rate swap. Many felt that they did not have much choice but to take it. The British economy is showing welcome signs of starting to recover, and the Bank of England is pushing cheap credit into it to get the banks to lend, which is having an impact. However, we should all reflect on the fact that 30,000 to 40,000 businesses run by serial entrepreneurs could well go out of business before the process that we are discussing is finished, which would have a cataclysmic effect on the businesses with which they deal, the people who work for them and many of our local economies. The issue is not just mis-selling but whether we maintain stable economic growth and create jobs and prosperity in future.

[Richard Fuller]

Does not my hon. Friend find it sadly ironic that the victims of mis-selling were people who had shepherded their money and built their businesses carefully over many years, while the people who benefited were those who were in it for a fast buck?

[Mr Syms]

I do, and many of the people who have been affected have a lifetime’s work in their business—more than one lifetime in the case of many family businesses, which are the bedrock of our constituencies. Those people have been key members of the community and employed many people. Today’s debate is therefore important, as we need to give the FCA and the Government a strong message that the authorities must get the banks to get on with it. Things are going too slowly. As we heard earlier, the banks have put forward some billions of pounds for compensation, but they have dealt with only 0.2% of cases. Of the £3 billion that is potentially available for redress, only £2 million has been paid out to 32 businesses, which shows that we need to speed things up.

In many cases, first the capital was sucked out of businesses and then the break clauses were such that many people could not afford to get out of the contracts. With most normal capitalist activity, if someone felt they could not make a go of it, they would sell their business on. However, nobody will buy a business that has the poison pill of an interest rate hedging product because they know that it is a major drag on the business. It is not free enterprise as we know it, and I rather agree with Members who have suggested that the banking system has not done itself any favours.

What is so tragic about the products in question is that people have no way out. We need to get on with achieving compensation. Members have made some good contributions today, and behind every story they have told is tragedy and worry. People cannot sleep at night because they are not sure how to deal with the problem. I say to Ministers and the FCA that we need to get some speed up and get compensation paid. We need to deal with people fairly, and to support and cherish serial entrepreneurs, who should be playing a major role in the economy’s recovery, rather than being put in a position of not knowing what will happen in a week, six months or a year. We need to give them our support.

12:49

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

I pay tribute to the sterling work of my hon. Friend the Member for Aberconwy (Guto Bebb) who secured this debate, and I thank the Backbench Business Committee for granting it time to take place.

The sale of interest rate hedging products to small and medium-sized businesses that simply wanted a loan from one of our high street banks is nothing less than a national scandal. Let me say straight away that I know there are many hard-working, decent and honest people involved in our banking industry, who will be as horrified as everyone else at what happened with the sale of these products. With the sale of interest rate hedging products, however, banks allowed their desire to make a profit to override the need to be open and transparent with their customers. The sellers of those financial instruments blinded customers with a snowstorm of financial gobbledegook. They presented a complex and risky financial product as something that, if people signed up to it, would be to their benefit. In reality, nothing could be further from the truth.

Small companies in my Bury North constituency have been affected, and I want to outline briefly one particular case—understandably, and for obvious reasons, many constituents are reluctant to allow their cases to be made public. Lavender Hotels owns and runs a small chain of hotels in north-west England. In January 2007, it took out a loan from Barclays to finance the purchase of another hotel. A couple of months later, the bank—which Lavender Hotels had banked with for more than two decades—suggested that it fix its interest rates on the grounds that no one could predict where interest rates were heading.

The bank mentioned rate fixing, collars and caps, and stressed that those were not a profit earner for the bank but merely designed to give the customer protection. The bank told the customer that the agreement could be transferred to another bank, and that it would not create any obstacle to changing banks. Although the term “rate swap” was initially used, it was quickly replaced by the term “fixing”, suggesting that the bank was fixing the interest rate, rather like a fixed-rate mortgage. The term “fixing” certainly suggests certainty, not risk, which I submit was misleading.

That initial meeting with the relationship manager was followed by a further meeting with a salesman—although he was never described as such—who amplified the fears of rising interest rates. At no point was any explanation given of the penalties that would be payable if the customer wanted to terminate the agreement. The bank did say, however, that to fix a cap or collar an upfront fee would have to be paid, which could be as much as £20,000. Since most customers thought that such charges were excessive, they decided to go with an interest rate swap agreement that meant that if interest rates went up, no charges would be paid at all. The salesman never explained that he would be earning commission on the deal. Indeed, it was stressed that it was just a service that Barclays was providing for the benefit of its customers.

The managing director of the company agreed to fix—as he thought—the interest rate of around 40% of the company’s total loans. When interest rates started to reduce, what should have been good news turned into a nightmare and the amount that had to be paid back to Barclays rose dramatically. When the company sought a loan to purchase another hotel the following year, it was forced to enter into a 10-year rate swap. The managing director said:

“I was put in no doubt that had I not agreed the rate swap I would not have been granted the loan.”

By 2010 the customer had discovered that the interest rate swap agreement did indeed create a problem if they wanted to change banks, and the company was told it would cost over £95,000 to exit the agreement. The company had no alternative but to agree to its loans being re-priced. It had been misled into being tied unnecessarily to Barclays by a financial product that was inappropriate and that I believe had been mis-sold.

The managing director told me:

“Since the publicity surrounding the mis-selling of rate swaps, and my further investigation into the practice, I feel cheated. What has angered me the most is that my trusted manager, with whom I had developed such a strong relationship, lied in respect of the potential profitability of these rate swap deals to Barclays.”

As a result of those agreements, my constituents have lost hundreds of thousands of pounds, but despite the problems caused by interest rate swap agreements, Lavender Hotels is surviving and progressing well. The company is ahead of target and continues to trade profitably. It would, of course, be doing even better had it been able to trust its bank, and not been penalised by it because of a totally unsuitable financial product.

These companies are suffering and need help now. The redress scheme is progressing too slowly and must be speeded up. Livelihoods are at stake; those companies need action and they need it now.

12:55

[Martin Vickers (Cleethorpes) (Con)]

I, too, praise my hon. Friend the Member for Aberconwy (Guto Bebb) for securing this debate and leading the campaign, and like the previous speaker, my hon. Friend the Member for Bury North (Mr Nuttall), I wish to highlight one or two particular cases that constituents have brought to my attention. So often in this place we discuss issues that are difficult for individuals to relate to, but on this occasion I—like many other Members—have constituents in the Gallery whose businesses have been practically destroyed by the actions of the banks they trusted.

I have received only three complaints from individual constituents about this scandal, but it is fair to assume that since there are tens of thousands of such cases across the country, many are perhaps suffering in silence. I suspect that just as in the cases brought to my attention, people trusted their banks and regarded them as one of their financial advisers, who would advise on the best course of action for their business. People were not so naive as to assume that the bank was not benefiting in some way, but it is fair to say that they assumed that, irrespective of any commissions paid, they were at least being sold a product that would be advantageous to their business.

I will quote from the statement of one specific case:

“We are just two working class families…we trusted our bank, and thought they were looking after our business interests. We, like other small SMEs were misled and lied to by the bank. The bank basically cornered us into taking out swaps, we didn’t have a choice, and as we trusted them, we took the products. The swaps were not properly explained to us, we were not told how they fully worked and were not told about the huge exit costs….We should never have been sold these products, they were not appropriate to our business...Financially this has crippled our business, and the knock on effect is we can’t employ…people like we used to...Several times we tried to talk to the bank about these products, but each time they shut the door in our face…We are in the redress scheme, but…the banks are playing a game and dragging their heels.”

That certainly seems to be the story we are hearing from other colleagues in the debate.

My constituents go on to say that they moved banks because the bank

“wanted to sell us their life policy cover (at £550 per person, per month), which we insisted we did not need…We were confident now that we had a great knowledgeable team working with us”.

They are referring to their solicitor, accountant and banker, whom they trusted as they assumed that the bank had the best interests of their business at heart. The statement continued:

“Our banking relationship manager…discussed with us a hedging product that the bank said we needed…We trusted the bank, and decided we had no choice but to continue and enter into hedging arrangements. We were not looking for any different type of lending, we have always borrowed money on standard terms…The only reason we entered into the swaps was because our bank manager said it was a condition to any future lending, that we must have these swaps…We do feel betrayed by the Bank, we had trusted them and worked with them for a number of years…We have kept our commitments…the bank does not realise what we have had to do to honour our payments. It’s been very, very tough….We just need the bank to do the right thing now.”

I hope that when the Minister sums up he is able to give some assurance to my constituents that he will do everything possible to ensure that the redress scheme is dealt with and pays out as quickly as possible. Understandably, people are writing to me and to other Members to ask how much longer they will have to wait. We hear many stories of banks crippling and ruining companies, and we cannot go on like this. We have regulators, yet we have another scandal that should have been prevented. Were the regulators asleep on the job? Those caught up in this and other scandals trusted their banks. Trust in the relationship between banks and their customers is a prerequisite. Clearly, there has been no trust in this case. Many constituents have been let down and we must not let it happen again.

13:00

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

I had a very interesting meeting two weeks ago with senior regional managers of HSBC, who told me that the bank is transforming its culture by removing from individual managers any sales targets: no more pressure from on high and no more commission on individual products sold to a customer. If that is right, then that is significant news. That is how it was when I started my illustrious legal career in 1978: bank managers could be trusted and they were on our side.

Last night, a few colleagues and I met senior figures from the Royal Bank of Scotland in the west country, as well as the managing director of RBS corporate for the UK, Chris Sullivan. They were at pains to tell us how RBS is changing its culture, removing from managers the pressure to sell products to customers and instead offering a service to help customers succeed and grow.

[Mr David Burrowes (Enfield, Southgate) (Con)]

While progress is welcome, not least just before a parliamentary debate, does my hon. Friend recognise that people have been the victims of dishonest and probably fraudulent sales, and are now victims of a process that is characterised by delay and inaction by the Financial Conduct Authority? It is also far too dependent on parliamentary pressure. Can we look forward to reassurance from the Minister that there will be leadership and a timetabled delivery of compensation before it is too late?

[Mr Streeter]

I completely agree with my hon. Friend. I am expecting robust leadership from those on the Front Bench at the end of the debate, because our constituents have waited far too long.

The shift in culture is to be welcomed, but the point I made last night and make again today is that if the banks want to decontaminate their brand—that is what they are really talking about—it is not enough to change the way they do business today; they have to deal with the past. They have to put right the wrongs of the past and compensate those who have been hurt by wholesale mis-selling of products before 2009.

The realisation by the banks—or some of them—that they need to change their culture is fundamental to our debate today on interest rates swaps. The banks not doing what was right for customers and not being on their side—instead selling them products they did not request, could not understand and were not in their interest simply to rack up commission for the bank and its managers—is the cause of the problems we are discussing today. A shift in culture is welcome, but the banks must deal with the problems of the past.

That was certainly the case for my constituents, Mike and Di Hockin, erstwhile owners of London and Westcountry Estates Ltd, a company owning several business parks across the south-west, which is now, after a lifetime’s work and through no fault of their own, in administration. In July 2008, RBS insisted that if the company wished to have its borrowing facility renewed it must enter into a swap arrangement on the alleged imminent threat of rising interest rates. My constituents are experts in property, not finance. They were given no alternative by RBS, so they signed up to a three-year loan and a 10-year swap arrangement. How does that work? It turns out that they had been persuaded to enter into a swap arrangement for 10 years at a rate of 6.4%. Although they had been told that the deal contained a break clause after three years, it transpired that this would enable the bank only to withdraw, not the customer. They later learned that breaking the swap arrangement would incur a penalty that seemed to fluctuate on a daily basis, but would be millions of pounds. None of this was known to them at the time of signing the agreement. I submit that this is a clear case of mis-selling.

It got worse. The loan was bundled up with a number of other troubled loans and sold on by RBS to a new company, Isabel Assetco Ltd, which was 25% owned by a US venture capital company called Blackstone and 75% owned by RBS. This £1.36 billion deal was made at a 30% discount and funded with £550 million from RBS. A bank owned by the taxpayer transferred my constituents’ company’s debt at a discount to a third party company, lending it taxpayers’ money to do so, so the new company could set about dismantling the business that my taxpaying constituents had spent years building up. That is an absolute disgrace.

None of this would have happened but for the mis-sold swap. That the company was put into administration unnecessarily needs to be investigated. Several of my hon. Friends have talked about criminal sanctions for the bankers who make such decisions. I add my support to that call. The people who knowingly make such decisions deserve to be investigated and penalised. I have no doubt that RBS is liable in law to compensate my constituents for their losses. However, because of the administration involved, that will be a complex journey. I intend to help them to succeed, no matter how long it takes.

Talk from bank bosses is cheap. Anthony Jenkins, the new chief executive of Barclays, says that it has learnt its lesson and will put things right. However, in another constituency case, involving a company established in south Devon in 1925, the financial ombudsman determined seven weeks ago that Barclays had mis-sold a swap to the company and ordered it to put the company back in the same position it would have been in if the swap had never been sold. Imagine the disappointment on the part of my constituents when Barclays responded just yesterday by indicating that it accepts only a tiny part of the judgment and intends to fight the rest—so much for the fine words from the chief executive of Barclays. Has Barclays really listened, learned and changed? It does not seem so.

I welcome the fact that there seems to be a cultural shift on the ground in some of our leading banks. This will eventually lead to public confidence being restored, which is very important. Dealing with customers differently today, however, is not enough. The banks have to deal with the past and only then can their reputations be fully restored, as we all want them to be. The UK needs a vibrant and trusted banking sector. Chris Sullivan, the RBS UK corporate managing director, insisted last night that this was his intention. He assured me that every case of mis-selling, including that of London and Westcountry Estates Ltd, is being investigated, and that if mis-selling is established it will compensate. I want to say on the record that I am prepared to take him at his word, but need to see the process speeded up.

As a taxpayer, I hope we will be able to sell off RBS one day, but I ask the Minister to make it clear to RBS that it cannot go forward with any flotation until it has compensated properly all the small and medium-sized enterprises it has dragged down through mis-selling. The message is clear: the banks have done wrong. Let them deal with the past and compensate their customers rapidly and fairly. Then, and only then, can we welcome a new dawn of helpful banking.

13:08

[Bill Wiggin (North Herefordshire) (Con)]

I draw the attention of the House to my declaration in the Register of Members’ Financial Interests.

We have a problem at the moment with the Financial Conduct Authority. It has been given the remit to act and the banks have set aside the money, but not enough has been done, or is being done, to ease the burden on British business. I have been contacted by many of my constituents about the FCA, the banks and the progress being made. Last night, that progress was slammed by none other than the chief executive of the FCA. Giving a speech at the Mansion House, Martin Wheatley said that

“the industry is deceiving itself if it imagines that a total of 32 offers accepted, totalling £2 million, is adequate progress.”

That is an admission, by the head of the FCA, that progress has been pathetic. With that quote, Mr Wheatley appears to be passing the burden squarely on to the shoulders of the banks. It is as if the FCA, and its predecessor the Financial Services Authority, had not been involved in the delays that have led to such inadequate progress. The FCA has the remit and the authority to speed up that progress. It is inextricably linked to that progress and the entire situation. As one of my constituents put it to me, it appears from the outside as if the

“FCA is unwilling to discuss anything with a bank customer, the British Bankers Association represents only the bankers, and the Financial Ombudsman Service remains buried in PPI cases.”

One mis-selling case in my constituency concerns a residential home. Thankfully, the business is still operating, but two of its owner’s other businesses have not been so lucky. The owner was mis-sold an interest rate swap agreement—in this case a “vanilla swap”—but the FCA scheme has been too slow in offering redress. Another constituent came to me today because he felt he was targeted by HSBC and sold an interest rate product that was wholly wrong for him and his business, but very profitable for HSBC.

The campaign group Bully-Banks, which I am sure has contacted many Members here today, highlights the precarious financial situation of the many businesses affected. People are up at night worrying about their bank and whether they will receive redress. As Mr Wheatley admitted, only 32 businesses have agreed redress out of the many thousands of businesses affected. That is not good enough. The country and the Government are focused on business for our economic recovery. We all know that more businesses mean more people in work, but with the FCA redress scheme operating at a snail’s pace, there are many thousands of businesses that will not be making those investments that we want them to; they will not be expanding or hiring more staff, until they receive redress and these matters are finally concluded.

The FCA’s chief executive contends that the banks are to blame for the speed at which redress is being offered to affected companies. According to several ongoing cases in my constituency, the banks are also to blame for a lot more. One business run by a constituent has already ended up in administration. It changed banks from HSBC to Lloyds TSB and was then badly advised. It seems that these two banks feature in practically all of my casework. My constituent was advised to set up a factoring account, which then disrupted his business, drove away his customers and caused problems with his cash flow. This was a high street bank once again showing a serious error of judgment. It poorly advised a business owner in my constituency, which led to that business being driven into administration. In this case, the Financial Ombudsman Service protected the bank after an investigation owing to a lack of documentation.

In yet another case of a bank not operating as it should, constituents of mine, attempting to grow their free-range egg and cider business, in the face of weak product prices and rising expenditure, received a support loan from their bank, Lloyds. Despite my constituents’ winning several high-profile contracts, however, Lloyds started to put what has been labelled as “unrelenting pressure” on the business. The bank gave my constituents a deadline to repay their loan and advised them to find an alternative bank. It then refused to release the ownership documents that would have allowed my constituents to sell a parcel of land, which would have repaid their debt to Lloyds and allowed them to move banks.

The Connaught Income Fund might be familiar to the House. I know that a number of parliamentary colleagues are involved in this matter. It is yet another case where the FCA and its predecessor, the FSA, have failed to take appropriate action. The fund was originally promoted, based on an information memorandum, as being of low risk. That memorandum now appears fraudulent, but was the FSA negligent to allow the fund to continue to operate, particularly when it became apparent that the memorandum was fraudulent? Several investors in the fund have gone even further, claiming that the FSA deliberately withheld information from the police and downplayed the serious nature of the fraud.

I am sure that the Minister will want to send a clear message from the Government to the FCA. We need the FCA actively to work to sort out these messes and to speed up its efforts. We need it to listen to the complaints and take serious action backed by meaningful compensation or fines. If this is not possible, perhaps he will confirm what changes in the law are needed to make it so. Finance is complicated, but the FCA is supposed to be sufficiently expert to appreciate what is going on and then have the teeth and nerve to act. Any bank must prefer to follow the FCA instructions—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I apologise to the hon. Gentleman. I am listening so intently to every Member’s contribution that I forgot to look at the clock.

13:14

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

I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on his tireless work to bring this matter to our attention, on having secured this second debate and ensuring that so many colleagues are here today, and on his enormous hard work as chair of the all-party group on interest rate swap mis-selling.

The last time we debated this subject, I was aware of only three constituents affected by interest rate swap agreements and described it then as a niche problem. Since then, however, the number of constituents affected—that I am aware of—has doubled to six. While the problem affects only a small number of constituents, the figures involved are eye watering—for two of my constituents, the sums run into several million pounds—but what has struck me is the features they all have in common: they are all small business people working hard to build up and expand their businesses. Whether in student lets, the leisure industry or farm diversification, they have all sought, ostensibly with the help of their banks, to grow their business, provide more employment and greater opportunity in the local area and, of course, help our economy. Some have quite impressive premises; others are literally run out of a garden shed or a room above the garage, but until they were unwittingly sold a product quite unsuitable for their circumstances, they had all enjoyed good relationships with their banks—those frankly are now in tatters.

Over the last few days, undoubtedly like other Members, I have suddenly started receiving updates from the banks about the progress they are making, setting out how they are compensating customers mis-sold these products and in my view trying to gloss over what have to date been quite unacceptable delays. I cannot repeat what the managing director of the Landish Group, which operates in my constituency and the constituencies of other hon. Members, said to me about the update I forwarded him from his own bank. The language was quite unparliamentary, so I will not repeat his words, but I can understand his frustration.

As we have heard, the banks have collectively spent more than £500 million on their own administrative costs, but in nearly 16 months they have delivered only a handful of decisions; and only 32 businesses have received any payments at all. It strikes me that a number of key issues must be addressed. First, on the speed of redress, I would like to reiterate what my hon. Friend the Member for North Herefordshire (Bill Wiggin) said about the snail’s pace of payments. It is painfully slow, but it was notable that as this debate drew close, there was a flurry of updates and self-congratulatory crowing from some of the banks about how they had made contact with 96% of their customers. Well done! How about paying back some of the money?

Secondly, we need to separate direct and consequential losses. One of my constituents had his decision from Barclays on 8 July. The bank admitted that he had been mis-sold and said that the swap would be torn up and exchanged for a simple cap at a cost of £29,000 and that, allowing for the cost of the cap, his direct costs—£1.35 million—would be returned, but four months on, he has seen no sign of that money. He placed a consequential loss claim at the beginning of August, which has not yet been accepted, declined or even discussed, and Barclays will not return the £1.35 million that it acknowledges it owes him until it has agreed the consequential losses, which it will not even talk about. I entirely endorse the call from my hon. Friend the Member for Aberconwy for the direct and consequential losses to be separated, so that the banks can crack on and refund some of the money owed, allowing businesses to invest, employ people and carry out redevelopment that might best take place at this time of year.

Thirdly, there is the thorny problem of what constitutes a sophisticated customer. Two of my constituents were judged to be sophisticated and so, along with 10,000 others, were excluded from the FCA redress scheme. One was deemed to be sophisticated despite his having no finance director; having never heard of a swap before he was sold one; doing his own accounts on a spreadsheet; having no in-house accountant; not being a limited company or even registered for VAT; and literally running his business out of a garden shed. I do not think it could get much less sophisticated if it tried.

[Bill Wiggin]

I am most grateful to my hon. Friend for giving way. I hope she needs the extra minute. Does she agree that an arbitrary limit on the number of employees is no way to determine sophistication in relation to financial products?

[Caroline Nokes]

I certainly agree with my hon. Friend about that.

All my constituent is asking for is the chance for what happened to his business to be reviewed, because of the situation he now faces—owing to the swap product, the fees, the charges and the circumstances of the product, an initial £3 million loan has spiralled to a massive debt of £9 million in just five years. The product far exceeds the term of the loan, time-wise. He has found himself having to work to the limit every day, seven days a week, just to make sure that he can make the repayments on the loan.

I was somewhat relieved today that my constituent did not turn up wearing a snail suit, which he was threatening to do—sadly, it was unavailable—but I am conscious that Bully-Banks is organising some sort of snail racing today. I have no idea whether it has taken place yet, but I can well understand why the snail has become the emblem of the campaign. I sincerely hope that the Financial Secretary will act to help these small businesses—which are, after all, the lifeblood of our economy, but have found themselves caught up in this nightmare—and make sure they are given swift and fair redress after all this time.

13:19

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

I echo everyone else’s congratulations to my hon. Friend the Member for Aberconwy (Guto Bebb) on driving the campaign forward in such a passionate way. I also thank my hon. Friend the Member for Wyre Forest (Mark Garnier) for explaining to me something that I thought I understood and for proving that I did not in fact understand it—indeed, I am now worse off in my understanding of swaps than I was before he started speaking.

I am here because I want to talk about two constituency cases. Many Members have raised individual points, and each case seems slightly nuanced in different ways. My constituents simply went to their banks for a loan and came away with a product that they did not expect to come away with—a loan and a swap, or just a straightforward swap. In the first debate we had on this subject, I mentioned a constituency case involving a gentleman called Philip Derbyshire of Spirit Motors. He banks with Lloyds and was sold a product not just as a loan or a swap, but as a protection for his business—if he had subsequently sold his business or passed away, the product would have become an asset for him.

A number of people have talked about not understanding the product that was sold to them—that was well disclosed previously—but many were also unaware of the magnitude of the break cost or mark-to-market, as it is called. Banks said when the product was sold that they were unable to provide indicative figures for breakage costs, but it is absolutely obvious that this was not the case. The banks simply chose not to provide a scenario at that time. In the cases I have dealt with, my constituents took bank advice on what were very complicated products.

Mr Derbyshire has had an interesting time of late. He has been dealing with the lawyers from Lloyds, because he, like many others, had an interesting waiver—a disclaimer—in the hedge confirmation letters he received. Lloyds’s lawyers have denied all liability and hidden behind the waiver, which has a cash value in his contract of about £5,000, against a claim of well over £1 million. Slater and Gordon, Mr Derbyshire’s solicitors, have described the case of mis-selling by Lloyds as unbelievably shocking. Lloyds’s lawyers’ comments in response to Mr Derbyshire’s claim were quite interesting. They said that the account of the meeting at Mr Derbyshire’s home with a Lloyds representative was inaccurate and that he had “put a gloss on it”, vehemently denying that it had been asked whether Mr Derbyshire’s company was likely to breach any of the bank covenants at the end of the financial year, which ended on 30 November 2009. Mr Derbyshire completely contests this. He remembers the question with complete clarity—and I believe him completely—and his response to it. Indeed, in the end, Mr Derbyshire did not breach the terms of the covenants, but by then the damage from the waiver in the contract was done.

According to the Bully-Banks survey, 30% of Lloyds customers are classed as “sophisticated”, as my hon. Friend the Member for Romsey and Southampton North (Caroline Nokes) described. Mr Derbyshire has told me his level of education. He is a fantastic businessman; he might not have been the world’s most educated man. As such, he is ineligible, because he is “sophisticated” in financial matters for the purposes of the FCA review—obviously that is a matter of judgment on the part of his bank and himself. Mr Derbyshire has been a pressing individual. He wrote a personal letter, putting his case directly to the Lloyds chief executive—and of course, no one ever gets a reply to such a letter. Mr Derbyshire believes he has been treated with utter contempt by his bank—a bank that he used to have a huge amount of respect for and with which he had dealings for a long time.

The second case involves my constituent Mr Solanki, who owns Ashdown House residential care home, a small home that serves the aged local community with a specialised and dedicated dementia unit. Back in early 2006, he was approached by the manager of his bank, Barclays, who convinced him that, as interest rates were more than likely to rise, he should buy a 20-year interest rate hedging product to protect the business. The product was way beyond Mr Solanki’s technical understanding and abilities, so he was referred to an “expert” at BarCap, who convinced him that rates would rise significantly and that the product would protect him. Neither the BarCap salesman nor the bank manager explained the risks of the product; however, Mr Solanki was advised that it was transportable and easy to exit. Mr Solanki and the adviser never physically met—everything was done over the phone—which must in some way be non-compliant.

Soon after Mr Solanki had taken out the product, interest rates fell sharply, and we all know what happened from there. Because of the cost he was paying for the product, which ended up being more than the mortgage he had taken out on the business in the first place, he was unable to maintain the level and standard of the home. As occupancy fell, the company was forced to lay off staff and carry out patchwork repairs wherever possible. Much has happened since 2009, but essentially he is in a terrible place because of these awful products. Redress needs to happen; it needs to happen quickly.

13:26

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

I congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on securing today’s debate and on his excellent work in leading the all-party group, of which I am a member. He has done much to progress this issue.

In recent months, I have met many companies in my constituency on this issue. I have been struck by the sheer scale of the problems that they have detailed to me. I will not name any of the businesses, but I can see some of them in the Gallery and I am grateful to them for the—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Lots of hon. Gentlemen keep referring to the Gallery, and they need to be reminded that doing so is a procedural motion that causes a Division. Perhaps I could help them by suggesting that they say that their constituents are following the debate “closely”, “intently” or “not far from the House”, so that we can avoid any confusion about any unfortunate procedural vote that might be triggered.

[Andrew Jones]

Thank you, Madam Deputy Speaker. We do not want any procedural confusions—I am always lost by the procedures here anyway—but I am quite sure that this debate is being followed closely from somewhere very near to where we are.

The companies in my constituency have provided me with much detail. They have been frank in explaining some of their personal commercial circumstances and providing me with access to some of the supporting papers, so that I could see the whole thing—the background and implications for their companies. I have heard of the challenges that companies have faced with cash-flow problems; of companies having to sell assets simply to generate enough cash to pay their banks; of companies having to delay investment; of companies having to make people redundant simply to take cost out of the business and raise cash to pay their banks; and of company managers enduring sleepless nights and desperate worries. I have even had a case where a company was put into administration. In that case, the business owner believes it was done by the bank purely to avoid its mis-selling liabilities.

Overall, this issue has had a detrimental impact on many businesses. However, as we have heard from colleagues from across the country, it is not a local issue; rather, it affects people up and down the country. The collective effect is a detrimental impact on the entire economy.

I know that the problem has been recognised and that the redress scheme has been created, but I do not think that that is good enough. More needs to happen. The speed with which the scheme is proceeding needs to get a lot faster, because we need a swift resolution to this issue. Businesses are haemorrhaging cash, and they are still facing the problems that I have outlined. In the vast majority of cases, resolution will result in a judgment of mis-selling. It will also bring clarity and, consequently, an ability to plan for the future. Businesses are in a state of near-suspended animation until they get that clarity.

The one way to deliver that speed is to bring an end to all payments during the resolution process. That would help companies with cash flow, and provide an incentive for the financial institutions to get on with it. Progress has simply been too slow. The FCA is at least now publishing some data, which is a help. As of 27 September, the review population stood at 27,989 companies, some classed as sophisticated, some not. Of that number, 16,236 have been classed as non-sophisticated, of which 438 have gone all the way through the process and had an additional redress outcome communicated to them. That represents a hopeless rate of 2.7%, after months and months of work, and it involves only a communication, not a conclusion.

I have been told by the FCA and by the banks of the number of people recruited to deal with the issue and of the importance that they attach to it. I am sure that people have been recruited, but that is simply a measure of input. A process is designed to achieve an outcome, and the outcome is not having a process. The process is not working. I want us to send a message from this place that the impact on UK business is being recognised, that the pace of the process is unacceptable, that the financial institutions and the regulators will work to improve that, that we in this place will be watching their progress and that the Government will apply appropriate pressure. This issue needs to be resolved very quickly.

13:31

[Roger Williams (Brecon and Radnorshire) (LD)]

I, too, pay tribute to my hon. Friend the Member for Aberconwy (Guto Bebb) for the work and energy that he has put into this matter. The businesses in my constituency would certainly like to thank him for giving them hope of a successful resolution to some of their problems.

The banks seem to have adopted a herd mentality. When one of them discovers a profitable financial product, all the others have to pile in as well. It makes me wonder what work the banks actually did, before interest rate swaps started to be sold, to set out the risks to their customers. They might well have done some work on their risks themselves, although taking a turn on both sides of a swap and putting none of their own resources at risk probably involved very little risk to them. There might be more risk now that they are to be held to account and might have to pay for consequential loss. I am sure that there are many people in the banks who do the important work of horizon scanning. It would be interesting to know whether they examined the scenario of how very low interest rates would affect their clients.

I also want to pay tribute to Bully-Banks. It is a self-help group that has brought people together and given them more confidence to take on the banks and pursue their rights. I attended a Bully-Banks meeting in south Wales, which gave me an indication of the scope and scale of the problem, and of the different businesses involved. It became clear that a particular class of business that seemed more likely to be targeted by the banks was the well-established business with a fair degree of security, often in the form of property. That description certainly applies to a constituent of mine, Mr Evans from Ystradgynlais. He is seeing his way through this process at the moment, and his business is now secure, but he is still desperate to ensure that Barclays, which he believes has treated him very badly, puts his business back into the same condition that it was in before.

Mr Evans managed to get a facility with Barclays, and he was just about to sign it off when a salesman appeared. His name was Mr Shafto—never has a man been more appropriately named. Mr Shafto, who was very active in south Wales and the west of England, told Mr Evans that he had better sign up quickly because there were lots of victims—he probably used the word “customers”—who were desperate to see him, and he needed to get on a train to go and see some more. Mr Evans signed off on that agreement after only a short discussion. Surprisingly, he did not have to make use of the facility, so he ended up with the swap without having used the facility. We have seen instances of these swaps being mis-sold in the past.

Mr Evans runs a highly successful packaging business that deals with many of the pharmaceutical companies in this country. He has often had offers to buy the business, but he has resisted because he sees it as a family business that has given him security and that will give his family security in the future. Little did he know that the biggest danger of him losing his business would be created by the bank with which he had such a good relationship in the past.

If there is a bit of good news to come out of this debate it is that HSBC has announced that it will separate the technical redress from the consequential loss. I hope that all the other banks will come together and agree to do that as well. Mr Evans has been reluctant to accept an offer of technical redress because he thinks that it might compromise his consequential loss. He might now be in a position to take that money, however, and pursue his consequential loss at some point in the future. I shall finish by quoting a few words from the end of an e-mail from Mr Evans. He said:

“The mis-selling was a scandal. The resolution is an even bigger scandal.”

13:37

[Sir Gerald Howarth (Aldershot) (Con)]

I join everyone else in congratulating my hon. Friend the Member for Aberconwy (Guto Bebb)—and also my hon. Friend the Member for Wyre Forest (Mark Garnier), whose banking career was much more distinguished than my own—on initiating this debate. I hope that the message will go out to the British people, and particularly to small businesses, that Parliament understands their grievances and is prepared to be robust in addressing them. We look to the Government to be equally robust in their response to the debate.

I want to raise the specific case of Pacer Marine, a boat business that provides chandlery services and sells day boats, rigid inflatable boats and the like. It is located just 10 minutes from junction 4 of the M3, so if any of my right hon. and hon. Friends would like to take advantage of that business, they should please do so. The principals of the business, Dennis Davis and his son Kevin, are constituents of the Secretary of State for Health, my right hon. Friend the Member for South West Surrey (Mr Hunt), but their business is located in my constituency. My right hon. Friend is as concerned about this matter as I am.

Pacer Marine moved in 2005. Mr Davis and his son had previously been renting premises, but they found a place to buy in Aldershot. They went to their bank for a normal commercial 25-year mortgage, but that was not available. Dennis Davis has described his discussions with NatWest:

“The bank were fairly aggressive from the start. Our 2 corporate managers came along to see us, then told us about the hedging/rate swap, and that they would only give us a ten year fixed mortgage with a further 5 years. We wanted a 20/25 year term. They charged us a greater rate than normal although we challenged them on it. The main reason for the hedge/swap was because, in their words, they said rates never go down. Well, as we all know now, they did. They then at another meeting introduced a third person who did the deed. Because of the position we were in we agreed to it, but we had always felt that we had been mugged.”

I have done an interest rate swap deal, so I know that they are extremely complex. One wonders what on earth the Royal Bank of Scotland was doing trying to present this sort of opportunity to a very small business.

The documentation provided by RBS is interesting. Part of the background it gave included this statement:

“Loan serviceability is tight…so there is a ‘condition of sanction’ that an interest rate management tool be put in place to protect you from variable base rate”.

Protecting interest rate liability is a perfectly sensible issue to discuss, but we should note that this was a condition of sanction. In a market update, the bank interestingly pointed to all the reasons why interest rates were unlikely to go down and more likely to go up, yet the memo acknowledged:

“There were mixed views from you on base: you saw the possibility of cuts of between half to 1%”.

The bank was recognising the concerns of the customer, but actually trying to make the case that the customer was likely to be wrong and that interest rates were more likely to go up so that the hedging proposal could be put to him.

The person involved was an employee of another part of RBS, so his interest was to make the most money for his unit by exploiting the uninitiated customer and flogging him business that he did not understand. I asked Mr Davis, “Why did you go into this? Did you consult a lawyer.” He responded by saying:

“We trusted the bank. Our business is boat chandlery, not financial wizardry. We thought we were getting the best advice from them. We never thought we would have to go to Peckham Market and deal with a bunch of Del Boys.”

That was how the people in the business felt about it.

Both my right hon. Friend the Member for South West Surrey and I raised this issue with Stephen Hester in June 2012. Needless to say, we got some sort of reply from something called “Group Executive Office”, whoever those people are, but the matter remains unresolved to this day, notwithstanding the fact that when I visited my constituent at the end of August or the beginning of September, they were due to have a meeting with RBS to go through the process which, as many right hon. and hon. Members have mentioned, moves at a snail’s pace. Two months on, we are no further forward. This is an absolute disgrace. We have to be clear that although the banking system and the banking business are important to the prosperity of the United Kingdom, the banks have a lot to answer for.

[Bob Stewart (Beckenham) (Con)]

I was really taken by what my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones) said: perhaps the FCA should stop all repayments to banks until these problems are sorted out, certainly in specific cases. That might help the constituent of my hon. Friend the Member for Aldershot (Sir Gerald Howarth).

[Sir Gerald Howarth]

Several measures have been suggested during the debate and I hope that the Government will respond to them. I hope, too, that the FCA will respond more robustly than it has up to now.

My hon. Friend the Member for South West Devon (Mr Streeter) mentioned a meeting with Mr Chris Sullivan. Interestingly, he wrote to my right hon. Friend the Member for South West Surrey:

“As a Group, we are committed to the fair and timely treatment of our customers”—

what a fantastic and admirable sentiment!

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

Will my hon. Friend give way?

[Sir Gerald Howarth]

If my hon. Friend will forgive me, I will not, as other hon. Members wish to speak.

We have Mr Chris Sullivan, the chief executive of the corporate banking division—a very big wig in the Royal Bank of Scotland—saying that he is committed to the “fair and timely treatment” of the bank’s customers. I say, “Thank you very much,” to Mr Sullivan, because his letter was dated 3 August 2012 and yet my constituent has still seen no action. It is high time that the banks understood the gravity of the situation and the concern felt by the public. It is high time that they understood the risks they pose to businesses and the fact that they are damaging the United Kingdom by failing to address these concerns. They must do so forthwith, and the Government must give them every help so to do. I hope that eventually—indeed, soon—our constituents who have put their money on the line to try to generate wealth for our country and improve the economy will be given a better deal.

13:44

[George Freeman (Mid Norfolk) (Con)]

I am grateful for the opportunity to speak in this important debate, and I want to add my name to those of other colleagues in paying tribute to my hon. Friend the Member for Aberconwy (Guto Bebb) for his leadership and to the Bully-Banks campaign. I commend my hon. Friend the Member for Wyre Forest (Mark Garnier) for enlightening us all on how these mechanisms work, and I am grateful for the work of the all-party group, of which I am happy to be a member.

I want to speak about the context in which we need to view this issue, based on my own experience. I believe that this is the end of a banking boom-and-bust and bail-out, which speaks volumes about the role of banking in the economic crisis that we face. On the basis of my previous career in small businesses in East Anglia, it seems to me that the big bang, along with all the many good things, triggered a major cultural and financial neglect of the real bread and butter economy on the ground. Over the last 15 or 20 years, Norfolk has certainly seen a wave of bank closures, a “computer says no” culture, and a neglect and undermining of what was traditionally viewed as the backbone of our local economy, but what became in recent years, particularly under the last Government, rather unfashionable and, dare I say it, boring for the bankers of today.

Norfolk now sits on the cusp of a major economic renaissance—in life sciences, in engineering and in energy. I thank the Government for investing in the infrastructure but in that sector the banks have largely been irrelevant, in my experience, to such early-stage companies because they are too risky. Those companies usually rely on venture finance from angels, and corporate venturing from customers.

We thus need to ask ourselves some big questions about the banks’ role as our economy goes forward. Of course the banks play a crucial part. America has 20,000 banks and a new one is started nearly every week, and I believe that our banking sector and our financial services sector is one of our greatest and most innovative sectors. We sometimes talk about the City as if it comprised just four or five big banks; in fact, it is a fabulous crucible of financial innovation that should be celebrated and encouraged. The problem lies with the few big banks at the top that were bailed out by the last Government in such a way as to see them sitting on too many real businesses in the real economy that we need to grow and support.

I am going to speak about three of my constituents who have suffered as a result of the problem we are debating. Mr Andy Keats is a local entrepreneur who built up a number of companies—in this case, a successful 13-year-old company with 30 local employees, which is about to be sold for £3.5 million. When Mr Keats decided that he wanted to move his banking from RBS to Barclays, RBS stopped passing on the sales income from credit and debit card sales in the business. The business went insolvent within six weeks, and for the last four years, he has had to deal with RBS and NatWest and has had to face a series of major issues and challenges, to which I have been party. I have seen at first hand banks not responding and when they do, ignoring previous communications, and passing on debts to debt collection companies.

[Andrew Bridgen]

Does my hon. Friend agree that one explanation for the banks’ lack of enthusiasm to get on and pay out compensation is that if businesses that have gone bankrupt have no access to the redress scheme, there is no incentive for the banks to grasp this nettle, so the Government need to do something to force their hand?

[George Freeman]

My hon. Friend makes an excellent point for which I am very grateful.

Mr Keats has also pointed out that the solicitors acting on behalf of the bank sometimes take court action without serving necessary notice.

I cannot name the second constituent because, like so many in these circumstances, he wishes to remain anonymous. He is a leading local business man and something of a pillar of the community. His business was pushed into accepting interest rate derivative products by unscrupulous bank salesmen. He has filed legal action against his bank so that the statute of limitations does not time out on his claim, which is a very real threat.

The third constituent is Paul Adcock, the managing director of Adcock’s of Watton, a great family business on the high street of a great Norfolk town. He was one of the first campaigners to make a complaint and a key leading light in the Bully-Banks campaign. I want to pass on my thanks, on behalf of my constituent, to my hon. Friend the Member for Aberconwy because the campaign has been a huge help to him. Adcock’s, a major local business and a pillar of the local establishment, racked up £175,000-worth of unscheduled charges. In September this year, Barclays finally settled. I want to put on record my constituent’s thanks for doing so.

This is not just a local issue. It is an enormous issue that runs across our economy. The numbers are eye-watering. The Bully-Banks campaign has estimated that this mis-selling scandal has cost small businesses more than 400,000 jobs in our economy, with £1.7 billion a year lost to the Treasury. It has led directly to the loss of 162,000 jobs, and to the inability of SMEs to create 251,000 jobs that they would have been able to create otherwise. More than 30,000 small businesses still face long delays, and fewer than 7% of claims being considered by Royal Bank of Scotland had reached the redress stage by the end of the month, while nearly five times as many—32%—had reached that stage at Barclays. Just 2% of those whose cases have been deemed eligible for review have accepted offers of redress. The banks have, I believe, set aside £3 billion for redress purposes, and less than £2 billion has been paid to just 32 businesses so far.

We need a speedy and fair process for redress and compensation. I urge the Minister to use all the mechanisms at his disposal to encourage the FCA to accelerate its handling of claims, to ensure that the banks are not allowed to kick them down the road, to separate direct and consequential losses, and to ensure that the settlements are fair. We must be careful not to define consequential losses in such a way as to undermine the potential for future SMEs to raise funds from the banks.

We are lucky enough to have a Minister with a glittering career in finance and small business behind him, and, I do not doubt, a glittering career in politics ahead of him. Our group could not have a more doughty and outspoken campaigner and supporter of our cause on the Front Bench. I urge him to bring to this issue the skill that he has brought to other issues with which he has dealt, and to ensure that it is viewed in the context of the wider banking crisis, whose resolution will enable our economy to recover properly.

13:51

[Ian Swales (Redcar) (LD)]

It is a great pleasure to speak for the first time with you in the Chair, Madam Deputy Speaker.

I, too, congratulate the hon. Member for Aberconwy (Guto Bebb), not only on securing the debate but on his fantastic leadership of the campaign and the comprehensive speech that he has made today. These debates show Parliament at its best, although it is a little worrying that the banking industry seems to move tortoise-like between them, and to take on the characteristics of the hare only during the few days before and after they take place. Perhaps we just need to have more of them.

As I spoke in our last debate on this subject, I shall not repeat everything that I said then, but I do want to say something about the question of advice. Small businesses typically have an accountant and a bank, and in the past have typically relied on both to be on their side. However, it is clear from the mis-selling scandal that they should have been given independent financial advice, because the banks were no longer on their side, and were now treating them as potential consumers of sophisticated products.

If the banks insist on not being on the side of small businesses and on treating them primarily as sales prospects, we should be thinking about the regulations. We should be thinking about what sort of advice the banks should be telling their clients to seek, about what disclosures of commission they should be making, and about other matters that would be the norm if the banks were selling to private individuals. After all, many of the businesses that we are discussing are not much bigger than the affairs of a private individual. I hope that the Minister will respond to that point.

Some of my constituents, like those of other Members, are following today’s debate closely. Theirs is a very familiar story. Stephen Lilley wanted a loan, and stated explicitly that he wanted to pay it down as quickly as possible. However, he found himself locked into a long-term fixed deal involving a fixed amount of money. Roy Myers turned up to sign the papers for a fairly large loan, only to find that clauses were being inserted at the point of signing. He had no time to consider what was happening.

A point that I do not think has emerged clearly today is that the businesses that are involved in such arrangements are effectively locked into their existing banks, and cannot get out. There has been some predatory behaviour on the part of banks in those circumstances. A business in my constituency which, partly because of the banking arrangements, was in heavy weather financially, found itself having to pay an extra £500 a month for a “special relationship manager” who did not actually do anything. That was merely a way of extracting yet more money from the business. In another case—we heard of a similar example earlier—a life insurance policy was forced on a constituent who did not need it. People have very little room for manoeuvre when they are locked into their existing banks.

I welcomed last year’s decision by the FCA, but progress has been painfully slow. I was present when Barclays turned up at the all-party parliamentary group, many months ago, and convinced us that it was organising a great big operation and that things would move very swiftly from that point onwards—which, of course, they did not. Meanwhile, the lives of more and more businesses and individuals are moving on, and things are happening to them. A couple of months ago, one of my constituents who is a member of a support group was speaking to a woman who was ill at the time, and who has subsequently died. That is another person to whom the banks are no longer having to talk.

A great many businesses have gone bankrupt. The hon. Member for Harrogate and Knaresborough (Andrew Jones) raised a point that had not occurred to me before. If it is true that the banks will not have to compensate those behind bankrupt businesses, they have a financial incentive to bankrupt businesses. I have been around long enough to know that whatever banks have a financial incentive to do, we can pretty much count on their doing.

[Andrew Bridgen]

Does my hon. Friend agree that not only is this situation awful for the SMEs that have been caught up in the mis-selling scandal, but it sends a strong negative message to anyone who is thinking of going into business in this country? Does it not send them the message that the banks cannot be trusted, and provide them with a big incentive not to go into business at all?

[Ian Swales]

Absolutely. Earlier, the hon. Member for South West Devon (Mr Streeter) referred to the reputation of the banks. I think that they will have an enormous job to do to recover their reputation, and to rebuild the trust that new business people should expect.

I hope that the Minister will say something about the question of what happens when businesses have gone bankrupt, or their proprietors are deceased. Do they simply drop off the banks’ lists? If that is the case, I think that we should be very concerned about what the banks are doing and what they are incentivised to do.

There has been good news this week about the separation of compensation from consequential loss. Both the constituents of mine who are following this debate particularly closely have received money in the last few weeks. Why, Members may ask, should they be at the front of the queue? The two of them have been prepared to go very public—they have even appeared on television—and, amazingly, the banks appear to have moved them to the front. Cynic I may be, but I would guess this was part of a process of dealing with the most vocal people first, and of course it should not be like that.

The question has been raised of whether criminal activity has taken place. I think that there is a whole spectrum ranging from relatively innocent bank employees, selling something that they have been told to sell, to clear misrepresentation, lies and so forth. I think that Bully-Banks is finding that the same names recur in some cases, and I think that when what is clearly criminal activity has taken place, those involved should be prosecuted.

We have all talked about the need for extra pace. I hope that the Minister will put maximum pressure on the banks and the FCA to speed up the process, and will show that the Government are on the side of small businesses and our constituents.

13:58

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

It is a great pleasure to see you in the Chair, Madam Deputy Speaker. I congratulate you. I also congratulate my hon. Friend the Member for Aberconwy (Guto Bebb) on opening the debate, and congratulate him and his Committee on all the work they have done.

In mythology, David felled Goliath. [Hon. Members: “It is in the Bible!”] It is in the Bible, but it is also slightly mythological. [Hon. Members: “It happened!”] If Members have absolute proof, that is fine. Anyway, I want to make a serious point. We have seen a banking sector that has used corporate lawyers and all its muscle and might to ensure that it can take on small businesses.

This is what small business is up against. People can call me cynical if they like, but much of this selling of swaps was going on in 2006 and 2007, when interest rates were 5.5%, but by 2009 they had dropped to 0.5%, and I believe that many of those banks knew that interest rates were going to fall. Why were they so keen to go out and get everybody tied up in these swaps? Under the terms of the swaps, the higher interest rate could probably be capped at around 6.9%, but if they started to fall below 4% or 3%, people immediately got clobbered for huge amounts of money. It was therefore very much in the banks’ interests to get people into these schemes. That is where I do actually say that what went on was criminal. That is why we expect our great Minister, along with the FCA, to do something about this. The fact that only 32 or 33 cases in the whole country have been dealt with is an absolute scandal.

[Bob Stewart]

My hon. Friend referred to the Bible. Does he agree that this would be called usury or robbery in the Bible?

[Neil Parish]

I certainly do, and there is another word for it: theft. That is exactly what it is, because people entered into these agreements in good faith, and that brings me to another point I want to make. Throughout my business and farming career, I had a good relationship with my bank. I trusted my bank manager, and when I spoke to him or her, I expected them to give me good advice. That trust in our banks has been broken by this affair. If people in small businesses and in business generally cannot trust their bank when they want to raise finance to build up their company and employ more people, where on earth are we going to build a recovery? We are building a recovery, of course, but we could build it so much better if we could restore that trust. The FCA must do much more, so businesses can recover from this.

I have many affected businesses in my constituency, and two businesses in particular, both of which are with the Clydesdale bank. One of them is a large successful farm and the other is a hotel. They have all been put under enormous pressure and have paid enormous amounts of money, and this is stopping them expanding. One of the businesses was not given much choice about whether to take out the deal. Basically, it was told, “You either take the money with a swap, or you don’t have the money at all.” That is the kind of coercion that went on. We need to deal with this issue, because we need these businesses to prosper.

Some companies who have been sold a swap and have therefore come under enormous financial pressure have been driven into liquidation, and I suspect that, because of the wonderful financial institutions we have in this country—I am being sarcastic here—they will be snapped up at rock-bottom prices. That is all wrong, because we are talking about businesses that have worked hard for years and family businesses that have been established for generations being destroyed by this system.

It is great that we have got this second debate, and, in respect of the banks, it is great that the snail is beginning to turn into a hare, but I suspect, if we are not careful, that as soon as this debate is over it will transform back into a snail. That is why I say to the Minister that it is absolutely essential that he, along with the FCA, gets hold of the banks and makes them compensate people for what they have mis-sold and what they have done. Until that is done—until we have rectified the situation and compensated these businesses—we will not restore confidence in the banking system, which we badly need to be restored in this country. We must ensure that we move forward at an even quicker pace so that people have confidence to invest and know that if they approach their bank, they will be sold a good deal, not a pup, which is exactly what people were sold in this instance.

I look forward to hearing the Minister’s comments because I have great confidence in him and he has great experience in this sector. I have had more pain from banks than anything else. If we do not get the banking sector right, we will not get the economy right.

14:05

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

I congratulate all the Members who secured this debate, and I also thank the Backbench Business Committee for giving further time for this important issue to be discussed on the Floor of the House. I also want to put on record my recognition of the tremendous work done by the all-party group on interest rate swap mis-selling. Its efforts in campaigning on this issue since it first came to light last year have made sure it remains at the top of the political agenda. I should mention in particular the hon. Member for Aberconwy (Guto Bebb) for his leadership of that group and his willingness to run with this issue. He opened the debate with a powerful speech touching on all the different elements of the redress scheme, which have been causing problems to small businesses throughout the country. He reminded the House that the banks were telling us they cannot promise that the date for full redress will be much before 2015, despite having spent £300 million and recruited around 3,000 staff to deal with this problem. The number of claims settled to date is pitifully small. The record on that is nothing to write home about and it needs to be dealt with urgently.

The Chair of the Backbench Business Committee, my hon. Friend the Member for North East Derbyshire (Natascha Engel), made a fine speech. She reminded the House that the imposition of a blanket moratorium on payments would concentrate the minds of the banks and press them towards resolving the claims businesses have made more swiftly. She also made the important point that much of the language the banks are using in their correspondence with businesses and Members of Parliament on this issue is not easy language, and that means there is a danger of the same kind of confusion arising as that which led to this scandal in the first place.

The hon. Members for Wyre Forest (Mark Garnier) and for Aberconwy reminded the House that in the last 48 hours some banks have moved to decouple the issue of consequential losses from technical redress, and I will return to that point.

My right hon. Friend the Member for Wolverhampton South East (Mr McFadden) reminded the House that this scandal has further corroded and damaged trust between banks and their customers and drew a parallel with previous scandals, including the PPI scandal, which certainly should concentrate minds. He also reminded us that hedging and insuring against risks is not in and of itself wrong, and he is certainly right about that, but there has to be full understanding as to what these arrangements involve, and we must make sure that when they are entered into, it is done in a way that is suitable for both the companies getting involved and the banks.

My hon. Friend the Member for Llanelli (Nia Griffith) told us about the tragedy of good and very successful businesses who have been caught up in this scandal and the real fear felt by small businesses in seeking redress and how that can act as a barrier to them exercising their full rights under the redress scheme. They worry about admitting something has gone wrong because of what that might mean for their future relationship with their bank. That was an important point to put on the record.

My hon. Friend the Member for Edinburgh South (Ian Murray) reminded us again of the link between this scandal and the corrosion of people’s trust in the banks and how that has followed on from the PPI scandal and the manipulation of LIBOR. He also said that this all feeds into a sense that the banks, who are supposed to be on the side of small businesses—and who clearly need small businesses as much as small businesses need them—have not appeared to be behaving in that way and that needs to be dealt with forthwith.

Many Government Members, including the hon. Members for Poole (Mr Syms), for Bury North (Mr Nuttall), for South West Devon (Mr Streeter) and for Romsey and Southampton North (Caroline Nokes), made points about the snail’s pace of this scheme, which I will return to in a few moments. Those points were well made, and I hope they are being heard. On the speech by the hon. Member for Tiverton and Honiton (Neil Parish), I will not get into whether David felling Goliath is mythological, biblical or something else, but the analogy was well made and the symbolism of it will resonate outside this House.

It is clear from today’s contributions that the businesses caught up in this scandal, including businesses in my constituency that are following this debate closely from a place not very far away, have suffered terribly; we have heard distressing stories of injustice, bankruptcies, job losses, marriage breakdown, homelessness and, in some cases, death. Today’s contributions have rightly reminded the House that for all the debate about process—that is incredibly important and we have to get it right—there is a human cost, which should not be forgotten.

This scandal has highlighted shocking abuse of small and medium-sized enterprises; banks saw an opportunity in firms wanting to take out loans and they attached complex hedging products to them, in many cases giving the impression that this was a requirement of the loan itself. When interest rates plummeted, businesses were forced to pick up the punitive downside of the hedges. We know that in many cases banks had the option to cancel the loan. So, presumably, at any stage when interest rates might have gone up and the business would have benefited from having the hedge, the bank could cancel, but in the reverse situation the business could not exit the hedge when it became unfavourable to it without incurring punitive costs and charges. Not only was that an extremely unfair set of terms and conditions, but that behaviour violated the important relationship of trust between the banks and our small business community. Well run, long-established small businesses, which are the engine of our economy, have paid the price.

I will not rehearse the history of how we have got to the redress process that is in place, but suffice it to say that many concerns with this scheme require urgent action. I hope the Minister has heard all those points today and will take them away with him. I hope also that the FCA and the banks have been listening carefully to today’s debate. The biggest issue, about which we have heard a great deal today, is the time that this is all taking to resolve. Time is of the essence for the businesses concerned, yet figures show that banks paid out just £1.5 million in compensation in September, with 22 offers being accepted. That brings the grand total to a mere £2 million having been paid out, with 32 settled claims. In September, the chairman of the Federation of Small Businesses said:

“We are quickly losing confidence in the banks and the regulator as this scheme remains unbelievably slow.”

The initial target indicated for the redress scheme was six months. That time scale has already been missed, and it now looks as if it will be missed by a very large margin.

One of biggest issues with the redress scheme is the complete lack of a deadline for the process. Last month, my hon. Friends the Members for Nottingham East (Chris Leslie) and for Chesterfield (Toby Perkins) wrote to the chief executive of the FCA about the delay in compensation payments and requested that a strict deadline for settlement be imposed on the banks taking part in the scheme. Unfortunately, the imposition of a deadline has been resisted by the FCA. That is deeply disappointing, given the necessity of achieving a faster rate of progress for businesses that are in financial difficulty and the fact that the Federation of Small Businesses has indicated that some reviews of the interest rate swap products could be completed in as little as four to six weeks. I am sure the Minister will agree that firms that are due redress must receive it as quickly as possible if they are to survive; they need certainty and clarity so that they can plan for the future. Does he agree that a deadline would help matters? I hope he will respond to that point. Will he outline for us what he might do to bring that about?

We have seen some movement in the past 48 hours on the issue of consequential losses, which is very welcome. However, it is important that all the banks that have not signed up to the decoupling arrangement in respect of consequential loss and technical redress do so as quickly as possible. As this is now an evolving element of the redress scheme, will the Minister confirm that he will follow it closely to ensure that the evolving process will still allow for a fair assessment of consequential losses and that there is no risk that businesses will opt to forgo money they are owed in order to obtain compensation for their direct losses more quickly?

We also heard a lot about the suspension of payments, an issue about which many hon. Members have been writing to banks in our capacity as constituency Members of Parliament. Clearly, there is some inconsistency in the way in which the suspension of payments is being applied. Will the Minister undertake to do whatever he can to ensure that the suspension of payments applies wherever it is necessary? Will he consider the threshold? Will he eliminate the requirement for the business to go into special measures, as that is clearly holding some people back?

A huge amount of data have been published by the FCA on its website, which is helping Members of this House to assess the progress of this scheme. However, I wonder whether there is scope for some of those datasets to be expanded, particularly to give Members more information about what is happening to businesses in financial distress and businesses in administration, so that there is no incentive for banks not to bother dealing with them, as we have heard discussed today.

Small businesses are the lifeblood of our economy; they account for about half of private sector turnover, employ millions of people and make up 99% of UK enterprises. They deserve to be treated better by our financial institutions, and to be supported and protected more effectively by both the regulators and the Government. I hope that the Minister can provide some much-needed assurance, and that the FCA and the banks take on board all the points made by hon. Members today.

14:16

[The Financial Secretary to the Treasury (Sajid Javid)]

First, let me take this opportunity to welcome you to your new Chair, Madam Deputy Speaker. It is a great pleasure to see you in your place. I also welcome the hon. Member for Birmingham, Ladywood (Shabana Mahmood) to her new role and wish her luck with it.

I start by thanking all the hon. Members who secured this debate and by congratulating everyone on presenting their case well. Special thanks must go to my hon. Friend the Member for Aberconwy (Guto Bebb) for the time, energy and passion that he has put into this issue and for the leadership he has shown. We can see from this debate that this issue is very serious; 17 of my hon. Friends and four other hon. Members have spoken today. I am sure that everyone in this Chamber, like all those others watching in the Public Gallery, at home and elsewhere, including the hundreds watching in the Central Methodist hall from the many businesses that have been affected, is keen to see a quick conclusion to the FCA review and to see that those businesses that were mis-sold financial products are compensated accordingly.

When I was growing up, my father ran a small family business in Bristol, so I was made aware from a young age about the importance of cash flow and the dangers of unexpected costs. As such, I sympathise wholeheartedly with the small businesses that have been affected by this mis-selling scandal and have put such energy into lobbying on this issue. This Government have made it clear from the beginning that the mis-selling of financial products is totally unacceptable. We take extremely seriously the abuse that has taken place, and we are determined that any wrongs that have been inflicted on businesses should be righted.

I share the disappointment of fellow hon. Members about the progress made under the FCA review to date. I stood up in a Westminster Hall debate about four and a half months ago to discuss this very issue, and the fact that the FCA has not made any significant progress since that debate is, frankly, not good enough. As we have heard today, the FCA said in January this year that the full review process would begin, but it has since confirmed that the full process did not start until May this year. That delay has been disappointing, and the FCA should have been much clearer about exactly when this full review actually started. However, the review is now up and running, with the large majority of cases being looked at. I understand from the FCA that it believes that about 85% of cases are now under review, but hon. Members are absolutely right to say that it is time for the banks and the FCA to do more to speed up the process and get redress out the door. As such, the Government will continue to push the banks and the FCA to complete the process as quickly as possible. As the motion says, the redress scheme’s progress has been too slow. That is costly and has caused further undue distress to the businesses involved. The FCA and banks need to get on with the job.

[Mr McFadden]

Before the Minister leaves the issue of the FCA, will he say what he thinks of the FCA’s reply to some businesses in distress—that it will not consider individual cases?

[Sajid Javid]

The FCA has set out a clear process and is publishing more and more information on it. It is important that the FCA and the banks should stick to that. Equally, however, Martin Wheatley, the head of the FCA, has not ruled out any further action, including taking enforcement action if he deems that the redress process has not worked as intended.

A number of Members have mentioned redress payments. Of course we need to be confident that the scheme provides the correct level of redress for affected businesses. I understand why concerns have been raised about the FCA’s decision to allow the banks to settle with customers for a single redress offer, covering both basic redress and consequential losses.

It is right that the FCA, as an independent regulator, should decide such details. However, I agree that it is sensible for the initial payment for basic redress to be made to provide much-needed relief to the businesses. That is why I welcome the announcement this week, from HSBC and RBS so far, that they will now make an initial redress payment to businesses and then discuss consequential losses separately. Back Benchers should take credit for that move. Under the leadership of my hon. Friend the Member for Aberconwy (Guto Bebb), they have put pressure on the banks and we have seen the results already.

However, I want things to go further—I would like all the other banks to join the move announced by HSBC and RBS, and I shall be watching closely to see whether they do. That should help prevent any further undue distress for the businesses and give them much-needed cash-flow relief.

[Ian Swales]

I well understand that consequential loss calculations are probably unique to each business. However, the redress payments surely form a pattern, given that they are all based on similar products. Does the Minister believe that the banks should be able to move very quickly with the redress part of the compensation?

[Sajid Javid]

I agree. The banks should move much faster. Today’s announcement from the two banks is welcome, but other banks should take a serious attitude to not only the amounts but the timing of redress payments.

Hon. Members have also voiced concerns about the large number of businesses that have been assessed as sophisticated and so fall outside the scheme. My understanding is that the FCA used as a starting point the criteria for non-sophisticated customers set out in the Companies Act 2006. As such, the test reflects the fact that larger businesses would have greater resources to seek advice on the products in question, both at the time of sale and subsequently. Moreover, I understand that the FCA then amended the sophistication test in January to ensure that certain companies, which were classified as sophisticated under the Companies Act test but which might reasonably be considered to be non-sophisticated, were also brought into the scope of the review.

Throughout this debate, the Government have been clear that when a business lacked the necessary skills and knowledge to understand fully the risks of the products, it should receive the appropriate redress. We do not agree that all businesses should have access to the FCA review; there needs to be a defined cut-off point beyond which more sophisticated businesses take responsibility for understanding the products that they entered into. I am confident that the FCA has found the right balance to ensure that all non-sophisticated businesses fall inside the scheme.

I will not be able in the time available to address all the questions raised, but I might be able to help with a couple in particular. Some Members asked whether insolvency could be a reason for banks to try to delay the redress process. I assure the House that that could not be a reason. No one wants businesses to go insolvent, but if, sadly, they do, they will still be part of the review process. If mis-selling is found to have happened, banks will still be liable and on the hook—they will gain no advantage from the insolvency of a company.

Hon. Members, including the shadow Minister, asked whether the FCA could consider setting a deadline. There is a good case for the FCA to consider that, but it would have to be its independent decision. Due regard must be taken of the fact that it might take longer to sort out the most complex products, but it would be good for the FCA to consider whether setting a deadline would help to speed up the process.

[Steve Brine]

A number of colleagues have mentioned this. Does the Minister have a view on a truly independent appeals process? Given that 93% of the cases looked at thus far have been non-compliant, the number involved would not be massive.

[Sajid Javid]

As my hon. Friend will know, there is a necessary degree of independence in the process. However, he raises a good point, which, as he said, has been raised by others today. It is important to make sure that there is confidence in the process. If confidence does not come about in the coming months, the FCA may have to review things and the process that my hon. Friend suggests could be taken forward.

I end by reiterating that the Government take extremely seriously the abuse that has taken place in very many cases. I sympathise wholeheartedly with campaigners in the Chamber and beyond. I am determined that any wrongs inflicted on businesses should be put right and want a quick solution to the mis-selling of interest rate hedging products.

Small businesses are the backbone of our economy and they should be allowed to draw a line under this issue and get back to what they do best—working hard, creating jobs and creating growth for the UK economy. Once again, I thank hon. Members, particularly my hon. Friend the Member for Aberconwy, for bringing the issue to the attention of the House. I assure them that I will make sure that the issue continues to receive the highest level of attention from the Government.

14:27

[Guto Bebb]

With the leave of the House, I should like to make a few concluding remarks. This has been a positive and necessary debate, and we have seen significant progress as a result of it. Members from across the House have made it clear that they want a step change in the progress made by the FCA review process. That is necessary; we need a significant increase in the number of businesses offered redress. There are real concerns about an expansion of the scheme. Speeches have highlighted the issue of embedded swaps and the concerns about the sophistication test, which I would like to discuss in further detail with the Minister in due course if I can.

The other pretty obvious thing from this debate is that we need the banks to provide support for the businesses while they wait to be reviewed. We want the banks to show forbearance and to understand that the difficulties faced by many businesses were created by the banks’ own mis-selling. No further businesses should be lost to the UK economy as a result of the mis-selling of these products, which were inappropriate in the vast majority of cases. This has been a positive debate, but we still need to see the proof of the pudding in the way in which the scheme delivers from now on.

[Sajid Javid]

May I tell my hon. Friend that I would be more than happy to meet him and other stakeholders to discuss this further?

[Madam Deputy Speaker (Mrs Laing)]

If the Minister has finished his intervention, the hon. Gentleman may conclude his speech.

[Guto Bebb]

I appreciate that offer very much, Madam Deputy Speaker.

Question put and agreed to.

Resolved,

That this House considers the lack of progress made by banks and the Financial Conduct Authority on the redress scheme adopted as a result of the mis-selling of complex interest rate derivatives to small and medium businesses to be unacceptable; and notes that this lack of progress is costly and has caused further undue distress to the businesses involved.

Aviation Strategy

Thursday 24th October 2013 Commons Chamber

[Relevant documents: First Report from the Transport Committee, on Aviation strategy, HC 78, and the Government response, HC 596.]

14:29

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

I beg to move,

That this House has considered aviation strategy.

May I congratulate you on your new role, Madam Deputy Speaker?

I am pleased to have the opportunity to debate aviation strategy in the UK, which was the subject of a Transport Committee report published in May. A decision on capacity in the south-east has been in the “too difficult” box for too long. The independent Davies commission set up by the Government has been asked to submit its final report after the next general election, but the Transport Committee felt that this was too important an issue to ignore in this Parliament. I therefore thank the Backbench Business Committee for this opportunity to debate our findings.

Our main focus was inevitably on the controversial subject of runway capacity in the south-east. We concluded that the expansion of Heathrow was the best option, because that recognises the importance of aviation to the UK’s economy and the need for more hub capacity to maintain international connectivity, and reflects consideration of the feasible options. The report considers future demand forecasts for aviation, the impact of aviation growth on the global and local environment, the importance of hub airports in securing connectivity, the role of airports outside the south-east, and aviation taxation, especially air passenger duty, and I will refer to all those issues during the debate.

It is vital to recognise the importance of aviation to the economy. In 2011, the UK’s aviation sector had a turnover of some £53 billion and generated about £18 billion of economic output. It employs more than 220,000 workers directly, and it has been estimated that the total number of jobs supported could be as high as 921,000. Aviation is also important for the lives of many citizens by providing transport, and trade and leisure, links to the rest of the world. Demand for aviation links is growing. In 2012, UK airports handled 221 million passengers, which was 1.4 million more than in 2011. The latest passenger forecasts predict that demand at UK airports is set to grow. Unconstrained forecasts—those in which there are no airspace constraints or capacity limitations—show that passenger numbers will grow to 320 million a year by 2030 and 480 million a year by 2050. It is likely that there will also be greater demand for air connections to new destinations.

The UK has direct air links to more than 360 international locations. There are, however, serious and growing concerns about poor connectivity between the UK and some of the world’s emerging markets, such as the BRIC group of Brazil, Russia, India and China. There are particular concerns about the absence of links to China’s manufacturing centres. The lack of capacity at Heathrow, the UK’s only hub airport, is reducing the UK’s connectivity to important destinations. For many years, Heathrow has operated with two runways at full capacity while competitor hubs such as Paris, Frankfurt and Schiphol have benefited from four to six runways each. The growth of large hubs in the middle east, such as Dubai, has also threatened the UK’s position as an international hub. If the necessary hub capacity is not available in the UK, airlines use competitor hubs to places such as Schiphol, Frankfurt and Madrid, and if no action is taken, the UK will continue to lose out.

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

What weight would the hon. Lady give to the warning from Michael O’Leary of Ryanair, who says that the UK’s current approach to airport expansion will mean that another runway will be built at Heathrow and at Gatwick some day, but it will be done in an incredible hurry, will not be well planned, and will be the usual sticking-plaster solution?

[Mrs Ellman]

It is undeniable that additional capacity is needed, so we need to make decisions now. We may well need to make more in the future and I will refer to them in due course.

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

I congratulate the hon. Lady and her Committee on their excellent work. On capacity, does she agree that there are more cost-effective options that could better meet the need for capacity than proposals to build a £70 billion new estuary airport? I declare an interest, because it would be located near my constituency.

[Mrs Ellman]

I am about to address that very point. The situation could be dealt with in three ways: build an entirely new hub airport; link existing airports through high-speed rail to form a split hub; or expand one or more existing airports.

Many of the proposals for a new hub airport would locate it to the east of London in the Thames estuary area. There are significant challenges associated with building such an airport, including the difficulty of designing airspace in an already crowded environment, and the need to mitigate bird strike and to deal with environmental challenges such as future sea-level rises and the risk of flooding. Noise would also become an issue for the many people who inevitably would move into the area.

We commissioned specific research into the options and it became clear that, in addition to the factors I have mentioned, the first option would inevitably lead to the closure of Heathrow, threatening more than 100,000 jobs, which would be devastating. It would also require a significant public subsidy of up to £30 billion towards surface infrastructure and compensation for the closure of Heathrow, which would be on top of the tens of billions of pounds that it would cost to build the new airport itself.

The second option is to link existing airports through high-speed rail to form a split hub, perhaps involving Gatwick and Heathrow—Heathwick. That was rejected because of uncompetitive connection times for transferring passengers, especially compared with the transfer times of competitor hubs overseas. The third option is to expand one or more of our existing airports. We looked in detail at the possibility of expanding Gatwick and/or Stansted as alternatives to the expansion of Heathrow, but new runways alone, distributed across a number of airports, will not provide a long-term solution to the specific problem of hub capacity. We concluded that expansion of Heathrow with a third runway would be the best way forward, and that was also the solution that British business throughout the country overwhelmingly favoured.

[Mr Andy Slaughter (Hammersmith) (Lab)]

I appreciate the work the Committee has done, but I wonder whether it has been somewhat bamboozled by the public relations operation that is Heathrow. The fact is that it has been the only game in town for a number of years. To dismiss the option of expanding other south-east airports as a split hub, rather than viewing them as a network serving the whole of the huge city of London and the south-east, is somewhat too glib.

[Mrs Ellman]

I thank my hon. Friend for his comments. Our report looks specifically at his suggestions, but we came to the very clear conclusion that the expansion of Heathrow was the only realistic option. We recognise that there might be a case for additional runways at Gatwick and perhaps Stansted, but that is not an alternative to additional hub capacity at Heathrow.

We acknowledged the need to address the very real environmental objections that may arise. In particular, noise in excess of 55 dB is a major problem for more than 700,000 people in the airport’s vicinity. We have suggested a number of steps that could be taken to mitigate that serious issue. Planes are getting quieter, but aircraft manufacturers must continue to develop quieter aircraft. To facilitate that, we recommend that the Government, through their involvement with the International Civil Aviation Organisation, try to influence global noise standards. Airports themselves should encourage airlines to take older, noisier aircraft out of service at the earliest opportunity, and people living under the flight path who are affected by excessive noise should be adequately compensated. We have called on the Government to develop a comprehensive, nationwide approach to noise compensation. The Civil Aviation Authority should review existing flight paths and landing approach angles to reduce noise pollution.

Local air quality is also important, and the Government should draw up plans to ensure that the EU limits on air pollutants are met. We were especially concerned about unnecessary emissions that are generated due to the stacking of aircraft over London. We recommended that NATS, the air traffic controllers, should carry out modelling work to identify the extent to which stacking might be reduced if an additional runway was built at Heathrow. Ultimately, any plans for increased aviation capacity must take account of progress on global initiatives to deal with emissions.

It is vital to remember that a hub airport is about serving the national interest, meaning that 63 million people in the UK are affected. Local problems must be addressed, but that must be done in the context of considering the needs of the UK as a whole.

Our report looked at the important role that is played by airports outside the south-east. We hope that increased capacity at Heathrow would improve connectivity to other UK regions as more slots became available. The Government should do more to reduce the barriers that are faced by airports when trying to secure new routes, such as through better marketing or the introduction of an unrestricted open skies policy outside the south-east. The introduction of an air passenger duty holiday, which we have recommended, would also encourage the development of new routes.

In the course of our inquiry, we heard numerous concerns about the high rate of air passenger duty, which is damaging to UK plc and puts UK aviation at a disadvantage compared with our European competitors. We were disappointed that the Government rejected our recommendation to reduce significantly or abolish air passenger duty and we are concerned that they show no willingness to undertake a full review of its economic impact.

Parliament has shied away from deciding whether and where to permit additional aviation capacity in the south-east. That is a prime example of a failure to recognise our infrastructure needs. The Davies commission will produce an interim report at the end of this year with recommendations for immediate action to improve the use of existing runway capacity over the next five years, as well as a short list of options to address capacity over the longer term, but the commission’s final report will not be published until after the general election in 2015.

We must act decisively on this issue before we lose our competitive edge as a global hub for aviation. The commission must provide a robust and independent evidence base for future decisions, as well as recommendations for action. The failure to take a decision has consequences for the UK because it puts our competitiveness and economic success at risk. When the Davies commission reports, it will be time to decide, and that will be the challenge for the 2015 Parliament. I hope that today’s debate assists the House in identifying the key issues so that a conclusion that is in the interests of the UK can be reached.

14:43

[Sir Alan Haselhurst (Saffron Walden) (Con)]

It is a pleasure to address you in the Chair, Madam Deputy Speaker. It is a reversal of roles that happens very rarely in this House.

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

Will my right hon. Friend give way on that point?

[Sir Alan Haselhurst]

I was about to welcome the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill) to his new duties, but I give way to my hon. Friend.

[Mr Jenkin]

I merely remark that my right hon. Friend used to play Caesar to Caesar’s wife and now he plays Mark Antony to Cleopatra.

[Sir Alan Haselhurst]

I am grateful to my hon. Friend for that erudition, of which I was not capable.

I must declare an interest because Stansted airport is in my constituency. However, the views that I hold on airports policy were formed when I had the honour to be the Member for Middleton and Prestwich in Greater Manchester. I took the view then, in the wake of the study by the Roskill commission, the last great body to study airports policy, that none of the inland sites, whether Cublington, Nuthampstead, Stansted, Willingale or any other, should be developed, and that if we were to have a proper airport system for London, it should be offshore. My view was that it would be a mistake to urbanise a large part of the countryside in any of the home counties. I never dreamed that, due to the sad early death of Sir Peter Kirk, a vacancy would occur in the Saffron Walden constituency, which I was chosen to fill. I am therefore not simply saying “Not in my back yard”—I have tried to have a wider perspective on the matter.

The subject of the debate is aviation strategy, but looking back, it is difficult to espy that there has ever been a real strategy. The evolution of our policy has been part deception, part confusion and part cowardice. Why? Because as soon as we begin to formulate a strategy, all the opposition from different parts of the country is combined, and Governments tend to run away from that. It is easier, perhaps, to pick off particular parts of the policy and have a bit-by-bit approach, which is what has led us to the current wholly unsatisfactory situation.

If I dare mention it, we got nearest to a policy when Geoff Hoon was Secretary of State for Transport. Certain difficulties arose in the House, and the hon. Member for Hayes and Harlington (John McDonnell), in defence of interests around Heathrow, got to the Mace quicker than I could have, as I was occupying the Chair. I therefore recognise the passion to which the subject gives rise.

I contend, as many other Members have, that it was probably a mistake initially to choose Heathrow for London’s principal aerodrome, as it was then called. I do not think anyone foresaw the increase in civil aviation that would take place. I can remember when the facilities on the north side at Heathrow were in tents, and when it was decided that aviation was going to be a more serious factor in our post-war world, I found it astonishing that the permanent buildings were put between the two runways, so that they had to be reached by a tunnel—what a brilliant way of developing the airport.

[Mr MacNeil]

Does the right hon. Gentleman also feel that the subsequent post-war behaviour in conducting international bilateral air agreements, which for decades stipulated that the London airports should be used for access to the UK, was a mistake, particularly given the bleating and screaming that is now happening in the south-east of England and around London?

[Sir Alan Haselhurst]

The hon. Gentleman anticipates me. I will come to that point, but I am starting with Heathrow, the design of which has been a complete disaster. After three terminals were put in the middle of the runways, more were needed, so terminal 4 had to be on the south side. It was sworn that there would be no further expansion, and BAA consistently said that the idea of moving the Perry Oaks sludge works was out of the question—that it was impractical and that those of us who suggested it did not know what we were talking about—but that is where terminal 5 now stands. Had an intelligent approach been taken to the development of Heathrow, that would have been where all the terminals were put. It was not to be.

Giving BAA control of the three London airports was a huge mistake, and it was extraordinary that the person who had to pilot that proposal through the House was the late Nicholas Ridley, who I do not think believed in that type of monopoly being created. With the passage of time, I think very few hon. Members believe that it was the right policy, and it is now being dismantled.

[Steve Baker (Wycombe) (Con)]

My right hon. Friend has just mentioned a good free market Conservative and he spent some time eloquently setting out the degree of capital investment in Heathrow. Will he join me in recognising that if we use the power to tax and direct to throw away that capital investment and force scarce capital into a loss-making project in the estuary, this country will become poorer?

[Sir Alan Haselhurst]

I am coming to that. The problem is that the design of Heathrow is not good and expanding it further—although I recognise that that might happen because in some people’s eyes it is the easiest option, what business most wants and so on—runs the risk of compounding the problem.

The next airport to come on to the horizon was Gatwick. A previous Minister of Civil Aviation said in this House in answer to a question that Gatwick would not be a second London airport but would merely be a diversionary airport for Heathrow. Eventually, of course, the truth came out that it was to be the second London airport.

BAA—I have no time for it—then decided to enter into a pact with West Sussex council not to build a second runway at Gatwick for 40 years, which was the equivalent of the Molotov–Ribbentrop treaty as far as I was concerned. That pact expires in 2019. Having done that, BAA was still anxious to go and find a third airport so it must bear a heavy responsibility for the split situation. Had there been competition between those three airports, we might be in a slightly different place—and this is certainly not the best place.

I agree with the hon. Member for Liverpool, Riverside (Mrs Ellman), the Chairperson of the Transport Committee, that we need a hub airport for our major city. There has been much talk of late of that being old hat, as everything is now point-to-point. Everything is not point-to-point. Point-to-point becomes increasingly possible when traffic increases and routes become, in the language of the trade, thick routes, meaning that so many flights a day can be justified between those points. That is fine and that will go on, but it will be a long time before there is a daily flight between Denver, Colorado and, say, Naples. There will be a need for passengers to interline at an airport and it would be to our advantage commercially, not just for the businesses in London but for the airlines, if British Airways, Virgin or any other British carrier had part of that business. The argument for the split hub, suggesting that interlining is not important, overlooks the fact that many passengers are now not coming through London. They are going to airports in Europe where interlining is more conveniently executed.

I believe that there needs to be a hub in London and I accept that it is perhaps inevitable that that will be Heathrow, but to build a third runway, possibly a fourth runway and a sixth and seventh terminal for that airport will not make it anything like the new airport in Hong Kong, or Changi in Singapore, or the airport in Beijing. It will still be a confusing mass airport. I do not think that that serves London best, but it might be the best that can be achieved in the circumstances.

I absolutely understand why London deserves a decent airport. Our engineers and architects have designed some of the other airports in the rest of the world, so it is a great shame that we cannot give them the chance to build a decent airport for our city.

I am also concerned, as I have a northern history, about balancing this country. I saw the effect of deciding to develop Stansted. One can still walk around the towns and villages of north-west Essex and find a variety of regional UK accents, as people were drawn down to the area. That is all part of a problem that post-war Governments have contested, unsuccessful by and large—that is, the drift from the north to the south. I think that is a great shame.

I was close to Manchester for a time, and I saw the potential for the development of Manchester airport. It has two runways, so why can that potential not be seen? Why not promote that as at least one other gateway into the country? Most air traffic has to do with leisure, and from Manchester not only can the business community be served in that part of the country—going both west to Liverpool and east to Leeds—but there is access to north Wales, the Derbyshire peak district, the Yorkshire dales, Yorkshire moors, the lake district and so on. We ought to encourage those who visit this country to see parts of it other than just London and the home counties. That would take some of the pressure off London, without—of course—excusing the need for a proper hub. I tell my constituents who occasionally ask, “Should we be spending all this money on HS2?” that when I hear that HS2 would bring Birmingham airport within 36 minutes of London, my eyes water because it is an average of 47 minutes from Stansted airport into London.

That brings me to a point about infrastructure. Over the years, our one consistent failing—there have been many—is that we have not been prepared to back airport development with suitable infrastructure for people to get there. So what happens? Well, I can speak for Stansted with some passion. On the back of an airport that we were unhappy to see develop, we did not get the compensation of a good railway system. In fact, we got one that is worse because priority was given on a two-track railway to the Stansted Express. I am all in favour of a good service to Stansted airport, but that must not be at the expense of all the commuters whom Government policies over the years have encouraged to live in the M11 corridor. They get the worst of both worlds and that is wrong.

On compensation, we have been niggardly over the years in the amount of money we are prepared to give to people—it is all spent on long public inquiries, fighting the case and so on, instead of being paid to those people who might feel most affected by the project. We should provide those people with at least some compensation so that if it is necessary in the national interest to bring about a major project, they will at least get some advantage from that. We must do more on that if we are to get people to settle for whatever strategy—if we actually succeed in getting one at the end of all the further deliberation through the Davies commission.

In the late 1960s and during the period of the Heath Government, it was decided, in the name of the environment, to go for an estuarial solution. That was my wish and that would still be the ideal. I do not believe the most pessimistic forecasts about the time and expense it would take. We lack imagination in this country. We struggled over the channel tunnel; we struggled over the rail link to the channel tunnel—we were going to build half of it at one point, and it would be difficult to imagine anything more crazy. Finally, however, we got there. It took us an awfully long time to think about Crossrail before we began building it. Why cannot we realise that London deserves a good airport? The whole country deserves a better deal, and to level up the north.

[Mr MacNeil]

Will the right hon. Gentleman give way?

[Sir Alan Haselhurst]

I am about to come to an end and I have given way once already to the hon. Gentleman. The whole country needs to get some benefit from the people whom we encourage to travel to our country for business or pleasure. We need imagination—that is what I appeal for—and a solution that is worthy of our main city and our country as a whole.

14:59

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

It is a pleasure to follow the extremely erudite and knowledgeable speech by the right hon. Member for Saffron Walden (Sir Alan Haselhurst). I learned most of what I know about aviation and Stansted during the air inquiry in the run-up to the 1985 White Paper on aviation. At that time, as leader of Manchester city council, I was a director of Manchester airport. We put together solid arguments against the expansion of Stansted airport, which we believed would contribute to a continuing imbalance in the country’s economy. I should tell him that I have not shifted far from those views, although some of my then colleagues, who could not have envisaged that Manchester airport would end up owning Stansted, have shifted quite a long way from their views. That is for a more detailed future debate.

I agree with the right hon. Gentleman—I shall put it in slightly different words—that this country has been hopeless, not only in aviation infrastructure, but all infrastructure. We have the lowest motorway density in what used to be called western Europe; we have one small high-speed line, which, symbolically, goes out of the country; we have built one new runway—at Manchester airport—in the whole UK since the second world war; and we have poor broadband speeds. We have been very poor indeed at infrastructure.

I believe that the recession was caused by bankers and the euro—Government Members might have a different perspective—but, nevertheless, productivity has fallen, and if we are to earn our living in the world, it must increase. One way in which the Government can support industry and jobs, and the country’s competitiveness, is by ensuring that we have good infrastructure.

That brings me to the main point in the Transport Committee’s aviation strategy report. We have been through some of the arguments, but there is no shortage of runway capacity in this country. Figures in the written submissions to the report show that, at the main airports, only a third of runway capacity is used, and that, throughout the UK, we have 21 times the runway capacity we need. However, we are extraordinarily short of hub capacity. Heathrow is full, and what happens there cannot easily be replicated directly at Gatwick, Stansted, Birmingham or, unfortunately, Manchester.

The example given by Heathrow—we are not falling for its public relations—was the Seattle service. There are insufficient passengers in London to provide a daily service to Seattle from London. The British Airways Seattle service flies daily because of transfer passengers. Approximately a third of passengers at Heathrow are transfer passengers. I have chosen the Seattle example, but there are many others. Heathrow enables routes to connect London and the UK to the rest of the world.

The constraints on the hub capacity come in because, when we consider the number of serious destinations served, we realise that it is not just a numbers game. At the time of the report, Heathrow served 128 destinations, although there might be fewer now because it is declining all the time. At the same time, Amsterdam served 131 destinations; Frankfurt served 149; and Paris served 155. It is not good for the business of this country if our European competitors are connected to more parts of the world.

In the emerging economies, it is not the cities to which London and the UK are connected that stands out, but the fact that we are not connected to places such as Jakarta and Manila. We are not connected to huge mega-cities in China, such as Nanjing, Hangzhou, Chengdu, Guangzhou and Xiamen. One thousand more flights go from Frankfurt to China per year than from this country, excluding flights to Hong Kong. That cannot be good for the business of the UK.

On the alternatives, I think “mad” was the word that some professionals used to describe spending £30 billion on an airport in east London, with all the environmental problems that that would cause. It is said that fewer people would be affected by noise, and that would be true to start with. However, once an airport is built out there with all the jobs that would be created, people would, as the right hon. Member for Saffron Walden said, go to live near where they work and be affected by the noise. An estuarial airport costing at least £30 billion is therefore not an alternative.

Another alternative, which I think has been dealt with, is joining up airports. That has been tried in Toronto, Tokyo and Glasgow and it simply has not worked—people want to transfer within one airport.

There is no alternative but to expand Heathrow, otherwise this country will lose out. When the Roskill commission sat the figures would have been different, but all the arguments about having a major hub airport in London were before them. We are now in the commission’s future and we still have not dealt with the problem. We need to deal with it as quickly as possible.

Yesterday, there was a debate—I do not intend to repeat it—on air passenger duty. The Economic Secretary said that she did not accept the figures in the PricewaterhouseCoopers report, which indicated that if air passenger duty was abolished completely the Treasury would collect more finance and 60,000 extra jobs would be created. I accept that in any report consultants know who they are working for and include assumptions that are often helpful to the conclusion. The Minister said that she did not accept the assumptions, which is fair, but she needs to explain why, and that was not part of the debate. I hope that the Minister responding to this debate will explain why the assumptions are not acceptable, because it is difficult to understand why a report that states that more jobs could be created with less tax—an attractive proposition to Conservatives—is being rejected.

A report by York Aviation has also been mentioned, and I would be interested in a response from the Minister. The report did not look into the current situation, but it did study how many more passengers could be attracted to airline travel in long-haul, interregional, non-congested airports if there was an APD holiday. For Manchester—there are similar cases for other regional airports, such as Birmingham and Bristol—routes to Bangkok, Hong Kong, Delhi, Mumbai and Beijing would become viable if there was an APD holiday for two or three years. There would be no loss to the Treasury, just gain when people arrived in this country and spent money, because the routes do not currently exist. Will the Minister respond to the detail of that report, either now or at a future meeting, because that should also be an attractive proposition for a Conservative Government.

During the passage of the Civil Aviation Act 2012, I regularly questioned the then Transport Minister, now the Secretary of State for Northern Ireland, the right hon. Member for Chipping Barnet (Mrs Villiers), about why so many extra costs and regulations—in terms of security and extra red tape—were being imposed on airports. She said that they were not being imposed, but when the Civil Aviation Authority came before the Select Committee, it admitted that the costs had gone up, and now we find they have risen again. Will the Minister look at why these costs and burdens on airports have almost quadrupled since the Bill became an Act, contrary to the assurances from the then Minister?

Finally, many people make an environmental argument against aviation. We have heard about the perverse situation of air passenger duty, which is huge for people travelling from China and for those on other long intercontinental routes, forcing people into Paris and thus losing us business, but it also forces people to multi-ticket. For a long journey, it is much cheaper for someone to take a plane from Stansted, Gatwick, Heathrow, Manchester or Birmingham to a major European hub and then to fly on. By doing that, a family can save hundreds of pounds, but it leads to a 5% to 16% increase in carbon dioxide output and an increase in NOx gases, most of which are produced on take-off and landing. If someone changes in the middle east—increasingly a major competitor to Heathrow, alongside the European hubs—on their way to the far east, the result is a 37% increase in fuel usage. The case, therefore, for constraining airport capacity to improve the environment is actually having a perverse effect.

I should, at the beginning of my speech, have congratulated the Minister on his appointment. We worked together on the Transport Select Committee at one time, and I wish him well and look forward to his responses. I know he cares about aviation, which is not a well-understood part of the transport industry, but I genuinely believe that the Government’s policies are severely restricting what could be a genuine growth industry that could create many jobs in the country.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Before I call the next speaker, I must tell the House that there is considerable demand from Members, but very little time left to fill. After the next speaker, therefore, I will have to impose a seven-minute time limit on speeches from the Back Benches.

15:13

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

I am delighted to see you in the Chair this afternoon, Madam Deputy Speaker. I am grateful to the hon. Member for Liverpool, Riverside (Mrs Ellman) for generating the opportunity for us to debate something of absolute national importance. Finally, I am pleased to see my hon. Friend the Minister on the Front Bench and welcome him to his new job. I look forward to welcoming him to Kent in the not-too-distant future—he does not know that, but it is going to happen.

I do not want to rerun yesterday’s debate either, but during the debate on air passenger duty, the hon. Member for Blackley and Broughton (Graham Stringer) referred to the loss of business to Schiphol and Charles de Gaulle—he might have added Frankfurt—and several other locations in Europe. This is crucial for the economy of the UK. We cannot gainsay the fact that the economic hub of the nation is in London. There is much good business in Manchester, Birmingham and Scotland, but the place that people have got used to interlining through, and therefore also doing business in, is London.

Frequently people just change planes, but equally frequently they stop over. Because they are coming through London, they take the opportunity to take in a show or do business in the City of London. It is not just the thousands of jobs at Heathrow or Gatwick that are at stake and which we could lose to mainland Europe; this is about all the other, ancillary jobs, and the tourism and business that go with them. The cost to the country from the loss of aviation business in the south-east to mainland Europe is almost inestimable.

A long time ago, I upset my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) when I championed the cause of the airport at Stansted. I remember saying then, “It’s not Heathrow or Stansted; it’s Stansted or Schiphol.” That is even truer today than it was then. If I need to underscore that point, KLM Royal Dutch Airlines and Air France are now flying from Manston, in Kent, twice daily to Schiphol, as they are from a number of other regional airports. They are not doing that for fun; they are doing it because they can see there is business to be taken, from the south-east of England in particular, to Schiphol to interline and to go on to all the other places in the world—literally, anywhere that it is possible to fly to from Schiphol. We cannot afford to sacrifice that business.

This debate is about aviation strategy, but my worry is that there is no aviation strategy. There is a commission, and Sir Howard Davies will do his job and report by 2015. Then there will be a debate and more discussion, and there will not be another strip of tarmac or another building, or a Boris island, for 20 years. That is how long it will take. We are losing business today—not tomorrow, in a year’s time or in five years’ time, but today. As we speak, business is transferring from the United Kingdom to the mainland European airports. We cannot afford to sustain that loss.

On the doorstep of London there is a place called Manston, in Kent. It has the fourth longest runway in the country—it has taken Concorde and wide-body jets—and it is available now. I am not suggesting for one moment that Manston could or should be another London airport, but I believe it could have a major role to play. In, I think, 2005—I stand to be corrected—the right hon. Member for Edinburgh South West (Mr Darling) published his White Paper on the future of aviation in the south-east, but since then nothing at all has happened in any meaningful or constructive form, apart from perhaps another terminal at Heathrow. I put it to him at the time that Manston was available, and I was told, “No, it’s too far from London”—76 miles.

Let us think about that. Manston is quite a long way—it is further than Gatwick and Heathrow. Actually, it is not, at least not in time. I hope we will eventually finish High Speed 1—my hon. Friend the Minister might have a hand in that. Indeed, I have travelled on the existing line, with old rolling stock, in under an hour from central London to Manston, and if that was possible then, with High Speed 1, it is even more possible today. We can get the journey time down to about 50 minutes. It takes more than 50 minutes to get from central London to Heathrow and almost as long to get to Gatwick. Therefore, in terms of time rather than distance, which is what matters to the traveller, Manston is viable.

So what do we have? We have an airport sitting in Kent, out on the peninsular, relatively out of harm’s way in terms of overflying, available today and under new ownership—Manston was sold and bought last week. Its future was in a bit of doubt because it was on the market, but it has now been bought, so it is secure, at least for the foreseeable future. Manston is there and I say to my hon. Friend the Minister and the House that we have to buy time if we are not going to lose more jobs. Manston is never going to be another London airport. What Manston can do is take traffic from Gatwick to release capacity, allow Gatwick to take traffic from Heathrow and free up the capacity there, which is what we need in the short term while the Government take long-term decisions. Manston is a national asset—not a regional or local asset—and we need to use it now. This country cannot afford to waste it.

15:20

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

I am delighted to welcome you to the Chair, Madam Deputy Speaker, and to welcome the Under-Secretary of State for Transport, the hon. Member for Scarborough and Whitby (Mr Goodwill) to his post. I am pleased to be able to participate in the debate.

I agree with the Select Committee on two of the three main themes in its report. First, it is completely right to recognise the need for increased runway capacity and increased scope for aviation in the national interest—a point made forcefully by my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman). Secondly, I agree with the vital importance of a hub and the inadequacy of the other options, which do not provide a hub solution.

I am afraid, however, that the Committee has made a mistake in opting for Heathrow as the location of Britain’s future hub. I fear that it has not learned the lessons of history. The right hon. Member for Saffron Walden (Sir Alan Haselhurst) gave us a certain amount of that history, and I shall now amplify it a bit more. I suspect that I am almost as old as he is, and I recall the Roskill committee. Like him, I was attracted to the concept of an estuary airport at the time, and I was disappointed when the project initiated by the Heath Government was cancelled by the incoming Labour Government in 1974 as an austerity measure. There are echoes of recent history there, too. Cublington was the wrong solution—I entirely agree with the right hon. Gentleman that the idea of an inland airport was wrong—but the crucial point is that Heathrow is in the wrong location. It might have been right in 1947, when we were looking for a new airport immediately after the war, but by the 1970s it was clear that, because of its location in an area of dense population, it was not the right location for the long term.

The subsequent history of all the inquiries into airport expansion included the Layfield inquiry into terminal 4 and the Vandermeer inquiry into terminal 5, as well as the sad history of the third runway proposal in the 2000s. Every one of those projects was bitterly opposed, which produced dishonest responses from the airport operators, in saying that that was as far as they would go. I remember BAA stating emphatically at the time of the terminal 5 inquiry that that was it, and that if approval were granted, it would not seek any further expansion. Public confidence and trust in the airport operators was totally destroyed, and people were further infuriated, when it came back seeking further expansion only a few years later. That history has undermined public confidence in the veracity of the people responsible for planning our airports.

We need to get this right. We need to have a strategy, rather than just continuing to make do and mend, and adding a bit more in an unsatisfactory and inappropriate location at Heathrow. It is inappropriate because around 700,000 people are seriously affected by the noise it creates. My constituency is a huge distance from Heathrow, yet I get more complaints about the noise from aircraft approaching Heathrow than I do about the aircraft using City airport, which is just across the river from me. My constituency is far outside the 55 dB contour—let alone the 57db one—yet there are still people there who are deeply affected by aircraft noise.

[Mr Jenkin]

The aircraft noise that we get in North Essex comes from early morning flights coming into Heathrow, and on a quiet morning it can be disturbing. We would get no disturbance from a Thames estuary airport.

[Mr Raynsford]

The hon. Gentleman is absolutely right; I am with him on that.

It is notable that 25% of all the people in the European Union who are seriously affected by airport noise are to be found around Heathrow. The airport cannot operate 24 hours a day, and any attempts to relax the restrictions on night flights are strongly contested. That, too, has an impact on the efficacy of the airport and makes it impossible to operate as a proper international hub that can receive aircraft at all times of the day and night. Furthermore, the approach path to Heathrow over central London is potentially hazardous. The incident involving an aircraft coming down short of the runway two or three years ago was a timely reminder of the serious risks associated with having an airport in a densely populated area.

There is also the issue of air quality. I remind the Chair of the Select Committee, my hon. Friend the Member for Liverpool, Riverside, of what her Committee’s report says on that issue. She quotes the Environment Agency, which gave evidence about Heathrow to the effect that

“concentrations of nitrogen dioxide were expected to continue to exceed the EU air quality limit for the foreseeable future.”

Because of the heavy volume of vehicle and industry, there are already serious problems with air contamination in the surrounding area, so the airport is simply adding to them.

If we are going to have extra capacity and a hub to allow expansion to, say, 150 million passengers a year, it is in my view inconceivable that this can be done at Heathrow. It should obviously be done in an appropriate location. I believe that the estuary is the right location: it has the capacity for a four-runway hub airport; it would allow 24-hour operation; and it would dramatically reduce the number of people affected.

[Rehman Chishti]

With regard to the issue of safety, which the right hon. Gentleman mentioned earlier, along with the capacity of an estuary airport, has he taken into consideration the fact that if the proposed estuary airport goes ahead, it will be 12 times more likely to be subject to bird strike than any other major airport in the United Kingdom? Does not safety in that respect also need to be taken into consideration as well as the fact that an airport is in London?

[Mr Raynsford]

The hon. Gentleman makes an important point about bird strike, but it occurs at Heathrow. A number of aircraft are affected by bird strike at Heathrow—and, indeed, at other airports internationally, including Hong Kong, which is in a waterside location—so these problems have to be addressed and are addressed by airlines at the moment. It is not at all inconceivable—indeed, it is absolutely feasible—to take appropriate measures to provide safeguards against that particular hazard and some of the other hazards that might be encountered—instances of fog in the estuary, for example. Although evidence suggests that there is no greater incidence of fog in the estuary than there is at Heathrow, it is an issue that needs to be taken into account. Practical issues certainly need to be addressed, but I do not accept that this problem is a showstopper, which prevents us from considering the option.

Other hugely important issues for future planning include the way in which people get to an airport. Heathrow’s problem is that is located very close to the M4-M25 junction, which is already a heavy generator of air pollution and traffic congestion. The modal split in respect of access to Heathrow is heavily dominated by the motor car. One of the great advantages of the estuary airport, which I am afraid the Select Committee did not recognise in its report, is that it would effect a very considerable modal shift by having a far greater proportion of passengers—estimated at 60% by advocates of the Foster-Halcrow scheme on the Isle of Grain—coming by rail.

Looking at the Select Committee report, it was a little disappointing to see an access map based on drive times being used to argue the case that access to the estuary site would be more difficult and slower than at Heathrow. Surely we should be doing our best to try to discourage driving to airports and to encourage the modal shift, which will also help to reduce air-quality problems.

[Mrs Ellman]

Is my right hon. Friend concerned about the £30 billion cost of an estuary airport and the impact of the closure of Heathrow, with the massive numbers of jobs involved there?

[Mr Raynsford]

The £30 billion cost is, of course, entirely conjectural. I understand that the Select Committee took evidence from Oxera, but as its report says:

“Oxera has used the following assumptions, based on recent proposals, although Oxera has not tested the validity of these estimates.”

I have to say that the figures showed a cost for a third runway at Heathrow of £8 billion to £9 billion, whereas we now see from the latest Heathrow proposals that it is likely to cost a minimum of £18 billion. I therefore do not think that the figures in the report necessarily support my hon. Friend’s case.

15:29

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

May I join others in congratulating you on your election to your new office, Madam Deputy Speaker? It is a great pleasure to be speaking in one of your debates for the first time. I also congratulate the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill), on his appointment as the Minister responsible for aviation. Welcome to the hot seat!

I commend the hon. Member for Liverpool, Riverside (Mrs Ellman) and her Committee for tackling this important issue at a time when it is very topical. As a fellow Select Committee Chairman, I can vouch for the fact that policy inquiries such as this are the most difficult in which to engage. Certainly the evidence is the most difficult to assess. However, while I agree with the right hon. Member for Greenwich and Woolwich (Mr Raynsford) that the hon. Lady has got some things right, I think that some of her Committee’s decisions were wrong.

I congratulate the hon. Lady on recognising that London will not survive as a global city unless we maintain its connectivity. Being a city is about being connected. If we want London to remain the world’s global financial centre—the premier international city—we must have international connectivity. Aviation services are the new rivers of our generation. Along with the airwaves and the internet, aviation is what connects cities nowadays, and if we cut ourselves off by persevering with a patch-and-mend aviation policy in London and the south-east, we shall see an end to London’s global status in our lifetimes.

The hon. Lady is right about “Heathwick”—it just would not work—and she is entirely right about hubs. However, she is wrong about Heathrow. As the right hon. Member for Greenwich and Woolwich pointed out, experience and the political reality tell us that there will simply not be any new runways at Heathrow. Have we not learnt from the fact that, although every member of the last Government was absolutely committed to getting that proposal through, it did not go through? That was due to the sheer scale of opposition from west London constituencies. Far more marginal constituencies would be affected by the development of Heathrow than would be affected by the choice of any other possible site for an airport. It is simply not possible to generate enough political support for development at Heathrow—one party or another will always oppose it.

Which mayoral candidate will stand, and be elected, on a pro-Heathrow policy? That will never happen. Ken Livingstone was against development at Heathrow, Boris Johnson is against it, and I guarantee that all three members of the main political parties who stand in the mayoral election will be against it. It is never going to happen.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

The hon. Gentleman is making an interesting point, to which I hope to return if I am lucky enough to be called to speak. Given that the Conservative party went into the 2010 general election as the only party that was totally opposed to the third runway at Heathrow, why did it not win that sweep of west London marginals?

[Mr Jenkin]

I can tell the hon. Gentleman that we would have won even fewer seats in London had we supported the Heathrow case. There is no doubt about that. Why does he think that my hon. Friend the Member for Richmond Park (Zac Goldsmith) is so strongly opposed to a new runway at Heathrow?

[Alok Sharma (Reading West) (Con)]

Is my hon. Friend suggesting that Heathrow is not the right hub airport, and does he support the proposal for an estuary airport? If so—and I suspect that that is the argument that he is about to advance—does he believe that Heathrow should close, which would lead to the loss of many, many jobs?

[Mr Jenkin]

If my hon. Friend will forgive me, I will develop my argument further before dealing with that point.

The Davies commission has a hugely difficult task to perform. It must take a strategic view, and that means taking a long-term view. I think that the Select Committee has inevitably fallen victim to the pile of evidence shunted in its direction by business. Yes, we should listen to business, but business does not tend to take a view that covers more than about seven to 10 years—perhaps a maximum of 15. We need the Davies commission to take a 50-year view. The chief of Ryanair—bless his cotton socks—and, indeed, the chief of British Airways are not taking a 50-year view; they are taking a much shorter-term view than that.

The Davies commission needs to recognise that taking a 50-year view means stepping outside many of the immediate short-term controversies. It is significant that the Select Committee has not come up with a long-term solution to our airports question, but has merely suggested, rather tentatively, that there should be one more runway at Heathrow, and then probably another. If the Committee wants a four-runway hub airport at Heathrow, why did it not just spell that out? I think that it has been diverted by short-term commercial interests and has not taken that 50-year view.

[Mrs Ellman]

The hon. Gentleman is wrong. The Committee looked at the future and the possibility of high-speed rail links between London and Birmingham, and it says that that would produce a different situation.

[Mr Jenkin]

I perfectly accept that, but we are committed to a hub. We need a hub, and we need a decision to build a four-runway hub now. Once we have reached that conclusion, all the logic drives us towards having a Thames estuary airport.

Not a single objection has been raised to a Thames estuary airport—not cost, not bird strikes, not sea level rise—that is a showstopper; and then there are the advantages of a Thames estuary airport: it is achievable, and achievable within a predictable time frame; and its connectivity is better than that of any other possible site for a four-runway hub, and that almost includes Heathrow. Because it is already almost on the HS1 route, it has better rail connections to European onward destinations than any other possible site. It is also closer to the City of London by rail time than Heathrow. As the right hon. Member for Greenwich and Woolwich said, its connectivity by non-road is better than any other possible site, so that puts it firmly on the agenda, as does the fact that east of London is where we need regeneration and investment.

This is the visionary approach that should be adopted by the Davies commission. The estuary airport is the best environmental option because a bird habitat that would be affected can be replicated and replaced—or even doubled—elsewhere, and the Ramsar sites can be moved. It is the best safety option, because there would be no more flying over populated areas, and it is the best noise option, too. Some 750,000 people live under the 50 dB-plus noise footprint of Heathrow, which is why a decision there is impossible. Almost no people will be living under such a noise level around the Thames estuary airport, which is why this is a no-brainer.

[Alok Sharma]

rose—

[Mr Jenkin]

I am sorry, but I am not going to give way again as I do not have much time.

I just want to deal with the point about the closure of Heathrow. It would be a very big decision, but not a catastrophe—it is an opportunity.

[Mr David Lammy (Tottenham) (Lab)]

rose—

[Mr Jenkin]

I am not giving way.

It is an opportunity to create 250,000 new homes west of London—a new hi-tech city that has all the infrastructure already in place. It is a huge opportunity to solve the shortage of housing problem in London, and to drive growth west of London, not to close it down. I am afraid that we can come to a slightly myopic view if we do no more than talk to people who work at Heathrow. We will get the view that somehow this change is bad. All change is difficult, but this is a change that needs to be made.

In this age, nobody in their right mind would choose to put London’s hub airport where Heathrow is located. There only needs to be one accident, and we nearly had that a few years ago when the airliner with frozen fuel came down on the edge of the runway. If it had come down half a mile short of that spot, it would have landed on a densely populated area and people would be crying out for the airport to be closed on safety grounds.

Big airports have been moved before: notably British engineers and British planning in Hong Kong moved Hong Kong international airport—an airport of comparable size—to a new island site. As that has been done before, it can be done again, and this is the vision the Davies commission needs to have to deliver on its remit. It must not get sucked back into a shorter-term view and propose a patch-and-mend solution—a runway here and a runway there. I believe that Manston will have a big role to play, particularly in the interim, because it will take time to build a four-runway airport in the Thames estuary. We have to solve this problem once and for all and to take the really big strategic decision that will ensure that London and the south-east remain a globally connected part of the world, and that London remains the global city it deserves to be.

15:40

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

I am pleased to congratulate you on your election, Madam Deputy Speaker; this is my first opportunity to do so formally. I am delighted to follow the hon. Member for Harwich and North Essex (Mr Jenkin). He rightly said that this is a crucial issue for UK plc, but after that I stopped agreeing with him as he went on to develop his support for the estuary airport and the proposal of Mayor Boris Johnson, which is very much the wrong one. His suggestion of closing Heathrow would be an economic disaster for London, certainly for west London.

I also welcome the Minister to the Chamber. When he was my shadow in 2007-08, he coveted my office and told me that he would have it one day. He has now got it, and I hope he enjoys it—of course, it was not my office, but that of the Under-Secretary of State for Transport. I would be surprised if he does not enjoy his time there. May I also welcome my hon. Friend the Member for Blackpool South (Mr Marsden) to the shadow Front-Bench position? We have already had one or two discussions, and I wish them both well in developing the aviation strategy that has been suggested by the Transport Committee.

I congratulate my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), the Chair of the Committee, and commend the Committee’s report to the House. I agree with the vast majority of its conclusions. Recommendation 34 is the most important, and that is what I shall be seeking reassurances from the Minister and the shadow Minister about in due course.

Colleagues will know that I was the aviation Minister in the previous Labour Government between 2007 and 2009, during which time I argued for the third runway, both in the House and outside, and that I was shadow aviation Minister until the Syria debate a couple of months ago. I have therefore spent a lot of time looking at this issue. The Select Committee’s examination is timely and its recommendations are food for thought for the Government, so account ought to be taken of them.

I will not repeat all the statistics that my hon. Friend the Member for Liverpool, Riverside set out, but I will say that aviation is responsible for a turnover of £28 billion and 120,000 directly employed jobs, and that it raises £9 billion in tax and duty. In addition, most of the £18 billion achieved through tourism is raised from air passengers. All that demonstrates the importance of aviation to the UK economy and UK plc. It has been clear that the vast majority of the speakers in the debate have underscored the importance of a hub airport in that regard. However, there are also key concerns to address—noise and the big problem of emissions—and recently we have seen the noise health study and the report on impacts on human health. Both the 2003 aviation White Paper and the third runway proposal addressed those issues, as does the Select Committee. It is important that they are addressed—they cannot be ignored—so that residents under flight paths and near airports are reassured.

The 2003 White Paper pointed the way forward, and the 2007 proposal for a third runway was hotly contested. The Conservative party made that a party political issue in the run-up to the 2010 general election. That was political opportunism. I am not criticising that; I suspect that we probably would have done the same thing if we had been on the other side. I would hope that we would not have done, but we did not have the opportunity to demonstrate that opportunism, whereas the Conservatives did. A clutch of west London marginals did not fall because Heathrow has underlying, solid support in west London, however.

Naturally, the Lib Dems are in complete denial on aviation—at least they have been consistent on that. One of the red lines of the coalition agreement was, “No aviation capacity whatsoever.”

[Mr MacNeil]

I am a bit stunned. Has the hon. Gentleman put his finger on something that the Lib Dems have been consistent about over the past few years, both in opposition and in government? That must be some sort of record; I congratulate him on his observation.

[Jim Fitzpatrick]

I am grateful to the hon. Gentleman for pointing out that, as we all know, the Lib Dems are not consistent in opposition and in government. He rightly says, however, that this is one issue on which they have been consistent—consistently in denial.

When we look at the international competition from Schiphol, Charles de Gaulle and Frankfurt, and from the new airports that have been built or are being built in Dubai, Abu Dhabi, Berlin and Istanbul, we see the importance of aviation and having a aviation hub. We are falling behind the times. However, when the Prime Minister indicated that the Government were appointing the Davies commission, we saw the beginning of one of the longest U-turns in recent British politics. The moving of the right hon. Members for Putney (Justine Greening) and for Chipping Barnet (Mrs Villiers) to other Departments and the appointment of the current Secretary of State for Transport clearly indicated that, after three years, Conservative Back Benchers who had been arguing the case—as did the CBI, the British Chambers of Commerce, London First, the TUC and others—had gone to the Government and said, “This issue is too important. We’ve got it wrong and we need additional capacity.”

I think that the Conservative manifesto for 2015 will have a commitment to the Davies commission’s conclusions, although I want to hear what the Minister says about that because he has history on this issue, given his support for the village opposed to the third runway at Heathrow. When the right hon. Ladies were moved and the new Ministers were brought in, that was a sign of encouragement for the aviation industry and those who support additional capacity. However, when the Under-Secretary of State for Transport, the hon. Member for Scarborough and Whitby (Mr Goodwill), and Baroness Kramer, the predecessor of the hon. Member for Richmond Park (Zac Goldsmith), were appointed, it was almost as if the Government were going back to where they were before the last reshuffle. I would like reassurance from the Minister about what that means.

For me, the Transport Committee’s key recommendation is No. 34. Whether we support the Heathrow plan, the estuary plan or point to point, there is general agreement that capacity is an issue, as well as about the importance of aviation to UK plc and the significance of a hub airport. The Davies commission at least gives us a chance of a fresh start and an opportunity to try to build consensus so that there is not the party political squabbling of the past 10, 20 or 30 years and the piecemeal approach to aviation that was cited by the right hon. Member for Saffron Walden (Sir Alan Haselhurst).

[Mr Jenkin]

Will the hon. Gentleman reflect that if Davies comes down in favour of some cobbled together compromise on Heathrow, we will go straight back into that kind of paralysing debate? If he comes down in favour of a Thames estuary airport, that will be decisive and a way forward. There will be far more consensus around a long-term solution than around a patch-and-mend, short-term one.

[Jim Fitzpatrick]

I am grateful to the hon. Gentleman for making the point. He said that there was no showstopper for the estuary option, but for me the showstopper is the £50 billion to £70 billion—depending on the estimate—of public sector money that it would cost. The options for Heathrow, Gatwick, Stansted and elsewhere involve private sector money, which is a whole different ball game.

If the Davies commission says that Heathrow is the answer, some people will oppose that—the Lib Dems, my hon. Friend the Member for Hayes and Harlington (John McDonnell) and, I suspect, my hon. Friend the Member for Hammersmith (Mr Slaughter). Some have been consistently against aviation or Heathrow, but I hope that the general consensus will be, “Davies has been given three years to do the job. We have wasted 20 years already—we can’t waste another decade.”

[Rehman Chishti]

I support a lot of what the hon. Gentleman has said about the estuary airport. Does he agree that my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) has to explain which public services he would cut to fund the £50 billion to £70 billion needed to build the airport, which is completely unviable?

[Jim Fitzpatrick]

I agree, and I am sure that the hon. Gentleman will have the opportunity to develop those points.

My conclusion is that everybody in the Chamber agrees that we need an aviation strategy. The Davies commission provides a new opportunity. Whatever its conclusions, they will be controversial and opposed by some. However, we need a strategy—of that there is no doubt—and hopefully the Davies commission will give us the chance to have one.

15:48

[Mike Thornton (Eastleigh) (LD)]

I was going to join colleagues in congratulating our new Deputy Speaker, but unfortunately she has left the Chamber. I congratulate the Minister and his shadow on their appointments.

On consistency, perhaps I should ask Labour Members about the previous Government’s consistency on maintaining a balanced budget, the 10p income tax band, tax allowances and so on. Inconsistency has been rife on their side of the Chamber.

As an MP with a thriving and well-run airport in my constituency, I am well aware of the importance of civil aviation to the economy of my constituency and that of the United Kingdom as a whole. We are proud of the part that Eastleigh aerodrome, as it was then, played in the defence of this country in world war two, because it was there that Reginald Mitchell designed and built the Spitfire. We are still very proud, although it has now unfortunately become Southampton international airport.

Growth in demand for air travel is inevitable, and responding to that growth through infrastructure and policy takes time. Although it is Liberal Democrat policy to oppose a third runway at Heathrow and the Mayor of London’s proposal to build a brand new island in the Thames estuary, we fully accept that we need to address the forecast lack of capacity. That can partly be done by redirecting some air travel on to rail, better use of airports away from London and the south-east, and more efficient use of existing resources. While Heathrow may be full in terms of flights, there are still too many flights that are not full and too many planes that are too small. We must remember that four other airports besides Heathrow serve London.

The economic needs of the country must also take into account our obligation and moral duty to take a lead in combating the increase in carbon dioxide in the atmosphere. One can argue about the speed and effects of this, but the fact that a carbon atom reflects back heat is as much a law of physics as the fact that if I dropped my glasses they would fall to the ground. A build-up of CO₂ acts like an overcoat. Yesterday, the hon. Member for South Antrim (Dr McCrea), who is not in the Chamber today, made clear, in advocating the abolition of air passenger duty, his scepticism about the human contribution to global warming. However, if he went out in the sun and then put his overcoat on, I think he would soon find that he got a lot warmer than just by standing in the sun.

[Mr MacNeil]

In the debate on APD on 18 April, Scottish National party Members made repeated attempts to tease out from the hon. Member for Argyll and Bute (Mr Reid), who is also not here today, the Liberal Democrat position on APD. Has that become apparent to the hon. Gentleman since his arrival in this House?

[Mike Thornton]

I thank the hon. Gentleman for alluding to my rival. Obviously our position was that a per-plane passenger duty was far more sensible than an individual, per-passenger payment. Unfortunately, international regulations and laws do not allow for that possibility at the moment. It would be good if we could seek to change that and use a far more efficient per-plane tax system that encourages full aeroplanes.

It is not possible to solve this capacity problem within one or even two Parliaments. Consequently, there is a real danger that political differences, whether genuine or contrived, could prevent a proper, long-term strategy. These are complex matters. We therefore welcome the setting up of the independent commission on aviation chaired by Sir Howard Davies, which is considering the UK’s airport capacity needs and how to address them. As the hon. Member for Liverpool, Riverside (Mrs Ellman) said, the commission will publish an interim report expected before the end of this year and a final report in 2015. It seems to me that there is little point in establishing such a commission if we do not wait to pay attention to its findings. I am sure that the whole House recognises the need for a long-term, consistent strategy. Liberal Democrat Members look forward to Sir Howard Davies’ interim report, which is due shortly.

[Zac Goldsmith (Richmond Park) (Con)]

My understanding is that the Liberal Democrats have ruled out Heathrow expansion completely, whatever happens under the next Government or any Government after that. In that case, why did they sanction the inclusion of Heathrow expansion in the terms of reference for the Howard Davies commission? Surely that means either that they have absolutely no intention of forming any part of the next Government or that they have wasted an enormous amount of time and money, and, I suspect, have been playing a few games at the same time?

[Mike Thornton]

The point is that when one sets up an independent report one has to allow it to report.

[Zac Goldsmith]

So why have you ruled Heathrow out already?

[Mike Thornton]

We will have to wait for the report to see the answer to that. [Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think we will work through the Chair. Have you finished?

[Mike Thornton]

Yes, Mr Deputy Speaker.

[Mr Deputy Speaker]

No problem. I call David Lammy.

15:54

[Mr David Lammy (Tottenham) (Lab)]

It is now 10 years since a Government White Paper highlighted the need for action on London’s airport capacity—10 years of dithering and hand-wringing, of refusing to make difficult decisions about aviation and of inaction—so I welcome this debate as an opportunity to highlight the urgency with which this issue must now be addressed.

In the time that successive Governments have pushed this problem into the long grass, London and Britain have lost out. The number of destinations served by Heathrow has dropped by a fifth in the past 20 years and it now has connections to just half the number of cities served by Amsterdam Schiphol. We have been overtaken by our rivals—that is for sure. Schiphol, Charles de Gaulle and Frankfurt all now outrun us. Delays to flights landing at Heathrow are now the highest of any major airport in Europe. This simply cannot continue.

I want to be clear: it is beyond doubt that London and the south-east vitally need increased air capacity. I am pleased that the Davies commission has also reached that conclusion, as, of course, has the Transport Committee. Our capital and the surrounding area face an air-capacity shortfall of £16 million by 2030 and £57 million by 2040. The Department for Transport forecasts that demand for UK airports will double by 2050—an increase of more than 100 million passengers.

There are no easy choices in tackling this problem, but not tackling it is simply out of the question. Last year, Germany overtook the UK for new investments, which is hardly surprising given that it has significantly more connections to developing markets in China, India and Latin America. In fact, London has fewer weekly flights than its European rivals to most of the emerging market economies. Heathrow has nearly half as many flights as Frankfurt to China’s airports, despite the fact that Britain’s trade always increases 20 times over when we have direct flights to that country. That is why, if London is to have a next chapter in its ever-evolving success story, measures must be introduced to increase its airport capacity.

I support the Government’s decision to set up the Davies commission to investigate all options and make a comprehensive recommendation on the best way forward, but I see no need at all for Davies to take three years to make a recommendation. Why does this commission need three years to report on something that the Transport Committee managed to report on in a matter of months? Yes, it is crucial that we get the right decision, that a recommendation is not made hastily and that we should properly examine all of the options, but let us be honest: that will not take three years.

[Mr Slaughter]

I think everybody now knows that the reason why the commission will not report until after the next election is that the Conservative party does not want to lose marginal seats in west London before it comes out in favour of a third runway at Heathrow, which it undoubtedly will if it is in power after the next election.

[Mr Lammy]

My hon. Friend makes the point that I was about to make. He is absolutely right.

We have to be bold, honest and ambitious about what this country needs. Every week delayed is a week in which London and our country lose and our competitors gain. Every week lost is a week in which British industry loses potential business to its international rivals.

[Zac Goldsmith]

I am yet to meet a single person other than those who occupy the Government Front Bench who supports the deadline falling after the next general election. I do not think that anyone on our Back Benches believes that that is a credible deadline, so in real terms this is probably in the hands of the Labour party. If it wants to force the agenda, I suspect that would be very easy to achieve. Perhaps the right hon. Gentleman could put some pressure on his own Front Benchers.

[Mr Lammy]

I think the pressure I am able to put on my Front Benchers is about exactly the same as the pressure the hon. Gentleman is able to put on his, he makes a very good point.

I hope that the Davies interim report due at the end of the year will show that real progress has been made in coming to a conclusion. It would be disappointing if the interim report consists merely of a long list of all the options we already know are on the table, many of which have been discussed today. The commission was set up over a year ago. We must begin to get some concrete early results. I would like to see a shortlist of two or three of the best options for increasing Britain’s airport capacity. That would provide a much clearer idea of the way forward and focus the debate on aviation, which is very much needed.

I am especially clear on one thing: one of London’s biggest success stories must not simply be wiped off the map. Heathrow airport is the busiest airport in the world on the basis of passenger numbers. It directly or indirectly employs 230,000 people. The contribution of the western wedge of London and the home counties accounts for 10% of the country’s GDP. The percentage of GDP that is contributed by London, at 21.9%, is the highest that it has been since 1911. We therefore ought to be very careful in talking about the idea that Heathrow could somehow be shut overnight with no problem.

It was right that the last proposal for a third runway at Heathrow was rejected, but that was largely because it took no account of the population in the wider west London area. The recent proposals contain more consideration of how to minimise noise levels and disruption to residents. It is obvious that the expansion of Heathrow is one of the main options that the Davies commission must consider.

This debate must be based on the assumption that airport capacity will be increased in addition to the continued success of Heathrow, not at its expense. Let us be clear: any strategy that results in closing one of Britain’s most successful and important infrastructure locations should be avoided like the plague. We should rule out right now any option that would close Heathrow airport because it would be a disaster for London and for the country.

That includes the idea of a new hub airport in the Thames estuary. It is clear that building a new hub airport in the east of London would require Heathrow to be closed. That would decimate the west London economy and end all the wider benefits that Heathrow brings to the city. If that option ever was on the table, it should be taken off the table right now. Not only is it economically and technically unfeasible; it would mean closing Britain’s best and most successful airport. Thankfully, there is only one person in this country who genuinely seems to believe that the answer to Britain’s airport problem lies in building a new £65-billion airport in the middle of a river. Unfortunately, that person happens to be the Mayor of London.

[Mr Jenkin]

Will the right hon. Gentleman give way?

[Mr Lammy]

I suspect that there is a second person. I give way.

[Mr Jenkin]

Moving a major airport is a dramatic idea, but it would happen over a period of time and would be an evolution. If Heathrow ceased to be an airport, there would not just be a big hole. There would be a massive opportunity to fill the space with new industries, homes and economic activity. That would be a huge opportunity for the whole of west London.

[Mr Lammy]

Ministers often talk about the country’s finances. We must be absolutely clear about the staggering cost of that proposal.

I will end by saying that it is important that we recognise the contribution of Stansted—an airport that is below capacity as we speak. It is ridiculous that the journey from London to Stansted takes so long and is so unpredictable. We need to deal with the infrastructure on the West Anglia line. It needs to be upgraded so that Stansted is more viable.

[Mr Jenkin]

What about the cost?

[Mr Lammy]

That is a cost that would benefit Stratford, London and the airport.

16:03

[Alok Sharma (Reading West) (Con)]

I congratulate the Under-Secretary of State for Transport, my hon. Friend the Member for Scarborough and Whitby (Mr Goodwill). He is not just a decent man, but hugely competent, and I am sure that he will do brilliantly in his new role.

I will start by giving some figures on the airports that are being built in China. The Mayor of London has been to that country recently, as has the Chancellor. Between 2005 and 2010, 33 new airports were constructed, taking the total number to 175. By 2015, there will be more than 230 airports in China. If my maths is correct—I am an accountant by training, so I think it is—there will have been 55 new airports over five years, an average of 11 a year. I know that it is a developing nation, that is much larger than us and has the advantage of a different form of government, but if we compare and contrast that with what we have had in this country, it makes us think that we have not got to grips with the need for more airport capacity.

The Transport Committee made the point, as a number of Members have today, that it has been a decade since the last White Paper on the subject, and at that time it was 20 years since the previous one. We are back to the future, because now the Davies commission has said that there is a need for more airport capacity in the south-east, but we still have not concluded where it should be.

As Members have said, there are two problems with the fact that we have not reached a decision and that the pace has been slow. The first is that the lack of certainty is bad for business and investment. I know that my hon. Friend the Member for Harwich and North Essex (Mr Jenkin) will agree with that, although we may not agree about the solution. The other problem is that others are getting ahead. A number of Members have made the point that Frankfurt, Schiphol and Charles de Gaulle are all getting ahead in the global race that we want to win. I was at a meeting this week at which somebody who knows the airport industry well made the point that people at Schiphol talk about their airport being Heathrow’s third runway, which says something.

Another sobering fact that I have found in considering the matter is that more flights leave Frankfurt for cities in China in a week than leave Heathrow for the whole world in a weekend. That must tell us something. Figures from the International Air Transport Association show that due to the lack of capacity at Heathrow, between 2005 and 2011 there was a 49% growth in the number of passengers flying from UK regional airports to transfer at overseas hubs such as Schiphol and Charles de Gaulle. That represents a loss of business and jobs to the UK that we should do everything we can to retain.

I note the Transport Committee’s recommendation of a third runway at Heathrow, and I commend it on the urgency of its deliberations. It has come to a conclusion a lot faster than the Davies commission, which will release its interim report at the end of this year. There has been discussion of the costs, which I am sure will continue, but the proposed expansion of Heathrow would have much less of an impact on public expenditure and the Exchequer than a Thames estuary airport.

The other innovative proposal that I have found interesting to learn about is the Heathrow hub, proposed by the Centre for Policy Studies. It talks about doubling capacity from two to four runways and suggests that that can be done at no cost to the public purse.

[Zac Goldsmith]

Is my hon. Friend not slightly alarmed that that study takes no account at all of the extra impact of congestion? Just a third runway would lead to an extra 25 million road passenger journeys a year, and a fourth would presumably have more or less the same effect. Can he explain how our roads would be able to handle 50 million extra road passenger journeys a year to and from Heathrow? Does he share my concern that the costs simply do not exist in the report that he cited?

[Alok Sharma]

Clearly, that is exactly what the Davies commission should come up with. I am not suggesting that the CPS’s proposal is the only one in town, I am just highlighting it as a particularly interesting one.

We have waited a long time for a conclusion, so we might as well see what the Davies commission comes up with, but the one thing I would find disturbing in any final recommendation would be a solution that ultimately led to the closure of Heathrow. That would be bad news for business and jobs. I do not agree with the right hon. Member for Tottenham (Mr Lammy), who is no longer in his place, about everything, but I do agree with his points about the impact that it would have not just in London but in the western wedge, which covers areas such as the Thames valley and Reading, which I represent. As he said, a report commissioned by a range of local enterprise partnerships covering the Thames valley, Buckinghamshire, west London and Oxfordshire concluded that £1 in every £10 of UK economic output is generated in the western wedge area around Heathrow, and that aviation and related activity at Heathrow supports about 120,000 jobs there. If a new hub airport was to be built to the east of London and Heathrow was to be closed by 2030, because I do not think anybody is suggesting that we are going to end up with two hub airports—

[Adam Afriyie (Windsor) (Con)]

My conclusion differs slightly from that of my hon. Friend. I am the Member of Parliament for Windsor, where we are very much affected by our noisy but welcome neighbour at Heathrow, and there is certainly a scenario in which Heathrow could continue to operate as a hub airport if the estuary airport were to take over. This scaremongering about hundreds of thousands of jobs disappearing is not necessarily entirely helpful.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I do not want to scaremonger, but the hon. Gentleman is hoping to catch my eye later and we are running out of time. If we have more interventions, I will have to drop the time limit.

[Alok Sharma]

I note the point my hon. Friend is making, but the idea that we would have two hub airports operating—

[Adam Afriyie]

Regional.

[Alok Sharma]

Well, let us see what the Davies commission comes up with, but I personally think that it is unlikely that we could operate a system with two hub airports.

The report goes on to say that the closure of Heathrow would put at risk another 170,000 jobs in the western wedge area. We can have a discussion about the number of jobs at risk and about the fact that, if there was going to be an estuary airport, things would not just change overnight. There is no doubt, however, that there would be a huge economic impact in a region that is the powerhouse of Britain in driving the economy forward.

The Davies commission must clearly take into account the economic benefit of any of the recommendations it makes and, of course, the environmental impact. We have to take into account what business wants and what airlines want. If we build another airport, will airlines come? Will British Airways move to a new hub airport? Ultimately, it comes down to the cost to the public purse resulting from any new expansion.

Those who have been in this place for many years will see this debate as another groundhog day in the life of Parliament’s debates on aviation policy. I suspect we will see a lot more groundhog days. Of course, the question is very difficult, but once the commission makes its final recommendation what we want is politicians who will show a bit of backbone and implement the recommendations on expanding airport capacity in the south-east, whatever those recommendations might be. To duck the question for another electoral cycle will do a huge disservice to Britain’s hopes of succeeding in the global race.

16:12

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

I agree with the hon. Member for Reading West (Alok Sharma): this is like the annual reunion of the Heathrow debate. The Transport Committee always comes out with a report in favour of expansion. I have a lot of respect and affection for my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), but it is the same recommendation every time it reports. We then have a discussion and we usually put the decision off. As the right hon. Member for Saffron Walden (Sir Alan Haselhurst) said, we also put off having a discussion on aviation strategy more generally, including coming to a conclusion.

I agree that we should not put off any decisions from here on in. The Davies commission is a fudge to get everyone past the next general election without having to come to any conclusion so that the electorate cannot know what any political party stands for on this political issue. That is not good enough. It is not good enough for parliamentary democracy and it is not good enough for my constituents.

I agree with the hon. Member for—is it Putney?

[Zac Goldsmith]

Richmond Park.

[John McDonnell]

Richmond Park. That posh area of London, anyway.

I agree with the hon. Member for Richmond Park (Zac Goldsmith). All of us with sound common sense should band together on a cross-party basis and insist that the Front Benchers agree that the Davies commission should report in full before the general election, so that we can come to some conclusion. We should be able to go into the next general election with a clear view from each political party about their position on future aviation strategy.

I cannot see any political party going in to the next election in favour of expansion at Heathrow. Before the last general election, the Prime Minister made it very clear that as part of his greening of the Conservative party it would come out against the third runway at Heathrow. The Lib Dems, to give them their due, have consistently opposed it—the one thing on which they have been consistent throughout. The current leader of the Labour party opposed the expansion of Heathrow and has made that clear publicly. That might be why—together with his position on Syria—my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) is on the Back Benches, I do not know. The politics of this is that there is no consensus in favour of expansion at Heathrow, and so far there is no consensus in favour of a new airport in the estuary. The arguments put forward have been about cost, and I cannot see anyone grasping that nettle.

[Mr Jenkin]

There is no knockout blow in the report about cost. The cost is reckoned by the consortium to be about £23 billion, and it agrees that any airport will need infrastructure that is funded by the taxpayer.

[John McDonnell]

I think that anything that gets past £40 billion frightens the horses of any future Government—I apologise for allowing the intervention, Mr Deputy Speaker. I will press on.

In recent months, the debate has changed significantly as people have become more aware of the environmental and health consequences of what is already happening at Heathrow. A series of reports from Imperial College London and Harvard have demonstrated that, as a result of air and noise pollution, the area has low birth weights. Children’s growth patterns are affected even as they grow older, and there has been some growth delay as a result. In addition, a huge study over 12 boroughs has demonstrated an increased risk of heart attack and stroke as a result of aviation noise. If anyone comes forward at this stage in favour of further expansion at Heathrow, there will not be protests like last time and the Camp for Climate Action—I was there—or anything on that scale; the protest will be multiplied tenfold. It will be the largest environmental battle that the country has seen, and I will be part of it.

If there is a fudge at the next general election, and then a decision is made to expand Heathrow, people will feel that they have been conned and betrayed. That will motivate them even more into saying that democracy in this country has been undermined, and there will be more direct action as a result. It is important to convince the leaders of the different political parties that they need to bring forward the Davies commission to before the next election, so that we can have a proper debate and be honest with the electorate about its conclusions.

I enjoy a good joke, so I saw the submission by Heathrow Airport Ltd to the Davies commission—I do not know whether Members have seen it. It does not just want one more runway, it wants three; it wants to obliterate not only my constituency, but two others as well. The hon. Member for Spelthorne (Kwasi Kwarteng) is not in his place, but he is a prime advocate for expansion at Heathrow. Now he has been taken at his word—they want to expand into his constituency. His councillors have met and said, “We’re still in favour of expansion at Heathrow, as long as it is to the north”—a breathtaking act of nimbyism if ever I saw one.

The proposals by Heathrow Airport Ltd—now owned by Ferrovial, the Chinese sovereign state fund, and Qatar—looks at an expansion that will take 20,000 people from their homes and expand air pollution, possibly to about 100,000 people. We are already beyond EU limits; children in my constituency are already going into classrooms and handing over their puffers to their teachers. The proposals would increase such things, perhaps tenfold. It will destroy whole communities, but I do not think people will sit back and allow that to happen. I think they will mobilise.

A new campaign has been launched called Back Heathrow. It has basically come together and said, “We are in favour of ensuring that we maintain the airport.” I contacted it and said, “This is a wonderful initiative.” I fully support that because we want to keep jobs in the area, and we can improve the quality of Heathrow and look at how we expand to meet challenges, for example that of China. Routes between China and Heathrow have been limited because we have been refused access in some areas, but that is now opening up. There is capacity at Heathrow to do that because if we took out the short-haul flights—25% of flights at Heathrow are short-haul or point-to-point—we could accommodate those direct flights to China.

I was in favour of the Back Heathrow campaign, but then I discovered that it backs Heathrow only in favour of the airport’s recommendation to expand, and that it is actually funded by the airport itself. What a surprise.

[Zac Goldsmith]

I had something from Back Heathrow through my door as well. It calls itself, “The voice of the silent majority of west London residents in favour of Heathrow expansion”. Does the hon. Gentleman agree that it is a very, very silent majority in west London?

[John McDonnell]

The silent majority is in an office by Heathrow airport and solely funded by Heathrow airport. I cannot find a community group or a resident in favour of the expansion. Let us expose that campaign for what it is on the Floor of the House and ensure that people are aware that it is a con of that nature.

We want a sensible debate on aviation strategy. We need to recognise that, realistically, London has seven airports and eight runways serving it. We move more passengers than any capital city in the world. Paris is fifth behind London—nowhere near us. People make the argument of business connectivity, but we come top of every poll on business connectivity. The answer to the need for further capacity at Heathrow is to ensure that it is not bigger, but better, which is exactly what the Conservatives said at the last election. We should manage it better by moving the short-haul and point-to-point flights elsewhere. I do not accept the argument that we cannot have a collective hub. We can have one as long as we ensure connectivity between the airports.

We need that rational debate to take place. I welcome the report as part of the debate—it is rubbish, but it at least stimulates debate. I urge Members not to allow the deal that is going on between the political leaderships to put the debate off until after the election. Let us have the Davies report before the election, and come to conclusions with which we can then go to the electorate.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am sorry but we have to introduce a time limit of four minutes—[Interruption.] Well, I do not think you have been helping with that, Mr MacNeil.

16:19

[Martin Vickers (Cleethorpes) (Con)]

I suppose it was inevitable that the debate would be dominated by London and the south-east, but I remind the House that the northern economy is very dependent on improved communications, including better air services. I shall concentrate on the role of regional airports and, from a constituency point of view, Humberside airport, in economic regeneration and development locally.

First, as a member of the Transport Committee, I should put my cards on the table about Heathrow. I was not a member when the Committee conducted the inquiry prior to the report, but I broadly agree with its recommendations. The Chair of the Committee might be somewhat reassured by that.

The Humberside area has been designated and recognised by the Government as a potential area for major economic development. To give a couple of examples, they have shown their support for the area by halving Humber bridge tolls and creating the largest enterprise zone in the country. Only a month ago, the Prime Minister highlighted the area in his party conference speech.

We need better services in the area. Whatever happens in London and the south-east, getting them will be a long job. All hon. Members recognise that, and Governments make a habit of kicking it into touch. That point has been made clearly. Regional airports have a role to play in that respect. The Minister has been to Humberside more than once, and will know that Humberside airport would be ideally located if only there were better connectivity between the various modes of transport. A railway line runs within a quarter of a mile of the airport terminal, but there is no air-train connection. That is worthy of consideration—I have made that point regularly to the local enterprise partnership, local authorities and the like.

In the minute I have left, I should like to talk about the impact of air passenger duty, which is particularly relevant to regional airports. I have a note from Paul Litten, the commercial director at Humberside airport. He recognises that the tax is required, but says that

“it would be better to encourage airlines to move to smaller regional airports and take advantage of space, flexibility and customer demand but having a much lower APD amount for”

such airports. He says that

“if you use the logic of the congestion charge in London, then where there is a large demand, you should continue to tax; but apply a lower rate to those areas that need development.”

In other words, he says we need a smaller tax for regional airports. Finally, he says:

“Let me know if this makes sense.”

It makes sense to me, so perhaps the Minister could tell us in his reply to the debate whether it makes sense to the Government.

16:24

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

I will try to charge through what I have to say and if any political enemies or friends wish to intervene to give me another minute or two, they would be most welcome.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

You could try to intervene on yourself.

[Mr MacNeil]

I can always try, Mr Deputy Speaker.

I know the importance of aviation. I fly probably more than any other MP—at least four times a week and sometimes six times a week. At least, I did until flights in my constituency were vandalised by the local council, which axed 60% of inter-island flights between Stornoway and Benbecula and Barra and 100% of flights to the most vulnerable island community. That was all the more strange given that they were public service obligation routes. While the council can make arguments about rurality and peripherality in Edinburgh, London or Brussels, the arguments hold no weight it seems once it secured the money within its own corridors of power. Indeed, flights used by people going for cancer treatment have been described by the council leader as 10-minute tourist flights, which is very disappointing. The flight was not 10 minutes and the councillors he dragooned into voting to axe flights to these communities have not been to visit them since their election. The upshot of this transportation vandalism is that travel from one end of the Outer Hebrides to Edinburgh, London or Brussels is faster for most of the week than going to the other end of the Outer Hebrides.

Why do I mention this? The debate has concentrated on the south-east of England and Heathrow, about which there seems to be a love-hate relationship. London has tremendous connectivity, with 360 destinations—almost one for every day of the year—which I think is more than Paris, Frankfurt and Amsterdam enjoy, although the individual airports are better.

[Jim Fitzpatrick]

The hon. Gentleman will be aware that when I was Minister with responsibility for aviation, I heard repeated requests by Members from the regions for access to Heathrow. That clearly was not possible, as my hon. Friend the Member for Hayes and Harlington (John McDonnell) said, because short-haul routes were taken out so that there could be flights to international destinations.

[Mr MacNeil]

The building of Heathrow has been brought about through general UK taxation. Scots have on average paid more tax than the rest of the UK in each of the last 30 years. We have contributed to Heathrow, as have other areas of the UK, and our investment should be protected. There are 360 other areas that have contributed and are arguing for the benefits of Heathrow. The hon. Gentleman makes a good point.

Heathrow is a disappointing airport. If one travels to it by train, one straightaway meets a glass wall between the train and the lifts. That is indicative of rest of Heathrow and terminal 5, where passengers seem to be reversing into each other constantly. Gatwick is no better—a veritable rabbit warren that makes London City airport almost look like bliss. The Heathrow Express, Heathrow airport and the airlines seem unable to talk to each other when there is a train delay—an example of component efficiency rather than network efficiency that is sadly all too typical around UK airports.

There is doublethink at the heart of the relationship with Heathrow. Recommendation 9 of the Select Committee report states:

“It is imperative that the UK maintains its status as an international aviation hub.”

That seems to be about a badge of prestige rather than transporting people, as the hon. Member for North Thanet (Sir Roger Gale) said. I have mentioned, yesterday and today, that decades of bilateral agreements have favoured London airports to the detriment of Scotland and other places. This has now come back to bite the south-east of England. One solution could be co-operation with the Dutch and the French. Schiphol and Paris are not that far away, and increased and improved surface transport could bring them closer. As the hon. Member for North Thanet said, it is time, not distance, that matters to the passenger. A global mega-region encompassing either side of the Channel would benefit passengers globally. There is an economic benefit to linking hubs, an argument I would make for the central belt of Scotland, too.

What happened to the south-east of England when the London docklands lost its pre-eminence to Rotterdam will happen in aviation. Schiphol will win and Heathrow will lose out, as the right hon. Member for Saffron Walden (Sir Alan Haselhurst) said, because of the UK’s piecemeal approach.

The right hon. Member for Tottenham (Mr Lammy) pointed out that with direct air links trade improves twenty-fold. As a result of the imbalance in the UK, Scotland has definitely lost out; we have paid in, but we are not getting the benefits. It is disappointing that this high-tax Government are not interested in reviewing APD at any point. Their “see no evil, hear no evil” approach continues. In the meantime, Spain is getting rid of it and Barcelona has seen 37 new routes in the last year. APD is a demand-management tool for Heathrow and it comes at a tremendous price for other areas of the UK, particularly Scotland. With independence, I am hopeful that we can sort that one out.

16:30

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

An estuary airport strategy would be binary and lumpy. The proposal is for one massive new airport opening at a single point in the future, but it would run the risk of being half-empty when it opened, and in the meantime we would have none of the capacity we need now.

It is ridiculous to suggest, as the Mayor of London did, that we could build such an airport in the same time it would take to add one runway to an existing airport. And all the while, the economy is suffering. The Stalinist command-and-control-economy assumption that we could move hundreds of thousands of jobs to the Thames estuary at the stroke of a Mayor’s or even a Government’s pen is preposterous: many of these jobs would not move, many would move to Europe and many others would no longer be economical, because the capital and investment on which they depended would be destroyed. The assumption that all the hotel and business infrastructure around Heathrow could be rebuilt, cost-free, in the estuary airport is wrong. If people had to pay twice for that, many fewer jobs would survive.

We hear from the Mayor of London that Heathrow could become like Kensington and Chelsea or Canary Wharf, yet he has just been to the old airport in Hong Kong, which, 15 years on, is still a shell, with next to no development, in one of the fastest-growing economies in the world. Boris told me that if he proposed this seriously, he would come down to look at the Thames estuary and the Hoo peninsula, in my constituency, where he wants to build it, but he has not come, so I can only assume that he is not serious. The Davies commission, which did come, was absolutely astonished. It thought, having listened to Boris, that it was like a blank sheet of paper, but there are more than 23,000 people living there, nine villages and some of the most important energy infrastructure in the country.

I am pleased at least that Transport for London has recognised that we could not use HS1 to access that new airport—it would not have the capacity and there is no where to put the trains at St Pancras—yet, like Fosters and Partners, which is in the clouds as much as my hon. Friend the Member for Harwich and North Essex (Mr Jenkin), it is saying that there could be three other substantial railway projects, including a parallel new high-speed line. Even those three projects would not provide the local access to work for the people coming into that airport, which would require further tunnelling under the Medway towns to get those people across the two river pinch points.

Crucially, given the level of environmental protection in this area, legislation states that there must be an “absence of alternative solutions” even before we can consider building such an airport. It cannot be a credible option, therefore, if it has already been determined, as the Davies commission must, that there are other credible options.

I heard that the scheme would cost £80 billion, but the Deutsch Bank aviation analyst tells me it would be £120 billion. Of that, up to £30 billion would be public money. It is absolutely extraordinary. It is incredible. I do not think any Government would fund that. What about the private money? Ignoring all the new investment, we would still be looking at about another £50 on every ticket for anyone who used that airport. What a blow to business that would be!

As to its operational viability, National Grid said that

“the proposals being put forward for a Thames Hub Airport on the Grain peninsula are incompatible with the energy infrastructure”.

The fog is three times what it is at Heathrow and the risk of bird strikes is twelve times as high. The delivery risks are absolutely enormous.

We have heard a lot about Heathrow, but what about Stansted, which we have also heard about? It needs better train service connections. Perhaps even our Lib Dem friends would support those extra train connections to allow the half-empty runway to be better used. Gatwick should be strongly considered, too, because it has the money. It would only cost £5 billion to £9 billion —about one tenth of the Thames estuary airport—and with the improved train connections, particularly the Thameslink service to London Bridge and, crucially, to Farringdon, it would be a credible option and provide competition.

16:34

[Mr Andy Slaughter (Hammersmith) (Lab)]

“Aviation Strategy” is a great title for a debate; what we are actually having is the “Is Heathrow going to get away with it yet again?” debate yet again. I fear that those at Heathrow might get away with it, as those of us in west London who have debated these issues with them over 30 years and seen how they operate think they might, because of political cowardice and the way in which politicians of all parties have given in to the airport lobby over that time.

Although we have had some excellent speeches today, I am somewhat surprised by that, because at the moment we have very little of substance to say that is new. The reason for that is partly the vacuum caused by the Airports Commission not reporting until after 2015, for no reason whatever other than political convenience. That has created a vacuum into which has floated the Mayor of London, with his frankly ludicrous suggestion of an estuary airport.

[Rehman Chishti]

Will the hon. Gentleman give way?

[Mr Slaughter]

I do not think I should.

Not only is the idea of an estuary airport distraction politics of the worst kind; it is now affecting Stansted as well. Because the Mayor has virtually abandoned the idea of an airport actually in the river, he is now looking at the four-runway option at Stansted as a fallback position, which has mesmerised those at Stansted, who cannot get on with their ordinary work.

The fact that we had three London airports in the same ownership for so long has constrained the debate and let BAA, as it was then, keep control of the argument. I still do not understand why so many politicians—this includes the last Labour Government—are mesmerised by the airports and airline industry, which are simply looking after their commercial advantage. That has happened to such an extent that the Conservatives in opposition were saying that HS2 should go via Heathrow. That was another mad suggestion, which slowed down high-speed rail, but it has now been abandoned.

We have been ill served by the debate so far—that goes not just for my constituents, but for the general public. Because Heathrow has been making the weather on this issue and because the other airports in the south-east have been so far behind the curve, it has been left to organisations such as HACAN—the Heathrow Association for the Control of Aircraft Noise, led by John Stewart—and community groups to provide the rationale and the arguments, which they have done admirably.

We are now faced with the prospect of two options. I do not have the time to go into this, but I am pleased that other colleagues have talked about the horrendous effects that Heathrow expansion would have, and not just on noise—the fact that 25% of those in the EU who are bothered by serious noise nuisance are from around Heathrow should rule out expansion alone. However, there is also the congestion and pollution, as well health and safety issues. Expansion is therefore simply unthinkable, but so is an estuary airport. Not only would an estuary airport be in the wrong place—hon. Members should see what the chambers of commerce have said about the prospect of that much public money going into such a white elephant; it is a ludicrous suggestion—but it would close Heathrow, as the Mayor of London, its chief cheerleader, says it would, or Heathrow would otherwise be reduced to the size of City airport.

That is not sustainable for either the west London or the UK economy, so why are we so hung up on this idea of a hub airport? In advocating expansion, I am not expert enough to say exactly how it would occur and where it would be possible in a city and a region that has five airports, but Gatwick, which is now making some money, Stansted and Heathrow should all get together and look at that proposal. Failing that, our politicians from all parties should get together, show leadership and put forward a proposal that can deliver short-term gains for public transport and free up the existing capacity and, in the longer term, deliver a network to serve the great capital city, rather than going for an expansion of Heathrow.

16:38

[Adam Afriyie (Windsor) (Con)]

We are debating aviation strategy today, but a lot of the comments I have heard—particularly about the sticking-plaster solutions for Heathrow and all sorts of other complicated, detailed, short-term fixes—do not deal with the strategy we need for the nation. We used to be a great island global trading nation in the 1700 and 1800s, and we had a fantastic period even in the early 1900s. If we are talking about strategy, we should be talking about a long-term vision for where we want our country to be, and having a new offshore airport is a very good idea for the long-term economic growth of our country.

A short runway at Heathrow would not do it, while an extra runway at Gatwick would not deal with the hub issue. All those small fixes for the short term would just lead us straight back to where we were: putting off the long-term decision again, as my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) described. I very much welcome the Davies commission. I differ somewhat with the timetable for the reporting and the decisions, but it is right that someone is going to take a calm, long-term view of the situation.

There have been a lot of scare stories saying that, if a new hub airport were to be built over a period of 20 or 30 years, Heathrow would somehow cease to exist. However, we already have regional airports, and Heathrow could continue in that capacity and gradually evolve over time. I must declare an interest, in that I live under the flight path in my Windsor constituency. The biggest challenge is to ensure that, with 480,000 air traffic movements a year, the number of flights does not increase. A second concern relates to night flights. I was involved with the recent Civil Aviation Bill. Thankfully, Heathrow has only 16 night flights at the moment, but with an extra runway, that number would increase massively. I will certainly continue to go on marches and to work with hon. Members across the House to ensure that a third runway does not become a reality.

We need to step back and look at the interests of the nation over the next 50 to 100 years, then make this decision in a cool, calm and collected fashion without focusing on short-term, sticking-plaster solutions. I hope that, when the Davies commission reports, it will have taken a long-term, mature look at the matter. I believe that an offshore airport would solve all the problems, despite the short-term challenges involved in getting it built.

16:39

[Mr Gordon Marsden (Blackpool South) (Lab)]

We have had an extremely good debate. I do not have time to dwell on all the contributions, but I shall simply say that the Chair of the Select Committee, my hon. Friend the Member for Liverpool, Riverside (Mrs Ellman), has performed a singularly important task on behalf of us all in putting forward her views so strongly and eloquently. The right hon. Member for Saffron Walden (Sir Alan Haselhurst) made an imaginative pitch for diversification. My hon. Friend the Member for Blackley and Broughton (Graham Stringer) made some thoughtful comments about hub connectivity, which were echoed by many other hon. Members, and my hon. Friend the Member for Poplar and Limehouse (Jim Fitzpatrick) brought all his experience and distinguished service to his comments. My hon. Friend the Member for Hayes and Harlington (John McDonnell) spoke with passion, as always, on behalf of his constituents.

I come to this new brief to listen and to learn, as well as to speak, but I do have Blackpool airport just down the road from my office. It handles 250,000 passengers a year, and 750,000 RAF staff trained there during world war two. Flights have been taking off from there since 1909. As today’s debate has shown, the aviation sector has enormous strengths and strategic importance. It encompasses skills in manufacturing, in leisure and tourism, in professional standards and in logistics. The sector serves a huge variety of customers and passengers, balancing business and leisure.

I believe that the aviation sector has a major contribution to make, not least because we have BAE Systems just down the road from Blackpool, supplying good jobs and apprenticeships to my constituents. There are huge opportunities for the sector to contribute to local economies, and I know that Heathrow has done some really innovative stuff with the schools and colleges in its area. The future brings great challenges, not least that of how to satisfy those under the planes as well as those on them, and how to strengthen the sense of a community of interest between them.

We agree with the Government that the aviation sector needs to grow, but we believe that that should be subject to concerns about sustainability criteria being met. The UK scores fifth in the International Air Transport Association connectivity index, and we must maintain and strengthen that position. The industry is vital to the UK economy. The aviation policy framework that was published earlier this year showed that aviation adds some £18 billion to our gross domestic product, although the Airport Operators Association puts the figure at nearly £50 billion. The Minister might like to think about whether the significance of aviation jobs, the supply chain and tourism ought to be included in that assessment. The Government’s role is to be an active and intelligent provider of connectivity for those expanding export businesses.

I broadly agree with the Chair of the Select Committee that expansion in the regions will not provide a magic bullet to deal with all our capacity problems and that there are national infrastructure issues that urgently need to be addressed. The question of whether to locate in London and the south, or in the areas beyond, is not an either/or—we have to do both. Similarly, the question of whether to opt for point to point or hub expansion is not an either/or—both are necessary. Addressing the question of the hub, and the spokes that might come from it, is critical to connectivity and consumer experience, and we must remember that that cannot simply be measured or satisfied by the number of shopping malls that might accompany the development.

Howard Davies confirmed to the Airport Operators Association conference on Tuesday that any major response to hub capacity would not become operational until 2023. In that case, there must be a particular and minute focus on short-term capacity solutions. As Davies himself has said:

“A number of airports have proposed that there are ways in which you can make existing airports more appealing and provide some additional headroom.”

I agree, and I also agree with the chief executive of AOA, who says:

“To deliver the UK’s future air connectivity we need both vibrant point-to-point airports and sufficient world class hub capacity”.

That view is echoed by the British Chambers of Commerce, although it makes the point that that strategy should not focus only on the south-east, but

“should also involve the strengthening of regional airports throughout the UK.”

There are some splendid examples of such airports in my region, quite apart from my airport at Blackpool. There is Manchester airport—we have heard wonderful illustrations of its importance—which has great strengths in local connectivity. All the 10 councils of Greater Manchester were involved with the exercise from the ’80s, and this is an £800 million airport city. Liverpool airport is increasingly widening travel options for huge swathes of people across the north-west, Wales and beyond. Elsewhere, Birmingham has put forward to the airports commission, as part of its bid for a second runway, some innovative and interesting ideas on future flight patterns and its future involvement in them.

To the extent that it is relevant to the area, I welcome the language of the aviation policy framework, which sets out the Government’s objectives and principles to guide the making of plans and decisions at local and regional levels, but if we will the ends, we also have to will the means, which means real localism on the ground from government. We believe in active empowered government, and if we are to achieve these objectives, we need local economic partnerships, local authorities and other sub-regional stakeholders to collaborate with airports.

There is particular potential for boosting tourist economies in popular destinations about the UK, in which regard the APF refers to the strategy of the Department for Culture, Media and Sport. Transport Ministers must not allow aviation to remain in a silo in one branch of the Department or elsewhere. Engagement is needed with other aspects of departmental responsibilities, not least the rail network, and they need to be a force for innovation and collaboration.

Airports are key players in their communities and, as the APF recognises, airports should be encouraged to strengthen these relationships with communities. To build and maximise such initiatives, we need to link rail policy with airport policy. I did not agree when the Government responded to the Select Committee by saying:

“The Government does not agree with the Committee’s view that surface access to major airports in the south east is poor.”

That shows a very complacent attitude, and we should be using the Davies gap to look actively at other ways of expanding. It is crazy that current rail services to airports are not directly considered in the aviation policy framework, and that is why we support building the new western rail link to Heathrow.

[Mr Jenkin]

Will the hon. Gentleman give way?

[Mr Marsden]

I will not; I do not have the time.

That was also why I supported my right hon. Friend the Member for Tottenham (Mr Lammy) when he expressed his concerns about Stansted.

We will not prejudge the conclusions of the Davies commission, which has been tasked with producing independent recommendations on the strategy. It must be left to produce its initial report in December and subsequent recommendations, but we echo the calls of the Select Committee to the effect that, given the protracted timetable, the time available must be used to ensure that the research is comprehensive and robust.

[Mr Jenkin]

Will the hon. Gentleman give way on that specific point?

[Mr Marsden]

No, I will not; I am trying to keep to my time.

The Government must also address consumers’ ongoing concerns about air passenger duty. As we said in yesterday’s Opposition day debate, the Government need to undertake a real review of the effects of that tax. In straitened times, we need to keep a clear line of sight over costs and charges, ensuring that consumers are not at the centre of any resolution between airports and airlines that disbenefits them. We also have to make sure that new or improved public transport links remain affordable to consumers because otherwise unfair burdens will be imposed on them.

Of course, we have to deal with noise, which was raised by several hon. Members, not least my hon. Friend the Member for Hayes and Harlington. We will continue to oppose any increase in night flights and to listen to arguments for tighter restrictions. We will urge the Government and industry to look further at noise mitigation measures.

These are difficult times and the decisions are difficult to make, but the strategy is not a choice between economic growth, and social and community cohesion and contentment. Those factors have to be reconciled, and the Government will have to play a key part in that process.

16:49

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

I welcome the opportunity to respond to what has been a timely and generally good-natured debate. I also welcome the hon. Member for Blackpool South (Mr Marsden) to his new post. He represents Lancashire’s premier resort; I represent the United Kingdom’s premier resort.

I thank the hon. Member for Liverpool, Riverside (Mrs Ellman) for seeking the debate, the Backbench Business Committee for arranging it, and Members on both sides of the House for taking part in it. The hon. Lady is the sole survivor of the Transport Committee on which I served, and I remember my days there with great affection. She is continuing the assiduous work of her predecessor, Gwyneth Dunwoody, even if not in quite the same pugnacious style.

The Government are determined that the whole country will continue to gain the economic benefits of a vibrant aviation sector. The sector employs some 120,000 people directly, and many more indirectly. Today’s debate stems from the Transport Committee’s report on aviation strategy. As part of the Committee’s investigation, my right hon. Friend the Secretary of State gave evidence before it on 11 February this year, and the Government responded to the report in July.

Let me update the House on some significant aviation policies before dealing with a number of points that were raised. We appear to be in broad agreement about the importance of maintaining the United Kingdom’s position as a leading global aviation hub for the UK economy. Freight volume and terminal passenger numbers were higher in 2012 than in the previous year. We have the third largest aviation network in the world, after the United States and China. The five airports serving London offer direct services at least weekly to more than 360 destinations worldwide, which is more than Paris, Frankfurt or Amsterdam. We are determined to take the necessary action to maintain the UK’s position as Europe’s most important aviation hub.

Aviation capacity is important for the economic growth of the UK, and that vital issue requires long-term thinking and consensus-building. The UK continues to have excellent aviation connectivity, both on a point-to-point basis and through the London hub, but our major airports face a capacity and connectivity challenge in the medium and longer term. Heathrow is operating to capacity today, Gatwick is expected to be full in the 2020s, and Stansted, which currently has considerable spare capacity, is expected to be full by the early 2030s.

The Government accept that aviation capacity, especially in the south-east, has been a controversial and difficult issue for many years. The only way in which we can end the years of indecision and inaction is by taking the approach that we have adopted, which I hope establishes cross-party support and political consensus. That was an important factor in our decision to create the airports commission and to make it independent of the Government. Led by Sir Howard Davies, the commission is examining options, and it will make recommendations that will maintain the UK’s status as a leading global aviation hub in the long term.

[Mr Jenkin]

Given that we believe in democracy, openness and transparency, would it not be much more democratic to allow the Davies commission to report before the general election so that the debate at the time of the election can take place in the light of its findings?

[Mr Goodwill]

The commission will publish its interim report before the end of the year, and the Government will respond to it by the spring. There may be some action that we can take at that stage, perhaps in respect of surface connectivity, but I think it is important for the commission to have a chance to do its work properly, and that means giving it enough time. If we are going to do this, let us do it right.

I am pleased by the support for the commission’s work that Members have given today. The Government welcome the publication of its discussion papers on issues such as connectivity, climate change and noise, and we look forward to receiving its interim report by the end of this year. That report will outline the scale of the additional capacity that is needed, shortlist the places that the commission thinks can best provide that capacity, and make recommendations for the effective use of existing capacity in the short term. We have also asked the commission to consider the findings of the report on our trial of operational freedoms at Heathrow, so that, too, will be covered in the interim report.

The Government look forward to the interim report, and we will give it full consideration, but we shall not be in a position to comment on the scope or content of our response—which, as I have said, we intend to issue in the spring—until the report’s publication at the end of 2013. I hope that the hon. Members for Liverpool, Riverside and for Poplar and Limehouse (Jim Fitzpatrick) will understand the need for the work to be done thoroughly, and the time that that will take.

I am pleased to be able to tell my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) that I will visit Stansted soon, so I will learn about some of the issues there first hand. He said there has never been a strategy, but I hope that the Davies commission addresses that failing.

The hon. Member for Blackley and Broughton (Graham Stringer) has considerable experience of this subject through Manchester Airports Group, and I hope he welcomes the fact that I spent an Industry and Parliament Trust year with MAG, when I learned a lot about the operations of airports. He mentioned the vexed issue of APD, which the House had a good opportunity to discuss yesterday. Although I am new to the job, I am not so wet behind the ears that I would encroach on the Treasury’s territory, but I would make the point that there are other barriers to visitors coming to the UK, including the issue of visas for people from China, so I was pleased that my right hon. Friend the Chancellor addressed that on his recent visit there.

[Mr MacNeil]

I would hope that the Department for Transport would have a fairly robust view on this and that it would communicate its thoughts to the Treasury if it felt that APD was limiting the numbers of passengers, although we know it is—by about 2.1 million per annum in Scotland. Surely the Department for Transport will not sit back and let the Treasury take the lead.

[Mr Goodwill]

The Government are determined to stay on track with our deficit reduction plans, and it is important that the aviation sector continues to play its part. A number of Members in the House should shoulder some of the blame for the deficit that we are having to reduce.

On CAA costs, I assure the hon. Member for Blackley and Broughton that I intend to have regular meetings with its chair, Dame Deirdre Hutton. Indeed, one such meeting is already in my diary. Of course, under the Civil Aviation Act 2012, there is a requirement on the CAA to consult on charges.

The right hon. Member for Greenwich and Woolwich (Mr Raynsford) raised the issue of noise and air quality, as did the hon. Member for Hayes and Harlington (John McDonnell), whose views on this matter are well known. The right hon. Gentleman referred to recent research by Imperial college and others about heart attacks and strokes in areas affected by aircraft noise. We need to do further work on that because other factors may also be in play.

My hon. Friend the Member for Harwich and North Essex (Mr Jenkin) made the case for London to be better connected, so I look forward to his support next week as we push forward with plans for the High Speed 2 rail network, which will connect London with the north of England so effectively. The hon. Member for Poplar and Limehouse raised concerns about some of the initial press coverage following my appointment. May I assure him that he should not read too much into the meeting I had with the Scarborough Greenpeace people? Indeed, I was relieved that the coverage was not portrayed as the Chancellor having another of his chums in a Government Department watching his back. I assure the hon. Gentleman that I come to this with an open mind. Indeed, when the Secretary of State appointed me he said, “You’ll be just the person for aviation as you’re 250 miles away from the south-east of England.”

Looking outside London, the Government’s aviation policy framework, which was published earlier this year, supports the growth of regional airports, and we recognise the importance of regional air connectivity to London in supporting regional economies and contributing to national cohesion. In fact, domestic airport connectivity across the UK increased in 2012. We now have a flight from Leeds Bradford to Heathrow, which is becoming a boon to the Yorkshire economy.

Aviation is a challenging topic. Successive Governments have struggled with how best to continue to gain the economic benefits it brings while restraining its impact on local people. I hope that the House agrees that the Government have established the right foundations to move forward, gain consensus and secure the benefits aviation brings for the nation.

16:58

[Mrs Ellman]

I thank all Members who have participated in this very well-attended Backbench Business Committee debate. There is overwhelming support for additional hub capacity to support our economy. I hope that hon. Members’ contributions will assist the Davies commission to come to the correct conclusion. This issue will not go away; it is about the future of our country.

Question put and agreed to.

Resolved,

That this House has considered aviation strategy.

Share Capital (Businesses)

Thursday 24th October 2013 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Gyimah.)

17:00

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

I am grateful to Mr Speaker for giving me the chance to raise the important issue of how we can raise share capital for our nation’s businesses. All hon. Members will be well aware that we do not have to spend long in either Treasury questions or business questions before Members from all parts of the House get up to talk about the difficulties that businesses have in gaining access to finance. Every time that has happened over the past couple of years when I have been in this Chamber the complaint raised by Members has been that the banks are not lending. Indeed, we still have a partially broken banking system, which is why the banks are not able to lend in the way that British business, large and small, would ideally like them to do.

Of course, loan finance is only one way in which businesses of all sizes—although I am thinking particularly about small and start-up, fast-growing businesses— can raise the capital they need. The other way is through equity or share capital. I find it odd that that type of capital—that way of helping businesses to start up, grow and expand—is a subject so rarely raised in this House, and I wish to remedy that this afternoon. So I stand here on behalf of the nation’s 4.5 million smaller businesses—the small and medium-sized enterprises that do so much to power our economy and grow the larger businesses of tomorrow—and on behalf of the men and women who work in the “small- cap” market sector of the City of London, who try to raise that much-needed and incredibly important share capital, or equity finance, for our nation’s businesses.

I wish to pay tribute to some of the people who work in that sector in the City and who took time out, at no remuneration to themselves, to write the Drury report. They are: Tony Drury, Roger Hardman, David Scott, Michael MacDougall, Simon Webber, Robin Stevens, Brian Hibbert CBE, Charity Walmsley, Laura Keeling, Teresa Quinlan and Paul Quade. I had the pleasure of working with them and helping them. Indeed, I took them all to meet the previous Financial Secretary to the Treasury, so that they could outline what was in their report.

This is not a new issue. The Macmillan committee report of 1931 identified what became known as the “funding gap” as far as British businesses were concerned. Our Government, in March 2012, commissioned the Breedon taskforce to write a report, “Boosting Finance Options for Business”, examining these very issues. In our relatively recent history, we have been quite successful in getting stock markets, large and small, to raise equity capital for small and growing businesses. Between 1998 and 2008, the Alternative Investment Market—AIM—and the PLUS market provided many hundreds of UK companies with early-stage equity finance. It is the belief of the Drury report that if the small-cap sector was rejuvenated in the way it suggests, a further 200,000 people could be found work as the businesses were helped to grow in the way that those behind the report believe they can.

I have to tell the Minister that, sadly, all is not well in the small-cap market in the UK. Between 2009 and 2012, there was de-listing of 722 companies on the AIM. Indeed, the amount raised on the AIM in 2012 was barely 17% of the £16 billion raised on that market in 2007. Let me quote one small paragraph from the Drury report. It states:

“For us the small-cap sector is ‘Middle England’: the millions of people trying to run and grow their businesses against all the odds. The sector is friendless, ignored by the banks, hounded by officialdom, bullied by bigger brothers and misunderstood by some politicians.”

I hope to rectify some of that misunderstanding today.

Many people are not even aware of all the markets that enable smaller businesses to raise funds. In addition to the AIM, we have the ISDX—the ICAP Securities & Derivatives Exchange—formerly known as PLUS markets. Currently, 112 companies are listed on it. That story is not happy either, I am afraid—there have been 35 de- listings from the ISDX since the ICAP relaunched the exchange in October last year, but only eight additions.

There is also the GXG, on which 106 companies are listed; again, that could be larger. At the moment, 859 UK companies are listed on the AIM, whereas in 2007, before the great recession, there were 1,347. Companies de-list for a number of reasons, one being the cost of being on a market; I will talk about that and regulatory issues, which we need to consider, in a moment.

Today I was given some stunning figures—they really jumped out at me—by the London stock exchange. In the United States of America, bank lending as a percentage of external, long-term funding is 19%—that is, under a fifth. In the European Union, however, the figure is 81%, or more than four fifths. Those figures are stunningly divergent. If the Minister and his officials take back only one set of figures from this debate, I ask them to consider why there is such a different financing model in the US and why so much more share capital and long-term investment are put into businesses there than here in the European Union.

The European Commission green paper on the long-term financing of the European economy has been published and the Government will respond to it. It has some sensible suggestions. The London stock exchange has urged a “think small first” approach and asked the Commission particularly to assess the regulatory impacts on access to capital for smaller companies, the costs of capital and the fiscal bias against equity, which I shall come to.

For the sake of completeness, I should say that there are three other, smaller equity markets: Sharemark, AltCapX and BritDAQ.

Clearly, there is a funding gap for British industry and many businesses. Banks are increasingly nervous of lending to businesses that do not have strong balance sheets. I am not setting up equity capital against loan finance; if a business has a strong balance sheet and a decent amount of share or equity capital, it is more attractive for a bank to lend to. The two issues go together.

As we know from recent research from smallbusiness. co.uk, one in six small businesses has had to resort to a payday loan and just one in 10 was able to secure a loan from its bank in the first year of trading. The Minister’s Department, the Department for Business, Innovation and Skills, has said that it estimates the current funding gap facing British industry up to 2017 at anywhere between £84 billion and £191 billion, of which between £26 billion and £59 billion relates to smaller businesses. Those are huge figures. It is clear why we need to consider how share capital can help bridge some of that gap. Many smaller businesses are simply unaware of even the possibility of raising share capital and how they would go about doing it. I shall come to that in a second.

It is worth putting on the record that the tax treatments of share capital and debt are very different. Debt interest payments are tax deductible, whereas share capital is taxed four times—on purchase, for stamp duty; when profits are declared, through corporation tax; when profits are paid out, through income tax on dividends; and when shares are finally sold, through capital gains tax.

Credit where credit is due—the Government have reduced stamp duty on AIM shares, which is excellent, and we are lowering corporation tax. The Government have already helped in some areas. However, the Minister will see that there is a significant difference between the tax treatments of share finance and loan finance.

The regulatory costs of raising share capital are significant, and the Government need to look at that issue very closely. I am delighted that we have here not only this Minister, who is an excellent Minister for whom I have the very highest respect, but a BIS Minister. I sometimes wonder who in Government is looking at this issue, not just from the investor’s point of view in making sure that every box is ticked as regards regulation, but in being the champion for these 4.5 million small businesses as regards their need to raise share capital. I would love the Minister, as well as dealing with the very many important tasks he has to deal with, to be that champion. I am throwing down the gauntlet to him and hoping that he will take up that challenge as part of his many important responsibilities.

Financial Conduct Authority costs are high in this regard. One broker who deals in the small-cap market in the City, in a relatively small firm, estimated that the regulatory costs are about £10,000 per member of staff. A company that has large volumes of business can cope with that, but for one with relatively small volumes of business the whole thing will border on being unviable. Yesterday morning, at a breakfast meeting, I put that point to Martin Wheatley, the chief executive of the FCA. He acknowledged that the costs of raising share capital for smaller businesses are high and that regulation is onerous. He did not disagree with me, but I am not sure that we quite worked out what we can do about it.

I am convinced that we need to have a proper campaign of education for businesses up and down the country about the advantages of raising share capital rather than just going to a bank for finance. I would like chambers of commerce, the Federation of Small Businesses, the Institute of Directors, the CBI, accountants, lawyers and other business advisers to work together in our communities explaining to businesses how they can raise share capital if they are having difficulty raising loan finance. They could explain that having outside shareholders in a company does not mean that it loses control. Many businesses think that if they have an outside shareholder they lose control of their business, but they do not; if they still own 51% of the equity, they retain control. Yes, their standards of corporate governance may need to improve a bit, and that is generally a good thing, but they retain control. That is often not understood, and changing that would further open up the possibility of raising share capital.

It is important to give praise where praise is due. I was delighted when stamp duty was removed from AIM shares earlier this year; indeed, I was one of the people who lobbied very hard for that. AIM shares can now be included in individual savings accounts. It is not generally understood that if someone is lucky enough to have an estate that might breach the inheritance tax threshold, any money they have in AIM shares is not counted towards that threshold. That is another good thing that will encourage vitally needed investment in this important and growing sector of the economy. Indeed, I understand that the Share Centre reported an increase of over 106% in AIM stock purchases on the day that the policy was introduced.

There are some tremendous success stories; I would not want the Minister to think everything was bad. Let me give him an example. Abcam plc is a business involved in cancer research that sells antibodies to researchers. It listed on the AIM in 2005 with a £58 million flotation. By the summer of 2012, it had grown to a market capitalisation of £770 million. Its revenue rose from £12 million to about £100 million, and the number of staff grew from 78 to 600. The company has significantly expanded, opening up offices abroad, and it is now looking to join the main stock market. That is a huge success story, and we want many other businesses to do the same.

I mentioned the European Commission. I was encouraged to see that posted on its website on 18 October, just six days ago, was information about its “Competitiveness of enterprises and SMEs” programme, known as COSME. Its remit includes improving SMEs’ access to capital markets, so that is good.

The London stock exchange is making representations to the European Union and has asked the Government to do so as well. On the markets in financial instruments directive II, it is pressing for the creation of an “SME growth market” classification in order to, again, make it easier, less expensive, quicker and less of a burden for our vital small and growing companies to raise the capital they need. It also wants to ensure that the implementation of the solvency II directive does not divert capital from equities, and it wants the Government to engage with the Commission’s green paper—I know they will—on long-term loan financing.

In conclusion, I think I am remedying this House’s failure to highlight the significance of share capital to small, fast-growing businesses in particular. I repeat my request to the Minister to be, among others, a champion for the needs of businesses large and small up and down the country to raise equity finance and to help them get the funding they need so that they can grow, prosper and create the jobs that our constituents need to help power our economy forward and pay off our deficit so that we can have a secure and prosperous future as a nation.

17:16

[The Minister for Skills and Enterprise (Matthew Hancock)]

It is a great pleasure to respond to this debate, because I agree with the central thrust that motivated my hon. Friend the Member for South West Bedfordshire (Andrew Selous) to call it, namely the importance of equity finance, especially for small and medium-sized businesses, and the fact that it is not discussed as often as it should be in this House.

It is telling, as my hon. Friend has pointed out, that during Treasury and Business, Innovation and Skills questions we tend to get more questions on access to finance than on any other subject. There is some evidence that access to finance is improving, although it is still not in a strong position. Thanks to the tough choices we have made since 2010, I think it is widely recognised that the economy is, broadly speaking, on the mend. It has not fully recovered by any means, but it is on the way back. That is reflected in the number of businesses, not only in my hon. Friend’s constituency, where businesses are creating jobs, but across the country. Companies House records show that there were 480,000 new incorporations in 2012-13, which is the highest figure on record. If I may correct one of my hon. Friend’s figures—I do so as gently as possible—yesterday’s figures show that the number of SMEs in this country is now 4.8 million, not 4.5 million. I hope he is not too disappointed by that minor correction.

I accept my hon. Friend’s challenge to be, along with the BIS team, a champion of smaller businesses in their quest to access finance. Our programme is vital. The Breedon report made a series of recommendations, many of which have been acted on, including the introduction of the business bank, which my right hon. Friend the Business Secretary announced in September.

We know that it has been much harder for businesses to access finance since the crisis. One of the lessons of the crisis was that the economy had become too reliant on one source of finance, namely bank finance from the four big banks. The business bank will help to solve that problem, but it is by no means the only solution, because we need to increase the supply and diversity of finance available, which brings me to the subject of equity finance.

I will take on board all the points my hon. Friend has made and if I miss any out I will read Hansard and make sure they are acted on. I would stress that when talking about equity finance, we need to be cognisant of the importance of the wider availability of both private equity finance and public equity finance. Although it is difficult to measure with precision, in recent times, the amount of private equity finance, whether through angel investing, venture capital investing or bigger private equity financing, has been greater than the amount of public equity finance. Both are important. It is important to have diverse forms of finance, not only so that if one form struggles, others can take up the slack, but because different forms of finance are right for different companies.

It is true that we have extended tax relief, not only by cutting corporation tax, removing stamp duty on AIM shares and allowing individual savings accounts to invest in AIM shares, which is a tax relief in a sense, but through the extension of the enterprise investment scheme and the introduction of the seed enterprise investment scheme, both of which are extremely popular schemes for investing in small and fast-growing companies for those who pay UK income tax. The encouragement of equity finance, in whatever form, through tax relief is an important part of our programme to solve the problems that my hon. Friend highlighted.

Tax treatment plus regulatory costs, whether in the public or private sphere, make up the gap between the equity that an investor can put in and the investment that a small business receives. I hope that drilling down on both will bring more liquidity and finance where they are needed, which is in growing companies that can make good use of them.

I was struck by the figures that my hon. Friend set out. In the United States, 19% of this kind of finance comes from the banks, compared with 81% in Europe. The UK is one of the more friendly destinations in the EU for non-bank finance, but the figures are striking. When I was in the United States last week, I was struck by the powerful fact that more venture capital is available in the skyscraper in which the British consulate in Boston is housed than is available across the whole of Europe. That shows the difference between the two continents not only in the amount of finance that is available, but in the number of people who have started and grown a business and are now reinvesting. The United States, whether on the east coast or the west, is a generation ahead of us. Part of our job is to catch up as fast as we can. That challenge is real; the good news is that the opportunity that it presents is great.

My hon. Friend spoke eloquently about the various small exchanges. I urge him to look also at peer-to-peer finance, whether equity or loan, because that is a small but growing part of the market that companies can look to when trying to access finance.

As well as bringing tax relief and bearing down on regulatory costs, the Government make direct interventions. In the business angel sector, the Angel CoFund makes equity investments of between £100,000 and £1 million in SMEs. It does that alongside syndicates of business angels. It encourages greater levels of angel investment and syndication, and provides companies with experience and expertise alongside the capital. I echo my hon. Friend’s remarks that when finance comes into a small business, it brings not only pure capital, but better governance and advice from people who have skin in the game and who therefore take care in the advice that they deliver.

In the Budget this year, we announced that another £50 million would go to the Angel CoFund, doubling its size. I hope that it will help to strengthen the whole business angels sector, because it invests only when appropriate due diligence has been undertaken and a deal is structured properly. The UK Business Angel Institute, founded by the UK Business Angels Association and AngelNews, is creating standards of professionalism in UK angel investing, which by its nature often involves investing early in quite high-risk companies. If we can have more quality in training courses for private investors, such as those that the UK Business Angels Association is delivering, that will strengthen investing skills in that important area of the market.

My hon. Friend made the point that equity is taxed four times whereas bank debt is tax-deductible. A number of non-tax factors have an impact on whether a business decides to use debt over equity financing, so tax is not the only issue. Different companies look to different forms of finance, and debt can be quicker to obtain and less complicated to use. Of course, there is the also the question of the amount of ownership that is given up in return for equity financing.

I turn to deductions for interest as a business expense. To protect the UK Exchequer, a number of rules limit how much interest a company can deduct from its tax liability. My hon. Friend made the point that dividends are paid out of a company’s tax profits. However, they are exempt from tax in the hands of the company receiving them. In the case of an individual shareholder in the income tax system, the combination of dividend tax credit and the lower rates of tax for dividends ensures that dividends are taxed at broadly the same level as other forms of income, even after corporation tax is taken into account. It is important to take into account not just the number of different taxes that apply to a piece of income but the rates of them, so that we can work out the relative rate on each form of finance. Having said that, it is clear that the Government are moving in the direction that he wants, for instance through abolishing stamp duty on AIM shares and other growth markets, making investments eligible for ISAs and so on.

I wish to mention one other area of tax, which is the entrepreneurs’ relief. That is a valuable incentive and reflects the fact that entrepreneurs take risks and are often the beating heart of growing businesses, which should be recognised in the tax system. We have increased the amount of relief that can be used and allowed it to be used in more situations, so that more businesses and entrepreneurs can benefit from the 10% capital gains tax rate rather than the normal 28% or 18% rates. Over a number of Budgets, there has also been an increase in the lifetime limit for entrepreneurs’ relief to £10 million, so shares acquired from the enterprise management incentive can qualify for a lower capital gains tax rate. There has been action on stamp duty, capital gains tax and corporation tax, three of the four taxes that my hon. Friend mentioned as part of the barrier. The direction of travel is clear, and his argument is strong.

The value of small businesses to our economy makes them absolutely vital, and helping small businesses create jobs and take people on has been one reason why we have had such strong growth in the number of people employed in the private sector in the past few years.

[Andrew Selous]

I am heartened by what the Minister has said and by the tone and general thrust of his reply. Will he reflect briefly on my points about the cost of regulation? Might he perhaps meet Martin Wheatley of the Financial Conduct Authority, who admitted to me yesterday morning that the costs of raising capital are high? With his business hat on, representing 4.8 million businesses, will he consider whether there is any way to lower the costs of raising capital through regulation, while keeping investors safe?

[Matthew Hancock]

My hon. Friend will be delighted to know that I am already arranging a meeting with Martin Wheatley to make the arguments that he has eloquently made today and broader arguments about ensuring that we can get good finance into our small and growing businesses.

Question put and agreed to.

17:29

House adjourned.

Ministerial Correction

Thursday 24th October 2013 Ministerial Corrections

Thursday 24 October 2013

Redundancy

Thursday 24th October 2013 Ministerial Corrections

[Jackie Doyle-Price]

To ask the Secretary of State for Foreign and Commonwealth Affairs how many staff in his Department were made redundant in (a) 2010-11, (b) 2011-12 and (c) 2012-13; and how many such staff received payments in lieu of notice.

[Official Report, 14 October 2013, Vol. 568, c. 546-47W.]

Letter of correction from Hugh Robertson:

An error has been identified in the written answer given to the hon. Member for Thurrock (Jackie Doyle-Price) on 14 October 2013.

The full answer given was as follows:

[Hugh Robertson]

In 2010-11, 131 staff left the Foreign and Commonwealth Office (FCO), at a cost of £15.3 million. 118 of these left under old exit schemes.

In 2011-12, 89 staff left the FCO, at a cost of £5.3 million.

In 2012-13, 55 staff left the FCO, at a cost of £4 million.

The correct answer should have been:

[Hugh Robertson]

The Foreign and Commonwealth Office made one member of staff redundant on compulsory terms in financial year 2011-12 (who received a compensation period in lieu of notice); there were no compulsory redundancies in 2010-11 or 2012-13, however, the Office has run several voluntary exit schemes over this period and the details of these are:

In 2010-11, 131 staff left the Foreign and Commonwealth Office (FCO), at a cost of £15.3 million. 118 of these left under old exit schemes.

In 2011-12, 89 staff left the FCO, at a cost of £5.3 million.

In 2012-13, 55 staff left the FCO, at a cost of £4 million.

Westminster Hall

Thursday 24th October 2013 Westminster Hall

Thursday 24 October 2013

[Mr Dai Havard in the Chair]

Backbench business

Thursday 24th October 2013 Westminster Hall

Planning and Housing Supply

Thursday 24th October 2013 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(John Penrose.)

13:30

[Mr Laurence Robertson (Tewkesbury) (Con)]

I thank the Backbench Business Committee for granting this debate, which has been supported by a large number of concerned Members. In particular, I thank my right hon. Friend the Member for Arundel and South Downs (Nick Herbert) and the hon. Member for St Albans (Mrs Main) for sponsoring it along with me. There is concern among hon. Members and local planning authorities about apparent confusion in the Government’s planning policies. I requested this debate because I want to consider planning, the countryside and housing projections, as well as related issues, such as the Government’s professed preference for localism, as these matters are all interconnected.

Protecting the countryside was one of my main motivations for entering Parliament in the first place. As I represent the constituency of Tewkesbury, I am more sensitive than most to the need to avoid developing on or near flood risk areas. The terrible 2007 floods in Tewkesbury will never be forgotten by anyone who lived through them. I spend a lot of time trying to attract businesses, visitors and people in general to Tewkesbury, so I believe that a balance can be struck between allowing appropriate development and protecting our green belt, green fields and important open spaces, but I am not sure that we are striking that balance at the moment.

What do I mean by confusion in policy? The Government have said frequently, for example, that their policy is to preserve green-belt land, yet my local planning authorities—my constituency covers three—are telling me that the Government are pressuring them to provide for so many houses in their local plans or joint core strategies that it will inevitably compromise the green belt, green fields and flood risk areas.

In a ministerial statement dated 6 September 2012, the Government said:

“The green belt is an important protection against urban sprawl, providing a ‘green lung’ around towns and cities. The coalition agreement commits the Government to safeguarding green belt and other environmental designations”.

That seems clear enough. However, the same statement goes on to say:

“As has always been the case, councils can review local designations to promote growth. We encourage councils to use the flexibilities set out in the national planning policy framework to tailor the extent of green belt land in their areas to reflect local circumstances.”—[Official Report, 6 September 2012; Vol. 549, c. 33-34WS.]

That is less clear. Indeed, it is confusing, perhaps even contradictory.

On the face of it, reaffirming councils’ right to re-designate the status of their land could be seen as promoting localism. However, the fact is that Government pressure to create high housing numbers is forcing such re-designations, which flies in the face of localism and contradicts the localism policy. The Government’s policies on the green belt and the wider countryside are confusing and contradictory; clearing up that confusion is one of the purposes of this debate. The Government’s insistence on high housing numbers is threatening the green belt, which leads me to question why the Government believe that we need so many houses in the first place. I wish to consider the question of housing projections.

I recognise and claim everyone’s right to a decent place to live. My job immediately before I was elected to Parliament involved working with homeless women in London. My responsibility was to raise money to build a hostel and day centre for them, to enable them to take the first steps back to normality. I learned that in almost all cases, homelessness is caused not by a property shortage but by other factors such as finances, family breakdown, drug or alcohol abuse, unemployment, refugee status or other social factors. It is not that there are not enough houses.

The Government’s own figures seem to confirm that there is no shortage of houses. In an answer to a recent parliamentary question that I tabled, the Government informed me that at the last count, there were 709,426 empty properties in England. Add to that the number of houses with planning permission that are not yet built and the figure for available properties in England comes close to 1 million.

Of course, there are in fact shortages of two kinds of housing: affordable homes, which are scarce in the village where I live, and privately rented properties, partly because it is hard and often undesirable to be a landlord. There are shortages in those two sectors for reasons other than a shortage of houses as such. For example, it is getting on for 2 o’clock, yet any one of us could go out into London or anywhere else and find houses to buy this afternoon. I question the Government’s assertion that so many houses need to be built that local authorities must re-designate green-belt land in order to meet the Government’s arbitrary and undefined housing targets.

Tewkesbury is an example of what I mean. There is no housing shortage in my area. In fact, there is planning permission for houses that have not yet been built, as well as empty properties. In the past 20 years, 7,536 houses have been completed in the borough of Tewkesbury, yet the Cambridge university econometric assessment, which is used by local councils and presumably approved of by the Government, suggests that 10,900 houses will be needed in the borough over the next 20 years—or, to be strictly accurate, over the next 18 years, as two years of the plan period have already passed. Why has Tewkesbury’s housing need for the next 20 years been assessed as 45% higher than for the last 20 years? It needs explaining.

It gets worse. Tewkesbury borough is involved in drawing up a joint core strategy with Cheltenham and Gloucester. The JCS allocation for Tewkesbury borough for the next 20 years is not the 10,900 I refer to, high though that is, but 18,800, which is 150% higher than for the last 20 years. Why? Partly because it is deemed that Cheltenham and Gloucester cannot find land for their housing growth needs, so the houses will be dumped in Tewkesbury borough, potentially causing housing stock in Tewkesbury to increase by 54% over the next 20 years and causing the councils to build on green-belt land and in other undesirable areas.

That raises the question of the duty to co-operate. Gloucestershire has six council areas, not just three, and the duty to co-operate goes beyond county boundaries. Why, then, will the houses that Cheltenham and Gloucester are deemed to need but cannot accommodate end up being built on green-belt land in Tewkesbury? That cannot be fair, and it demonstrates the paucity of the current planning guidance, which says that plans will be considered unsound if the councils concerned have not co-operated. However, it is the councils that are not involved in the plan, as well as those that are, that need to co-operate. How does that work?

I reiterate that if it were not for the Government’s apparent pressure on local authorities to plan for a greater number of houses, the problem would not arise. Such a top-down approach is arbitrary and undefined. I say so because that is basically what the Government indicated to me in reply to a parliamentary question. In a written answer dated 9 July, the Minister told me:

“While there is no standard methodology, councils’ assessments should be demonstrably objective.”—[Official Report, 9 July 2013; Vol. 568, c. 191W.]

What exactly does that mean? If there is no standard methodology for assessing future housing needs, how can Government assessments be right and the local authority’s previous housing figures wrong? That is another question that I want answered today.

That brings us to the issue of localism. In my view, the Government were right to scrap the regional spatial strategies. It was surely wrong for unelected, anonymous people to determine how many houses an area should build and where they should build them. It was therefore with great anticipation that I and many others looked forward to the new housing and planning strategy—only, so far, to be disappointed.

Local plans have always had to be sound, and developers have always had the right to appeal against decisions against them locally; there has also always been a presumption in favour of sustainable development. However, we now seem to have gone beyond that, and to be setting the bar far too high for local planning authorities, and that causes them to contradict another area of Government policy, which is the need to protect the green belt.

As I have said, in my area, Tewkesbury borough will, if the JCS is adopted, have to increase its housing stock by about 54% over the next 20 years. That massive increase will mean that the council has to grant permission for developers to build thousands of houses on land that is currently designated green belt. Such sites have already been identified.

[Sir Bob Russell (Colchester) (LD)]

I understand the point that the hon. Gentleman is making, but is it that Tewkesbury borough council is not engaging in a conversation with neighbouring authorities, or do those authorities want to foist some of their development on Tewkesbury, or on its borders?

[Mr Robertson]

The authorities are involved in the joint core strategy, which covers three councils, but there are six councils in the county, and others outside the county overlap with them, or are contiguous. Perhaps there has not been enough of an attempt to ensure that all councils join in, and there has been obstinacy on the part of some of those involved in the joint core strategy, but whatever the case, it is a really strange situation to have three councils getting together while others each have their own plans. The whole system is very confusing and difficult. As for Tewkesbury’s allocation, even if we accept the Cambridge assessment of 10,900 homes, we will not have that figure; we propose to have 18,800, even though we built only 7,500 in the previous 20 years. The situation is very confused.

I have mentioned that there are proposals to build on designated green-belt sites. If they are built on, it will bring the coalescence of Cheltenham and Gloucester nearer, but it was precisely to avoid that that the land in question was designated green belt in the first place, in line with the policy stated in the written ministerial statement that I read out. Surely that is not what this Conservative-led Government intend to happen?

As I have mentioned the Conservative party, may I say in the privacy of this room that our policies on planning are losing us many votes in many areas? I am sure that the leaders of my party do not intend that to happen. In some ways, I feel that the Government believe that recovery and growth in the economy can be kick-started by encouraging more house building. Perhaps that is why the Government are requiring such high numbers, rather than following assessments based on experience and fact.

[Mrs Anne Main (St Albans) (Con)]

I will be brief, because so many hon. Members want to speak. There are huge numbers of readily accessible plans in the system that no one is building for, so just granting more plans will not kick-start the economy; it will just provide more land-banking for developers.

[Mr Robertson]

I entirely agree. I do not believe that it is for the Government to engineer a recovery in such a way. Surely the market will determine in which areas there will or will not be growth, so why not leave local councils to determine how many houses they need over any given period and to make their plans accordingly? The Minister may reply that that is indeed happening, but it is not. The three council areas I cover have all told me that they have to make plans for a high number of houses, because the Government will reject plans as unsound if they do not plan for such large numbers. If that is wrong, I want the Minister to say so. I will then go back to those councils and tell them that their view is wrong. I do not, however, believe that that is the case.

There is certainly a feeling that developers’ ad hoc applications are granted too freely on appeal by the Secretary of State. I have examples of that in my area. Appeals have been granted that will allow the building of many houses at Bishop’s Cleeve and Winchcombe, against the wishes of local people. On the face of it, those appeals were allowed because the council has been deemed to have an insufficient five-year land supply. What is that assessment based on? Is it based on the number of houses built in the past, on some arbitrary and undefined calculation, or on figures in the regional spatial strategy? The strategy for the south-west was never signed off, and that whole policy has been scrapped in any case. Once again, this practice flies in the face of the localism concept that the Government are promoting.

Many hon. Members wish to speak, so I will summarise my main concerns. The Government’s policy on the green belt is confused and contradictory, and we need clarification today. Exactly how do the Government assess how many houses will be needed in the future? Why are they following the predict-provide approach? Why are estimates for future housing need so high, and why are they so much higher than what was needed for the last 20 years? As a slight aside, much of the population growth in the past 20 years has been caused by immigration. Given that the Government are intent on reducing net immigration and claim to have done so already, how can housing need be predicted to increase? Why is the localism agenda being ignored? Why is pressure being put on local councils, causing them to build on green-belt land? All those questions are being asked in the council areas that I represent and, most importantly, by the constituents I represent, and they would all like answers.

[Several hon. Members]

rose—

[Mr Dai Havard (in the Chair)]

Order. I thank hon. Members who have indicated that they wish to speak. I have a long list of 15 Members. Given the time constraints, I appeal to you to plan on having seven minutes each. That will give everyone a fair chance to speak, and allow for a proper response from the Minister, as Members will want him to give a comprehensive reply.

13:48

[Valerie Vaz (Walsall South) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Havard. I thank the hon. Members for Tewkesbury (Mr Robertson) and for St Albans (Mrs Main), and the right hon. Member for Arundel and South Downs (Nick Herbert) for calling the debate, which is very timely.

I declare an interest as a member of the National Trust—I am concerned about its announcement that the National Trust will allow fracking on its land, but perhaps it will consult its members—and in my previous life, I used to litigate on behalf of the Government on planning matters.

I want to focus on three main areas that have affected my constituency of Walsall South, which is an area of mixed housing, with 11 farms—planning and the green belt, land banking and permitted development.

The green belt was first proposed by Ebenezer Howard in 1898, in his book “Garden Cities of Tomorrow”. Hon. Members may not know that as well as writing that book, his day job was as a transcriber for Hansard in Parliament, so who knows what the transcribers get up to in their spare time? In 1935, the metropolitan green belt was proposed by the Greater London regional planning committee, under the leadership of Herbert Morrison, one of whose relatives is in the other place. In 1947, under the main Town and Country Planning Act, councils outside London became able to control the use of, and to develop, undeveloped land. In 1955, the green-belt policy was established, requiring local authorities to set out the green belt in their area.

Like the hon. Member for Tewkesbury, I still find that there is a misconception about the nature of the green belt, what planning in the green belt is and what “very special circumstances” means. We have a national planning policy framework in place. In old money, which is what I am used to, it was called planning policy guidance. There were lists of criteria of what could and could not be built on the green belt. Either way, whether we use the old money or the new framework, the green belt should be protected, and it is not.

In Walsall South, we fought against development on the site of the Three Crowns pub. Against the planning officer’s advice, permission was granted for 14 flats with three detached houses on the green belt. The development was clearly out of character for the area. Since then, nothing has happened, except for the development of a car wash. No building work has taken place. The only sign of creativity is graffiti on the building. Land and building have lain empty and unused for three years.

As we are debating this matter today, a decision will be made about the disused site of the Three Crowns school. It is green-belt land that was given to the community, so it is council land. Permission will be given—or perhaps not—for eight detached houses. Such development is not required in the area. Not only was the consultation carried out in the summer holidays when people were away, but the plans go beyond the footprint of the building.

There is need for housing in Darlaston, in another part of the constituency, and there is permission for 224 houses to be built on a former factory site. Permission was granted in 2007 and still the site remains derelict, without the sound of people coming in and out of their houses. The owners are a subsidiary of the Royal Bank of Scotland. The residents in the area say that they want housing, a community space and a place for young people. The owners, however, want a retail development on a site that is near the largest retail parks in the region; that is land banking at its worst.

My third area of contention is permitted development and its extension. We have the extraordinary situation in my constituency where a phone mast has been placed in a high street. The council rightly refused permission, but because it sent the rejection by second class post, the company was deemed not to have been given reliable and verifiable notice of the refusal. There was notice: Vodafone were informed of the result by phone and the refusal was on the council website. Residents will have to put up with this phone mast, as there has been no compromise from Vodafone. Indeed, Vodafone is planning to extend the height of the mast. There were many sites for the mast—I have been in discussions with Vodafone—but the company insists that it wants to keep it on the high street. It is an eyesore, and because of a simple mistake, my constituents are affected. Furthermore, with the new permitted development rights these phone masts can be extended up to 20 metres and widened by up to a third. The Phesay phone mast is on a pavement on the high street. Once again, other interests carry more weight than those of the people who have to live with the consequences of such decisions.

In conclusion, with cuts to local authority budgets, those with the skills to make coherent planning decisions are in short supply. Such people should be valued, as should the views of residents, with a tribunal attaching the appropriate weight to the views that are based on planning grounds, and not just on commercial interests. In that way, we will maintain the spirit of Octavia Hill and Beatrix Potter and balance the need for housing with a protection of the countryside preserved for future generations.

[Mr Dai Havard (in the Chair)]

I thank you for your time consideration. I now call the co-sponsor of the debate, Mrs Anne Main.

13:54

[Mrs Anne Main (St Albans) (Con)]

St Albans is ringed by green-belt land and green fields. We have good schools, very low unemployment, good links to London and a beautiful historic city. We are an aspirational living destination as well as an area in which people have firm roots. Once they are there, they do not usually wish to move; they want to bring up their families there, and their families want to stay.

It is no wonder that developers have us in their sights. We are in the proximity of London and house prices are high. I hope that local need and modest growth are not being confused with the ramped-up desire to market our area, as I regularly see local developments being actively marketed in London in terms of relocating for quality of life. For local councils, therefore, the “predict and provide” is hard, as we are trying to satisfy the appetite of developers. We want to ensure that we support the local economy, businesses and the need for the sort of development that our area can handle. I want to focus on the economic balance of an area.

Locally, it is hard to find a significant number of large brownfield sites, so any development tends to be a sensitive issue. We must make hard choices and my authority is up for that. We are actively undertaking a green-belt review, but we wish to have minimal impact on our green belt and coalescence. The need for local decision making in the planning system will be a strong theme in the debate, and Members from different areas will have their own issues and views in that regard. I trust local elected representatives to act like grown-ups, to listen to residents, to recognise the need to build and develop, and to plan and provide for their local area. No one wants a no-build or silo mentality, and in St Albans we are certainly not averse to having cross-border authority co-operation.

I welcomed the fact that in June my right hon. Friend the Minister urged local councils to encourage co-operation. I urge him now to listen to neighbouring authorities, which are being frustrated by the current developer-led system. They may wish for something in their area, but it will not happen because something is being imposed in a neighbouring area.

A case in my area proves that point. Hertfordshire is furiously resisting a rail freight interchange on 300 acres of green belt, slap bang in the middle of villages, accessed off village roads and with no direct motorway access. It is at a commuter pinch point on the line—commuters are very important to the economy of St Albans, and we do not have blue collar workers—and all in all, the villagers are up in arms about the interchange, which certainly was not included in the local emerging development plan. We believe that it is the wrong site in the wrong area and that it will have an injurious effect on our part of the countryside. Even the inspector in his first and second reports rejected the site, observing that

“there is not a large, available work force local to the Radlett site…The net result would inevitably be mass in-commuting, mostly by car, all of which is directly contrary to the Government’s policy. The irony of this is almost painful. The Government promotes SRFIs in order to advance the cause of sustainability—“

and the developer is promoting the proposed site—

“in a wholly unsustainable location.”

If we are to take seriously the protection of the green belt, surely we should be looking at relinquishing parts of it only when we absolutely have to and we should relinquish only those bits that would be least injurious to us. The inspector also said that there is no dispute that we enjoy very low levels of unemployment

“and several of those who spoke at the inquiry advised me that employers in the area were already experiencing difficulties in recruiting workers.”

He said that there would be no reason for that to change should we have this large commercial development on our green belt.

Members might be amazed to hear that only 15 miles north in a neighbouring authority—I know that we are supposed to co-operate with our neighbours—on exactly the same train line, well away from residential homes, unlike in my constituency where residents are directly backing on to this site, development is starting on a newly constructed motorway spur off the M1 costing £134 million. Also under development is a £2.5 million slow passing link, which would allow freight lorries to wait and heavy trains to let through the passenger services that are all part of the new £6 billion Thameslink commuter services. Moreover, there is a willing local work force who need the jobs.

I cannot say this strongly enough: the public will find that scenario completely puzzling. We are supposed to have a commitment to the green belt and to the policy of letting localism decide. We talk about having economic regeneration in areas that need it and about not over-heating the areas that do not need it. Here we have an area that waited to get the infrastructure in place. It now has it in place and the funding to facilitate it. The scheme is included in the local plan. The reason it wants it is to improve the economic regeneration of the whole area. In January, the site assessment was made in which the council said:

“Overall, it is considered that this site will be suitable for the development of a RFI and employment land and will make a significant contribution to the economic growth of the area.”

In its own assessment, it said:

“It will contribute to the economic delivery of the area by providing much needed employment opportunity to complement the growth of north Luton and Houghton Regis.”

This is where the public are puzzled; my hon. Friend the Member for Tewkesbury (Mr Robertson), who opened this debate, said exactly that. We must have a degree of sympathy and co-operation with areas that are near to us, and I really want that to happen, as people can imagine. However, I am puzzled why the Minister did not give this mutual gain and benefit to both areas. At the time of his minded-to decision—that is somewhat in the past, so I hope today he has a chance to reflect on it—he said that there was

“'little substantive evidence…to indicate that…site”

was “preferable”.

Perhaps today the Minister will reflect on those recent developments, which I believe are material planning considerations. First, Mid Bedfordshire has a firm commitment to this project; it has expressed the need for development. There is a massive motorway funding agreement now in place and going ahead. The rail infrastructure work has started; he can visit it and see it. It is in an area of green belt that is certainly not as sensitive as mine. What is more, I am not fighting an authority that is resisting it; we are looking at an authority that will welcome it with open arms.

My site will have 25 mph trains crossing a fast line. There will be an interruption to my commuter services, and those commuters are a part of the London economy. The St Albans economy is very much knowledge-based, and those workers support a lot of businesses in London. To have their fast Thameslink train commuter services interrupted by 25 mph freight trains will be a nightmare. I have written to the Secretary of State for Transport because we still do not have the pathings, and we still have not received the assurances we want.

I find it amazing that the planning process is still developer led. Developers pick the sites they want to build on and it seems they are delivering some Government aims, whether on housing totals or strategic rail freight. Surely we can start looking at this process in a more local fashion.

The latest jobs figures in St Albans, which are all part of the mix, confirm almost zero unemployment. Nothing alters; we are fortunate in St Albans. We have a blue collar worker deficit, and yet there are nearly 5,000 unemployed people in the Luton area, which is where the proposals show we would draw our work force from. Why are we still bussing—well, we are not using buses, but why are we allowing cars to circulate around our countryside to access inaccessible sites, when just up the road from us we have an area crying out for economic regeneration? The second inspector’s report said:

“Employment has never been a major problem in this part of Hertfordshire. A project such as this ought to be directed towards a regeneration zone.”

I agree with that.

Of course, a developer will always push his own site, whether it is for housing or—as in my case—for a major infrastructure project. Ironically, on a large infrastructure project such as this one, the developer is allowed to conduct his own alternative sites assessment and choose his own selective criteria by which to judge a site. So it is not surprising that—hey presto—you can demonstrate after all, Mr Havard, that after due consideration of everywhere else, your site is the best—not yours, Mr Havard, but the developer’s.

Is there any consideration within the Minister’s current thought processes about whether we can alter that situation? Why should the developer pick the criteria by which we will judge a site and then say, “Well, mine’s the best”? If we listen to local decision makers, the answer is different, as I have just demonstrated, but not surprisingly in my case I have two different developers, so each one wants to say that their site is the best; the difference is that one local economy believes theirs is the best.

[Mr Dai Havard (in the Chair)]

Can I ask you to—?

[Mrs Main]

I certainly can.

If we are to stand for anything, it is as a Government of empowerment and choice over planning and local decision making. That is what the residents expected when this Government came as a coalition. I cheered the abandonment of the regional planning targets. I sincerely hope that this Government will review its planning processes.

[Mr Dai Havard (in the Chair)]

Thank you very much. Well, Ms Vaz gave us a little bit of extra time and as you, Mrs Main, are a co-sponsor of the motion, it was probably helpful that you had a little extra time. May I remind everyone please to give others the opportunity to speak?

14:03

[Sir Bob Russell (Colchester) (LD)]

Thank you, Mr Havard, for calling me to speak. I thank you, the Minister, and the shadow Minister—the hon. Member for City of Durham (Roberta Blackman-Woods)—for understanding that I am not able to be here for the wind-ups.

The Minister will have noticed that there are 23 Government Back-Bench MPs here today, and it may well be that, at the end of three hours of debate, he will not have too many supporters. That is because the reality and the rhetoric of the Localism Act 2011 sadly are not the same, and while the intentions were clearly there, the reality is not.

I will be very parochial and talk about my constituency, which is supposed to be the fastest-growing town in the east of England. The Minister will know from questions that I have put to him and to his predecessors that I will be site-specific. I ask him and his officials whether it is appropriate that they will shortly make a determination on a development of 1,600 homes, even though the section 106 agreement fails to deliver the funds for the two schools that are required. It is not me saying that but Essex education authority. It says that there is no money to build the schools. How on earth can approval be given, particularly as the development is contrary to Government policy, which is that brownfield land, where available, should go ahead of greenfield land?

This particular site, which I have dubbed the fields of west Mile End, is adjacent to a former psychiatric hospital site that is on the market and zoned for housing; it has been for several years. The sale could be scuppered at the 11th hour if the development on the farm land goes ahead, because even though Colchester is the fastest-growing town in the east of England, there must come a point when there are too many houses and there is a glut. We already have a glut of flats—the “Prescott” flats. The last Labour Government insisted that the future was flats. We have a glut of empty flats in my town. What we want is family housing.

Do hon. Members remember an advert from a few years ago about a beer that reached the parts that other beers did not reach? Well, we have a local developer called Mersea Homes that is able to reach land that has never been lined up for development before. For example, the fields of west Mile End have always been land without notation—white land. It was never going to be built on, and no developer had a chance there. All of a sudden, under the radar, the land was lined up for development. The ward council did not know about it, or if it did—I am not sure what happened. It is the only part of my constituency with a community council—Myland community council—and it was late in the day when it found out what was going on.

This is a bad development, a bad plan, with 1,600 houses to be served by the longest cul-de-sac in Britain. All the cars will pour on to the already congested highway network around Colchester mainline station. Everybody knows it is wrong, and in a question that I put to the Department for Communities and Local Government, I said that developers and planners should be

“forced to live there for a minimum of five years”.—[Official Report, 4 February 2013; Vol. 558, c. 13W.]

They are creating problems for others to suffer that they will not suffer themselves, because they tend to live in big houses miles away; they do not have to put up with the consequences.

To the east of Colchester—this is why the hon. Members for Tewkesbury (Mr Robertson) and for St Albans (Mrs Main) are absolutely right—the next-door council, Tendring district council, wants to plonk houses on farm land that, astonishingly, nobody has ever thought should be built on, and on which, in 2010, Mersea Homes secured the best part of 800 acres. Having been lucky twice with farm land that had never been zoned for housing, Mersea Homes must know how to go about securing it. I will leave that hanging there.

Tendring district council has the North sea on one side. Clacton is 15 miles from Colchester, and the council is talking about a development of 3,000 houses adjacent to the borough boundary of Colchester. It will double the urban estates of Greenstead and Longridge Park. It will just be an urban sprawl going eastwards. The local authority—Tendring—should build its houses where its people want them. As for the idea that people living on this huge estate right up on the border of Colchester will look to Clacton—16 miles away, where they pay their council tax—rather than to Colchester, when many of the houses will be in sight of the town hall, that is not what the Localism Act 2011 was about.

What is worrying—I will end on this, Mr Havard—is that it is quite clear that this has all come in under the radar. Elected councillors in Colchester—virtually all of them—have not been engaged in the debate. Secrecy, or at least lack of involvement, is a serious issue here. There should be an inquiry into what the hell is going on.

[Mr Dai Havard (in the Chair)]

Thank you. I have had a missive from Mr Turner. Although special pleading is not allowed, it is his birthday today. I cannot accede to the request that we all sing him “Happy Birthday”, but he indicated to me that he has a pressing engagement, so I call Mr Turner.

14:10

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

Thank you, Mr Havard. It is a pleasure to serve under your chairmanship. I congratulate my hon. Friends the Members for Tewkesbury (Mr Robertson), and for St Albans (Mrs Main), and my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), on securing this important debate on a issue that affects everybody in every constituency.

I have long been interested in planning and there are many points that I could raise, but I want to keep my remarks brief and will restrict them to an aberration in the planning rules. I shall also make an observation about local development plans.

The problem is that planning authorities can give themselves planning permission to develop sites that they own. I was a city councillor in Oxford for 17 years, until 1997, and during that time, on many occasions, the council gave itself planning permission, sometimes in preference to other applicants. I am certainly not suggesting that my colleagues at the time did anything wrong or even anything questionable. However, if people own a site and are responsible for giving themselves permission to develop it, it is hard to ensure that there is no appearance of impropriety. We all know that appearances are important. We need to make sure that people have faith in the planning system. I know that this issue troubles people across the country; indeed, a number of people have raised it with me on the Isle of Wight.

I am not sure what alternative procedure we could or should follow. Perhaps it would be appropriate for neighbouring authorities—if there are neighbouring authorities—or a totally separate body to take decisions about council-owned land, or in cases where the local authority would benefit in some way. I should be grateful if the Minister shared his thoughts on this issue and said whether he believes it to be a problem that the Government should address that a council may give planning permission for land that it owns, where it would benefit from doing so.

Local development plans were introduced in 2004, so they postdate my experience as a councillor. I do not claim to have any particular knowledge of or expertise about them. However, I know that writing them and getting them approved can be a long-drawn-out process. Although they replaced a system that was seen to be inflexible, the intention being that they could more easily be amended, having spoken to Bill Murphy, head of planning services at Isle of Wight council, I am not convinced that changes to the core strategy document can be made as quickly and easily as was envisaged when the plans were brought in. It seems to me that a Minister can change the rules much quicker than a local authority.

To provide an example of certain problems, on the Isle of Wight the core strategy document sets out that we should have 520 new dwellings every year. It is not a secret that I think that is far too many, but it was not a decision for me to make; it was made, quite properly, by an elected council. However, it is now clear that the existence of that target may make it more difficult for the Isle of Wight council effectively to oppose inappropriate developments, such as Pennyfeathers, a proposal to develop a 55-hectare greenfield site just outside Ryde. There are many problems with that proposal. Not least of them is that Monktonmead brook already floods. Also, there are a number of brownfield sites available in and around Ryde that should be developed before greenfield farm land. Putting between 800 and 1,400 additional houses on Pennyfeathers farm land is quite wrong. I sincerely hope that the council will find the grounds to reject this development; if it does, I will be pleased.

It should be much easier to amend the core strategy document to take account of changes, particularly political change. A Conservative council may be replaced by a Liberal council the following day. [Interruption.] Well, not a Liberal, but an independent one, perhaps. The council should be able to change the rules, because the people have voted. That also applies to changes in economic circumstances, changes in local authority control, changes in demographic trends, or even changes in response to proposals that are clearly against the wishes of local people, because if localism means anything, it must take account of what local people want. I shall not detain the Chamber any longer. I should like the Minister to make his views clear.

[Mr Dai Havard (in the Chair)]

Happy birthday, Mr Turner!

14:15

[Nick Herbert (Arundel and South Downs) (Con)]

I congratulate my hon. Friend the Member for Tewkesbury (Mr Robertson) on securing this debate, which I am delighted to co-sponsor.

Two years ago, we passed the Localism Act 2011 and promised local people that they would be given a greater say over matters that they care about, including development. It was part of a deliberate programme of devolution of power to people and communities. Ministers promised, and continue to promise, that power will transfer to local people in accordance with our manifesto and the coalition agreement. I fear that, two years on, people’s faith in that promise will be considerably undermined if we allow, by the back door, the re-entry of top-down decision making that effectively denies the localism that was promised.

Let us consider the first problem. Central to the Government’s new planning policy was the principle of sustainable development. Paragraph 14 of the national policy framework states that this is the

“golden thread”

that should run through

“both plan-making and decision-taking.”

There are two words in the phrase “sustainable development”; it is imperative that proper weight be attached to the first of them.

Many in communities in my constituency are concerned that inadequate consideration is given to the availability of infrastructure to support development proposals. We have congested roads, over-subscribed schools, serious flooding issues and countryside that is valued and in short supply. Half my constituency is protected landscape, forcing all development proposals into the other half that is not.

Under the new system, local authorities are required to make an assessment of housing need, but surely that cannot be the last word. If sustainable development means anything, local authorities must be free to decide how many houses can be built—not just how many are necessary—to match that need, otherwise we might as well return to the top-down targets. The Campaign to Protect Rural England’s Sussex Countryside Trust, in my constituency, makes the point well:

“The figures generated by the Strategic Market Housing Assessment are an assessment of need without constraints. These figures cannot simply be passported into an emerging local plan without an effective analysis of the limitation imposed by the supply of land for new development, historic underperformance of infrastructure or environmental constraints.”

Are local authorities free to make such an assessment and, regardless of the housing need that they assess, then decide how many houses can be delivered sustainably in their area? Or is an assessment of need the last word? The Government are driving hard at the demand to provide more housing. The “sustainable” part of sustainable development, promised in the Localism Act, is being put in the second rank.

A second issue is whether there is proper assessment of the available infrastructure. That issue was raised by me and many of my hon. Friends during consideration of the Growth and Infrastructure Act 2013 in December 2012. I moved an amendment stating that infrastructure needs should be taken into account when drawing up local plans. I was grateful to the Minister for what he said in response:

“I will look at making sure that the guidance that is provided in a much reduced set of planning guidance is very clear about the need to plan positively and specifically for infrastructure that is required to support the development and to ensure that it is brought on stream in good time for that development.”—[Official Report, 17 December 2012; Vol. 555, c. 605.]

That was a pledge that there will be very clear guidance on the need to plan positively for infrastructure, but when the guidance was published in beta form—it was a draft—on 28 August, I think I am right to say that there was no such reference to infrastructure. My second question to the Minister is whether he will in fact introduce that guidance on infrastructure, as he promised in the House last December.

Another key way in which faith in localism will be undermined is if we return to the bad old days of planning by appeal, and allow the Planning Inspectorate to overturn planning applications. That is happening time after time, and it is hugely undermining faith in localism in my constituency and elsewhere. It is undermining faith in the whole system that we have set up to encourage people to take responsible decisions on planning in their local area. That is not just my view. In a briefing today, the Local Government Association said that the Planning Inspectorate’s

“apparent disregard for sites identified in emerging local plans not only undermines the principles of a plan led system and local determination set out in the NPPF, but also seriously undermines local communities’ trust in the planning system. This results in resistance to further local development, general local resentment, and development that does not reflect the needs of local communities as set out in the draft published local plans.”

In a letter to me on 6 August, the Minister said that

“decision takers may give weight to relevant policies in emerging plans”—

that is, plans that have not yet been completed, which is important, because they are either district councils’ plans, or emerging neighbourhood plans, in which people have put a great deal of effort into deciding where development should go. If those plans were given no weight, speculative applications would be allowed, and we would get a system that was not plan-led, but developer-led, which would effectively amount to a free-for-all on our countryside. However, when the guidance was published, it actually stated that

“arguments that an application is premature are unlikely to justify a refusal of planning permission other than in exceptional circumstances”,

so will the Minister consider allowing more weight to be attached to emerging plans, so that an indication by local people of where they do, responsibly, want development, and also where they do not, is taken on board by the Planning Inspectorate? If that is not taken on board, again, we might as well return to the top-down system that we had before, which did not deliver the new housing that we needed, and we cannot justify promising to people that we are delivering localism.

I understand why the Government were concerned about the situation they inherited. There was a low level of housing starts, and we have to accommodate this country’s housing need. There are important generational arguments about the lack of opportunity for young people and their ability to get their foot on the housing ladder, but allowing top-down targets to return through the back door—indeed, even encouraging them—will not deliver the additional housing that is needed. It will merely deliver a great deal of pain—pain politically, as people see that the promise of localism was not in fact real, and pain because such top-down targets will not help people to get their foot on the property ladder and will not have a significant effect in reducing property prices.

House building is growing at the fastest rate for 10 years. A more radical reform will be required if we are to seek to close the gap between incomes and rapidly rising house prices, but I urge the Government to keep faith in the localism that was promised in our manifesto and in the Act that we passed, and not to return to the bad old days of top-down targets and of allowing the Planning Inspectorate to override local decision making, which merely set up conflicts and delivered nothing, in terms of the housing that we needed.

[Mr Dai Havard (in the Chair)]

We have now used the time won by Sir Bob and Mr Turner.

14:24

[Sir Tony Baldry (Banbury) (Con)]

I last raised concerns on planning and planning guidance in a debate I initiated in the House on 18 January, which can be found at Official Report column 1218. I will not repeat what I said in that debate, and I will put the full text of what I intend to say this afternoon on my website, www.tonybaldry.co.uk.

In January, I expressed concerns that developers were making opportunist planning applications in the hope of securing planning permission before the adoption and introduction of a new local plan, and I also observed that if localism and neighbourhood planning were to have any meaning, local communities must have the opportunity and a reasonable period of time in which to draw up neighbourhood plans. I drew the House’s attention to four specific planning applications in my constituency, all of which clearly ran counter to Cherwell district council’s local plan.

Following that debate, the Secretary of State for Communities and Local Government decided to call in all four planning appeals. As a former Planning Minister, I am well aware of how rarely Ministers call in planning applications, so I assumed that the Secretary of State had called in the applications because he wanted to give an indication on the weight that the Planning Inspectorate should give to draft and emerging local plans, a point raised by my right hon. Friend the Member for Arundel and South Downs (Nick Herbert).

I assumed that the Secretary of State would also want to give some indication on how the Planning Inspectorate should calculate the five-year housing supply and would take the opportunity to reinforce the Government’s belief in localism and commitment to neighbourhood planning. In the event, the Secretary of State did give a clear indication on the weight that should be given to the draft local plan: absolutely no weight whatsoever, according to the decisions in all those appeals. By allowing all four appeals, the Secretary of State also made it clear that no weight or consideration should be given to localism or neighbourhood planning.

Given that those appeals all ran so clearly counter to the provisions in Cherwell district council’s draft local plan, they not surprisingly provoked a good deal of anger from local residents, local councillors and indeed myself, and given that all the decisions were made by the Secretary of State, they not surprisingly attracted press coverage. In response to journalists’ questions on why the appeals had been allowed, in one article the press spokesperson of the Department for Communities and Local Government observed that the appeals had been allowed because Cherwell had not made

“sufficient progress with their Local Plan”.

I will examine that proposition. A draft local plan is not something that can be whistled up overnight on the back of an envelope; it requires consideration and full and proper consultation with local people and house builders. If the local planning authority gets the local plan wrong, it is liable to judicial review.

One of my many frustrations with the Secretary of State’s decisions is that Cherwell, after careful, widespread and considered consultation, had managed to produce a draft local plan to which there is practically no opposition among local people. I would have understood the Secretary of State’s decision to allow all four recent planning appeals if there was a scintilla of a suggestion that my constituents or Cherwell district council were in any way wanting to frustrate local housing development. The reality is quite the contrary.

Over the past 25 years, Banbury and Bicester have been two of the fastest growing towns in Oxfordshire and everyone accepts and recognises that Banbury and Bicester will continue to develop with new housing growth over the next 20 years. Indeed, I can only assume that Ministers in the Department for Communities and Local Government simply do not talk to each other. That may be a consequence of the fact that, unlike in my day, when Housing Ministers—as the Chief Whip, the right hon. Member for North West Hampshire (Sir George Young), who was here briefly, and I were—were also Planning Ministers, those roles now seem to have been separated.

If Planning Ministers had spoken to Housing Ministers, they would have learnt that Housing Ministers had made numerous visits to my constituency over the past couple of years to support and encourage the numerous housing initiatives in north Oxfordshire, including: one of only two eco-town projects left and being developed, which in due course will deliver approximately 5,000 houses; probably the fastest turnaround to grant planning permission for new housing on a major Government surplus brownfield site on former Ministry of Defence land at Bicester, granting planning permission for 1,900 houses; and one of the largest, if not the largest, proposed self-build housing projects anywhere in the country. Indeed, the Minister’s Department and the Homes and Communities Agency tell me that what we are proposing at Bicester will be the largest self-build scheme by a long way anywhere in the country and will deliver up to 1,900 houses. Cherwell district council is so keen to get house building going in north Oxfordshire that it has offered to buy the surplus MOD land from the Government, so that it can ensure that new house building takes place there as speedily as possible.

This very Monday, Cherwell district council agreed its local plan for submission to the Secretary of State at a meeting of the full council, which endorsed it with a unanimous vote. No responsible local authority could have produced a local plan more quickly. The agreed plan makes robust provision for housing until 2031 and envisages 16,750 new houses being built in Cherwell district during the survey period up to 2021. That is in a robust and deliverable local plan that has been adopted unanimously and without any significant local opposition. Moreover, the House might be interested to know that more than 50% of the planned houses are already being built or are subject to planning applications under active consideration by the district council. Cherwell not only has an agreed local plan, but is doing all that it can to deliver on the provisions of that plan.

The whole point of local plans, however, is to enable local councils and local communities to decide where new housing provision should go. Cherwell’s local plan focuses development growth on the towns of Banbury and Bicester, while avoiding coalescence with villages by introducing new green buffers around the towns. That seems to be a wholly commendable policy aspiration on the part of district councillors.

One of the recent planning appeals decided by the Secretary of State, however, drove a complete coach and horses through that policy aspiration of developing green buffers, by allowing development in an area that the district council had allocated as a green buffer in the local plan. In effect, the Secretary of State has allowed a policy of first come, first served, with planning permission being given to whichever house builders or developers happen to get their planning applications in earliest. This is not plan-led development; this is not central planning policy—this is planning anarchy.

My hon. Friend the Minister will say that the Secretary of State, having granted planning permission, now has no locus on those decisions. In law, that is correct, although Cherwell district council is not surprisingly considering with leading counsel whether there are good grounds to take the Secretary of State to the High Court for judicial review of his decisions. Ministers may no longer be legally accountable for their decisions, but they are politically accountable.

Ministers say that one reason for allowing the appeals was because, at the time the planning applications were made, the district did not have adequate five-year housing supply. One of the main reasons why the district did not have adequate supply, however, was because, on a number of significant sites where developers had been granted planning permission, they had simply not started building work. Local authorities and local people, having granted permission on significant sites, are not to blame if the house builders decide not to build until some time in the future, for whatever commercial reasons of their own.

From what the Secretary of State decided in the four appeals, it appears that the local plan will have no weight until it is actually adopted. It cannot be adopted, however, until after the process of examination in public. District councils such as Cherwell are in no way in control of when the Planning Inspectorate will undertake and complete the continuous improvement plan. Until then, we are all vulnerable to continuing opportunist planning applications by developers who strongly suspect that they will be allowed by the Planning Inspectorate or by the Secretary of State on appeal.

14:33

[Martin Horwood (Cheltenham) (LD)]

I apologise to you, Mr Havard, and to my neighbour, the hon. Member for Tewkesbury (Mr Robertson), for missing the opening speech. I congratulate the hon. Members who secured the debate, which is enormously important.

The issue is enormously important politically for both coalition parties, because we both made profound promises in opposition. The Conservative party’s policy document, “Open Source Planning”, states:

“Our emphasis on local control will allow local planning authorities to determine exactly how much development they want, of what kind and where”—

not how much an econometric model tells them they need, or how much demand has to be met, but how much development they want.

The Liberal Democrats produced a document called “Our Natural Heritage”, which states that

“our quality of life is dependant on the quality of our environment. We will not only work to maintain and enhance it but will give people more access to and influence over it.”

One of the ways in which we suggested doing that was a new designation, the local green space designation. I helped to author that policy, and I was proud when it made its way into the coalition agreement, and from there into the “Natural Environment White Paper” and then the national planning policy framework. As the Prime Minister said to the director of the National Trust, I think, it would be a tool that local people could use to protect not vast tracts of countryside, but those local spaces that were not necessarily the most beautiful or the most rich in great crested newts, but the ones valued by communities.

Instinctively, all of us know which those areas are—we can all think of that local area that people have been campaigning to protect, sometimes for decades, as in the case of Leckhampton in my constituency. I thought, “At last, we have a Government committed to localism, which I am proud to be part of and a supporter of”—Conservative colleagues were equally proud—and that the Government were actually going to deliver on such promises, rejecting the very unpopular, top-down regional spatial strategies that seemed to be imposing numbers from above. The regional spatial strategy in the south-west had 35,000 objections—but the situation around my constituency in Cheltenham is every bit as bad now.

In practice, we are facing the loss of vast areas of green fields. The local paper converted the amount into that popular measure of area, football pitches—about 2,000 football pitches of green fields are about to be lost, if the plan being formulated in the joint core strategy goes through. Almost everything in the plan is greenfield sites, and almost all those sites are in the green belt—there is a Kafkaesque process whereby the green belt boundary is redesignated, so that the bits taken out of the green belt can be built on, while claiming that the green belt is not being built on.

Equally badly, another area at Leckhampton had a sustainability assessment and a green belt review, which talked about its value in biodiversity, public access, the enjoyment that it brings, its rural character, and such things—all of which were recognised by inspectors in the past—but again that is included simply because the econometric model dictates a certain number. That number for around Cheltenham is at least 10,000 houses, which is a 20% increase in the size of the town. That is not sustainable.

As the right hon. Member for Arundel and South Downs (Nick Herbert) rightly said, it is as if the rest of the national planning policy framework, which we celebrated at the time of its second draft, did not really exist. There were elements that discussed balancing economic growth with environmental and social factors, and things such as the local green space designation to protect what people really cared about; among the core planning principles were meant to be respect for the environment and sustainability, and prioritisation of open spaces and, if possible, brownfield over greenfield development. In practice, however, at local level all of that appears to count for absolutely nothing. We are told that the objectively assessed housing need dictated by the econometric model must be observed absolutely—that the developers must get absolutely everything that they are demanding, because otherwise unelected inspectors will declare the whole plan unsound.

There is a nice coalition balance of local councillors in Gloucestershire. In the constituency of my neighbour the hon. Member for Tewkesbury and in Gloucester city, we have Conservative councillors who felt obliged to vote for the thing, while the Liberal Democrats very much enjoyed opposing them. In Cheltenham, it was rather the other way around—many Liberal Democrats and some Conservatives voted for it, while others voted against. The result was that councillors were put between a rock and a hard place. They were told that if they voted things down and did not move on at least to the next stage of consultation, the plan was likely to be declared unsound, it would all fall apart and we would end up with a developers’ free-for-all.

I have to tell the Minister that local people see very little distinction between what is emerging from some local plans and a developers’ free-for-all. Despite all our promises in opposition, despite the national planning policy framework and despite all the grand words in it about balancing environmental and economic factors and respecting open space and sustainability, we are in a position that is every bit as bad as the regional spatial strategies. That is simply not acceptable—

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

Will my hon. Friend give way?

[Martin Horwood]

I suspect that I shall be out of time shortly, so I fear that I had better not.

I think we will end up in a situation that is just as bad as under the regional spatial strategies. I want to go back to my local councillors and constituents to say that the coalition Government have delivered on their promises, but I have to tell the Minister that that is not what is happening now.

14:39

[Rebecca Harris (Castle Point) (Con)]

Earlier speakers have said many of the things that I wanted to say, but possibly more elegantly.

I thank the Minister for declining a developer’s appeal in my constituency. That was warmly received, but we are on notice that developers may keep pushing, and they will.

I think all hon. Members here greatly welcomed the abolition of the previous housing regime and everything in the new national planning policy, including abolition of the regional spatial strategy housing targets. However, I see all around, particularly in my area, that it is pretty much business as usual for planning departments, for the Planning Inspectorate and certainly for developers. Some key aspects of the current regime seem very similar to the old regime and are being interpreted and treated similarly—for example, the requirement to find the local need. It is not a target, but it must be established based on complicated methodology. Consultants in my area have come up with four or five different scenarios, all wildly different, about local housing need. It is supposed to be objective, but councillors will have to choose the figure that they believe is most likely to be accepted by the Planning Inspectorate. That does not strike me as wholly objective.

We must put together a local plan that specifies deliverable land over a certain number of years and then developable land. There must be objective evidence of whether it really is deliverable, and I understand that. We cannot have local councils saying they want to build all their houses on what is currently a lake because that would be a good way to get around having building done. In the world of planning, however, what is deliverable is entirely down to argument. The big unit developers may see the four or five attractive green fields that are left in a borough, and argue that they could put their bulldozers on there tomorrow, that the development would be in single ownership and that that would be a good deal with a percentage going to the farmer. No one could argue otherwise—it is clearly developable tomorrow.

What happened in practice over the last decade and during the previous Government’s regime is that land was banked and there was not enough work done or pressure put on the little brownfield sites in multiple ownership, which is what we should be doing now. Those are the sites our communities would prefer to be developed, not the fields that they see and appreciate.

I urge the Minister to put as much pressure as he can on councils when interpreting and putting together their plans. In the national planning policy framework and the recent guidance, which I greatly welcome, it is clear that our councils have the power to do something about small sites, which may be in multiple ownership with some planning constraints. They can knock heads together and encourage local people to suggest such sites. That would save us from losing the fields that we all love and appreciate. However, that is a big ask for a constrained planning department. Everyone is feeling the pinch at the moment, and the planning inspector is breathing down councils’ necks to get the local plan completed. It is a lot more work and takes a lot more time, but it can be done. For example, if we want to build houses, we are much more likely to get small local sites up and running. If we told the local scrap metal dealer, who has gone bust because we have changed the law and he cannot take cash, that he could build five or six starter homes on his land tomorrow, he would not do what the big unit developers do and wait until the time is right or build only one or two homes because he does not want to flood the market; he would sell straight away and houses would be built there.

We should change what we are doing and target smaller and less popular sites that have local owners, who will use local builders and local estate agents. We would then have a much more popular local plan for residents, and we would not have the big household-name developers acquiring 600-unit sites where, if they got around to building houses on them, it would not be in the time frame we want, and would market them out of town and in London. Local estate agents would not get a look-in, and the houses would not go to local people.

That is the problem with the current planning regime, and we desperately need the Department to tell councils that it expects them to plan positively. Planning positively under the national planning policy framework does not mean more green-belt sites with many houses on them. It means they should find out where they want houses, and make that happen. We must get that message across, because it is in the national planning policy framework and it is good stuff, but out there on the ground it does not seem to be working.

I plead with the Minister to ensure that he directs councils to use their powers of compulsory purchase and to find owners of sites that people would like to be developed, instead of what happens at the moment with the big boys turning up, driving round the area, seeing the half a dozen local fields that everyone loves and appreciates, putting in a planning application, and arguing time and again that that is more deliverable.

[Mr Dai Havard (in the Chair)]

We now move from south-east England to Mr Stuart Andrew who will give us a view from the north.

14:45

[Stuart Andrew (Pudsey) (Con)]

I welcome this debate and congratulate my hon. Friends on securing it. I have been interested in the subject for a long time, not just because I represent a heavily affected ward, but because I am a member of a plans panel on Leeds city council.

My constituency has seen many significant changes over the past 20 years. It was renowned for its cloth and woollen mills, and other industries, but as those industries declined, their sites became redundant and places such as Pudsey, Farsley and Guiseley saw those employment sites turned into residential areas. During the first decade of the this century, we were inundated with application after application to build even more houses, and consequently our roads are congested beyond belief at weekends and during weekdays and evenings. Our surgeries have more and more patients and our schools are so busy that children living just across the road from their local school may struggle to get into them. Most of all, people were exasperated and frustrated that the planning system was something that happened to them, and that they had little say in it. Sometimes, even when the council said no and that enough was enough, an appeal was allowed. I cannot express strongly enough the anger and resentment that that created.

When the Government talked about planning reform, I thought “Hallelujah”. Many of the changes have been welcome and in the right direction. Reducing the plethora of guidance and advice to a more manageable document is making life a lot less complex and the system more understandable. The ability to create neighbourhood forums to offer real engagement is hugely welcome.

I pay tribute to the Minister for taking time to visit so many constituencies around the country. I was pleased to welcome him to mine, where he heard the concerns of local councillors and others, and saw for himself the significant development that has taken place. That was appreciated. I have noticed that when hon. Members list a number of positives in this place, a “but” invariably follows, and here it comes. Despite the Government’s work, a problem threatens the intentions of localism and people’s trust that we will have a real bottom-up approach to planning.

Localism is about local communities deciding what, where and when development should take place. There has been a real appetite and interest in my constituency in being involved in the planning process. Groups such as Wharfedale and Airedale Review Development and Aireborough Civic Society have campaigned long and hard on the issue. In addition, residents have turned up in their hundreds at public meetings when these issues were discussed. Organisations such as Horsforth town council. Rawdon parish council and Aireborough Neighbourhood Forum have all worked incredibly hard to engage with the whole community, bringing residents, schools and businesses together to develop a vision of future development that is sustainable, realistic and seeks to preserve our natural surroundings.

I am talking not just about building houses but about creating places that people want to live in, work in and play in: real place-making. Something is jeopardising all that work, and is still seen by my constituents as a top-down major influence: the housing targets that we have heard so much about today. We all know that the original regional spatial strategy placed huge burdens on local authorities, but despite abolition of the RSS, little has changed with the targets. In my constituency, the core strategy of the city council is being examined. It includes a plan to build 74,000 homes over the next 14 years, and it arrived at that figure with a host of scenarios ranging from 27,500 to 92,000. That means that the council has gone for the high end because it believes that the Government expect it to be far more ambitious than can reliably be achieved. I, local councillors, and all the groups I have mentioned have argued, ever since the document came out in draft form, that the figures are far too high. Despite our logical arguments, the council has kept the target, fearing that the inspector will force it to go even higher. The problem is that the council is far too ambitious.

What is the consequence? The council then has to prove that it has the land to supply such high targets. Even with the existing permissions of 20,000 dwellings, there is still not enough land, so the council is now looking at greenfield and green belt, meaning that in my constituency up to 80% of all new homes will be built on green-belt or greenfield sites. The precious places that are the lungs of our communities, the natural barriers between the towns and villages, and the green borders between the cities of Leeds and Bradford, will all be gone. They are now all under threat and my constituents are clearly not happy. Even in the best of the boom years, we never managed to build so many houses, and developers want to go even higher, saying that the brownfield sites in the city centre are not viable. That is because they are lazy and do not want to be ambitious about creating places where people want to live in our city centres.

The other day, I asked my hon. Friend the Minister what happens if the inspector, in the process of looking at these figures, agrees to such a high amount. If it is approved, I fear that the brownfield sites in city centres will be abandoned, that the developers will cherry-pick the green belt, and that residents will be stuck between the Government saying that local councils can set high targets and the council saying that the Government expect high targets.

I know that the Minister will say that the target needs to be objectively assessed, but what happens if those figures are approved? Is there any appeal process for my constituents to present their case? They are doing so brilliantly at the hearing, but if we are saddled with those housing targets, our green belt will be ravaged, and future residents will not be able to do anything, because the period will already have been set in stone. Worst of all, however, it will send a message that some already believe: localism goes only so far, but not far enough where it matters.

[Mr Dai Havard (in the Chair)]

In my spatial planning, we now move to Cheshire and Ms Fiona Bruce.

14:52

[Fiona Bruce (Congleton) (Con)]

I am here as a voice for my constituents, who feel grievously let down by the lack of clarity of the planning policy, practices and procedures of local and national Government. Only one thing is clear: despite more than 20 action groups representing thousands of people across my constituency, despite many public meetings, the most recent of which was held last night in Congleton town hall, despite my bringing successive leaders of Cheshire East council to meet Ministers for clarity on these issues, and despite countless letters having been sent to Ministers on behalf of constituents, we still have developer-led development in our area and unsustainable, unplanned development. It ignores town plans, places no weight on the emerging local plan and makes a mockery of localism.

The national planning policy framework, with its presumption of sustainable development, contains an inadequate definition of that—in fact, it is barely a definition at all—which certainly does not equate with my constituents’ definition. Sustainability means there being enough schools, roads, medical centres and facilities for local people, and there simply will not be enough if the rate of development continues in our towns.

In Alsager alone, which is a town of some 5,500 houses, applications are in the pipeline for 3,000 dwellings. This is a town recently described by the chief planning officer of Cheshire East council as “currently unsustainable”. In Sandbach, which is a town of 8,000, some 6,000 applications have been granted or are in the pipeline. Just last week, two consents for Sandbach were granted, in Abbeyfields and Congleton road. That makes the consents already granted for Sandbach sufficient to cover one third of its 20-year supply. And those are on greenfield sites. This is countryside. This is prime agricultural land. The mayor of Sandbach is in the Chamber today, having come directly from 10 Downing street, where he presented a petition objecting to the Government’s policies.

There is then the unclear procedure surrounding the requirement for a five-year supply of housing. That is simply unjust. The primary reason for the two appeals granted last week was that Cheshire East apparently is unable to demonstrate a five-year housing supply, and yet the council told residents months ago that it had developed a robust strategic housing land availability assessment, which would satisfy requirements for a five-year housing supply.

Who is right—national Government, through the inspectorate, or local government? How was it that Cheshire East could say that it had demonstrated a five-year supply if clearly it had not? Is there no means by which such statements can be validated with central Government before they are made? Surely the only way cannot be for the strength of such a supply statement to be tested on appeal, because it adds insult to injury for thousands of pounds of local taxpayers’ money to be spent on such appeals, when it could be spent on meeting local people’s needs. There is so much confusion regarding the requirements that injustice is being introduced into our communities, particularly because there are other sites—brownfield and non-brownfield, including in Sandbach—that the local community have already said that they will accept for development.

That brings me to my next point. It is wholly wrong that people in the towns of Alsager, Congleton, Middlewich and Sandbach in my constituency were offered the opportunity and funding under the Government’s neighbourhood plan front-runner schemes to develop neighbourhood plans, only to find that those town plans count for absolutely nothing, in terms of the Planning Inspectorate’s decisions regarding appeals against developments.

The situation is also producing inconsistent decision making. Just last week, when two developers’ applications were accepted for Sandbach, we had a refusal for a site at Sandbach road north in Alsager. That was despite the inspectorate acknowledging the lack of a demonstrable five-year supply of deliverable housing in Cheshire East, and apparently, according to my interpretation, giving weight to the draft Cheshire East local plan, which other decisions refused to do. It stated:

“It would seem wise in this part of the borough not to proceed with development which would go beyond the draft strategy at this stage.”

The inspectorate also rejected the developer’s appeal on the grounds that it is in open countryside, and that harm to it would be significant and demonstrable. But so it would be to Abbeyfields, Congleton road and Hind Heath in Sandbach, which have already been granted. We really need clarity on these issues. How long should a local plan realistically take to develop? We pride ourselves in this country on clear and speedy delivery of justice. We say that justice delayed is justice denied. We talk about the rule of law. And yet, in planning, we could not have murkier, muddier waters. That is simply unfair.

Our local authority has been working for three years on a local plan. What has gone wrong? Why does the draft plan that was prepared last year, which was the subject of a six-week public consultation, now have to be radically altered and be the subject of a further public consultation, while all the time, developers rub their hands with glee and take advantage of that void? Will the Minister provide whatever assistance is required for Cheshire East council from a senior planning adviser to ensure that there are no further delays or confusion regarding what is required to get our local plan through? My constituents have had enough.

I also ask the Minister to ensure that we have clarity on our five-year housing supply numbers, and that a clear message is sent to the people of my constituency, as I have sought to provide for three years, giving them every and any necessary and available means of help to resolve those issues. My constituents simply cannot understand the situation. They feel angry, in despair, ignored, impotent as regards the plans for development of their own communities, and without any democratic recourse, as one has said to me, except the ballot box.

On behalf of the Under-Secretary of State for Education, my hon. Friend the Member for Crewe and Nantwich (Mr Timpson), I confirm that he, too, has been working tirelessly with planning action groups in his constituency, which is adjacent to mine, and also in Cheshire East. He recently arranged for the Planning Minister to speak to those groups so that they could hear the advice that the Department had for Cheshire East council on resolving the adoption of the local plan and housing supply. I would appreciate that advice and clarity being given today in the Minister’s response.

[Mr Dai Havard (in the Chair)]

Thank you. Mr Brady will take over from me shortly. I ask you to temper your enthusiasm with the pessimism of the intellect, and look more towards six minutes than seven for your future contributions. We now move back to the west midlands and Mr White.

14:59

[Chris White (Warwick and Leamington) (Con)]

It is a pleasure to follow my hon. Friend the Member for Congleton (Fiona Bruce), who gave a passionate speech. I also start by thanking my hon. Friends the Members for Tewkesbury (Mr Robertson) and for St Albans (Mrs Main) and my right hon. Friend the Member for Arundel and South Downs (Nick Herbert) for securing this important debate. As we can see from the speeches that we have heard so far from around the country, this is an issue that affects so many of our constituencies.

During the past two years, Warwick district council has been seeking to create a new local plan that will guide the development of our community for the next 18 years. That is a hugely important document, but it has been mired in controversy and opposition since it was put forward. That highlights some of the problems in the current planning system. The local plan has been controversial because of the number of homes that have been proposed by the council, as well as their concentration and location. First, the scale of the proposed housing development is enormous. The local plan outlines the building, during the next 16 years, of more than 12,000 homes, in addition to the 6,000 that we built between 2001 and 2011. That would increase the number of dwellings in Warwick district by about 20% during the next two decades.

[Mr Graham Brady in the Chair]

The “Strategic Housing Land Availability Assessment” compiled by the council has indicated that the total capacity of the district is about 13,000 dwellings between 2014 and 2029, so the proposed local plan would use up 91.8% of the total capacity. Planning is something that we must consider over the long term. Once homes are built, we cannot turn back the clock to change the mistakes that we have made, so we must consider the long-term sustainability of our planning decisions as a whole. How can it be sustainable to build so many new homes and to use up so much capacity?

The concentration of development is also a deep concern and raises questions of fairness. The majority of the new properties will be in the area south of Warwick, Leamington and Whitnash, with 70% of the new homes being placed in that part of the district. That is despite the fact that there has been, and continues to be, a considerable amount of housing development in that part of the district and there are already concerns about the impact that the proposals will have on local infrastructure. I do not believe it is fair that such a concentration is allowed in that part of the district. Residents of those areas are rightly angry about the sacrifices that they are being asked to make in order to allow the development of so many new homes.

I shall take this opportunity to urge Warwick district council, once again, to pause the local plan process and start discussions with local residents so that we can build a consensus on creating a sustainable future for our community. During the process, in the lead-up to the preferred options being outlined by the district council, it was clear that residents did not want to have that number of homes and that they wanted development to take place primarily on brownfield land, rather than greenfield land as is proposed. That will have an impact on the wonderful Warwickshire countryside. Our area has a large percentage of green belt, and I do not believe that we should develop on green-belt land. However, that does not give the local authority an excuse to concentrate developments on non-protected greenfield sites. If our district was 95% green belt rather than 80%, would that mean that all development would be concentrated in the unprotected 5%? Surely it would make sense to adjust the scale and ambitions of the development, rather than to ram through such large developments, which take no account of this situation.

However, the views to which I have referred have not been consistently accepted by the council to date. As a result, public confidence in it has been damaged, and that will undermine future efforts by the council to undertake consultations on new developments or infrastructure. I appreciate that councils have an obligation to ensure that there is enough housing to meet demand in the future, but I also think that we need to ensure that that obligation is met in the right way. I do not believe that Warwick district council has so far acted in the right spirit during this planning process.

I believe that the Government have done the right thing through the Localism Act 2011 to try to ensure that communities have greater control over planning matters. However, we also need to ensure that the process is carried out in the right way, in empathy with such localism, that councils do not ride roughshod over the desires of local people, and that the principles of localism are delivered on the ground.

The best way forward would be for the Government to get each local authority to sign up to a national planning compact that outlines how councils are expected to carry out their consultations on planning matters; the role that local communities should have in co-producing proposals such as the local plan; and best practice in terms of planning processes that have been carried forward and that have brought communities with them. Having such a compact would ensure that each local authority was taking a long, hard look at how it was developing its local plan.

We must have a system whereby people feel that they have ownership of the planning process and whereby they can have confidence in the decisions that are reached. That will ensure that we create plans that have the support of residents, are in the long-term interests of our community, will address real housing needs and will almost certainly create local economies that grow and prosper.

15:05

[Julian Sturdy (York Outer) (Con)]

It is a pleasure to serve under your chairmanship, Mr Brady, and to speak in this very important debate. I congratulate my right hon. and hon. Friends on securing it. Like many other Members, I would like to highlight some of the concerns in my constituency.

York, like so many other towns and cities across the country, is surrounded by green-belt land, which is vital in preserving and enhancing its character and setting. It is as important to the identity of our great city as the Gothic minster, the Roman walls and the National Railway Museum. To my mind, it is an essential part of York’s DNA.

However, the very fabric of what makes York such a great and beautiful city is under threat from the misguided plans of the local authority. The City of York council published its draft local plan in April of this year and, to the utter dismay of many of my constituents, the plan proposes to take 1,400 acres out of York’s green belt and build 16,000 new homes on that land during the 15-year life of the plan. As if that was not enough to satisfy the council’s appetite for green-belt land, a further 1,000 acres will be removed from the green belt and safeguarded for future development. Sadly, the plan does not stop there. The council has also proposed more than 80 additional Traveller and showpeople pitches, all in inappropriate locations, on green-belt land, in quiet rural communities such as Dunnington, Knapton and Huntington in my constituency.

The icing on the cake is that the council is also pursuing its plans to destroy the open countryside that surrounds our great city with 40

“areas of search for renewable electricity generation”,

covering vast swathes of green-belt land in my constituency. It was, until recently, pursuing those sites as potential wind farms. However, due to the unsurprising lack of sufficient wind speed in the Vale of York—something that was obvious to most local people, but that the council and the local taxpayer-funded studies failed to pick up—I have now been given the impression from the council that it is considering solar farms on the sites as an alternative.

I am therefore speaking on behalf of my constituents in welcoming the recent announcements from the Minister of State, Department of Energy and Climate Change, my right hon. Friend the Member for Bexhill and Battle (Gregory Barker), about the Government’s determination to crack down on inappropriately sited solar farms in the countryside by introducing the solar road map. I urge the City of York council to consider very carefully what the Minister has been saying on the matter and not to ignore the views of local residents.

Turning to the important issue of housing supply, I want to make it clear that, like many right hon. and hon. Members here today, I fully support the decision to scrap the rigid, top-down housing targets in the regional spatial strategies. The Government should be congratulated on doing that. However, three years on, there remains confusion among some local authorities about what housing targets are appropriate.

Some local authorities surrounding York are reducing their targets from the levels that they were at in the now redundant regional spatial strategy. Meanwhile, York, which is currently controlled by Labour, is proposing to increase its old housing targets by more than 40%. In doing so, the council is placing itself completely at odds with the guiding principle behind the modern planning framework—that development should always be sustainable.

York is an historic city in which the local infrastructure is already under strain. Adding tens of thousands of new homes will mean tens of thousands more cars on an already congested road network and thousands more pupils trying to gain entry to our excellent but already oversubscribed schools. That is not to mention the drainage and the strain on existing health care facilities.

With approximately two thirds of the council’s overall housing projections to be allocated to York’s established green belt, I am deeply concerned that the plan will push our already creaking local infrastructure to breaking point. The council has provided no guarantees that it will help secure the investment we need in our local infrastructure. It clearly believes the local plan will result in economic growth for York, but having investigated the issue, I fear that putting the cart before the horse and failing to guarantee the infrastructure investment York already needs will lead many of the city’s leading employers to question in the long term whether York is still a suitable base for their businesses.

In its current form, the plan has the potential to end in disaster for York on the economic stage. That is why I entirely agree with my right hon. Friend the Member for Arundel and South Downs (Nick Herbert) that the requirement for infrastructure must be considered when granting planning consent—something that, to be frank, is blindingly obvious. I was reassured by the pledge from the former Minister of State at the Department, the right hon. Member for Tunbridge Wells (Greg Clark), that the requirement would form part of the planning guidance. I hope, therefore, that the omission will be rectified, as York’s future viability as a centre of commerce and enterprise could depend on it.

Local authorities that press ahead with unsustainable housing plans must be stopped and compelled to consider whether they have the necessary infrastructure in place; if not, they should change their plans accordingly. Equally, we must ensure that the important principles of sustainability and green-belt protection remain central to the national planning policy framework and that our local authorities understand that that is the case. Otherwise, I fear that the towns and cities we are proud to represent will change out of all recognition.

In summary, the tension between our local planning authorities and the planning inspector is twofold. Where councils produce reasonable, appropriate and sustainable local plans, we face the problem of planning inspectors overstepping the mark and making unreasonable demands. In areas such as York, however, we appear to face the opposite problem, because the local authorities propose to decimate our open countryside and change it out of all recognition. I therefore reiterate that it is vital that we have a strong and fair Planning Inspectorate to protect our communities and countryside from unsustainable development. That means that infrastructure must be at the heart of any considerations.

15:12

[Harriett Baldwin (West Worcestershire) (Con)]

I, too, congratulate my right hon. Friend the Member for Arundel and South Downs (Nick Herbert) and my hon. Friends the Members for Tewkesbury (Mr Robertson) and for St Albans (Mrs Main) on securing the debate.

The issue of planning also fills my postbag. I represent the thriving, beautiful constituency of West Worcestershire, which has one of the highest ratios in the west midlands of house prices to average earnings. It is also the birthplace of Elgar, and its countryside inspired much of his music.

Despite all the valid concerns colleagues have raised, I think we are in a much better place on planning than we were under the Stalinist diktats of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and I agree with colleagues who have welcomed the abolition of the regional spatial strategy.

Shifting local planning decisions to councils, which makes so much democratic sense, has raised a range of issues. I particularly welcome the Government’s introduction of neighbourhood planning. In the Malvern Hills district, the parishes of Kempsey, Clifton upon Teme, Leigh and Bransford, Alfrick and Lulsley, Martley, and Knightwick and Doddenham have all had their neighbourhood areas approved.

When we discuss planning, however, one thing that strikes me is that the beautiful villages we all love—in my area, I have the villages around Bredon Hill, the town of Pershore and the towns and villages of the Malvern Hills district—all grew up without our current planning regulations. Ironically, however, we would not be able to build those communities under today’s planning rules. Their growth tended to be more organic and more bottom up; people built their own homes on their own land, which they had bought for that purpose. When the Victorians became concerned that Great Malvern was encroaching far too much on the Malvern hills, they established the world’s first conservation area by Act of Parliament in 1884. Since then, the hills have been owned for the common good by the Malvern Hills Conservators charity. That organic approach has worked well for this country for the thousands of years there have been settlements in Worcestershire and elsewhere. That is why I am so supportive of the recent changes to the planning system, which move us back in the direction of the village and the neighbourhood, while embodying the countryside protections pioneered by the Malvern Hills Conservators.

In south Worcestershire, we may be a bit further ahead on our local plan than other colleagues are on theirs. Our three local councils—Worcester City, Malvern Hills and Wychavon, which my hon. Friend the Minister visited recently—have been working in partnership for many years to develop an ambitious and sound local plan. After the 2010 election, they presciently commissioned expert projections of population growth and perhaps got a head start on some other council areas. Their evidence base is now more up to date and fresher than those in some other parts of the country.

All three local councils democratically agreed the plan last December. I can assure hon. Members that that was not without a great deal of controversy, but one factor that encouraged councillors to vote in favour of the plan was that it would allow them to be in control. The south Worcestershire development plan has much more up-to-date and adequate five-year land supply numbers and such ambitious plans for employment land that we are getting complaints from Birmingham councils.

When I say the plan was democratically agreed last December, people complain that a bit of whipping was involved. Well, I hate to tell my local councillors this, but Whips are often involved in democracy here in Westminster. However, despite the vote last December, it took a further five months to send the plan to the inspector for the examination in public and another few months for him to decide on his inspection plan and timetable. The inspection has just got under way, and I would not be surprised if it took the inspector well into 2014 before he recommends adoption.

I want this period of uncertainty to be over, so that we can move forward with the construction, growth and jobs embodied in the plan. A delay of 18 months to two years is too long, and it undermines the local democracy of the vote in December. As the Minister knows, I and the leader of the council in my area have written to him. I have also written to the local planning inspector urging him to respect the local plan unless there are actual factual inaccuracies in it. The inspector has written a helpful reply, assuring me that he will seek to complete his inspection as soon as possible, subject to the legal requirements on him. The Minister has also responded constructively.

Here is my wish list of four things I would like to ask the Minister for. First, as he finalises his latest national planning practice guidance, which will set out the exceptional circumstances in which a refusal may be justified on the grounds of prematurity, will he try to ensure that the democratically agreed plans that have emerged will get almost full weight in any decision making, allowing the fresh evidence base and the numbers in the plan to be used, unless the inspector sees actual errors of fact, rather than just a divergence of opinion? Surely the future of the area should be entrusted to south Worcestershire councillors, rather than shaped by contesting opinions—they will only be opinions—from Birmingham and elsewhere?

Secondly, may I ask the Minister for his thoughts on how we as MPs can best support emerging neighbourhood plans? I love neighbourhood planning, which is an excellent way of giving power to local people and bringing back an organic approach to planning, reducing the need for vast swathes of land to be swallowed up by urban extensions. Thirdly, can we reassure villages that, once they have agreed their neighbourhood plan and won a vote on it in a referendum, it will take precedence over the local plan, even if that has been adopted?

Finally, what can the Minister say to the octogenarian farmer in my local area who lives in a draughty five-bedroom home and who wants nothing more than to build a bungalow in the field next door for the final years of his life? Under today’s rules, such building is prohibited in open countryside. If there is a neighbourhood plan, will my farmer have any hope that he can build his bungalow?

Once again, I congratulate my right hon. and hon. Friends on securing the debate, and I thank you, Mr Brady, for allowing me to pass on the concerns of my constituents in the glorious area of West Worcestershire.

15:19

[David Rutley (Macclesfield) (Con)]

It is a pleasure to serve under your chairmanship, Mr Brady. I am grateful to the Backbench Business Committee for securing the debate, and I congratulate my hon. Friends the Members for Tewkesbury (Mr Robertson) and for St Albans (Mrs Main) and my right hon. Friend the Member for Arundel and South Downs (Nick Herbert) on making sure that we have a debate on such an important subject. The fact that there are so many of us here shows that there is a need for a debate, and I am sure that the Minister is taking copious notes.

As others have said, the debate is a critical one. It is about balance: getting the housing supply right—we have a growing population, so that is an important priority—and protecting the countryside at the same time. We need to provide more houses, but also to protect our natural assets—and they are assets. Our countryside helps to define our communities, making them distinctive. It provides agricultural land and draws in visitors, which boosts tourism in towns and villages. Those things are valuable assets and need to be protected. It is important to underline the point that the debate is not about quaint rural traditions threatening to block housing development; it is about economic effects on the macro-economy and on communities, businesses and residents. That is why it is important to make the right decisions.

In east Cheshire we understand that it is a critical matter to get the local plan in place. The move to become a unitary authority, and the time taken to integrate services previously provided by other local authorities, initially slowed progress, but we got back on track quickly and a huge amount of work has now been done to shape the plan. Successive rounds of public consultation have been undertaken, at pace. Like my hon. Friend the Member for Congleton (Fiona Bruce) and the Under-Secretary of State for Education, my hon. Friend the Member for Crewe and Nantwich (Mr Timpson), I have attended many public meetings and met many community groups, so that I could understand their concerns better and help to shape and refine the plan.

I am pleased to say that the residents of Macclesfield are not shy about coming forward with their concerns. That is a good thing, and means that there has been rigorous and challenging debate. I commend those who have taken part in campaigns about south-west Macclesfield, Fence Avenue and Lark Hall, to name a few, for the way in which they engaged elected representatives and clearly expressed their views. I know that the final local plan will be much better for that. We recognise in Cheshire East, and in Macclesfield in particular, that the local plan urgently needs to be signed off to stop unwanted speculative housing developments, as my neighbour, my hon. Friend the Member for Congleton, so clearly articulated. At the moment they are a particular challenge in the south of the borough. In Congleton and Crewe work is going on tirelessly with Cheshire East council and residents to stop them, and I fully support that work.

We need to get the local plan set up, and are working hard, but we need the Minister’s support and advice to get the right plan signed off. I am, like other hon. Members, grateful for the Minister’s efforts to understand the issues on the ground better. I am pleased that he recently went to Cheshire to speak to residents. I am also pleased and grateful for his meetings with me and colleagues to hear about our concerns and challenges. As he knows, one key issue is defining what housing is required in our five-year housing supply. At the moment that is holding us back. As my hon. Friend the Member for Congleton pointed out, sites have been identified in our draft plan that can be developed. There is a difference of opinion between the councils and the inspector as to what the figure should be; that is what needs to be unblocked so we can move forward. I urge the Minister to use his good offices to help resolve the situation and clarify what the target should be, so that the plan can be concluded and unwanted, speculative house building can be stopped in the borough. That is a vital priority, as I think the Minister knows.

For all the hard work that has been done to shape the plan, there are other questions that urgently need an answer. Like many Macclesfield residents I understood that we were close to finalising the plan and that its focus was on housing developments to 2030. I think that the Minister may be a little surprised to know that I found out a few months ago that Cheshire East council officers were now under the impression that they had to work towards a planning horizon not of 2030—which by most people’s standards is, I think, quite a long time horizon—but 2050. That has completely slowed down the process. How can we have a view and a sense of purpose in relation to a time horizon of not 17 but 37 years?

The new requirements have major implications, particularly for the northern part of the borough. In communities such as Macclesfield and Poynton, which I am proud to represent, the news led the council to highlight green-belt land as supposedly “safeguarded for development”—not to be confused with safeguarding it from development, which is very different. The designation could be applied to large areas such as south-west Macclesfield, where up to 3,000 houses could be developed.

We have all worked hard to ensure that the green belt around Macclesfield and nearby communities is protected in the 2030 local plan. The green belt exists to protect the communities from urban sprawl from Manchester, and it is important for it to be kept that way. The Minister will understand the strong local concern—including mine—at the proposal to safeguard green belt “for development” to achieve housing targets for not 2030 but 2050. That situation is made even worse by the fact that there are no exceptional or compelling circumstances, which are a clear requirement in the national planning policy framework.

Will the Minister take this opportunity to set the record straight and tell the House whether showing how housing targets for 2050 will be achieved is a requirement for approval of a local plan? If it is not, will he also confirm that it will not be necessary to safeguard land for development, particularly in the green belt, beyond 2030? Macclesfield residents will be grateful for his views on those issues. They will affect green-belt areas that are vital to the fabric of the community, and will address the concerns of hundreds of residents who could become victims of a planning blight that I believe and hope is completely unnecessary.

15:26

[Damian Hinds (East Hampshire) (Con)]

It is a great pleasure to see you in the Chair, Mr Brady, and to follow my hon. Friend the Member for Macclesfield (David Rutley). I congratulate my hon. Friends the Members for Tewkesbury (Mr Robertson), and for St Albans (Mrs Main), and my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), on securing this important debate, which is particularly important to residents of East Hampshire—especially, at present, residents of Four Marks, the parish of Medstead, Liphook, Alton, Petersfield and the area in and around Bordon and Whitehill. I want to focus on two aspects of the issue that my right hon. Friend the Member for Arundel and South Downs set out clearly and convincingly: the need for recognition of in-progress plans; and the insistence on accompanying infrastructure where permissions are granted.

Like those of many other areas, our plan was stopped in its tracks. In our case it was stopped at the stage of the joint core strategy between East Hampshire district council and the South Downs national park authority, and we now find ourselves in the void period that many hon. Members have spoken about, which can last a long time. The concern is that in that long time, until things are finalised, there is a risk—we already see the signs—of a flood of speculative applications.

I should say that East Hampshire district council is not anti-development, and nor am I. There is concern that the average first-time buyer in East Hampshire is 40 years old, and that the average home costs £321,000. We also recognise the need for market towns and villages to have vibrant, diverse communities. If we want to save what is left of our village pubs and shops, we need people to work in them, and our small primary schools need young families with children to go to them. The council also supports a substantial development on former Ministry of Defence land at Whitehill and Bordon; my hon. Friend the Member for Banbury (Sir Tony Baldry) spoke about his area’s eco-town, and this is ours. In the case of Bordon, the development will add 2,700 homes. East Hampshire also has a very ambitious self-set target for affordable homes.

In its interim housing statement, in this void period, East Hampshire reflects the revised strategic housing market assessment, or SHMA—I think I am the first speaker this afternoon to say that, although I know that my hon. Friend the Member for Congleton (Fiona Bruce) mentioned the SHLAA—the strategic housing land availability assessment. The SHMA called for between 500 and 650 homes per annum, and East Hampshire is working towards the figure of 582, which is of course in the top half of that range.

In some places, the speculative applications and pre-application interest shown already exceed the targets in the areas and villages concerned for the period until 2028, and in my constituency that is especially true in Four Marks, the parish of Medstead, Alton and Liphook. There has also been significant interest in Petersfield, where a neighbourhood plan is in development; we expect the referendum on that next year. I suggest to the Minister that where a council is making proactive efforts, once the number of houses called for in the interim housing statement—in our case—has been reached in a particular area, it ought to be possible to say, “No more.”

A complication is that part of my constituency is in a national park—the relatively newly formed South Downs national park—and other parts have special protection area status, which leaves people who are in neither feeling somewhat exposed. We need a balance of development and a balance of community throughout the area. I strongly suggest that the elected local council is best placed to determine how the balance should be struck, and the interim housing statement seems to be a good way to express that. In general, residents’ concerns are twofold: first, they are concerned about the general scale of development and its implications for the character of an area; and secondly, they are concerned about the infrastructure deficit. Already, certain parts have seen significant infrastructure deficit. Four Marks has experienced a great deal of development, and needs commensurate infrastructure to ensure safety on the main road—the A31—sufficient primary places, and so on.

The approach is meant to be plan-led, so Ministers rightly say that the best thing that everybody can do is get on and make their plans. That is of course correct, but the plan process seems to take an inordinate amount of time, from beginning to end, and there must be ways to accelerate elements of it. We must recognise that many councils are not at the end of the process and find themselves in this void period. A large proportion of plan submissions in the first year of the national planning policy framework were found to be not sound. I therefore join strongly in the calls to make it explicit that infrastructure requirements should be met if permission is to be granted, the calls for emerging plans to be recognised, and the calls to find ways to speed up the whole process.

I shall strike a slightly different tone on the overall need for housing. I recognise that we need housing—the Office for National Statistics figure is 232,000 homes per year—but what is not necessarily well understood is that that is not all, or even nearly all, about immigration. If we strip out future net migration, the projected requirement is still 149,000: people are living longer; households are smaller, for all sorts of wider social reasons; kids live away at university and have a place at home; hardly anyone has a lodger anymore; and so on. There are lots of pressures, and they will not go away. The south-east will over-index on that pressure, and we must accommodate it but also mitigate it.

I encourage the Minister to work with councillors on how, on a relatively small scale in our local areas, we can do more about the conversion of redundant agricultural buildings; make granny flat conversions easier; work on empty properties, as my hon. Friend the Member for Tewkesbury said; and take up small-site opportunities, as my hon. Friend the Member for Castle Point (Rebecca Harris) said clearly. An interesting point in the Portas report was about the opportunity to concentrate town centres. That has the benefit of freeing-up space on the relative periphery for residential development. On a bigger scale, there are new towns, but perhaps the biggest opportunity of all is the one touched on by my hon. Friend the Member for Pudsey (Stuart Andrew): we should not only build higher-density, in-town living, but make it attractive. Some of the most sought after areas of the country are high-density, which proves that it can, in principle, be done. I see that I am out of time, Mr Brady, so I will stop there.

15:34

[Andrew Bingham (High Peak) (Con)]

I congratulate my hon. Friends on securing this debate. We can tell by the attendance today, and from our postbags, that the subject is of great importance to Members and our constituents. It follows on from a 30-minute debate held in Westminster Hall some time ago, in which, because of sheer weight of numbers, the time limit was very restrictive. Today we have been given double that limit— six minutes.

I spent 12 years on the local council, and planning exercised my residents more than anything else, and as an MP, I find a similar situation. The creation of the NPPF has simplified the planning laws, which had become complicated and burdensome. Like many others here today, I supported sending the power to rule on applications down to local authorities. As a councillor on the planning committee, I felt many times that we were rubber-stamping central Government policies on development. That was frustrating to me and my residents, because they believed, as I did when first elected, that the local authority was the sole arbiter on applications.

As previous speakers have said, I look forward to a brave new world under the new NPPF and local plans, where locally elected representatives make the decisions that impact so much on local people, but I, too, am concerned about recent events. My constituency, High Peak, is the most beautiful in the country, though I am biased. I am sure that others will disagree. As I said in the previous debate, there has been a proliferation of significant applications for development on greenfield sites. They have been refused by the local authority’s planning committee on perfectly legitimate grounds. This is not a case of nimbyism at all. The decisions were met with great approval, and in some cases relief, by local residents, who felt that their views had been represented by the people for whom they had voted.

I want to be clear: the High Peak is a great place to live. I am lucky, as are my constituents. We know that many people would love to live in the High Peak. We are not of the mind that says, “We have our housing and we’re going to pull the ladder up. We’re all right, Jack.” We acknowledge that there is a need for some housing. My constituents have young children and teenagers. There are people in their early 20s who want to stay and live in the High Peak. There is a housing need, which I touched on in my Adjournment debate last week on the challenges facing rural businesses. We need houses for people to live in, so that they can work in the High Peak. No one I have spoken to disputes that there is a need for housing. My constituents would accept development, provided it was proportionate.

Recent decisions by local councillors, who, I remind everyone, are elected by local people, have been overturned by the Planning Inspectorate, which is not. That flies in the face of everything that we believe about localism. I have spoken to many residents, who are seeing more applications coming forward, with the threat of ever larger developments. In my previous speech on the subject, I highlighted the area of Harpur Hill and the concerns of its residents’ association. I will not repeat the statistics, because time is short and they are in Hansard, but as I said in my previous speech, the problems facing Harpur Hill are mirrored in other areas of my constituency. As the Minister knows, Chapel-en-le-Frith parish council now objects to every significant planning application, after several applications have already been given the nod. If all of them were built, the size of that small village, where I live, would increase significantly, beyond what many believe the infrastructure could cope with.

I could run through a list of applications in different parts of my constituency, but we are not at a planning meeting today. My constituents are asking questions about the applications and the method of approval. Are they powerless to prevent approvals? Can they at least ensure that there is some sense of proportion? Proportion is what they are asking for. I am sure that the Minister will respond that local plans should be drawn up, and planning policy should be defined in documents and properly evaluated. My local council has yet to product its local plan; indeed, it has delayed its anticipated completion. In 2011, the controlling Labour group rejected proposals from the Conservative group to use some underspend to bring forward brownfield sites. It has now belatedly allocated some extra resources to that. Delaying the local plan has created a window of opportunity for developers. I could easily turn my contribution into a tirade against the Labour group and its management of the local authority. I have met the executive member to discuss the situation; he has his views and I have mine.

I want to deal with the harsh realities of the here and now. No local plan has been completed, and developers are submitting speculative applications time after time—applications that may have been refused in the past. They see from previous examples, which I highlighted today, that the Planning Inspectorate appears to be unmoved by local representations. I repeat that this is not nimbyism; my constituents and I are not against development. It is about proportion. A well-constructed local plan should bring in proportion, but at the moment the Planning Inspectorate does not listen to our views.

I am pleased that the Minister has agreed to visit the High Peak. I promise him a warm welcome in the hillsides. We can have an interesting day. There has been a dearth of houses built in the past few years, and that has created the shortage facing us today, but I am concerned that in our eagerness to deal with that, we are being too hasty, and will be left to repent at leisure. I have asked the Minister this question previously, and I will repeat it today: will he not seek to give more weight to emerging plans? I know that that may amount to making up for the shortcomings of the council, but I am looking to assist my constituents.

I am looking at the clock; time is short, and I could go on to several other issues. A consultation on the latitude in permitted development rights for agricultural buildings closed recently. The Peak District national park covers a large chunk of my constituency. I value that national park greatly, as I know the Minister does—he has gone on record on this. People are concerned about that proposal. There was also a consultation on catching up on housing deficits, and having to reduce them in the first two or three years. That will cause huge problems to local authorities if we are not careful.

I plead with the Minister: listen to what we have all said today. We are all on a common theme: we need houses. We know that under the previous Government, the numbers were woefully low, but let us get some proportion. The essence of localism is local decisions made by local people. That is not happening in the High Peak, and, from what we have heard today, it does not appear to be happening in other areas of the country. I would therefore like some assurance from the Minister that something can be done for my constituents. Harold Wilson once said to Hugh Scanlon,

“get your tanks off my lawn”;

the people of High Peak are saying to developers, “Get your bulldozers off our fields.”

I look forward to welcoming the Minister to High Peak. My residents are eager to see him. I hope that he will come soon. It is very cold and high where I live, and we will get a lot of snow soon, so I recommend that he comes as soon as possible.

[Mr Graham Brady (in the Chair)]

Hon. Members have all been so disciplined in their time-keeping that we have lots of time for Front Benchers’ responses. However, I am keen to reserve at least a couple of minutes at the end for the hon. Member for Tewkesbury (Mr Robertson) to respond, if he wishes.

15:41

[Roberta Blackman-Woods (City of Durham) (Lab)]

It is a pleasure to serve under your chairmanship again, Mr Brady. This debate is primarily for Back Benchers, so I had intended to keep my remarks fairly short. I think I should do that and give the Minister lots of time. I congratulate the hon. Members for Tewkesbury (Mr Robertson) and for St Albans (Mrs Main) and the right hon. Member for Arundel and South Downs (Nick Herbert) on securing a lively debate on what is clearly a serious issue, given the large number of Members present.

I hope that hon. Members will forgive me if I do not go through their contributions individually, because that would take up a great deal of time. They spoke passionately about their own areas. There clearly is a major issue across the country. I was pleased that a number of their remarks were not based on just being anti-housing. There was a sound recognition that we need more housing, but concern was expressed about the sites that have been identified for building houses. I was pleased to see a commitment to plan-making and place-shaping, because they are an important part of the solution to some of the issues that have been raised today. Hon. Members also produced a wish list. I am probably going to add to that a little bit, but I hope not too much.

We know that we need more housing, including in rural areas. In order to secure a typical mortgage, a rural resident needs to earn £66,000. With the average rural income standing at just over £20,000, there clearly is a problem with affordability. That exists partly as a result of insufficient supply. The situation in rural areas is part of a wider problem. For decades, under successive Governments, house building has stayed low relative to demand. I will hold my hands up to say that the previous Labour Government did not see enough houses built, but neither did the previous Conservative Government. Private house building completions in England have been relatively static for more than 30 years, averaging about 130,000 per annum. That is below the peak average of 180,000 per annum in the 1960s, and well below potential.

[Mrs Main]

The hon. Lady just said that the number of houses being built has been low or static. What about the number of permissions? I have not seen anything that shows that the number of permissions has been low or static. It is just the amount of development that developers are prepared to get under way.

[Roberta Blackman-Woods]

The hon. Lady makes a valid point. We know that a number of sites with planning permission never end up being developed. The point I am trying to make is that we must look seriously at the housing numbers that we need, particularly as we have a shortage, partly because we were not building enough in the past.

Private completions increased from 2003, with a steady improvement to 154,000 in 2007. However, they fell with the economic crash to 89,000 in 2012. In contrast, new affordable homes produced by local councils and housing associations, which averaged more than 130,000 per annum in the 1950s and ’60s, have seen a steep downward trend since the 1970s. Production has averaged fewer than 30,000 per annum since the mid-1980s, falling to 13,000 in 2003. There has been some improvement since then, with new completions at 27,000 in 2009 and a similar number in 2012, due to the housing stimulus put in place by the previous Labour Government following the crash. However, the numbers produced are too low.

There is an ever-growing gap between supply and demand, which means that millions of hard-working people are increasingly priced out of buying their own home. Home ownership has declined from its peak in 2001—69%—to 64% in 2011. The average house price is now nine times larger than the average wage. The average low-to-middle income household would now have to save for 22 years to accumulate a deposit for the typical first home, compared with just three years in 1997. So-called second steppers are also being affected, with the average age for a second purchase rising to 41, despite 40% of families saying that their first home is too small for a growing family.

More than 1.1 million families with children, and 8 million people in all, are now part of what we are calling generation rent. They are paying private rents that are rising faster than wages and contributing towards a cost of living crisis. They face rip-off letting agent fees, instability and uncertainty as a result of short-term tenures, and sometimes poor standards and service. Many want to buy their own home but have little hope of being able to do so.

We must address the housing shortage. I absolutely agree with all the Members who have contributed this afternoon that development sites need to be identified by local communities, with a stronger emphasis on neighbourhood planning and putting consent at the heart of the planning system. I think that can be helped in a number of ways. I have often paid tribute to the Minister and his predecessors for introducing neighbourhood planning. We think that is probably the key in the medium and longer term to delivering the sorts of neighbourhood that we all want.

The issue is not just about housing. I think we will partly get consent when we stop referring only to housing numbers when talking about the issue. People want to see employment, proper infrastructure and leisure, and they want to keep their open spaces. The issue is about building communities, and we have to talk more about that.

We also need to do something about quality. I know from my constituency that people often get upset about the houses proposed, because they simply look awful: they are too small, or have various features not in keeping with the local neighbourhood. We need to get better at improving the quality of our housing stock. That is especially important in rural areas, national parks, areas of special scientific interest and so on. I am a bit concerned that the Growth and Infrastructure Act 2013 reduced some of the existing protections in areas of outstanding natural beauty and national parks. That is not a good thing; it is a step in the wrong direction. [Interruption.] I think that hon. Members might think that the clock is set for 4 o’clock, but we actually have until 4.30.

Will the Minister consider the Woodland Trust briefing sent to all of us about giving better protection to ancient woodlands and planting many more trees? Does he intend to monitor the relaxation of permitted development rights and use-class order changes to see what happens to the quality of buildings in rural areas as well as on our high streets? High streets are not part of this debate, but rural town centres would be relevant as well.

I am looking forward to hearing what the Minister has to say about the over-reliance on appeals that seems to have emerged as a result—probably a temporary one—of the national planning policy framework having been put in place before local plans were adopted. I am interested to know whether he has thought about that, or considered speeding up plan-making to reduce the reliance on decisions made by inspectors. Does he plan to strengthen the brownfield first policy, which the NPPF weakened, and does he intend to reform land acquisition and assembly in accordance with some of the helpful suggestions made in this debate about opening up the land supply market for competition by a larger number of people?

[Mr Graham Brady (in the Chair)]

The shadow Minister is quite right: it is possible, though not mandatory, for the debate to continue until 4.30.

15:52

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

It is a pleasure to serve under your chairmanship again, Mr Brady. In your other role as the chairman of the 1922 committee, I am sure that you are delighted to see so many of your flock here. I wish I could pretend that I thought so many of my hon. Friends were here because I am so popular in the party or because I am a compelling orator, but I recognise that the reason is the level of concern in the communities that they represent and the lack of comprehension in those communities about some of the decisions being made on nearby developments that matter to them. Those decisions seem to be visited on them from on high without explanation.

Many hon. Members have asked specific questions. I could probably take up all the time until the end of the debate just answering them, although I do not intend to do so. Instead, if it is acceptable to you, Mr Brady, and to my hon. Friends and other hon. Members, I will try to address all the issues and see whether I can answer specific questions in doing so. If, by the time we start edging towards the close of the debate, there are burning questions that I have missed answering, I will be happy to take interventions to answer them. However, I hope that I will be able to cover most of them.

I need not start by underlining the scale of the housing crisis faced by this country, the extent of the need for housing or the grief and hardship that the crisis is visiting on millions of our fellow citizens. My hon. Friend the Member for East Hampshire (Damian Hinds) described it eloquently when discussing the average age of the first-time buyer and the average house price in his constituency, and others have referred to the situation in their constituencies. The hon. Member for City of Durham (Roberta Blackman-Woods) set out clearly the roots of the crisis and the fact that Governments of all stripes share responsibility for it. I hope that we can take that as a premise that everybody agrees on.

[Mr Laurence Robertson]

The Minister used the word “crisis”, but that is not a situation that I recognise. I would be grateful if he went into it in a little more detail.

[Nick Boles]

I will just recap some of the figures mentioned by the hon. Member for City of Durham and others. In the past year, the percentage of first-time buyers in England who were able to buy a home without their parents’ help fell to its lowest level ever, under one third. Two thirds of all first-time buyers in England last year required a subsidy from their parents. By definition, that means that they came from a relatively narrow social group—those from relatively well-off families. Until we introduced the Help to Buy policy, the opportunity to become a first-time buyer had been denied to a large number of our fellow citizens.

Another key fact also mentioned by the hon. Member for City of Durham is that the average age of first-time buyers has crept up and up, and is now nudging 40 in many parts of the country, although of course there are parts of the country where the crisis is not so acute. It is intense within the south-east and the south, but there are also pockets in parts of Yorkshire, and it is just as intense elsewhere, around certain big cities.

[Mrs Main]

rose—

[Martin Horwood]

rose—

[Nick Boles]

If I may finish, we also know that the size of the homes in which families are forced to live has fallen steadily for several decades. The number of overcrowded families has risen and the amount of space in which young people must grow up has fallen for several decades for a simple reason: our population has grown and we have not built enough houses to keep pace with it.

That growth in population has had two main sources. One, which is contentious in the House and elsewhere, is immigration, which was uncontrolled for a long time. We as a party rightly criticised that, and are now doing something to control it. However, it is important to remember that the majority—about two thirds—of the growth in population and in the number of households in the country has resulted not from immigration but from ageing. One way that I ask people to think about it is by considering how many people now are part of families in which four generations are alive. Quite a lot of them are. It used to be rare to have a great-grandparent or great-grandchild in a family; it is now common, because people are living longer, and they do not all want to live in the same house. I could go on, but I know that time is limited.

[Several hon. Members]

rose—

[Nick Boles]

I would like not to take interventions on the argument, as I have heard the argument from hon. Members. I will take interventions later if I have not answered the specific questions raised.

[Martin Horwood]

Will the Minister give way on that point?

[Nick Boles]

No, I will not take interventions on the argument; I will take them on the specific questions asked. I have sat here for two hours listening to the arguments from the Opposition, and I would like a brief moment to develop my argument.

Housing need is intense. I accept that my hon. Friend the Member for Tewkesbury (Mr Robertson) does not share my view, but many hon. Members do, and there are a lot of statistics to prove it. How are we going to solve the problem? My hon. Friend, whom I congratulate on securing this debate, referred to the country having 700,000 empty homes, which, he said, should be a priority for meeting the intense need for housing. Although I agree with the sentiment, unfortunately his figure does not give a true picture. The figure of 700,000 homes captures every home that is empty right now, including every home that is between buyer and seller and every home in probate.

I will, therefore, give him the true figure for homes that have been empty for more than six months, which I think we can all agree is probably the right figure for an empty home that could meet somebody’s housing need in the long term. That number is 260,000 for the whole of England. It has fallen by 41,000 since this Government came into office in 2010. We are spending a great deal of money, and we and local authorities are working hard, to bring those empty homes back into use. It is important to recognise that many—not all, by any means, but many—of those 260,000 are in parts of the country where demand for housing is not as strong as it once was, not in parts of the country where demand for housing is great. I do not believe that a Government can tell people to go and live somewhere with no jobs and no future, just because houses have been built there. Empty homes can make a contribution and are doing so under this Government, but in the scale of need explained so vividly by so many, they are a small contributor.

We need to move to the question of brownfield sites. If it were possible, everybody in this country would prefer every new house to be built on a brownfield site. We would all love not to develop a single scrap of greenfield land if we did not need to. Therefore, the question is whether there is enough brownfield land to do that. The Campaign to Protect Rural England often bandies about the statistic that 1.5 million homes could be built on the available brownfield land. I am afraid that that figure is not entirely a fair representation, because more than half of that brownfield land is already occupied for another use—for example, with a house or factory on it. In theory, it might make good sense to use it for converted housing, but the people currently occupying and using it for another purpose would, by and large, have a view on that: if they own or use the property, they will probably not want to give it up immediately, and if they did give it up, where would they be employed? Having taken all that out, a large number of the remaining brownfield sites are in places where demand for new housing is not so intense. In many areas of most intense demand, the number of brownfield sites that have not been developed is relatively small.

I reassure hon. Members that nearly 70% of new houses in 2010, the last year for which figures are available, were built on brownfield land. We are still building more houses on brownfield land than on greenfield land. We are approaching the point at which the number of brownfield sites that are in the right part of the country and are vacant and available for housing development is too small to supply more than a small, although significant proportion—nearly 70%, but not more—of our need.

Another subject raised here and elsewhere by many hon. Members, including my hon. Friend the Member for St Albans (Mrs Main), is the amount of land banking in the country. We all know individual examples of sites that have been bought and for which planning permission has been given, but on which development has not happened. The question we have to ask is: why has that happened, what is the scale of that problem and what contribution would fixing that problem make to solving our intense need?

We must first recognise that that is true of many sites because developers bought them before the financial crash, secured planning permission in anticipation of the economic environment pertaining at the time and, frankly, could not raise the money to build out the site or, even if they raised the money to do so, could not find people to buy the houses. Ultimately, developers are businesses. Certainly in my party, which so many hon. Members here represent, we believe that businesses need to be free to make investments and bring forward projects, but should be forced to complete such projects only if they have a reasonable prospect of getting their money back and perhaps gaining a small return. That problem grew during the recession not because of developers’ greedy behaviour, but simply because they do not want to build houses if there is nobody to buy them.

That situation led to an expansion in the scale of land banking, but let me tell hon. Members about the current position, because it has been reduced by the recovery in house building. The latest estimate is that the total number of units of housing in land banks throughout England is 500,000, but only half of that is on sites where building has not begun. From our constituencies, we all know that most housing developments of a scale greater than a dozen houses are not built out in one year, but sometimes in three or five years, because it is natural to do so. If all the houses were built in one place in one year, it would result in a strange development in which half the houses were sitting empty. That is how the house building industry works, and unless any hon. Member in the Chamber wants to nationalise house building, we have to live with that system.

Only 250,000 units are on sites that have not been started. That is a significant number, but the point is that it covers the whole country, including some places where demand is not sufficient to pull through supply. The Labour party has proposed to confiscate that land from developers, but will such compulsion really solve our housing crisis or lead developers to build more places where we want those houses? I am sure that that might make a contribution, as empty homes may, but I do not believe that it could solve the problem on its own.

On the whole question of local plans and the process that local authorities are asked to go through in putting them together, the fundamental basis of the national planning policy framework, about which many hon. Friends and other hon. Members have been generous, is that local authorities are in control because they have put in place a local plan. Doing the work of producing a local plan puts the local council, as the representative of the community, in control. The local plan has a very simple concept that is very difficult to deliver, which is that the authority has to provide a five-year land supply of immediately developable and deliverable sites to meet its objectively assessed housing need.

I understand that there are concerns. My hon. Friend the Member for Cheltenham (Martin Horwood) referred to an econometric model, and other hon. Members have spoken about the various methodologies. It is not unreasonable, however, for the Government to tell an authority, which is representing the people and has a duty to serve them, “Work out what’s needed, and make plans to provide it.” That is what we do with schools. We do not tell local authorities, “You can provide as many school places as you feel like”; we say, “Provide as many school places as are needed.” We do not tell the NHS, “Provide as many GPs as you feel you can afford right now”; we say, “Work out how many GPs are needed.” The same is true of housing sites: we tell local authorities, “Work out how many houses will be needed in your area over the next 15 years, and then make plans to provide them.”

[Stuart Andrew]

rose—

[Martin Horwood]

rose—

[Nick Boles]

I am happy to give way to my hon. Friend the Member for Cheltenham.

[Martin Horwood]

My constituents in places such as Leckhampton and Hatherley do not understand this: the econometric model is based not so much on need as on demand, which in areas such as mine—and St Albans and many other constituencies—is practically insatiable, so we will still have high house prices that are unaffordable for many first-time buyers in places such as Cheltenham, because we have good schools and shops, as well as a good local environment and good employment levels. If such areas are simply consigned to endless development, we will lose something very precious to local people and to the environment.

The problem with the Minister’s scenario is that the issue is not about trying to stop all development—nobody has said that—but about wanting local people to be able to make some difference and have some say. The economic model for the assessed housing need or demand—

[Mr Graham Brady (in the Chair)]

Order. I remind the hon. Gentleman that interventions should be short.

[Martin Horwood]

Sorry, Mr Brady. The model or whatever dictates that number should not be a be-all and end-all that nobody can influence.

[Nick Boles]

I want to reassure my hon. Friend that the process is not based simply on a measure of demand. It is not a matter of sending out a survey to ask people whether they fancy living in West Worcestershire. That is not how it is done; it is done on projections of population, of the number of households in which ageing is taking place and of the historical record and, therefore, the likely future trend of inward migration. That is the definition. The immigration figures are based on the past record. They are not just plucked out of the air as the number of people in the whole world who would quite like to live in Cheltenham. The model is based on an understanding of the pressure of demand from people who actually want to come to Cheltenham. They might want to move to Cheltenham to be near a job, go to college, or be close to their mum who is growing old on her own in a flat.

[Martin Horwood]

indicated dissent.

[Nick Boles]

My hon. Friend shakes his head. I am happy for him to go through the modelling that is the basis on which this is done. I simply say to him that if he added up all the projections of housing need of all the local plans in the country, he would find that it would add up to a figure that is too low to meet the overall population growth of England. It is not, therefore, the case that there are these hugely inflated demand figures being put into local plans, which add up to something way in excess of what we need; they are too low to meet our universal needs as a nation. Somehow, somewhere, we are not overestimating the need.

[Stuart Andrew]

In 2001, the population of Leeds was 715,000, and in the census of 2011, it was 751,000, but the estimate of the Office for National Statistics said that it would be 788,000, which is 37,000 more than actually happened. If we go on the same figures, Leeds will yet again be overcompensating for a population increase that will not exist, but it will have to have the five-year land supply, and to do that, it will have to go into the green belt. How does my hon. Friend marry up that problem that we and our communities face?

[Nick Boles]

My hon. Friend makes a good argument, and he has made a good argument generally, which he will have every opportunity to make in the examination in public. He will be able to say why he thinks that the projections done by his local authority are way out of line with any realistic possibility and to challenge those projections. He will be able to require the local council to demonstrate to the inspector the reasons it needs to supply those numbers, which cannot be that it is ambitious or that it is going for growth. If it has no good arguments or good evidence, there will be every reason for him to say that it is a plan to meet not need but ambition and dreams, which is a great and lovely thing but not what plans are meant to do.

A great many of my hon. Friends are concerned because they see that, in the absence of a local plan that has been fully adopted after an examination in public by an inspector, many decisions are being made that local people are not content with and their local authorities have opposed. It will be of no reassurance to them, but it is interesting that there is not a single person who has spoken in this debate who is from an area that has a recently adopted local plan. There is a reason for that: once there is a recently adopted local plan, the authority is then in the driving seat. It may well have gone through a process, as my hon. Friends the Members for Cheltenham, for Tewkesbury and for West Worcestershire (Harriett Baldwin) have—[Interruption.] No, let me finish my sentence. It may well have gone through the process of putting together that plan, which would be painful because it requires someone to carry out the contentious job of identifying the sites. Once the plan is in place, that is the point at which local authority decisions—[Interruption.] I hear lots of rumblings. If I could just finish the argument, I promise to take some more interventions. At that point, the authority will find that appeals are not going against it. I accept that there is a certain amount of scepticism about the figures, but I am giving Members the facts. In 2012-13, the number of planning appeals in which the inspector backed the local council and rejected the appeal was 67%. In 2011-12, it was 68%, and so far this year it has been 67%. In two thirds of all appeals, the inspector is backing local decisions, because the council has made local plans that meet the requirements, so it can be trusted to make its decisions.

[Sir Tony Baldry]

The Minister knows that, for historic reasons, almost half of all local planning authorities in England do not have an up-to-date local plan. They started to get that going with the introduction of the national planning policy framework. I suggest that most of them are doing so with all due speed, as is evidenced by my local authority, which adopted its local plan on Monday. My concern, and the concern of many Members, is that the Minister and the Government are not giving any protection or taking any notice whatever of emerging local plans. As a consequence, they are not giving any consideration to the efforts by local communities and local councillors to ensure that they have robust local plans.

[Nick Boles]

I thank my hon. Friend for that. I understand what he is saying. It is difficult and painful, especially in an area of high demand, to produce that local plan. Many local authorities have been making excellent progress, which is why the number of local plans has risen from about 30% when the national planning policy framework was passed to more than 50% now, and many more will be adopted over the next few months. The difficulty is that there are cases—I am afraid that some of those cases are represented in the Chamber—in which the local plan, despite what the local authority might have said, does not meet the requirements of the Localism Act 2011 and of the national planning policy framework, and does not provide a five-year land supply.

In some cases, that is because local authorities put too many eggs in one basket. They identify one big site to which they attach a lot of hope value, and which might make a fantastic development, but which, in reality, has no immediate prospect of being developed. It therefore cannot count as a site in a local plan. Sometimes, they make estimates that a site will build out over two years, when it clearly will not do so in less than five. It is not surprising, therefore, that the inspector sometimes says, “I’m sorry, but that is not a robust plan, because the sites you have identified will not deliver what you say they will deliver in the established time frame.” Then he asks the local authority to go back and revise the plan. That is happening in many local authorities represented in this Chamber, and is causing some of the frustration.

[Harriett Baldwin]

What, in the Minister’s view, is the appropriate time between a council democratically agreeing a local plan and the plan finally becoming set in stone, as there is a very protracted period of inspection by a scarce national supply of inspectors?

[Nick Boles]

In general—I cannot comment on any particular case—one would hope that that would happen in about nine months. If it could be six, that would be great. It certainly should not be more than 12. In some cases—I am not suggesting that it is happening in West Worcestershire—the inspector, rather than saying that the plan will not meet the requirements, says that the authority needs to do a bit more work on it and then suspends the plan. That can be a good thing, because we do not want to see a lot of good work thrown away because one part of the plan has not been properly completed. That is sometimes what causes it to be delayed beyond the time frame. If everything is in order, it should be done within six to nine months.

[Mrs Main]

rose—

[Nick Boles]

There are many questions that I have not yet answered, and there are only so many minutes left. I want to come on to the point of prematurity that some Members have raised. There is a difficult balance to be struck. One extreme would be to say that it does not matter how early stage a local plan is; as soon as an authority has started on a local plan, the draft policies, which have not yet been examined, consulted on or tested, should determine decisions. That is at one end. I understand that no one is suggesting that it should be at that extreme end. At the other end, we say that no weight should be accorded to a plan until it has absolutely finished the process.

The balance that we have put out in the draft guidance is that once a local plan has been submitted for examination—not completed or passed—it should carry significant weight if there are no substantial unresolved objections to parts of it. A neighbourhood plan has to pass a referendum, which is a big moment at which it might fail, and it starts to acquire weight when it has been presented to the local authority for what is called the local authority publicity period. I accept that both those stages are towards the end of the process. However, the difficulty if we try to move them earlier in the process is that—I promise you—developers will go to court, they will seek the judge’s interpretation and they will say, “This plan hasn’t even been consulted on. It hasn’t even been tested by examination. How can it be the basis for a decision, when in every other way this proposed development meets all of the policies in the national planning policy framework?” That is the argument that they will make, and indeed it is the argument they are making in cases right now.

Therefore, it is not simply in the gift of Ministers to move that decision point through guidance; we cannot do that. We have to put it at a point that the courts will find reasonable as an interpretation of the requirements for a plan to be sound and robust. We have set it where we have because we think that is the most reasonable position, but I am very happy to invite colleagues here in Westminster Hall today to meet my officials to discuss whether there is a way of finding another time frame that would stand up in court. However, I would simply share with them the view that the bar that would stand up in court is a very high one, and I have concluded that the position that we have outlined in the guidance is the one that will not only stand up in court but provide some protection for those plans that have reached an advanced stage of development.

[David Rutley]

Notwithstanding the point that the Minister is making, can he confirm that the planning horizon currently is to 2030 and any talk of moving to 2050 is for the birds, to use a technical term? Would he also use his good offices, given that there is good will—particularly in Cheshire East—to conclude local plans, to bring the requisite expertise to enable us to get over this hurdle as quickly as possible?

[Nick Boles]

I am very grateful to my hon. Friend for reminding me of two very important specific questions, to which it is a great pleasure—and a rare one—to be able to give an answer that I hope is satisfactory. The answer to the first question is that there is nothing in the Localism Act 2011, in the NPPF or in any aspect of Government planning policy that requires someone to plan beyond 15 years. So, anybody who is suggesting that there is any requirement to safeguard land or wrap it up in wrapping paper and ribbons for the future development between 2030 and 2050 is getting it wrong. There is no reason for it and my hon. Friend can knock that suggestion straight back to wherever it came from.

Regarding help for authorities, I will make an offer to everyone here in Westminster Hall who has an authority that is having difficulty resolving the final objections to a plan that is still in draft form. It is that I am very happy to ask officials in my Department and—perhaps even more usefully—the recently retired chief inspector and another recently retired very senior inspector to meet those authorities to help them, in a sense, to understand what are the practical things they have to do to get the plan to a point where it can pass examination.

I fully understand that there is a frustration, namely that people cannot negotiate with an inspector, because an inspector is basically like a judge; it would be like someone negotiating with a judge in court as to whether they will be found guilty or not. The inspectors cannot negotiate, but that is why we have created a resource within the Department that is able to provide that practical support, and I am very happy to offer it to Cheshire East and to other boroughs where it would be necessary.

[Several hon. Members]

rose—

[Nick Boles]

I will move on to the infrastructure point; I am happy to take more interventions after that. That is because my right hon. Friend the Member for Arundel and South Downs (Nick Herbert), who spoke so passionately and so persuasively, as he has done so many times before, on this subject, raised a particular point about a commitment to make a clearer reference to the need for infrastructure to be planned in planning guidance.

When my right hon. Friend raised that point with me before this debate, I was very concerned that I had failed to deliver on a commitment made on the Floor of the House, and that that was something I needed to correct. I will not suggest to him that it is impossible to improve on what we have done, but I would like to reassure him that my officials—being marvellous officials—put in something that addressed the concern that he raised and the commitment that I made; it just may not be something that he considers to be sufficient. I will quote from the new draft planning guidance, because it is important that we all understand it. It says:

“Local Plans set out a vision and a framework for the future development of the area, addressing needs and opportunities in relation to housing, the economy, community facilities and infrastructure”.

That is the introductory phase. Then it says specifically:

“The Local Plan should aim to meet the objectively assessed…infrastructure needs of the area”.

Then it says something even more specifically, which directly addresses the point of whether it is possible to ensure that a development only goes ahead once the necessary infrastructure has been put in place, and only after that necessary infrastructure has been put in place. We have made direct provision

“that a condition”—

that is, a planning condition—

“may be used to prohibit ‘development authorised by the planning permission or other aspects linked to the planning permission...until a specified action has been taken (such as the provision of supporting infrastructure).’.”

That is the element where we have attempted to make it clear that planning authorities can very reasonably say, “Yes, we’ll pass this planning application, yes, we will consent, but it can only go ahead and be built out once that infrastructure has been put in place.” I believe that the use of conditions is the right way to do it, as well as the plan making that makes the broader plans for infrastructure. However, I am very happy to invite my right hon. Friend to meet my officials and to come up with a better solution if one can be found that addresses his concerns.

[Nick Herbert]

I am grateful to my hon. Friend the Minister and I will have a look at the specific provisions that he says address the concern that we raised last December, and that he committed to bring forward; I thank him for that. Can he assure me that the proposals in the guidance in relation to infrastructure will enable a local authority, in drawing up a plan, to adjust the housing number that it sets, such that the number may be lower than the strategic housing market assessment provides, because of infrastructure considerations?

[Mr Graham Brady (in the Chair)]

Before the Minister replies, I remind him that we only have three and a half minutes left, and I am keen to allow the Member responsible for securing the debate—the hon. Member for Tewkesbury (Mr Robertson)—to reply as well.

[Nick Boles]

If you will forgive me a very scrappy finish, Mr Brady, I will answer the question, and then I will sit down to allow my hon. Friend the Member for Tewkesbury to speak.

Very specifically, development must be sustainable, and sustainable in many ways. Infrastructure is one of the ways in which it needs to be sustainable. However—the however is quite important—to say that the current infrastructure is insufficient to support a level of development that otherwise would be “sustainable” in other senses of the word is not quite enough, because someone has to be able to say that it is incapable of being made sufficient to support that level of development; in other words, that the local authority either could not bring the financial resources together or could not physically and geographically make arrangements to make that development sustainable. Just to say, “The road is too narrow; we can’t do anything more there,” is not quite enough. To say, “The road is too narrow and can never be widened, because it’s between two ancient forests that have the highest status,” could be sufficient and that tends to be where the debates take place. However, as I say, I am very happy to invite my right hon. Friend to meet officials to explore this issue further.

I will conclude. I am sorry if I have not answered everybody’s questions.

16:27

[Mr Laurence Robertson]

Thank you for calling me to speak, Mr Brady. It is a pleasure to serve under your chairmanship, and to have served under that of Mr Havard earlier.

I thank all the Members who have attended Westminster Hall today and contributed to this very lively debate. I thank the Minister for his attendance and his answers. I am not completely satisfied, as he would imagine, by some of the answers he has given, particularly about this so-called “housing crisis”. He said that we are an ageing population. Of course we will age during the next 20 years, but we aged during the past 20 years as well, so I am not convinced that the projections should jump up so much because of that single factor. Of course, families go their own separate ways and people unfortunately have divorced, but again I am not aware that the projection will go up in the way that it would need to in order to justify the additional housing figures that are being talked about.

The Minister was perhaps talking about people being unable to buy houses, and ignoring the financial constraints. In my experience, it is not necessarily that the houses are not there. We went through a situation where some lenders were lending 125% of the house price, which had the effect of inflating those house prices. Now we have the opposite, where there is a very tight lending policy, and that is making it difficult for people to borrow. I accept the philosophy of price elasticity, of course—demand and supply—but there is more to it than that, so I am a little concerned that the Government are still clinging to the “housing crisis” phrase.

I will rattle through one or two final points. I am very much in favour of neighbourhood plans, of course, but they have to be in conformity with the local plan, so they are not actually that valuable.

My final point is the one raised by my right hon. Friend the Member for Arundel and South Downs (Nick Herbert) about infrastructure. Does that mean that numbers can be reduced? What about the green belt? What about flood risk areas? All these provide great difficulties, certainly in my constituency, to coming up with the sort of numbers that are being proposed by the Government—

[Mr Graham Brady (in the Chair)]

Order.

16:30

Sitting adjourned without Question put (Standing Order No.10(13)).

Written Statements

Thursday 24th October 2013 Written Statements

Thursday 24 October 2013

Balance of Competences (Review)

Thursday 24th October 2013 Written Statements

[The Secretary of State for Energy and Climate Change (Mr Edward Davey)]

I wish to inform the House that, further to the Foreign Secretary’s oral statement launching the review of the balance of competences in July 2012 and the written statements on the progress of the review in October 2012, and May 2013, the Department of Energy and Climate Change has today published its call for evidence for the energy report.

This report, which will be completed by the summer 2014, will focus on the application and effect of the EU’s competence in relation to energy. It will include the internal energy market and its contribution to the single market and growth; security of energy supply, indigenous resources and energy infrastructure development; sustainability and energy efficiency measures, renewables and carbon capture and storage; the EU external energy dimension; and nuclear and Euratom.

The report will not include climate change aspects of the Department’s work, international climate change negotiations, the reduction of collective EU member state greenhouse gas emissions via burden-sharing arrangements and the EU emissions trading system. These issues will be covered in the Environment and Climate Change report due to be published this winter.

The energy call for evidence period will be open for 12 weeks and close on 15 January 2014. My Department will draw together the evidence and policy analysis into a first draft which will subsequently go through a process of scrutiny before publication next summer.

We will take a rigorous approach to the collection and analysis of evidence. The call for evidence sets out the scope of the report and includes a series of broad questions on which contributors are asked to focus. The evidence received (subject to the provisions of the Data Protection Act) will be published alongside the final report and will be available on: www.gov.uk/review-of-the-balance-of-competences. We will pursue an active engagement process, consulting with departmental Select Committees, the devolved Administrations, businesses and civil society in order to obtain evidence to contribute to our analysis of the issues. Our EU partners and the EU institutions will also be invited to contribute evidence to the review.

The resulting report is intended to be a comprehensive, thorough and detailed analysis of EU competence for environment and climate change and what this means for the UK. It will aid our understanding of the nature of our EU membership and will provide a constructive and serious contribution to the wider European debate about modernising, reforming and improving the EU. The report will not produce specific policy recommendations.

I am placing this document and the call for evidence in the Libraries of both Houses. The call for evidence will also be available at: www.gov.uk/review-of-the-balance- of-competences.

Agriculture and Fisheries Council

Thursday 24th October 2013 Written Statements

[The Secretary of State for Environment, Food and Rural Affairs (Mr Owen Paterson)]

The Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Camborne and Redruth (George Eustice) represented the UK at the Agriculture and Fisheries Council on 17 October in Luxembourg. Richard Lochhead MSP also attended.

The Council reached an agreement on fishing opportunities in the Baltic region for 2014. The Commission praised the Baltic member states as both providing a good example of regionalisation and sustainable management of stocks, in line with the spirit of the reformed common fisheries policy.

There was an exchange of views on the European Union-Norway annual fisheries agreement. This agreement is of vital importance to the UK fleet and the UK Government pressed for a 2014 North sea cod total allowable catch (TAC) which was in line with the science, maintaining current effort levels (the number of days fishermen are allowed to spend at sea) and for developing and expanding our discard-free catch quota schemes in the North sea.

In an exchange of views on the EU’s priorities for the annual meeting of the International Commission for the Conservation of Atlantic Tunas (ICCAT) next month, the UK supported continued protection of bluefin tuna stocks and argued for increasing the protection of vulnerable shark species. The Commission agreed with the UK point that, ICCAT was improving its performance and that this was finally bringing results. They promised to redouble their efforts to protect vulnerable sharks and to secure a ban on shark finning.

Under AOB Ireland raised the north-east Atlantic mackerel management and coastal state negotiations. The UK argued that new scientific advice could provide an opportunity to achieve a breakthrough in the long-running dispute with Iceland. However, a deal should not be at any cost, should not contain new access concessions and Norway must be a full and equal partner in any agreement. There was widespread support for the Commissioner’s approach of moving towards a fair and equitable solution that must involve Norway.

National DNA Database Ethics Group

Thursday 24th October 2013 Written Statements

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

My noble Friend the Minister for Criminal Information, Lord Taylor of Holbeach, has today made the following written ministerial statement:

I am pleased to announce the publication of the sixth annual report of the National DNA Database Ethics Group on 24 October 2013. The group was established on 25 July 2007 to provide Ministers with independent ethical advice on the operation and practice of the national DNA database (NDNAD).

I welcome the points raised in the report about the implementation of the Protection of Freedoms Act, and the consideration given in the report to a number of important issues around the ethical operation of the NDANAD.

The ethics group’s annual report can be viewed on the website of the independent forensic science regulator and I am arranging for a copy to be placed in the Library of the House.

DNA and Fingerprint Databases

Thursday 24th October 2013 Written Statements

[The Parliamentary Under-Secretary of State for the Home Department (James Brokenshire)]

My hon. Friend the Minister for Criminal Information, Lord Taylor of Holbeach, has today made the following written ministerial statement:

The Government have now delivered their commitment to reform the retention of DNA and fingerprint records by removing innocent people from the databases, and adding the guilty.

1,766,000 DNA profiles taken from innocent adults and children have been deleted from the national DNA database. 1,672,000 fingerprint records taken from innocent adults and children have been deleted from the national fingerprint database. 7,753,000 DNA samples containing sensitive personal biological material, no longer needed as a DNA profile has been obtained, have been destroyed. 480,000 of the DNA profiles removed as part of this programme were taken from children.

At the same time, 6,800 convicted murderers and sex offenders, not on the database under the previous Government, have had their DNA taken and added to the database. These records will be kept permanently, as will those of every convicted adult on the database, to ensure our databases remain a powerful tool for fighting crime.

Now that our DNA and fingerprint databases meet the requirements set out in part 1, chapter 1 of the Protection of Freedoms Act 2012, these provisions will be commenced on 31 October.

The national DNA database (NDNAD) annual report for 2012-13 was today published on the Home Office website, providing information for the public on the routine operation and effectiveness of the database, and on the programme to delete innocent people in preparation for the Protection of Freedoms Act. This report is an important part of the Government’s aim for transparency and public confidence in the use of DNA.

The figures in the first part of the report show the size of the NDNAD to 31 March 2013, part way through work to delete DNA profiles in line with the Protection of Freedoms Act. Following the deletions described above, the NDNAD will now be considerably smaller. Part 2 of the report provides more detailed information on these deletions.

The report is available from:

www.gov.uk/government/organisations/home-office/series/dna-database-documents.

A copy will be placed in the Library of the House.

HS2

Thursday 24th October 2013 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

Today I am publishing the Command Paper “The Government Response to the Design Refinement Consultation: Decisions and Safeguarding Directions for Northolt and Bromford”. This document sets out the decisions to tunnel the HS2 phase 1 route at Northolt and Bromford, in light of the responses to the May 2013 design refinement consultation, and the decision to reissue safeguarding directions for the phase 1 route to reflect these additional tunnels.

In July 2013, following consultation, the Secretary of State for Transport issued safeguarding directions to local planning authorities (LPAs) along most of the route of phase 1 of HS2, between London and the West Midlands. Safeguarding directions protect the route of HS2 from conflicting development. At that time we were consulting separately on fourteen design refinements on the phase 1 route. In particular, the Secretary of State proposed that there should be bored tunnels rather than a surface route at both Northolt and Bromford. As the nature of safeguarding in these areas would be very different depending on the option chosen it was decided to delay safeguarding these areas until the Secretary of State had reached the final decisions on the tunnel proposals following consultation.

Following careful consideration of the responses to the consultation, I can confirm the proposed changes to replace the surface sections of track at Northolt and Bromford with bored tunnels. In these locations tunnels are appropriate on the basis of cost, risk and environmental effects.

We are taking these decisions now in order to provide certainty to property owners in these areas as soon as practicable. Decisions on the remaining 12 refinements to the route will be published soon.

The purpose of safeguarding is not to prevent development along the route of HS2, but to ensure that any development that does take place is consistent with our plans for the railway. LPAs to whom safeguarding directions apply are required to consult HS2 Ltd on new planning applications in respect of land that is within the safeguarded area.

Safeguarding is also a trigger for statutory blight procedures under the Town and Country Planning Act 1990. We do not expect that many properties within the newly safeguarded area will be required for construction of the railway because the route will be in tunnel. However, some land on the surface is affected, particularly for construction purposes, and owners of this land may be able to take advantage of the statutory blight provisions.

The command paper “The Government Response to the Design Refinement Consultation: Decisions and Safeguarding Directions for Northolt and Bromford” is available at:

https://www.gov.uk/government/consultations/hs2-design-refinement-consultation.

Copies of the Command Paper are available in the House Library.

Haulage: Road Tank Vehicle Compliance

Thursday 24th October 2013 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

The Department for Transport is working with the Health and Safety Executive (HSE), the Department for Energy and Climate Change (DECC) and industry to resolve an issue around the incorrect certification of a particular model of fuel tanker in operation in the UK.

The tankers, manufactured in South Africa, and certified as meeting international standards by Bureau Veritas (SA), were first imported into the UK in 2006. Regrettably, they are not in full compliance with internationally-agreed regulations—the European agreement concerning the international carriage of dangerous goods by road— “ADR”) and remedial action is being taken to resolve the issue.

The Department has an ongoing dialogue with industry to discuss proposals to replace or modify the tankers according to a schedule that ensures security of fuel supply while maintaining safety. Around 230 of the tankers are in operation in Great Britain and account for around 12% of the fleet of vehicles delivering road fuel. Some of these tankers have been on the road for over seven years and collectively they have travelled millions of miles without a serious incident. We are not complacent about the risks and it is important that this remedial work is carried out as soon as is practical. This would involve tankers over six years old being taken out of service first, with modifications on newer models to allow a staged withdrawal of these vehicles over subsequent months. Some haulage firms have already placed, in total, orders for about 100 new tankers.